The New New Deal (19 page)

That included independent senator Joe Lieberman of Connecticut, the 2004 Democratic vice presidential nominee who had quit the party in 2006 and stumped for McCain in 2008. Liberals ached to see him punished for questioning Obama’s patriotism—not to mention showing up on Fox News every few minutes to whack the Democratic Party—and Reid did ask if he would give up his Homeland Security Committee chairmanship. Lieberman refused, and threatened to caucus with the Republicans if he were stripped of his gavel. At Obama’s request, Senate Democrats voted to let Lieberman remain chairman. So he stayed on their side of the aisle and pledged to help out when he could, which would start to pay dividends quickly.

“What made that happen was the president saying he didn’t want any recriminations,” Lieberman says. “A different kind of person would have been vindictive.”

Obama was the kind of person who liked to reach out. And the United States isn’t a parliamentary democracy, where the head of state puts forth an agenda, his party dutifully passes it, and the nation judges
its results. Even with numbers on his side, he had no intention of trying to shove a detailed stimulus plan down the throats of Democratic leaders. Bill Clinton had tried that with Hillarycare—“the stone tablets approach,” Axelrod calls it—and it hadn’t ended well. Bush’s strong-arming of the Republican Congress hadn’t ended any better, producing policy fiascoes and a Democratic political revival. Obama told his transition aides he wanted them to listen as well as talk.

“For reporters, either the president is dictating to Congress or Congress is dictating to the president,” Schiliro says. “He felt very strongly that he wanted a different model.”

Obama felt no need to control every subsection of the stimulus, and he figured his old colleagues would act faster if they felt a sense of ownership. Even if he had wanted to write the Recovery Act, his transition team didn’t have the manpower to do it. Rahm was also leery of making formal requests that would make Obama look weak if Congress rejected them.

So Schiliro settled on an 80-20 strategy: If the stimulus included at least 80 percent of what Obama wanted, Congress could fill the other 20 percent with its own priorities. There wasn’t time to haggle over every dollar, and Obama wanted lawmakers on his side. It would be impossible to make change without them.

“We don’t want to come in as conquering heroes,” Schiliro told the team.

R
ob Nabors had spent eight years at David Obey’s side, and was still technically on Obey’s payroll. A few weeks earlier, he had staffed Obey on a House stimulus bill. But now he was an Obama aide, briefing his old boss on Obama’s stimulus bill, reading a list of line items while Obey grunted and grumbled.

“He kept throwing things back in my face that we had worked on together,” Nabors recalls. “Just Obey being Obey.”

Nabors and Obey were like a May-December odd couple—the baby-faced, affable, thirty-seven-year-old African American staffer and the professor-bearded, irascible, seventy-year-old Wisconsin congressman.
Obey was a throwback to the high-handed, hard-drinking Democratic “old bulls” who once dominated Congress, smart and cantankerous, a no-filter, equal-opportunity denigrator who had spent four decades on Capitol Hill. Nabors was a mild-mannered, self-effacing number cruncher who listened more than he spoke, but projected an aura of quiet authority when he did speak. He was the son of an Army general, and as Obey often said, Nabors didn’t take any crap.

Nevertheless, Obey was giving him some.

“You know, this would be much easier if you gave me that piece of paper,” Obey snapped.

“I’m not giving you my piece of paper,” Nabors parried. “This is official transition paper.” Nabors had noticed Obey peeking at legislative language of his own; apparently, he had started work on a draft without waiting for Obama.

“You can look at your own piece of paper,” Nabors said with a grin.

Nabors, Furman, and Schiliro now had a plan to pitch, even though it existed only as a spreadsheet on Nabors’s laptop, and they needed to unite Hill Democrats around that plan in a hurry. Obama wanted a bipartisan bill with bipartisan ideas, and his aides planned to reach out to Republicans once there was a basic consensus among Democrats. But with such a compressed schedule, they didn’t think they had time for the interminable back-and-forth of a standard legislative process. Their mission was to get Democrats to embrace Obama’s plan and write it into a bill.

