The New New Deal: A Book Argues That President Obama’s Stimulus Has Been an Astonishing Success

The New New Deal

The New New Deal

Interviews with a point.
Aug. 14 2012 4:30 AM

The New New Deal

President Obama’s stimulus has been an astonishing, and unrecognized, success, argues Michael Grunwald.

(Continued from Page 1)

The New Deal produced tangible, monumental physical achievements—dams, trails, works of art, buildings. The stimulus produced none of that. There were no new bridges—instead they repaved old ones.  Why? Why didn’t the Obama administration look for physical structures to build and celebrate?

I wouldn’t say “none of that.” The stimulus is producing the world’s largest wind farm, a half dozen of the world’s largest solar arrays, and America’s first refineries for advanced biofuels. It’s creating a battery-manufacturing industry for electric vehicles almost entirely from scratch. It financed net-zero border stations and visitors centers, an eco-friendly new Coast Guard headquarters, a one-of-a-kind “advanced synchrotron light source.” It jump-started three long-awaited mega-projects in Manhattan alone—the Moynihan Station, the Second Avenue Subway, and the Long Island Railroad connection to the East Side—and it would have jump-started that multibillion-dollar rail tunnel to New Jersey as well if Governor Chris Christie hadn’t killed the project.

It didn’t build new dams, because we don’t need new dams, but it did finance the largest dam-removal project in U.S. history to restore salmon flows on the Elwha River. It even distributed $50 million to artists.


But I take your point. Most of the money in the stimulus went to unsexy stuff designed to prevent a depression and ease the pain of the recession: aid to help states avoid drastic cuts in public services and public employees; unemployment benefits, food stamps, and other assistance for victims of the downturn; and tax cuts for 95 percent of American workers. And the money that did flow into public works went more toward fixing stuff that needed fixing—aging pipes, dilapidated train stations, my beloved Everglades—than building new stuff. In its first year, the stimulus financed 22,000 miles of road improvements, and only 230 miles of new roads. There were good reasons for that. Repairs tend to be more shovel-ready than new projects, so they pump money into the economy faster. They also pass the do-no-harm test. (New sprawl roads make all kind of problems worse.) And they are fiscally responsible. Repairing roads reduces maintenance backlogs and future deficits; building roads add to maintenance backlogs and future deficits.

Obama and his team did try to push a few big physical legacy projects. During his transition, he called for a massive nationwide effort to rebuild and retrofit public schools. But Republican Sen. Susan Collins of Maine hated it, and Obama needed her vote to get the stimulus through the Senate, so it got deleted. Obama also wanted to build a smart grid, with digital meters for all Americans (the smart part) and a new national network of high-voltage wires (the grid part). His aides explained that couldn’t happen quickly and didn’t even make sense as a federal project. Instead, the stimulus included about $11 billion of seed money for the smart grid, which has launched a new era for the utility sector but hasn’t really penetrated the national psyche. Finally, the White House slipped $8 billion into the stimulus for high-speed rail, the largest new transportation initiative since the interstates. But Florida’s Republican governor, Rick Scott, killed a bullet train from Tampa to Orlando that was supposed to be the showcase project, and the only other bullet train, connecting San Francisco to Los Angeles in less than three hours, is still decades away from completion. The shovel-readier projects—like improvements that will slice an hour off the Amtrak train from Chicago to St. Louis—won’t produce the oohs and aahs of bullet trains. They’re really higher-speed rail—worthy, but not iconic.

Your subtitle is: “The Hidden Story of Change in the Obama Era.” Why hidden? What are the great hidden accomplishments?


There are two reasons this story has been hidden, one understandable, one less so. First, the stimulus was supposed to create jobs at a time when jobs were vanishing at a terrifying rate. Nonpartisan economists agree that it helped stop the free fall; job losses peaked the month before it passed, and the economy dramatically improved once it kicked into gear. But even after the dramatic improvements, the unemployment rate was still sky-high and rising; an economy can do a lot better than losing 800,000 jobs a month without doing well. Ultimately, the stimulus was a 2.5 million-job solution to an 8 million-job problem.

