The New New Deal (69 page)

63
In a speech at Brookings:
Obama speech, September 18, 2007,
http://www.presidency.ucsb.edu/ws/index.php?pid=93293
.

64
when your drapes cost more than an average worker’s yearly salary:
Obama,
The Audacity of Hope
, p. 193.

65
“more of the same old Democratic campaign playbook”:
Ruth Marcus, “The Two Obamas,”
Washington Post
, September 26, 2007.

66
A magazine profile about “Larry Summer’s Evolution”:
David Leonhardt,
New York Times Sunday Magazine
, June 6, 2007.

3. The Collapse

67
“the Bush boom is alive and well”:
Larry Kudlow, “Bush Boom Continues,” the Corner blog,
National Review
, December 7, 2007,
http://www.nationalreview.com/corner/153626/bush-boom-continues/larry-kudlow
.

68
“History has cautioned”:
Speech by Larry Summers, Brookings Institution, Washington, D.C., December 19, 2007,
http://www.brookings.edu/~/media/Files/events/2007/1219_economy/20071219_summers.pdf
.

69
Republican Mitt Romney proposed the most aggressive plan:
John Harwood, “Romney Offers an Economic Stimulus Plan,”
New York Times
, January 19, 2008.

70
Keynes wrote his masterpiece:
John Maynard Keynes,
The General Theory of Employment, Interest and Money
(New York: Classic Books America, 2009; first published, 1936).

71
Summers thought it should have been titled:
Ezra Klein, “Larry Summers: ‘I Think Keynes Mistitled His Book,’”
Washington Post
, July 11, 2011.

72
“Poorly designed fiscal stimulus”:
Larry Summers, “Why America Must Have a Fiscal Stimulus,”
Financial Times
, January 6, 2008.

73
A new Brookings analysis
…
:
Douglas W. Elmendorf and Jason Furman, “If, When, How: A Primer on Fiscal Stimulus,” Brookings Institution, January 10, 2008,
http://www.brookings.edu/papers/2008/0110_fiscal_stimulus_elmendorf_furman.aspx
; Mark M. Zandi, “Assessing the Macro Economic Impact of Fiscal Stimulus 2008,” Moody’s Economy.com, January 2008,
http://www.economy.com/mark-zandi/documents/Stimulus-Impact-2008.pdf
; “Options for Responding to Short-Term Economic Weakness,” Congressional Budget Office, January 2008,
http://www.cbo.gov/ftpdocs/89xx/doc8916/01-15-Econ_Stimulus.pdf
.

74
their plan included state aid and unemployment benefits:
“Barack Obama’s Plan to Stimulate the Economy,” Obama campaign fact sheet,
http://obama.3cdn.net/8335008b3be0e6391e_foi8mve29.pdf
.

75
“I know that Mr. Obama’s supporters hate to hear this”:
Paul Krugman, “Responding to Recession,”
New York Times
, January 14, 2008.

76
Obama won easily with an A-minus:
Ruth Marcus, “Whose Stimulus Makes the Grade?,”
Washington Post
, January 23, 2008.

77
Boehner was a conservative K Street Republican:
Michael Grunwald and Jay Newton-Small, “Mr. Speaker,”
Time
, November 5, 2010,
http://www.time.com/time/magazine/article/0,9171,2029476,00.html
.

78
The rest of 2008:
I consulted several books about the financial crisis. David Wessel’s
In Fed We Trust: Ben Bernanke’s War on the Great Panic
(New York: Crown, 2009) is an excellent account of the Federal Reserve’s role. Andrew Ross Sorkin’s
Too Big to Fail
(New York: Viking, 2009) is a gripping yarn from the Wall Street perspective. Henry Paulson Jr.’s
On the Brink: Inside the Race to Stop the Collapse of the Global Financial System
(New York: Business Plus, 2010) tells the treasury secretary’s story. And Carmen M. Reinhart and Kenneth S. Rogoff basically foretold the last few years in
This Time Is Different: Eight Centuries of Financial Folly
(Princeton: Princeton University Press, 2009).

79
the first in a series of unprecedented interventions:
Michael Grunwald, “Ben Bernanke: Person of the Year,”
Time
, December 16, 2009,
www.time.com/time/specials/packages/article/0,28804,1946375_1947251_1947520,00.html
.

