The New New Deal: The Hidden Story of Change in the Obama Era

  • Michael Grunwald
  • Simon & Schuster
  • 528 pp.
  • August 21, 2012

Two accomplishments of the Obama administration that most people don’t know about.

Reviewed by Laurence I. Barrett

If the Obama campaign sent The New New Deal to the 5 or 6 percent identified in polls as undecided, the investment might produce more votes than all the megamillions spent on attack ads. Not that Michael Grunwald has written a mash note to the incumbent. The New New Deal inflicts some deserved lumps on the president, his staff and his ostensible supporters in Congress. But Grunwald argues, persuasively, that Obama also deserves credit for two critical accomplishments: saving the country from a depression and setting in motion much-needed major changes in the fields of health care, green energy, education and transportation. He also explains why so many Americans missed the news.

An experienced journalist fluent in both politics and science, Grunwald uses the Recovery Act, signed when Obama had been in office less than a month, as his main vehicle for the narrative of the president’s domestic record. (The Affordable Care Act, enacted later and still taking effect, gets little attention.) Planning for what would become a complex, huge omnibus stimulus bill — 1,073 pages allocating $787 billion — had to start during the transition so pressing was the need. The economy was imploding, unemployment bad and threatening to get worse. Just how much more serious the situation might become was unclear to the president-elect’s economic advisors and embryonic White House team. Still sorting out their own relationships, they also had to calibrate the size and content of an effective stimulus measure while the basic economics shifted. The government’s initial estimate for third-quarter 2008 growth wa negative 0.5 percent. The adjusted figure: negative 4 percent. The first calculation for job loss in November was 500,000; that morphed into 800,000.

Christy Romer, who would lead the Council of Economic Advisers, wasn’t kidding when she opened her December 16 briefing by saying: “Mr. President-elect, this is your holy-shit moment.” Without rapid, robust action, she and fellow economists warned, unemployment would possibly rise to 25 percent. That would amount to America’s first full-blown depression since the 1930s.

Getting consensus on an effective response required multi-layered negotiations. How large should the package be? How much in spending and how much in tax cuts? What species of each? Of course the ever-tendentious Hill Democrats suffered internal divisions. House Republicans locked arms, signaling the beginning of their No-No-No posture. A few moderate Republicans might help the majority reach the magic number of 60 in the Senate — but only if their must list was addressed. Obama complicated matters by insisting that part of the stimulus money go to long-term innovation as opposed to short-term tonic. He had, after all, run on a platform promising fundamental change.

Grunwald relates the maneuvering and needle-threading briskly. He then lays out in voluminous and sometimes repetitive detail where the money went. The most interesting aspect of this phase of the story deals with what Grunwald views as Obama’s second accomplishment: creating innovative programs that promise lasting impact. These include accelerating alternative energy development, weatherizing both homes and large buildings, digitization of medical records and other improvements to the health-delivery system, Race to the Top incentives to encourage educational reform, and promoting 21st-century intercity rail service. By the end of 2010, the wind and solar energy industries employed nearly 200,000 Americans, more than coal extraction. Manufacture of high-tech batteries needed for electric cars became Michigan’s fastest growing industry. Further, the more conventional parts of the Recovery Act also had impact, gradually halting and then reversing the jobs drain. A depression had been averted, the recession was over and the economy was growing again, albeit very slowly.

But on the eve of the 2010 election, one reputable poll showed that only 6 percent of Americans believed that the stimulus program had created any jobs. Democrats dropped the word stimulus from their vocabulary and some forgot how to pronounce Obama. So Republicans recaptured the House of Representatives and gained seats in the Senate. The remnant of moderate Republicans in the Capitol and the state houses shrank further. And now, despite having fulfilled several of his campaign pledges in very difficult circumstances, Obama faces a strong challenge from an opponent who, by conventional measures, should be a weak candidate.

What happened? Grunwald is glad you asked. First, team Obama underestimated the economic crunch’s severity and overestimated the potential impact of the stimulus program. Unemployment continued to climb, hitting 10 percent before starting to dip, and still has not fallen to the 7 percent figure predicted for the administration’s two-year mark. This gave Republicans an easy target for their bumper-sticker cannon ball: the stimulus effort failed.

Second, despite displaying rhetorical flair earlier, Obama somehow mislaid this talent once in office when it came to selling his main initiatives. For too long, he naively assumed that at least a faction of Republicans would compromise, an assumption that hampered his tactics. He could not even establish a catchy label for his domestic goals. He tried the term New Foundation in several speeches, but it never caught on. Nor could he explain, in a way meaningful to most citizens, the wisdom of promoting seemingly blue-sky reforms when creating jobs immediately was the urgent need. As Grunwald aptly captions the marketing of the stimulus: “It was oversold as a short-term fix, undersold as a long-term catalyst for change, and fumbled as a political football.”

Third, both Republican legislators and conservative commentators repeatedly “discovered” waste, fraud and abuse once stimulus spending began. Nearly all such charges turned out to be false. In fact, Grunwald says, given how much money flowed out of Washington quickly, the program was remarkably clean. But the mainstream media frequently provided a megaphone for harsh accusations while rarely reporting the fault-free outcomes. Coverage by national news outlets was “overwhelmingly, relentlessly, knee-jerkingly negative.” Grunwald includes his former employer, The Washington Post, in that category. (He now works for Time, where I spent most of my career, but Grunwald arrived later. We never met.)

Grunwald makes no effort to hide his admiration for Obama’s overarching goals or his disdain for most of the president’s foes. Because he buttresses his case with so much hard fact, Grunwald’s biases become annoying only when they go over the top. His observation that House Majority Leader Eric Cantor has “reptilian sunken cheeks,” for instance, seems gratuitous.

Perhaps because his book groans under the weight of statistics and techno-speak, Grunwald tries to enliven it with rat-tat-tat passages that read like a parody of early Tom Wolfe. For instance: “The stimulus is also the ultimate window into the Obama era, the opening act that foreshadows the rest of the show ― the just-say-no extremism of the right, the unquenchable ingratitude of the left, the gotcha games of the media, and the President’s real achievements ― as well as the limits of those achievements, and his struggles to market those achievements.”

Such tics should be forgiven because Grunwald has produced an important book that appears at a defining moment. Whether serious works like this one can make a difference in a time as polarized as this one is an interesting question. (The same might be asked about book reviews intended to be serious.) The audacity of hope, perhaps, continues to fuel such efforts.

Laurence I. Barrett had a 39-year career in journalism, first at the New York Herald Tribune, then at Time, where his assignments included senior editor, national political correspondent, and chief White House correspondent. He is the author of The Mayor of New York and Gambling with History: Reagan in the White House. His book reviews have appeared in several publications.

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