“Truly Transformative”: Why The Stimulus Made America Better Off Four Years Later
President Barack Obama signed the American Recovery and Reinvestment Act on February 17, 2009, with the hopes of jump-starting a depressed U.S. economy and initiating his agenda for healthcare, energy, and education. Larger in constant dollars than President Franklin Delano Roosevelt’s New Deal, Obama’s stimulus is one of the most misunderstood pieces of legislation in U.S. history, says Time journalist Michael Grunwald. The author of The New New Deal: The Hidden Story of Change in the Obama Era recently spoke to U.S. News about why Republicans were so successful in their campaign against the bill, and why Americans don’t understand how truly transformative it was. Excerpts:
Why did Obama pursue the Recovery Act?
The economy had fallen off a cliff, and in the past, this idea that when the private sector shuts down, the public sector needs to step up was totally uncontroversial. Bush had passed a stimulus bill with overwhelming bipartisan support when the economy started to go soft in 2008. All the Republican and Democratic presidential candidates had their own stimulus plans in 2008. Mitt Romney’s was actually the largest. And House Republicans, including Paul Ryan, voted in 2009 for a $715 billion alternative to the stimulus that was quite similar to President Obama’s $787 billion stimulus. It was never really clear how the Republican plan could be good public policy and how Obama’s pretty similar policy was radical socialism.
While the Recovery Act was partly about recovery, it was also really the purest distillation of what Obama meant when he talked about change we can believe in, in terms of transforming energy, starting to reduce healthcare costs, reforming education with things like Race to the Top, and then the largest infrastructure investments, the largest middle-class tax cuts since Reagan, the largest research investments ever. That’s the new New Deal.
Why does the stimulus have such a bad rap?
First, you have to say that the Republicans did a brilliant job of completely distorting the substance of the bill. They turned this into an $800 billion boondoggle that was full of levitating trains to Disneyland and mob museums and snow-making machines in Duluth and all kinds of nonsense that wasn’t actually in the bill. They’ve been very disciplined and unified in portraying this as just a big mess. This thing was just hard to sell at a time when the financial earthquake had hit but the economic tsunami hadn’t reached the shore. It wasn’t like when FDR took office after three years of depression, so everybody knew it was Hoover’s depression. But Obama took office during a freefall, and January 2009 was the worst month for job losses. And then he passed the stimulus, and then the next quarter was the biggest jobs improvement in 30 years, but it improved from absolutely hideous to just bad, and it’s hard to sell a jobs bill when the job situation is bad.
What was the value of programs that weren’t necessarily shovel-ready?
After a financial meltdown, the recoveries are always going to be long and slow. That’s one reason the money was spread out over several years. Right up front they wrote big checks to states to help governors balance their budgets without doing mass layoffs of public employees and mass cutbacks of Medicaid spending on the poor. Tax cuts went out quickly to get money into people’s pockets. So all that stuff was obviously shovel-ready; you just shovel the money out the door. Then you had some stuff that really wasn’t supposed to be all that shovel-ready at all, like building the world’s largest wind farm or bringing our pen-and-paper healthcare system into the digital age, or building high-speed rail lines. It was always understood that those were going to take longer. The idea was that even if it wasn’t shovel-ready, it was shovel-worthy.
How are Republicans using the stimulus against President Obama?
Republicans had always supported stimulus up until January 20, 2009, and most of what’s in the stimulus were things that had always enjoyed plenty of bipartisan support. Highway spending and unemployment benefits and middle-class tax cuts and even clean energy, but of course Republicans had decided before that that they were in absolute lock-step opposition. They couldn’t have clean bipartisan support. They had to portray him as a radical partisan.
Why should Mitt Romney read this book?
What Republicans can learn from this is that a lot of the things they’ve been trashing as big government nonsense have actually had an effect.
Are Americans better off than they were four years ago?
I think the answer is yes. What people forget is just how catastrophic our situation was four years ago. Gaining 150,000 jobs isn’t that great, but it’s way better than losing 800,000. And that’s always going to be the difficulty for Obama: selling the notion that things could have been worse, and that things were worse.
By: Teresa Welsh, U. S. News and World Report, September 7, 2012
“Do Republicans Really Want To Compare?”: America Is Definitely Better Off Under Obama
Republicans seem to have hit on a question that has Team Obama fumbling, or at least squirming: Are you better off now than four years ago? Judging by my E-mail inbox yesterday, it’s a question Republicans seem genuinely interested in pursuing. Please do, GOP. It’s a trap.
I say this for two reasons. The first is factual, the second political.
On the matter of facts, when President Obama took office in January 2009, the economy was shedding 800,000 jobs per month. Stop for a second and read that again: 800,000 jobs lost per month. The economy has now added private sector jobs for 29 months running.
Does that mean that things are good? Not at all. The topline unemployment figure has worsened even as the overall economy has improved, and we still haven’t emerged from the jobs crater wrought by the Great Recession. But middling job growth is indisputably better than economic free fall.