80
By the time Obama clinched:
I relied on three fun books about the 2008 campaign in addition to my own reporting: Obama campaign manager David Plouffe’s
The Audacity to Win
(New York: Viking, 2009), John Heilemann and Mark Halperin’s
Game Change
(New York: Harper, 2010), and Richard Wolffe’s
Renegade
(New York: Random House, 2009).

81
“Nancy, we’re racing to prevent a collapse”:
Paulson,
On the Brink
, p. 255.

4. “We Were Staring into the Abyss.”

82
his run-in with a bald, strapping, tax-averse plumber:
Obama-Wurzelbacher exchange, October 12, 2008,
http://www.youtube.com/watch?v=BRPbCSSXyp0&feature=related
.

83
he unveiled his “Rescue Plan for the Middle Class”:
Obama campaign speech, Toledo, Ohio, October 13, 2008,
http://www.presidency.ucsb.edu/ws/index.php?pid=84562
.

84
Reporters described it as a $60 billion proposal:
Jackie Calmes, “From 2 Rivals, 2 Prescriptions,”
New York Times
, October 14, 2008; Don Gonyea, “Obama Proposes $60 Billion in Tax Breaks,” NPR
Morning Edition
, October 14, 2008.

85
“stimulus proposals are proliferating like Halloween pumpkins”:
Lori Montgomery and Dan Eggen, “Spending Surge Pushing Deficit Toward $1 Trillion,”
Washington Post
, October 18, 2008.

86
“open its wallet, not tighten its belt”:
David R. Sands, “Economists Prescribe Deeper Deficit,”
Washington Times
, October 17, 2008.

87
a fifty-six-chapter blueprint:
Mark Green and Michele Jolin, eds.,
Change for America: A Progressive Blueprint for the 44th President
(New York: Basic Books, 2009).

88
His own book:
John Podesta,
The Power of Progress: How America’s Progressives Can (Once Again) Save Our Economy, Our Climate, and Our Country
(New York: Crown, 2008).

89
a Goldman Sachs report:
Jan Hatzius et al., “US Economics Analyst,” Goldman Sachs, October 24, 2008.

90
conservative Harvard economist Martin Feldstein:
Martin Feldstein, “The Stimulus Plan We Need Now,”
Washington Post
, October 30, 2008.

91
Lew’s final stimulus presentation:
“Economic Team: Fiscal Stimulus,” November 2, 2008, discussion document provided to the author.

92
Soon the president-elect came on the screen:
Obama victory speech, November 4, 2008,
http://www.presidency.ucsb.edu/ws/index.php?pid=84750
.

5. Ready Before Day One

93
Obama’s first post-election move:
Several authors have written with insight about the Obama transition and White House. The best account of his first year is Jonathan Alter’s
The Promise: President Obama, Year One
(New York: Simon & Schuster, 2010). Other books covering this period include Ron Suskind’s
Confidence Men
(New York: Harper, 2011), Noam Scheiber’s
Escape Artists: How Obama’s Team Fumbled the Recovery
(New York: Simon & Schuster, 2011), and Richard Wolffe’s
Revival: The Struggle for Survival Inside the Obama White House
(New York: Crown, 2010).

94
The
New York Times
noted with dry understatement:
Peter Baker and Jeff Zeleny, “For Obama, No Day to Bask as He Starts to Build a Team,”
New York Times
, November 6, 2008.

95
“These reports don’t get much worse than a loss of 240,000 jobs in a single month”:
“Waiting for Obama,”
Wall Street Journal
, editorial, November 8, 2008.

96
Obama held his first news conference as president-elect:
Obama transition press conference, Chicago, Illinois, November 7, 2008,
http://www.presidency.ucsb.edu/ws/index.php?pid=84773
.

97
As Jonathan Alter chronicled in
The Defining Moment: Jonathan Alter,
The Defining Moment
(New York: Simon & Schuster, 2006). Rahm Emanuel was reading
The Defining Moment
during the transition, too, and Rob Nabors was listening to it on his iPod.

98
Nobel laureate Joseph Stiglitz:
Joseph Stiglitz, “A $1 Trillion Answer,”
New York Times
, November 29, 2008.

99
“You really, really don’t want to lowball this”:
Paul Krugman, “Stimulus Math (Wonkish),” The Conscience of a Liberal blog,
New York Times
, November 10, 2008,
http://krugman.blogs.nytimes.com/2008/11/10/stimulus-math-wonkish/
.

