The New New Deal (63 page)

Electronic medicine will do more than replace your doctor’s clipboard with an iPad, help you make appointments online, and eliminate all that time you waste filling out forms in waiting rooms. It’s also the foundation for health reform, what Sebelius calls “the single biggest component in improving quality and lowering costs.” As Zeke Emanuel points out, health IT firms that used to spend their time devising new ways to bill insurers and Medicare are now developing new ways to improve care and coordination, bringing hundreds of new products to market, attracting a wave of new venture capital.
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They will help doctors monitor the blood sugar levels of diabetic patients remotely, share MRI results with specialists on the other side of the country instantly, and change medical care in countless ways no one has thought of yet. Like the smart grid, health IT is a software play: Its killer apps are still waiting to be invented.

The computerization of medicine will also promote evidence-based care, by helping researchers collect data and helping providers use the results. The insurer WellPoint has announced plans to use Watson, the IBM computer best known as a
Jeopardy!
champion, to comb through data to suggest treatment options to doctors. And the Recovery Act’s
investments in comparative effectiveness are already producing news doctors and patients can use. One stimulus-funded study found that a $50-per-dose drug is just as effective as a $2,000-per-dose drug in treating macular degeneration. Another suggested bypass surgery might be more effective than stents at treating heart blockages.

Some doctors who consider medicine more art than science have bristled at the idea of computers suggesting evidence-based protocols. And during the Obamacare debate, well-funded critics denounced comparative effectiveness as vicious rationing; the drumbeat got so loud that Rahm argued for abandoning the White House’s efforts to expand and institutionalize the research, prompting a predictably indecorous response from his brother Zeke. In the final compromise, Congress refused to allow the new board overseeing comparative effectiveness to consider costs. Still, the trend is toward more data in more accessible forms, which should make the system more logical over time.

“We’re not naive. We know some of these studies may lead to challenging policy decisions,” says immunologist Richard Hodes, cochair of NIH’s comparative effectiveness council. “But our feeling is: First, let’s get the facts.”

Even before Obamacare, the Recovery Act started pushing the medical system in the directions Obama wanted it to go. States had been limiting access to Medicaid; the stimulus expanded access. It also expanded preventive care, built or upgraded more than one thousand community health clinics, and started addressing the shortage of primary care doctors and nurses. And it’s the reason our health care system no longer manages patient data with the same technologies Hippocrates used. It’s unlikely that all Americans will have an electronic record by 2014, Obama’s goal, but the vast majority should.

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efore the stimulus, 91 percent of Tennessee’s students were reported to be proficient in math. In 2011, thanks to the state’s Race to the Top grant, that figure was down to 34 percent. And the minority achievement gap had doubled. Yet Secretary Duncan was delighted.

That’s because the statistical nosedive was purely the result of much
stricter standards—and as they say in recovery, the first step is admitting you’ve got a problem.

“They stopped dumbing down their standards and lying to their kids,” Duncan told me. “Now they know the truth, which is a very liberating and motivating thing.”

Some of the Recovery Act’s impact on schools is obvious. Its fiscal relief saved at least 350,000 education jobs. It extended Pell Grants so that three million more low-income students could attend college, and more than doubled overall tuition aid. But it’s too early to know how the long-range school reforms slipped into the stimulus will change education. So far, the winning Race to the Top states have been setting up new training and evaluation programs for teachers and principals, while starting to implement the new Common Core standards for kids. Other than a few hiccups—labor disputes in New York, foot-dragging in Hawaii—things seem to be going as planned. The Race will drive new approaches to teaching and testing, and Duncan says some of the failing schools that received turnaround grants have already reported improved test scores, attendance records, and other signs of improvement. But the evidence is not yet clear.

What’s clear is that the Race and the Recovery Act’s other reforms, backed by less than 0.5 percent of annual U.S. education spending, will have an outsized impact on the future of schools. Their emphasis on competition is eroding the entitlement mentality in education funding, forcing applicants to demonstrate merit instead of lining up for automatic handouts. Reform is also expanding the federal role in local schools, imposing Obama’s technocratic vision through the strings attached to the cash.