And the Obama transition team put out a tragically dumb forecast suggesting it would keep the unemployment rate below 8 percent. In fairness, the situation was deteriorating far faster than people realized; the government had announced a growth rate of -4 percent in the fourth quarter of 2008, which is hideous, but that was later revised to -9 percent, which is way beyond hideous. Unemployment actually topped 8 percent the month the stimulus passed, which obviously wasn’t the fault of the stimulus. Recoveries after financial cataclysms are always ugly. But when you spend $800 billion on an economic recovery package, and the recovery stinks, people don’t tend to look past that.

That said, the national media should have tried to look past that, but it didn’t, because the national media sucks at covering public policy. The stimulus included $27 billion to computerize our pen-and-paper health care system, which should reduce redundant tests, dangerous drug interactions, and fatalities caused by doctors with chicken-scratch handwriting. It doubled our renewable power generation; it increased solar installations over 600 percent; it essentially launched our transition to a low-carbon economy. It provided a new model for government spending—with unprecedented transparency, unprecedented scrutiny, and unprecedented competition for the cash. Experts predicted that as much as 5 percent of it would be lost to fraud, but so far, investigators have documented less than $10 million in losses, about 0.001 percent. Despite all the controversy over the lack of shovel-ready projects, the Obama administration has met every spending deadline, and it’s kept costs so far under budget that it’s been able to finance over 3,000 additional projects with the savings. But the media coverage of the stimulus was almost exclusively gotcha stuff, usually without a real gotcha. And when the media did notice long-term investments in the stimulus, like Race to the Top or clean-energy research, it rarely mentioned the stimulus connection.

Except, of course, when it was noticing Solyndra. After a year of screaming headlines about crony capitalism and shady deals, even Republican investigators have admitted there’s no evidence of any political interference or other wrongdoing. A slew of independent reviews—including one led by John McCain’s finance chairman—have concluded that the clean-energy loan program is working well. Everyone knew that some of its loans would go bad. But the Solyndra scandal—which isn’t even a scandal—is probably the best-known product of the stimulus.

The complaint from the left about the stimulus has long been: It was too small. According to your reporting, that’s an unrealistic claim. Why?

Well, it was too small. More aid to states would have prevented more layoffs of public employees. More infrastructure projects would have put more unemployed laborers to work. More tax cuts would have put more money into the hands of consumers. What my reporting shows is that the disillusionment addicts of the left are wrong to blame President Obama for the size of the stimulus.

People forget that after Lehman Bros. collapsed in September 2008, Democrats couldn’t even get 60 votes in the Senate for a $50 billion stimulus; in fact, two Democrats voted against it. The $800 billion stimulus was over four times larger than Obama’s campaign proposal in October 2008. It was over twice as large as the package that 387 liberal economists urged Congress to pass in late November. It’s only in retrospect that $800 billion seems wimpy. And Obama couldn’t have gotten a dime more through the Senate. The three moderate Republicans who voted yes—Collins, Olympia Snowe, and Arlen Specter—all insisted they wouldn’t support anything over $800 billion. So did at least a half-dozen centrist Democrats, like Mark Begich of Alaska, Ben Nelson of Nebraska, and Blanche Lincoln of Arkansas. Byron Dorgan of North Dakota wanted a bigger stimulus, but he was in the room during the negotiations, and he told me: There was absolutely no way to make that happen.

Some progressives admit that Obama couldn’t have gotten more stimulus during his first month in office but complain that he never pushed for more stimulus after the Recovery Act passed. That’s just wrong. He never stopped pushing behind the scenes and ended up getting another $700 billion worth in 2009 and 2010, even though Republicans were trying to obstruct him at every turn. They were even marching in lockstep against unemployment benefits and small-business tax cuts that they had always supported in the past. So Obama did well to get what he got.