The New New Deal (70 page)

114
In a four-page summary distributed in early December:
“The American Economic Recovery Plan,” undated discussion draft provided to the author. It proposed $70 billion for building a clean energy economy, $80 billion for strengthening American infrastructure, $125 billion for health IT and state Medicaid relief, $25 billion for education, and $280 billion for tax cuts and protecting the vulnerable.

115
Geithner had told Obama that no matter what happened:
Scheiber,
Escape Artists
, pp. 15–16.

116
In his radio address:
Obama radio address, December 6, 2009,
http://www.presidency.ucsb.edu/ws/index.php?pid=84776#axzz1mIf49S9E
.

117
Obama chose his cabinet faster:
White House Transition Project,
http://uncnews.unc.edu/content/view/1971/70/
.

118
even two centrist Democrats had voted no:
Democratic senators Evan Bayh (Indiana)
and Claire McCaskill (Missouri) joined forty Republicans in voting against the $56 billion stimulus. The vote was 52–42 in favor, but the bill died because sixty was needed to overcome a Republican filibuster.

119
That was even bigger than TARP:
The cost of Afghanistan and Iraq through 2008 was $795 billion. Amy Belasco, “The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11,” Congressional Research Service, March 29, 2011.

120
a fifty-seven page “Executive Summary of Economic Policy Work”: The New Yorker
’s excellent Ryan Lizza was the first reporter to report on this memo, in “Inside the Crisis,” October 12, 2009, and then to obtain the memo, in “The Obama Memos,” January 30, 2012. He posted it at
http://www.newyorker.com/online/blogs/newsdesk/2012/01/the-summers-memo.html
.

6. The Moment

121
The stories Obamaworld tells about itself:
The best narrative journalism about the Obama administration and the stimulus always seems to home in on December 16. For example: Scott Wilson, “Bruised by Stimulus Battle, Obama Changed His Approach to Washington,”
Washington Post
, April 29, 2009; Ryan Lizza, “Inside the Crisis,”
The New Yorker
, October 12, 2009; Peter Baker, “Education of a President,”
New York Times
, October 12, 2010; Ezra Klein, “Financial Crisis and Stimulus: Could This Time Be Different?,”
Washington Post
, October 8, 2011. The “holy-shit moment” also appears in several books about the administration.

122
Romer had searing memories:
Christina D. Romer, “Not My Father’s Recession: The Extraordinary Challenges and Policy Responses of the First Twenty Months of the Obama Administration,” Speech at the National Press Club, September 1, 2010,
http://www.whitehouse.gov/sites/default/files/microsites/100901-National-Press-Club.pdf
.

123
In FDR’s most aggressive year:
Romer, citing Bureau of Economic Analysis and Census data, said the largest fiscal impact took place in 1936. Romer, “Back from the Brink,” Speech to the Federal Reserve Bank of Chicago, September 24, 2009,
http://www.whitehouse.gov/assets/documents/Back_from_the_Brink2.pdf
.

124
the biggest deficit in history:
The Congressional Budget Office projected the 2009 deficit to hit $1.2 trillion. The actual deficit that year was $1.4 trillion. The previous largest deficit was $459 billion in 2008. “The Budget and Economic Outlook: 2009 to 2019,” Congressional Budget Office, January 2009,
http://www.cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf
.

125
Summers hadn’t mentioned Romer’s $1.2 trillion figure:
Lizza, “Inside the Crisis,”
The New Yorker
. I don’t entirely agree with Lizza’s take on this memo, but he was the first reporter to write about it and then the first reporter to publish it. Felix Salmon’s criticism was typical. “How Larry Summers Hobbled Obama’s Economic Policy,” Reuters, January 19, 2011,
http://blogs.reuters.com/felix-salmon/2011/01/19/how-larry-summers-hobbled-obamas-economic-policy/
.

126
Romer had suggested in one draft:
Scheiber,
The Escape Artists
, p. 27. I think Scheiber makes way too much out of this tidbit, but he deserves credit for breaking the news and publishing the draft on his website (
www.noamscheiber.com
). Incidentally, by December 16, the situation had deteriorated to the point where Romer believed that even $1.8 billion would have been insufficient to fill the hole in demand.