More: As Time’s Michael Grunwald points out the economy shrank by an annual rate of 8.9 percent in the fourth quarter of 2008. At that rate, Grunwald writes, “we would have shed the entire Canadian economy in 2009.” Grunwald, who has written a book on Obama’s stimulus, goes on to make a pretty good thumbnail case about why that jobs plan did in fact work, as well as generally why Obama and his advocates have a lot to be proud of—the post is worth a read.
But it brings me to my second point—why the GOP is walking into a trap if they pursue the “better off” question. Look back at the figures quoted above: 800,000 jobs lost per month; an 8.9 percent annual contraction rate. Is that really the point of comparison to which Mitt Romney and the Republicans want to draw Americans’ attention? Please. Please!
Republicans constantly whine about President Obama pointing to the dreadful circumstances of his ascension to the Oval Office—but now they want to invite the comparison? Really? Really!
I understand that the president and his team have to toe this line carefully—we’re still digging out from George W. Bush’s recession. But Jon Favreau and the presidential speechwriting staff, are you paying attention? If the GOP wants to ask whether the country is better off than it was four years ago, then the answer is a no-brainer yes, and I can’t think of a better person or place to give that answer than Barack Obama on Thursday night.
By: Robert Schlesinger, U. S. News and World Report, Washington Whispers, September 3, 2012
“Government Is The Solution”: Healing The Economy For The Common Good
Why don’t Democrats just say it? They really believe in active government and think it does good and valuable things. One of those valuable things is that government creates jobs — yes, really — and also the conditions under which more jobs can be created.
You probably read that and thought: But don’t Democrats and liberals say this all the time? Actually, the answer is no. It’s Republicans and conservatives who usually say that Democrats and liberals believe in government. Progressive politicians often respond by apologizing for their view of government, or qualifying it, or shifting as fast as the speed of light from mumbled support for government to robust affirmations of their faith in the private sector.
This is beginning to change, but not fast enough. And the events of recent weeks suggest that if progressives do not speak out plainly on behalf of government, they will be disadvantaged throughout the election-year debate. Gov. Scott Walker’s victory in the Wisconsin recall election owed to many factors, including his overwhelming financial edge. But he was also helped by the continuing power of the conservative anti-government idea in our discourse. An energetic argument on one side will be defeated only by an energetic argument on the other.
The case for government’s role in our country’s growth and financial success goes back to the very beginning. One of the reasons I wrote my book “Our Divided Political Heart” was to show that, from Alexander Hamilton and Henry Clay forward, farsighted American leaders understood that action by the federal government was essential to ensuring the country’s prosperity, developing our economy, promoting the arts and sciences and building large projects: the roads and canals, and later, under Abraham Lincoln, the institutions of higher learning, that bound a growing nation together.
Both Clay and Lincoln battled those who used states’ rights slogans to crimp federal authority and who tried to use the Constitution to handcuff anyone who would use the federal government creatively. Both read the Constitution’s commerce clause as Franklin Roosevelt and progressives who followed him did, as permitting federal action to serve the common good. A belief in government’s constructive capacities is not some recent ultra-liberal invention.
Decades of anti-government rhetoric have made liberals wary of claiming their legacy as supporters of the state’s positive role. That’s why they have had so much trouble making the case for President Obama’s stimulus program passed by Congress in 2009. It ought to be perfectly obvious: When the private sector is no longer investing, the economy will spin downward unless the government takes on the task of investing. And such investments — in transportation and clean energy, refurbished schools and the education of the next generation — can prime future growth.
Yet the drumbeat of propaganda against government has made it impossible for the plain truth about the stimulus to break through. It was thus salutary that Douglas Elmendorf, the widely respected director of the Congressional Budget Office, told a congressional hearing last week that 80 percent of economic experts surveyed by the University of Chicago’s Booth School of Business agreed that the stimulus got the unemployment rate lower at the end of 2010 than it would have been otherwise. Only 4 percent disagreed. The stimulus, CBO concluded, added as many as 3.3 million jobs during the second quarter of 2010, and it may have kept us from lapsing back into recession.
So when conservatives say, as they regularly do, that “government doesn’t create jobs,” the riposte should be quick and emphatic: “Yes it has, and yes, it does!”
Indeed, our unemployment rate is higher today than it should be because conservatives blocked additional federal spending to prevent layoffs by state and local governments — and because progressives, including Obama, took too long to propose more federal help. Obama’s jobs program would be a step in the right direction, and he’s right to tout it now. But he should have pushed for a bigger stimulus from the beginning. The anti-government disposition has so much power that Democrats and moderate Republicans allowed themselves to be intimidated into keeping it too small.
Let’s turn Ronald Reagan’s declaration on its head: Opposition to government isn’t the solution. Opposition to government was and remains the problem. It is past time that we affirm government’s ability to heal the economy, and its responsibility for doing so.