But while most of the early attacks on the Race came from progressives, Washington Republicans are now attacking it as a federal assault on local prerogatives. It is, after all, an Obama initiative. So its fate might depend on 2012 as well.

V
ice President Biden was having a bit of fun at my expense, thanking me for my journalistic work as a Recovery Act cheerleader. “As you might guess, I’ve read all your articles, because you’re the only guy that
wrote anything remotely positive,” he needled me. I’m generally more Debbie Downer than Little Mary Sunshine, and I told Biden this was unusual for me. He grinned. “I took ’em to bed, slept on ’em …”

It was kind of funny because it was kind of true. At times, I did feel like I was writing about an alternative universe stimulus. But the facts were the facts. The Recovery Act was on schedule, and was so far under budget that the administration had financed an extra three thousand construction projects with the savings. As Biden liked to say, fraud was the dog that hadn’t barked. Experts had predicted tens of billions of dollars in losses, but there had only been 298 convictions, for scams totaling just $7.2 million; the Recovery Act’s unprecedented transparency and scrutiny made it an uninviting target for crooks. And its oversubscribed competitive grant programs—for everything from brownfields redevelopment to emissions-reducing transit projects—really did seem to promote a culture of responsibility, forcing bureaucrats to use judgment instead of just checking boxes. Even when their judgments were wrong, as with Solyndra or the busted battery manufacturer Ener1, there was no indication of corruption or cronyism.

Good government is hard to quantify. It’s mostly a counterfactual achievement, measured by the lack of scandals and other flubs. But I’ve heard countless stories about public servants like Claire Broido Johnson whipping the weatherization turkey farm into shape, Seth Harris lying awake worrying about that 13(c) provision, ARPA-E’s Eric Toone inventing electrofuels, and OMB’s Danny Werfel wishing he could bottle the Recovery Act for the rest of the government. After Obama and Biden made it clear the stimulus was a top priority, the federal bureaucracy mobilized. It was still the federal bureaucracy, with all the paperwork and legalisms that implies, but the Recovery Act inspired a much more collaborative, results-oriented, businesslike approach. I wish I had a dollar for every time I heard about “returns on investment” or “value propositions,” or for that matter “silos” or “stovepipes.”

“This is the first time we really did go in and absolutely knocked down these goddamned stovepipes,” Biden says. “We took sledgehammers like, Bah-Wham!”

The president has already signed an executive order creating a
government-wide version of the Recovery Accountability and Transparency Board, to extend its oversight to all federal spending. Obama has also proposed a bunch of new races to the top, from a Race to Green competition to encourage local building codes to a Workforce Innovation Fund for job-training programs to a $5 billion competition to help schools attract and reward excellent teachers. “The Recovery Act is going to create a new template for making government function,” Biden says. “Literally! Literally!”

These were worthy reforms, but after the soaring poetry of the Obama campaign, after all those lofty promises of unity and prosperity and an ennobling new politics, his supporters expected more inspirational change. They expected more Bah-Wham! When he had pledged to create a new Washington, and portrayed Hillary Clinton as old Washington, he hadn’t suggested that she was insufficiently focused on data collection or overly wedded to formula programs. He had suggested that she was too enmeshed in the city’s tawdry culture of partisan bickering and backroom horse-trading to change it. And by the time Obama signed the stimulus, it was clear he was unable or unwilling to change it as well.

But the question isn’t whether Obama has lived up to the hype. Nothing in life except parenthood lives up to the hype. The question is whether he has produced change. Change doesn’t mean perfect. Change means better. It’s a direction, not a destination. And the Recovery Act was exactly the policy direction he had promised, even if it wasn’t delivered through the uplifting process he had promised. He had said that America’s intractable policy messes would never be fixed until Washington’s intractable political messes were fixed, but he quickly proved himself wrong.