Yet they did not want to present it as a definitive plan. In a marathon series of briefings for Democratic staffers, they described their work as ideas, suggestions, the start of a process. They said things like: “The president-elect suggests that $25 billion would be a good number for school modernization.” Or: “The president-elect thinks $6.5 billion for neighborhood stabilization would help address foreclosures.” They avoided words like “ask” or “request.” They did not hand out any paper.

This cagey approach helped fuel the myth that Obama punted the Recovery Act to Congress. He never submitted a formal draft, and many Hill Democrats grew frustrated with his team’s refusal to nail
down exactly what he wanted and what he needed in the bill. Some saw his nonplan plan as a page out of the Bush playbook, a passive-aggressive effort to direct policy without leaving fingerprints.

“In the olden days, which weren’t that long ago, presidents used to send up proposals,” says one senior House aide. “They used to say, ‘I want this, this, and this, and this is the language I want.’ You don’t own it until you put it on paper.”

As one Senate staffer puts it, most legislators are like kids: They say they want freedom, but deep down they crave guidance. So Democrats who had spent years demanding respect from the White House quickly decided that Obama’s team was too deferential. “People were like: Just tell us what the hell you want!” recalls Tom Perriello, a Virginia Democrat who had just been elected to the House.

But Obama’s plan was real, even if Congress never saw it on paper, and it immediately became the foundation for the Recovery Act. His team’s briefings, while strictly verbal, laid out general goals as well as specific funding ranges for specific programs. On December 19, for instance, Nabors and Furman held a marathon session of back-to-back meetings in the Capitol basement with rotating groups of staffers, laying out Obama’s vision—uh, suggested vision—for the six major spending areas: energy, education, health care, infrastructure, protecting the vulnerable, and “other.” The plan—whether or not they called it a plan—got a friendly reception.

As the team reported in a four-page memo the next day: “Overall, congressional staff appeared accepting of most of our numbers.”
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On energy, there was “general support for most of the elements and packaging.” On health care, transition aides had already been speaking with the Hill, and “work is reasonably far advanced on a package looking a lot like what we have proposed.” On the vulnerable, “they are largely taking our proposals and refining them.” On taxes, “House and Senate staff largely view their role as drafting the Obama tax proposals and refining the details.”

The team’s suggestion of a $675–$775 billion overall price tag did draw a few gasps. “The first look we’d get was, ‘That’s crazy, there’s no
way,’” Schiliro recalls. The team hinted strongly that the final number ought to be even higher, suggesting that markets might react badly to anything below $800 billion. By the end of the day, Democrats “appeared willing to do whatever number we thought was appropriate,” the memo said. They also accepted Obama’s general principles for what should go into the stimulus: items that would create jobs, avoid permanent tails, spend out reasonably quickly, and advance sound policies. The three-T test would be the main test, although there might be a few deviations for the core of Obama’s agenda.

“We have communicated our willingness to work within these parameters as closely as possible and urge all offices to do the same,” Reid’s chief of staff wrote to Senate Democrats.
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When it came to the broad strokes, most Democrats seemed willing to follow their new leader.

“We didn’t have the lawyers or the staff to do the drafting, but everyone knew this was our bill,” Nabors says. “There wasn’t that much disagreement.”

D
emocrats on the Hill didn’t love everything in Obama’s plan.

For starters, $200 billion worth of aid to states sounded like a truck-load of political spinach. Partisanship aside, why would members of Congress want to write checks that would make them look like bigger spenders and their governors look like better stewards? State aid was especially unappealing to Democrats from states with conservative Republican governors who were unlikely to use their windfalls to preserve services for the poor or save the jobs of state employees. They had slashed taxes irresponsibly when they were flush; why help them avoid the consequences now that they were broke?

“A lot of us were saying: Don’t give the governors slush funds!” recalls Congressman Xavier Becerra of California, the vice chair of the Democratic caucus.

Hill Democrats weren’t interested in giving Obama slush funds,
either. The transition team wanted large pots of money with minimal strings attached, so the administration could steer the cash where it could create the most jobs and drive the most reform. But steering cash is what legislators do. Letting presidents make spending decisions was not the kind of change Congress tended to believe in.