By: E’ J’ Dionne, Jr., Opinion Writer, The Washington Post, June 10, 2012
“Can’t Touch This”: It’s Time To Stop Letting Mitt Romney Off Easy
Mitt Romney wants the presidential election to be all about Barack Obama. If the press doesn’t start asking Romney some difficult questions about the core arguments upon which his entire presidential candidacy is based, he may very well get his way.
Case in point: Check out Mike Allen’s preview this morning of the Romney campaign’s next attack on the President’s economic record…
A senior aide tells us Mitt Romney plans to begin hitting specific stimulus projects as he travels, arguing that President Obama has actually subtracted jobs:
“Were these investments the best return on tax dollars, or given for ideological reasons, to donors, for political reasons? He spent $800 billion of everybody’s money. How’d it work out? It was the mother of all earmarks, not a jobs plan. By wasting all of this money, you had the worst of all worlds: It destroyed confidence in the economy, and makes people less likely to borrow money. Dodd-Frank has been a disaster for the economy. Where are the steady hands? Who’s in charge of energy? Where’s the strong, confident voice on the economy?”
So Romney will now go back to claiming Obama subtracted jobs. But there’s a new twist: Romney will claim that the effect of the stimulus has been to destroy jobs. As it has in the past, the Romney camp will justify this by pointing to a bogus metric — the net jobs lost on Obama’ watch. That includes the hundreds and hundreds of thousands of jobs lost before the stimulus went into effect. Really: The Romney camp’s claim is that we can calculate that the stimulus destroyed jobs overall with a metric that factors in all the jobs destroyed before the stimulus took effect. That’s not an exaggeration. It really is the Romney campaign’s position. It’s time to ask Romney himself to justify it.
The Romney camp will also begin claiming that Obama has “never created a job.” Will anyone ask Romney about the two dozen straight months of private sector job creation we’ve seen?
And if Romney is now going to start hitting individual stimulus projects, it’s also time to ask him what he would have done if he had been president in January of 2009. He has previously said positive things about stimulus spending. Are those no longer operative? Would Romney really not have proposed any government spending to stimulate the economy when it was in free fall? What would he have done instead? This question is absolutely central. How about asking it?
Then there’s the claim that “Dodd-Frank has been a disaster for the economy.” Romney has pledged to roll back financial reform completely, but he hasn’t said with any meaningful specificity what he woud replace it with, beyond claiming (after the J.P. Morgan debacle forced him to do so) that he supports “common sense regulations.” How about asking Romney what, if anything, he would do instead to guard against future Wall Street recklessness after rolling back Obama’s regulatory response to the worst financial disaster since the Great Depression?
Many of the claims that form the foundation of Romney’s entire case for the presidency are going without any meaningful national press scrutiny to speak of. Why?
By: Greg Sargent, The Washington Post Plum Line, May 29, 2012
“Forward Economic Momentum”: Obama’s American Recovery And Reinvestment Act Has Been A Success
The short answer is yes, the economy has improved due to the policies President Obama implemented with the support of Congress.
Labor market conditions are the most important indicators of whether the economy has improved. Most people get the majority of their income from paid employment and having a good job, with decent pay and benefits including health insurance, retirement, and policies that make sure employees can also be good caregivers for their families. Most have little savings, if any, to rely on.
The labor market is moving in the right direction and this is a testament to the success of the American Recovery and Reinvestment Act and other steps taken to address the Great Recession. Recent data from the Bureau of Labor Statistics shows that the private sector has added jobs every month since March 2010, with 245,000 jobs added on average over the past three months. This is a remarkable turnaround from when President Obama took office and the economy was shedding about 20,000 jobs per day.
As a result of job creation, the share of Americans with a job in February edged up to 58.6 percent, higher than it’s been since June 2010. Further, there has also been steady progress to bring unemployment down from its peak of 10.0 percent in October 2009 to 8.3 percent in February.
The Recovery Act and other programs worked because they targeted funds toward a variety of specific job-creation efforts that have been shown to have created jobs and been cost-effective. The President’s Council of Economic Advisers credits the Recovery Act with increasing employment through the second quarter of 2011 by 2.2 million to 4.2 million jobs and reducing unemployment by between 0.2 and 1.1 percent. Economists Alan Blinder and Mark Zandi estimate that the Recovery Act and other fiscal policies resulted in 2.7 million jobs, and that without them unemployment would have hit 11 percent and job losses would have totaled 10 million.
Make no mistake, there has been sure and steady progress in the economy. But, these gains would have been much stronger had conservatives not blocked efforts to invest in much-needed infrastructure and help state and local governments keep employees on the job teaching children and policing streets. The forward economic momentum continues to be at risk as Congress and state and local governments move toward an austerity agenda that will hinder, not promote, strong growth and an improved labor market.
By: Heather Boushey, Sr. Economist, Center for American Progress, Published in U. S. News and World Report, March 13, 2012
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