127
Pelosi didn’t even want to go past $600 billion:
Her staff told the Obama transition team, “The Speaker at this stage is at $600 billion and is extremely nervous about going above that.” She was also pushing to reduce the size of the package by using it
to repeal the Bush tax cuts for the wealthy. “Issues in Congressional Discussions on Economic Recovery,” December 20, 2008, four-page transition memo provided to the author.

128
“It is easier to add down the road”:
“Executive Summary of Economic Policy Work,” p. 57,
http://s3.documentcloud.org/documents/285065/summers-12-15-08-memo.pdf
.

129
Paul Krugman also predicted:
“Behind the Curve,”
New York Times
, March 9, 2009.

130
I made the same assumption:
Michael Grunwald, “How to Spend a Trillion Dollars,”
Time
, January 15, 2009,
http://www.time.com/time/magazine/article/0,9171,1871915,00.html
. Otherwise, the article holds up pretty well. I didn’t grasp the macroeconomic importance of bailing out even irresponsible states, but I still think my idea of attaching more strings to state aid made sense. The stimulus did attach more strings than I realized, although most of them were “maintenance of effort” requirements to make sure governors didn’t just use the money as an excuse to make even deeper cuts to Medicaid and education.

131
he called it “unforgettable”:
Obama speech at Brookings Institution, December 8, 2009,
http://www.presidency.ucsb.edu/ws/index.php?pid=86975
.

132
Advocates had identified $10 billion in shovel-ready water and sewer projects:
Letter to Democratic senators, American Water Works Association, January 26, 2009,
http://www.awwa.org/files/GovtPublicAffairs/PDF/SenateStimulus.pdf.easier

133
the National Park Service had less than $1 billion in ready-to-go projects:
The “Green Stimulus” memo said the NPS had identified $440 million worth of projects that could be contracted out in less than six months. “By focusing on NPS infrastructure investment, this effort could generate jobs and follow in spirit with the WPA and CCC,” the memo said. The National Parks Conservation Association later said there were $2.5 billion in ready-to-go projects.

134
History has bathed the CCC in a romantic glow:
I consulted several books on the original New Deal including Alter’s
The Defining Moment
, Alan Brinkley’s
The End of Reform: New Deal Liberalism in Recession and War
(New York: Random House, 1996), Anthony J. Badger’s
The New Deal: The Depression Years, 1933–1940
(New York: Hill & Wang, 1989), and William E. Leuchtenburg’s
Franklin D. Roosevelt and the New Deal
(New York: Harper Perennial, 2009; first published, 1963).

135
He didn’t have another cake:
Jonathan Alter first wrote about the smart grid discussion in “The PDQ Presidency,”
Newsweek
, October 23, 2009, and
The Promise
. I also wrote about it in “How the Stimulus Is Changing America,”
Time
, September 6, 2010. Suskind and others who wrote about Obama’s obsession with the grid tend to portray it as a sign of his misplaced priorities. Even Alter portrays the episode as a failure, but the Recovery Act would end up jump-starting the smart grid.

136
Bob Greenstein would soon ratchet up:
“State Budget Troubles Worsen,” the Center on Budget and Policy Priorities, December 23, 2008.

137
polls would find that fewer than 10 percent of them were aware:
For example, Michael Cooper, “From Obama, the Tax Cut Nobody Heard Of,”
New York Times
, October 18, 2010.

138
Behavioral economics had become trendy:
Steven D. Levitt and Stephen J. Dubner,
Freakonomics: A Rogue Economist Explores the Hidden Side of Everything
(New York: William Morrow, 2005); George A. Akerlof and Robert J. Shiller,
Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism
(Princeton: Princeton University Press, 2009); Richard H. Thaler and Cass R. Sunstein,
Nudge
(New Haven: Yale University Press, 2008). I wrote the first journalistic piece about the influence of behavioral economics in Obamaworld:
Michael Grunwald, “How Obama Is Using the Science of Change,”
Time
, April 2, 2009,
www.time.com/time/magazine/article/0,9171,1889153,00.html
. My former colleague Justin Fox has written a smart book about the follies of neoclassical thinking,
The Myth of the Rational Market
(New York: HarperBusiness, 2009).

