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.

Michael Grunwald
Michael Grunwald

Photograph by David Whitman

Michael Grunwald, a Time magazine correspondent, this week publishes The New New Deal: The Hidden Story of Change in the Obama Era, a gripping account of President Obama’s stimulus bill. Grunwald writes that the stimulus has transformed America—and American politics—in ways that we have failed to recognize. I interviewed him by email about the book.

David Plotz David Plotz

David Plotz is the CEO of Atlas Obscura and host of the Slate Political Gabfest.

Slate: What possessed you to write this book?

Grunwald: I fled Washington for the public policy paradise of South Beach while writing my last book, about the Everglades and Florida, so in 2010 I was only vaguely aware of the Beltway consensus that President Obama’s stimulus was an $800 billion joke. But because I write a lot about the environment, I was very aware that the stimulus included about $90 billion for clean energy, which was astonishing, because the feds were only spending a few billion dollars a year before. The stimulus was pouring unprecedented funding into wind, solar, and other renewables; energy efficiency in every form; advanced biofuels; electric vehicles; a smarter grid; cleaner coal; and factories to make all that green stuff in the U.S.

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It was clearly a huge deal. And it got me curious about what else was in the stimulus. I remember doing some dogged investigative reporting—OK, a Google search—and learning that the stimulus also launched Race to the Top, which was a real a-ha moment. I knew Race to the Top was a huge deal in the education reform world, but I had no idea it was a stimulus program. It quickly became obvious that the American Recovery and Reinvestment Act (the formal name of the stimulus) was also a huge deal for health care, transportation, scientific research, and the safety net as well as the flailing economy. It was about Reinvestment as well as Recovery, and it was hidden in plain view.

So I decided to do a piece for Time about this untold story. But my editors thought I was nuts. The stimulus was old news. Unemployment was 9 percent; what else was there to say? I actually flew up to New York to make my case. I told my bosses I felt like a reporter in 1938, trying to convince them to do a story on this initiative called “The New Deal.” They looked at me like I was that blogger in The Newsroom pitching his story on Bigfoot. To their credit, though, they eventually let me write an article about how the stimulus was changing America, which led to the book.

In what ways has the stimulus been like and unlike Roosevelt’s New Deal?

The stimulus isn’t the New Deal. But they were both massive exercises in government activism in response to epic economic collapses. And they were both about change. The stimulus was the purest distillation of what Obama meant by “Change we can believe in.” And it’s the essence of Obama-ism—not only the policies, which came straight from his campaign agenda, but his approach to getting them into law, which was more pragmatic and political and messy than his hopey-changey rhetoric had led people to believe. So there was plenty of New, and plenty of Deal.

The Obama team thought a lot about the New Deal while they were putting the stimulus together, but times have changed since the New Deal. The Hoover Dam put 5,000 Americans to work with shovels. A comparable project today would only require a few hundred workers with heavy equipment. Christy Romer, the Depression scholar who led Obama’s Council of Economic Advisers, kept reminding colleagues that the Roosevelt administration hired 4 million Americans in the winter of 1934. At one point she started calling Cabinet departments to see how many employees they could hire with unlimited funds: They’d say oh, a lot, maybe 20,000! So the stimulus didn’t create giant new alphabet agencies like the WPA or CCC. It only created one new agency, a tiny incubator for cutting-edge energy research called ARPA-E.

People forget that the CCC herded unemployed urban youths into militarized rural work camps—often known as “concentration camps,” before that phrase became uncool—for less than a dollar a day. That kind of thing wouldn’t fly today. The New Deal basically created Big Government, but it’s still here. There was no need to re-create Big Government, and no political desire to expand Big Government.

So the stimulus didn’t establish new entitlements like Social Security or deposit insurance, or new federal responsibilities like securities regulation or labor relations, or new workfare programs for the creative class like the Federal Art Project, Federal Music Project, or Federal Writers Project. The New Deal was a barrage of contradictory initiatives enacted and adjusted over several years. The stimulus was one piece of legislation cobbled together and squeezed through Congress during Obama’s first month in office. The New Deal was a journey, an era, an aura. The Recovery Act was just a bill on Capitol Hill.

But it was a really big bill, 50 percent bigger than the entire New Deal in constant dollars. It included some New Deal-ish programs, like a $7 billion initiative to bring broadband to underserved areas, a modern version of FDR’s rural electrification. It included another $7 billion in incentives for states to modernize and expand the New Deal-era unemployment insurance system, which was created for a workforce of male breadwinners. Its aid to victims of the Great Recession lifted at least 7 million people out of poverty and made 32 million poor people less poor. It built power lines and sewage plants and fire stations, just like the New Deal. It refurbished a lot of New Deal parks and train stations and libraries. And Republicans have trashed the stimulus as a radical exercise in socialism, just as some Republicans—but not all Republicans—trashed the New Deal.

The most significant difference is that the New Deal was wildly popular, while the stimulus has been a political bust. There are many reasons for this, but the most important is that FDR launched the New Deal after the U.S. had suffered through more than two years of depression under Hoover, while Obama launched the stimulus when the economy was nowhere near rock bottom. Everyone knew about the financial earthquake, but the economic tsunami hadn’t yet hit the shore.