Before Obama had completed his first month in office, the stimulus started building all four pillars of his New Foundation. It took a giant leap toward cleaner energy, including a smarter grid, greener buildings, and low-carbon fuel and electricity. It dragged health care into the digital era, toward a less expensive and more rational system. It laid the groundwork for data-driven education reforms that Democrats had
always resisted. And it began to advance his long-term vision for the economy, with a more progressive tax code, a more expansive safety net, and more aggressive investments in research and infrastructure. Meanwhile, the Recovery Act was saving the economy from sinking into a depression. It didn’t produce robust growth, but it made a nightmarish situation better. And better is better than worse.

The new New Deal has not left an indelible mark on the national psyche the way the New Deal did. It didn’t have a Hoover Dam, or a CCC, or a visible public works campaign. Its iconic solar arrays and wind farms are in remote areas; its bullet trains are still question marks; its smarter grid and refundable tax cuts have mostly gone unnoticed. Its innovations like electronic medical records and homelessness prevention aren’t associated with the stimulus in the public mind. Most governors wouldn’t even put Recovery Act signs alongside Recovery Act construction projects. And the relentless Republican campaign to brand the stimulus as a big-government failure has been an overwhelming success.

The Recovery Act has already launched America on an inexorable course toward digital medicine and a digital grid, and helping to rescue the country from a second depression will always be part of its legacy as well. But much of its legacy is still up for grabs. Obama wants renewable energy, electric vehicles, and energy efficiency retrofits to reach critical mass; Republicans want to end their subsidies and scuttle his green agenda. Obama wants to make “refundable” credits for the working poor a permanent feature of a progressive tax code; Republicans talk about “broadening the base” to stop coddling Americans who don’t pay income taxes. At this point, just about everything in the Obama stimulus is toxic to the GOP, by virtue of being in the Obama stimulus; the president has joked that he ought to say he’s adamantly opposed to investments in education and infrastructure, just so Republicans will support them.

Politically, the most obvious legacy of the stimulus is that politicians want nothing to do with “stimulus.” It’s become a four-letter word, shorthand for reckless spending and wasteful pork and political shenanigans.
That doesn’t describe the Recovery Act at all, but Obama still won’t say the S-word, and the bipartisan consensus for fiscal expansion during recessions has completely unraveled.

“This is going to be the last stimulus we see for a long time,” says former Democratic senator Evan Bayh. “That can be the last sentence of your book.”

Well, not quite. The ultimate legacy of the stimulus will be decided in 2012.

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ack in January 2008, as the economy softened, Mitt Romney was all about stimulus. When his Republican rival John McCain said spending cuts were the path to prosperity, Romney scoffed: “That’s not stimulative.” When deficit hawks said his $250 billion plan for permanent high-end tax cuts would create too much red ink, he argued that a recession would create even more. When the
Washington Post
’s Ruth Marcus wrote her column grading stimulus proposals—the report card that gave Barack Obama an A-minus for focusing on timely, targeted, and temporary—she gave Romney a D, not only because his plan flunked the three-T test, but because it was “too big.”

A year later, as the economy cratered, Romney still sounded like a Keynesian. “A stimulus plan is needed without further delay,” he wrote.
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Consumers and businesses were reeling, so “what’s left is the government sector,” he told a panel of House Republicans.
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He was still pushing permanent tax relief for the rich—eliminating taxes on dividends and capital gains, slashing corporate rates, making the Bush tax cuts permanent—but he also called for some spending. Infrastructure projects were slow, but “should be part of the picture.” Romney had mixed feelings about state aid, but said he “won’t prescribe zero help for the states.” He also said the package should include “spending for energy research and energy infrastructure”—and no earmarks.

The Recovery Act followed those suggestions—except for the budget-busting permanent tax cuts—and in his 2010 book
No Apologies
, Romney acknowledged that it would “accelerate the timing of the start of the recovery.” But for the paperback edition in 2011, Romney airbrushed out those tempered words, and any suggestion that he might have favored stimulus in the past. “The Obama stimulus, funded with a mountain of debt, was a bust,” he wrote. The politics of stimulus had shifted, and so had Mitt Romney.