139
Democrats had criticized Bush:
Devlin Barrett, “Dear Taxpayer: This Letter Cost You $42 million,” Associated Press, March 7, 2008.

140
As the team reported in a four-page memo:
“Issues in Congressional Discussions on Economic Recovery,” December 20, 2008, memo provided to the author. David Obey was the only member of Congress the team met; otherwise, its meetings were all with Democratic staffers. There were a few discordant notes, like “skepticism about the magnitude of our smart grid numbers,” “somewhat more distance” on education, and “strong desire” to include a patch to the Alternative Minimum Tax.

141
“We have communicated our willingness”:
This memo from Gary Myrick was reported at the time. Jackie Calmes, “As Outlook Dims, Obama Expands Recovery Plans,”
New York Times
, December 20, 2008.

142
The seventy-four-year-old chairman of the House Transportation and Infrastructure Committee:
Michael Grunwald, “Bridges to Nowhere,”
Time
, August 6, 2007,
http://www.time.com/time/nation/article/0,8599,1650149,00.html
.

143
“The biggest issue is less the reaction to our topline numbers”:
“Issues in Congressional Discussions on Economic Recovery,” December 20, 2008.

144
The U.S. Conference of Mayors identified $180 billion:
“Main Street Economic Recovery,” U.S. Conference of Mayors, December 2, 2008,
http://www.uptown-indy.com/pdf/Main_Street_Economic_Recovery%20_Plan_120308.pdf
.

145
he went on Fox to warn:
Neil Cavuto interview with Evan Bayh, February 3, 2009.

146
Schiliro was spreading the word:
Mike Allen, “Big Tax Cuts in the Works,”
Politico
, January 5, 2009,
http://www.politico.com/news/stories/0109/17039.html
.

7. The Party of No

147
Just a few years earlier:
Tom Hamburger and Peter Wallsten,
One Party Country
(Hoboken, N.J.: Wiley, 2006); Thomas Byrne Edsall,
Building Red America
(New York: Basic Books, 2007).

148
Now publishers were rushing out titles:
Sidney Blumenthal,
The Strange Death of Republican America
(New York: Union Square Press, 2007); James Carville,
40 More Years: How Democrats Will Rule the Next Generation
(New York: Simon & Schuster, 2009).

149
“If the Purpose of the Majority”:
Pete Sessions, “Who Wants to Be in the Majority?: A Blueprint for Victory,” January 2009; copy of this PowerPoint provided to the author. The
New York Times
first reported on it: Jim Rutenberg and Jeff Zeleny, “Democrats Outrun by a 2-Year G.O.P. Comeback Plan,”
New York Times
, November 3, 2010.

150
Cole had been a political consultant:
Juliet Eilperin and Michael Grunwald, “A New Pitchman—And a New Pitch,”
Washington Post
, May 9, 2007.

151
Five of the forty-one surviving Republican senators:
Christopher (Kit) Bond of Missouri, Sam Brownback of Kansas, George Voinovich of Ohio, Mel Martinez of Florida, and Judd Gregg of New Hampshire (after some drama) would all announce their retirements soon.

152
He had dubbed himself the Abominable No-Man:
Edwin Chen, “Free Speech Will Pay Heavy Price Under Campaign Finance Reform, Key Foe Says,”
Los Angeles Times
, March 15, 1997.

153
he stuck to his talking points:
A copy of the talking points was provided to the author.

154
the CBO had just
tripled
its deficit projection:
“The Budget and Economic Outlook: 2009 to 2019,” Congressional Budget Office, January 2009,
http://www.cbo.gov/ftpdocs/99xx/doc9957/01-07-Outlook.pdf
.

155
“We thought—correctly, I think”:
Joshua Green, “Strict Obstructionist,”
The Atlantic
, January 2011,
http://www.theatlantic.com/magazine/archive/2011/01/strict-obstructionist/8344/
.

156
McConnell slyly questioned why America needed 600,000 new government jobs:
McConnell interview,
This Week
, ABC, January 4, 2009,
http://abcnews.go.com/ThisWeek/story?id=6573506
.