100
Furman’s eleven-page Confidential Discussion Draft:
“Economic Team: Fiscal Stimulus,” November 12, 2008; document provided to the author.

101
At the time, 387 predominantly liberal economists:
Economists’ letter to Harry Reid, Mitch McConnell, Nancy Pelosi, and John Boehner, November 19, 2008,
http://www.cepr.net/documents/publications/Economists_letter_2008_11_19.pdf
.

102
a “Green Stimulus” memo:
“Memorandum for the Economic Team,” November 11, 2008; memo provided to the author. The proposals included $11 billion to install smart meters in 110 million U.S. homes, $4 billion for solar roofs on federal buildings, $20 billion for renewable energy tax credits, $30 billion for mass transit, and $7.25 billion for green schools. The transit estimates, cribbed from Transportation 4 America, turned out to be way more than agencies could spend, so the team reduced them.

103
Bob Greenstein came bearing especially bad news:
Greenstein’s eighteen-page presentation was provided to the author: “Economic Team: Federal Budget Baseline and Selected Policy Issues,” November 11, 2008. Greenstein’s think tank, the Center for Budget and Policy Priorities, produced a number of reports about state fiscal gaps.

104
The council’s number-one priority:
David Wessel, “Shaping the New Agenda (A Special Report)—Finance and the U.S. Economy,”
Wall Street Journal
, November 24, 2008; Jon Hilsenrath, “CEOs Say Stimulus Top Priority,”
Wall Street Journal
, November
19, 2008; Jon Hilsenrath, “Obama Aides Say Economy Needs Big Lift,”
Wall Street Journal
, November 18, 2008.

105
GOP leaders and conservative pundits were laying down markers:
For example, Senate Republican whip Jon Kyl of Arizona warned: “If they go after things like card check and the Fairness Doctrine, or some big tax increase or get-out-of-Iraq-immediately, that is likely to unify Republicans.” Obama didn’t go after any of those things, but Republicans managed to remain unified anyway. Kirk Victor, “Q&A: Kyl Talks About Playing Defense,”
National Journal
, November 17, 2008,
http://lostintransition.nationaljournal.com/2008/11/kyl-talks-about-playing-defense.php
. Also: Amy Schatz, “Fairness Doctrine Stirs Angst Among the Right,”
Wall Street Journal
, November 3, 2008; “Do Gun Owners Fear an Obama Presidency?,” America’s Election HQ, Fox News, October 31, 2008,
http://www.foxnews.com/story/0,2933,445627,00.html
; David Ignatius, “Mr. Cool’s Centrist Gamble,”
Washington Post
, January 9, 2009; Karl Rove, “Thanksgiving Cheer from Obama,”
Wall Street Journal
, November 28, 2008.

106
“a virtual Rubin constellation”:
Jackie Calmes, “Rubin Protégés Change Their Tune as They Join Obama’s Team,”
New York Times
, November 24, 2008.

107
“I don’t know what the exact number is”:
Austan Goolsbee on
Face the Nation
, CBS, November 23, 2008.

108
“before exchanging hellos or even shaking hands”:
Suskind,
Confidence Men
, p. 150. To his credit, Suskind says he plans to correct this scene in his paperback edition.

109
Obama pitched his new New Deal:
Obama press conference, November 24, 2011,
http://blogs.suntimes.com/sweet/2008/11/presidentelect_obama_second_pr.html
.

110
“It’s as if the news is full of floods”:
Peggy Noonan, “Turbulence Ahead,”
Wall Street Journal
, November 28, 2008.

111
“The economy is unraveling so fast”:
Neil Irwin and Steven Mufson, “Economic Indicators Continue Nose Dive; Half-Million Jobs Cut: Worst Month Since 1974,”
Washington Post
, December 6, 2008.

112
As Romer later pointed out:
Christina Romer, “So Is It Working? An Assessment of the American Recovery and Reinvestment Act at the Five-Month Mark,” Speech at the Economic Club of Washington, D.C., August 6, 2009,
http://elsa.berkeley.edu/~cromer/DCEconClub.pdf
.

113
about as much as the United States spent on Medicare and Medicaid:
In 2008, net mandatory Medicare spending was $386 billion, while federal spending on Medicaid was $201 billion. “The Long-Term Outlook for Medicare, Medicaid, and Total Health Care Spending,” Congressional Budget Office, June 2009,
http://www.cbo.gov/ftpdocs/102xx/doc10297/chapter2.5.1.shtml
.