“We came in saying, look, we want some flexibility, we want to fundamentally transform education, we want better transportation projects,” Nabors says. “They felt like flexibility had been abused under Bush. They wanted constraints.”

The one clear nonstarter in Obama’s plan was an infrastructure bank, which he had proposed during the campaign to promote merit-based funding for public works. Most lawmakers preferred the existing system of pork-based funding. The seventy-four-year-old chairman of the House Transportation and Infrastructure Committee, Jim Oberstar, had bragged about snagging fifty-seven “high-priority projects” for his rural Minnesota district in the bloated SAFETEA-LU bill, including a bridge for snowmobiles in Onamia, population 878, and a $3 million road to ease the notorious congestion between County Road 565 in Hoyt Lakes and the intersection of Highways 21 and 70 in Babbitt.
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Oberstar had first joined the committee as an aide in 1963. He wasn’t about to surrender its power now that he had the gavel.

Democrats were willing, though not eager, to accept Obama’s demand for an earmark-free stimulus. They saw how it could be awkward to let 535 lawmakers lard up a bill with pet projects during a crisis. But they still expected to plus up their pet programs, proposing over a hundred different line items for infrastructure alone. Committee chairmen all saw pressing needs in their jurisdictions. When would there be a better time to buy the Coast Guard a new polar icebreaker, or install the next generation of airline security, or prepare for a flu pandemic? Wouldn’t House Agriculture chairman Collin Peterson of Minnesota know if the Farm Service Agency needed new computers? Arkansas senator Blanche Lincoln wanted emergency aid for catfish farmers suffering from high feed costs; didn’t catfish farmers need stimulus, too?

“The biggest issue is less the reaction to our topline numbers and
major components but the very large number of miscellaneous requests,” the Obama team’s memo said.
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Many of these requests were worthy, and perfectly defensible as stimulus. New border stations and child care centers on military bases could inject money into the economy just as effectively as new highways. Workers hired for nuclear waste cleanups and wildfire management would be just as likely as construction workers to spend their paychecks at local grocery stores. In fact, because of the diminishing returns problem, sprinkling stimulus money through multiple funding streams would have an even greater impact on aggregate demand than pouring it all into a few simple buckets. And realistically, who was going to tell House majority whip James Clyburn of South Carolina, the top-ranking African American in Congress, that he couldn’t reserve $15 million—2 cents out of every $1,000 in the Recovery Act—for job-creating historic preservation projects at black colleges?

It just seemed messy. Rahm worried that all these “cats and dogs,” as the Obama team described random congressional desires, would make the Recovery Act look like spending on steroids—money here, money there, money everywhere. Summers huffed and puffed about “the Democratic moment,” the danger of using the stimulus to reward every Democratic constituency, scratch every Democratic itch, and revive every long-neglected Democratic program. This was what Jack Lew and the shadow team had warned about, the risk of losing control of the stimulus and letting Congress turn it into a grab bag.

The chum of a must pass mega-bill was already creating a feeding frenzy, as lobbyists for shoe companies, telecoms, zoos, student lenders, ethanol refiners, and anyone else who could afford their retainers scrambled to rebrand their client wish lists as stimulus proposals. The tourism industry wanted a loan to promote the United States as a destination. The maritime industry highlighted the deplorable condition of seaports, while the airline industry spotlighted the deplorable condition of airports. The concrete lobby pushed for longer-term infrastructure projects that tend to be more transformative, and use more concrete, while the asphalt lobby pushed for shorter-term road repairs that tend
to be more stimulative, and use more asphalt. The U.S. Conference of Mayors identified $180 billion worth of locally approved projects that could go into a stimulus, including a $350,000 fitness center in New Mexico, a $1.5 million water slide in Florida, and a $4.8 million polar bear exhibit in Rhode Island.
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One less inspiring legacy of the New Deal was the word “boondoggle,” a reference to leather knickknacks made by unemployed Americans in federally funded arts-and-crafts classes. Obama hadn’t run for president to build water slides, and he repeatedly warned his staff that modern boondoggles would discredit the stimulus, his fledgling administration, and government activism in general.