An insider's view on SOTU: 5 big last-minute changes the president could make

I was a White House lawyer for President Obama. Here are five memorable executive actions he could announce tonight

Published January 28, 2014 12:43PM (EST)

  (AP/Charles Dharapak)
(AP/Charles Dharapak)

State of the Union speeches are the product of a long process, with many advisers and policy experts weighing in often for weeks if not months in advance. And yet, if my experience watching several of these come together as a White House lawyer is any guide, there are presidential aides sitting right now in a small room in the West Wing mulling over last-minute additions.

Sometimes, it’s those last-minute changes that are the most memorable. Like in 2010, when a week before the State of the Union the Supreme Court decided Citizens United, opening the floodgates to unlimited corporate spending in our elections. President Obama’s response, added at the very end of the process, and Justice Alito’s famously mouthed “not true,” not only defined the speech but helped focus Americans’ attention on the threat posed to our democracy by the Supreme Court’s decision.

So today, it’s worth considering what last-minute additions President Obama might still make. By most reports, he’s planning to announce a “modest” list of executive actions, reflecting the limits of his authority given an uncooperative Congress. But there are bold and realistic executive actions he could add that both because of their actual impact and because of their symbolism in bigger fights could amount to a profound and powerful second-term legacy. For those still sitting in that little room, here are five such actions he could announce in tonight's speech.

1. Remove marijuana from Schedule I of the controlled-substances list.

President Obama said this week in the New Yorker that marijuana is no more dangerous than alcohol. And yet, his administration continues to list it as a Schedule I controlled substance, a list reserved for the most dangerous drugs that also includes heroin, ecstasy and LSD (cocaine and meth aren’t even on the list – they’re schedule II). By removing marijuana from Schedule I, not only would he align his policy with his now-stated beliefs, it would become easier for scientists to research pot, including its potential medical applications, and would make it safer for patients with prescriptions to obtain it in states where that is legal.  Most important, it would give states the flexibility to experiment with new approaches to drug policy, as Washington and Colorado have done, and allow for further shifts in resources from enforcement to treatment. It would, in short, mark an end to the failed war on marijuana that has driven our mass incarceration crisis and devastated communities, particularly communities of color here in the United States and the Central and South American states that have been taken over by narco-traffickers.

President Obama has already indicated a willingness to lean forward in the movement to end the failed war on drugs. His Justice Department is permitting Washington and Colorado to proceed with their tax-and-regulate approach – an approach Obama called “important” – and just this past week his Justice and Treasury Departments revealed that they are working on guidance that would give comfort to banks heretofore nervous about accepting deposits from pot businesses. There’s been remarkably little political pushback to any of these moves, a sign of how mainstream marijuana decriminalization has become, earning support from both Republicans and, for the first time, a majority of Americans.  President Obama could remove marijuana from Schedule I with the stroke of a pen.

2. Appoint two reform-minded FEC commissioners.

Reports this week that the Koch brothers are streamlining the operations of their $400 million political operation and that Priorities USA is at work mounting a war chest in support of Hillary Clinton’s expected presidential bid big enough to render any challenge impossible prove yet again how captured our democracy is by those with the biggest wallets. It’s a defining issue of our time and one the president crusaded against far more in his younger days than he has as president. To be fair, any attempt to tackle this issue triggers as fierce a response as anything you’ll ever see in Washington: When I was working on this issue for the White House in 2011, I was astonished at how rapid and ferocious the opposition was when it was even suggested in the press that the president might be considering an executive order just modestly increasing disclosure of political spending.  Nevertheless, it would be shameful if he did nothing to address an issue this existentially tied to the viability of our democracy, during eight years in office.

So here’s what he can do: appoint two reform-minded commissioners to the Federal Election Commission. Right now, the FEC is divided between three pro-reform Democrats and three anti-reform Republicans. As a result, the deadlocked commission has been unable to meaningfully regulate money in politics for years.  But four of the sitting commissioners are serving past the end of their terms and can be replaced at any time. Traditionally, the party leaders in Congress tell the president whom he should appoint and he complies, but there’s no legal reason he has to.

He could appoint a reform-minded Republican to fill one of the Republican seats and an outspoken reformer to a Democratic seat and tip the balance of the commission 4-2 in favor of aggressive reform. An empowered FEC wouldn’t be able to eradicate the influence of money in politics, but it could put significant hurdles in the way, such as by changing the absurd rule that donors need not be disclosed so long as they don’t earmark their donation for a specific ad. More important, an innovative reformer with a national audience like Larry Lessig could use the platform of the FEC as a bully pulpit to campaign publicly and nationally for greater action to deal with this pressing problem.

This idea isn’t new, though in the past it has been mere fantasy. We received countless pleas from government reform groups to do just this early in the administration but the closest it ever came to happening was when President Bartlet did it in Season 1 of "The West Wing." The arguments against it then and since were that by usurping the congressional prerogative to pick appointees, the Senate would refuse to confirm the president’s picks, the minority would retaliate in other ways, and a future president of the other party would respond in kind, turning the FEC into a partisan battleground. But today, with the filibuster abolished for presidential appointees, there’s no longer reason to fear the first. The Republicans are already planning every obstruction under the sun so there’s little to be lost on the second. And a Republican president’s stacking of the FEC would make it no less toothless than it already is. The president should stack the FEC and bring some integrity back to our campaign finance system.

