President Barack Obama signed the American Recovery and Reinvestment Act on February 17, 2009, with the hopes of jump-starting a depressed U.S. economy and initiating his agenda for healthcare, energy, and education. Larger in constant dollars than President Franklin Delano Roosevelt's New Deal, Obama's stimulus is one of the most misunderstood pieces of legislation in U.S. history, says Time journalist Michael Grunwald. The author of The New New Deal: The Hidden Story of Change in the Obama Era recently spoke to U.S. News about why Republicans were so successful in their campaign against the bill, and why Americans don't understand how truly transformative it was. Excerpts:
Why did Obama pursue the Recovery Act?
The economy had fallen off a cliff, and in the past, this idea that when the private sector shuts down, the public sector needs to step up was totally uncontroversial. Bush had passed a stimulus bill with overwhelming bipartisan support when the economy started to go soft in 2008. All the Republican and Democratic presidential candidates had their own stimulus plans in 2008. Mitt Romney's was actually the largest. And House Republicans, including Paul Ryan, voted in 2009 for a $715 billion alternative to the stimulus that was quite similar to President Obama's $787 billion stimulus. It was never really clear how the Republican plan could be good public policy and how Obama's pretty similar policy was radical socialism.
While the Recovery Act was partly about recovery, it was also really the purest distillation of what Obama meant when he talked about change we can believe in, in terms of transforming energy, starting to reduce healthcare costs, reforming education with things like Race to the Top, and then the largest infrastructure investments, the largest middle-class tax cuts since Reagan, the largest research investments ever. That's the new New Deal.
Why does the stimulus have such a bad rap?
First, you have to say that the Republicans did a brilliant job of completely distorting the substance of the bill. They turned this into an $800 billion boondoggle that was full of levitating trains to Disneyland and mob museums and snow-making machines in Duluth and all kinds of nonsense that wasn't actually in the bill. They've been very disciplined and unified in portraying this as just a big mess. This thing was just hard to sell at a time when the financial earthquake had hit but the economic tsunami hadn't reached the shore. It wasn't like when FDR took office after three years of depression, so everybody knew it was Hoover's depression. But Obama took office during a freefall, and January 2009 was the worst month for job losses. And then he passed the stimulus, and then the next quarter was the biggest jobs improvement in 30 years, but it improved from absolutely hideous to just bad, and it's hard to sell a jobs bill when the job situation is bad.
What was the value of programs that weren't necessarily shovel-ready?
After a financial meltdown, the recoveries are always going to be long and slow. That's one reason the money was spread out over several years. Right up front they wrote big checks to states to help governors balance their budgets without doing mass layoffs of public employees and mass cutbacks of Medicaid spending on the poor. Tax cuts went out quickly to get money into people's pockets. So all that stuff was obviously shovel-ready; you just shovel the money out the door. Then you had some stuff that really wasn't supposed to be all that shovel-ready at all, like building the world's largest wind farm or bringing our pen-and-paper healthcare system into the digital age, or building high-speed rail lines. It was always understood that those were going to take longer. The idea was that even if it wasn't shovel-ready, it was shovel-worthy.
How are Republicans using the stimulus against President Obama?
Republicans had always supported stimulus up until January 20, 2009, and most of what's in the stimulus were things that had always enjoyed plenty of bipartisan support. Highway spending and unemployment benefits and middle-class tax cuts and even clean energy, but of course Republicans had decided before that that they were in absolute lock-step opposition. They couldn't have clean bipartisan support. They had to portray him as a radical partisan.
Why should Mitt Romney read this book?
What Republicans can learn from this is that a lot of the things they've been trashing as big government nonsense have actually had an effect.
Are Americans better off than they were four years ago?
I think the answer is yes. What people forget is just how catastrophic our situation was four years ago. Gaining 150,000 jobs isn't that great, but it's way better than losing 800,000. And that's always going to be the difficulty for Obama: selling the notion that things could have been worse, and that things were worse.