3. Classify Internet service providers as common carriers and reinstitute net neutrality.

Last month, the D.C. Circuit struck down the Federal Communications Commission’s net neutrality rules. The court reasoned that the FCC doesn’t have the authority to regulate broadband Internet, only common carriers like telephone services. The president could fix this by urging the FCC to reclassify broadband Internet as a common carrier.

The notion of common carriers is that they transport goods or people for a fee and that, although privately owned, they provide a public service subject to certain regulations to ensure the provision of that service is made in a non-discriminatory way (buses, airlines and telephone companies are examples of common carriers). Broadband Internet providers fit this definition; we all rely on the Internet in modern society as much as we relied on the post office or telephone companies in the past to transport our information. The only reason it’s not treated as one is that the FCC mistakenly thought it wasn’t necessary.

Some argue that treating broadband providers as common carriers and subjecting them to all the accompanying regulation would squash investment and innovation and slow the rapid development of new technologies. But the FCC need not apply any existing regulation to broadband providers if it reclassified them; it could simply exempt Internet providers from all regulations except for newly instituted net neutrality rules, achieving the same result it already tried to achieve when it passed the original net neutrality rules in the first place.

Although the FCC is technically independent, and when I was in the White House we were always careful to make sure the rules about that separation were respected, if the president said publicly that he wanted the FCC to reclassify broadband, his hand-picked chairman Tom Wheeler would almost certainly abide that request. And in so doing, the president could guarantee as his legacy that the Internet remained open, non-discriminatory and free.

4. Order the FHFA to allow Fannie and Freddie to write down principal.

Nearly one in four Americans are currently paying off underwater mortgages – that is, they owe more on the mortgage than their property is worth. For those owned or guaranteed by Fannie Mae or Freddie Mac, the federal government has the power to write down the principal of those loans to bring them in line with the current market. Private banks do this all the time to help ensure the loans are paid, but for years, a Bush administration holdover named Ed DeMarco ran the regulatory agency with the power to do that (the Fair Housing Finance Agency) and adamantly refused. He argued that writing down principal would essentially hurt taxpayers who ultimately hold the notes, notwithstanding the fact that his own agency in 2012 determined that writing down principal would save Fannie and Freddie money by ensuring more loans are repaid.

In order to protect DeMarco and prevent anyone else from ordering this reform, Republicans in the Senate blocked any effort by President Obama to replace him. That changed when Harry Reid changed the filibuster rules for executive appointees.  One of the first nominees confirmed under the new rules was former congressman Mel Watt, the president’s choice to oversee Fannie and Freddie.  Now that he’s in place, President Obama should make clear he’d like to see Watt begin principal write-downs.  It would be the single most powerful step the administration could take to address the housing crisis, providing long-term relief to millions of Americans that would affect their financial prospects for the rest of their lives – and it would save taxpayers money.

5. Peg federally issued student loan repayment to income, and provide a forgiveness sunset.

There are roughly 37 million Americans with outstanding student loans today, each carrying an average of $24,000 in debt.  More than 40 percent of them will be delinquent at some point during the first five years of repayment and defaults are on the rise as the job market for young people has tightened.  And most are locked into interest rates well above the current market.  The result doesn’t just hurt those borrowers – in 2011, first-time homebuyers with a median age of 31 fell to its lowest level since 2006, putting a larger drag on the national economy.  And forget about this cohort being able to get new credit to open businesses and fuel their generation’s economic growth.

In 2010, Congress reformed the federal student loan program so that some loans initiated after the reforms would provide borrowers the option of limiting their repayment to no more than 10 percent of their discretionary income at any given time. Loans not fully repaid after 20 years would be forgiven and that forgiveness would kick in after 10 years for anyone in public service.  But the reforms were not retroactive.

President Obama doesn’t have the authority to rewrite the terms of private bank loans to students, but he does have the power to rewrite the terms of loans issued by the federal government to students pursuant to a program that was in place from 1994 to 2010. Allowing those students to take advantage of the same terms available to some of those getting new loans would give those currently struggling under the crushing weight of that debt a new pathway to opportunity and keep many out of bankruptcy.

* * *

It’s true that the power of the presidency in our system is limited by design. That is how it should be. But there are many things President Obama still could do to cement a powerful legacy. He already plans to announce steps to confront climate change and income inequality on Tuesday night, and hopefully the House will take up immigration reform. By adding to that measures designed to end the war on drugs, reverse the tide against unlimited money in politics, protect a free Internet, provide relief to those still hurting from the housing crisis, and give a new lease on financial opportunity to millions of young people trapped under the weight of massive student loans, President Obama could make his second term as significant and historic as his first. And he doesn’t need Congress to do it.

By Ian Bassin

Ian Bassin is a former Associate Counsel to President Obama.

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