In Philadelphia, for example, an aging stormwater system was dumping raw sewage into local waterways after heavy rains, and engineers had proposed a $9 billion outflow tunnel underneath the Delaware River to stop the overflows. Instead, Mayor Michael Nutter launched a stimulus-funded campaign to capture runoff from one-third of his city’s impervious surfaces. He’s not a tie-dyed tree hugger—although he does enjoy converting parking lots into parks—but he didn’t feel like burying $9 billion 150 feet underground. Greening his infrastructure instead could save $7 billion.
“It’s revolutionary, but it’s really a no-brainer,” he says. “We help the environment, and we don’t have to waste all that money tearing up the city.”
Electronic Medicine. Obama saw computerization as a crucial foundation for health care reform, a way to cut extraneous costs, reduce fatal errors, and start collecting the data needed to rationalize a chaotic system. But after announcing he wanted the Recovery Act to spend $20 billion to get every American an electronic medical record within five years, he left most of the details to Congress.178 And while there was strong support for health IT on the Hill, a slew of competing bills had stalled over disagreements over how to protect patient privacy, how to get doctors and hospitals to go digital, and how to get computer systems to talk to each other.
The Recovery Act forced the major players into a deal. For example, Congressman Pete Stark of California had to drop his idea of mandating adoption of the Veterans Administration’s computer system, which would have squelched innovation and forced early adopters to “rip and replace” competing systems.179 But Stark successfully argued that to qualify for financial incentives, physicians should have to prove they’re “meaningful users” of digital systems, not just purchasers, to make sure they’re e-prescribing, getting lab reports online, and reaping the benefits of the new technology. The negotiators eventually agreed on carrots and sticks that provide up to $48,400 for doctors and $11 million for hospitals that put electronic medicine into action, while slowly reducing Medicare payments for those that don’t. Patients will have to give consent before their data can be transferred electronically, but won’t have to reiterate their consent before every transfer.
As short-term stimulus, health IT didn’t pass the laugh test. Most of the money wouldn’t begin to go out the door until 2011. But even Summers thought it was exactly the kind of investment that government should make, helping to overcome private disincentives to build a network that would have huge public benefits once it reached critical mass.180 Summers had spent one of the most traumatic hours of his life waiting helplessly in a hospital after a lab technician misread a handwritten record—it said “Simmons,” not “Summers”—and thought his blood counts were crashing.181 So he understood in his gut how crazy it was that the average 7-Eleven used more information technology than the average doctor’s office.
Anyway, Obama figured he was entitled to a few exceptions to the three-T rules. Health IT was a bipartisan cause, and a campaign promise, too.
Comparative Effectiveness. Bush’s prescription drug bill had included a token effort to expand comparative effectiveness research, but only authorized $15 million a year, when a single study comparing the performance of antipsychotic drugs had cost $67 million. During the campaign, Obama promised to finance a real effort to figure out which medical treatments work best in which situations. The Recovery Act would pour in $1.1 billion, by far the most aggressive effort ever to transform a system driven by habit and assumption into a system driven by data and evidence.
Rahm’s brother Zeke Emanuel, a noted oncologist and bioethicist who would become Orszag’s health adviser, happened to be one of America’s leading advocates of comparative research. He still remembers his first visit to a cancer ward as a medical student, when the white coats ordered a transfusion for a teenager with Hodgkin’s disease because her platelets were below 20,000. Zeke asked: Why 20,000? Because that’s what we do here, one doc replied. “It drives me fucking nuts—the ignorance is overwhelming,” says Zeke, who shares Rahm’s linguistic proclivities. (So does their brother Ari, a Hollywood super-agent who was the model for the potty-mouthed Ari Gold on HBO’s Entourage.) A billion dollars was 0.05 percent of our annual health care expenditures, but it could go a long way toward shifting that’s-what-we-do-here to that’s-what-works.
Lobbyists for drug and device makers, eager to protect the veil of ignorance around their products, pressured Congress to water down the comparative effectiveness language, warning it would lead to “cookbook medicine” and medical rationing. And after Republican health care propagandist Betsy McCaughey wrote a column portraying the combination of comparative effectiveness and health IT as a plot to let federal bureaucrats track clinical decisions electronically and punish doctors who prescribe costly treatments, Rush Limbaugh began trashing the provisions as the first step toward government-controlled medicine.182183 (McCaughey would later dub Zeke Emanuel “Dr. Death.”) Nervous lawmakers eventually added language clarifying that they didn’t intend the money to be used to drive payment decisions, as if the goal was to produce purely academic research.
“There was a real fear about the government saying: We know what’s best, that drug’s too expensive, you can’t have it,” says Tony Coelho, a former Democratic congressional leader who is head of the Partnership to Improve Patient Care, an advocacy group funded by drug and device companies. “We never said: Don’t do the research. We said: Don’t use it to make decisions for patients and doctors.”
But advocates were confident the $1.1 billion worth of new information wouldn’t just sit on the shelf. With better information, patients and doctors could make better decisions for themselves.
“It’s going to be a tremendous driver of change,” Zeke says. “It’s going to provide a tsunami of data.”
High-Speed Rail. Zeke was staying at Rahm’s house in Chicago over the holidays when a fax arrived listing the transition team’s stimulus priorities. Zeke knew he shouldn’t snoop, but he snooped. He was thrilled to see his own priorities, electronic medicine and comparative research, in line for serious cash. But when Rahm got home from the gym, Zeke confronted him: “Where the fuck is high-speed rail?”
The predictable response would have been a family-unfriendly version of: Why are you reading my faxes? Why is an oncologist lecturing me about infrastructure? But Rahm agreed with his nosy brother.
America’s freight rail was the envy of the world, but our intercity passenger rail wasn’t even the envy of the Third World.184 While 220-mile-per-hour bullet trains were zipping around Europe and Asia, most U.S. trains still trudged along at speeds first achieved in the 1830s. Rahm and “Amtrak Joe” Biden had pushed high-speed rail early in the transition, but the economic team had objected that it would be too slow to spend out and too costly relative to its benefits to travelers. Now Rahm decided to resurrect it, and ordered the transition team to assemble a plan. “I got a call at 7 A.M. on a Sunday: Help! We need high-speed rail!” recalls Mort Downey, the head of the transition’s transportation group.
High-speed rail wouldn’t be timely, either. But it could advance Obama’s vision in multiple ways, easing road and air congestion, reducing fuel consumption, and jump-starting a domestic train-making industry. Spain, a country the size of Texas, was pouring $200 billion into a high-speed network. China was building more high-speed track than the rest of the world combined. Nations like Brazil, Turkey, and Russia were getting into the game, too.
“Tell me, how are we going to have an efficient twenty-first-century transportation system without high-speed rail?” Biden kept asking.
Broadband. America’s sagging global ranking in high-speed Internet access—behind Korea, Japan, and even Lithuania—was another Obama hobbyhorse. Universal broadband access was not just a top priority; it was also vital for so many of Obama’s other priorities that relied on information technology, like the smart grid, electronic medicine, cutting-edge research, and twenty-first-century schools. Bu
t when he announced the Recovery Act would help the United States catch up to its competitors on the information superhighway, his technology advisers were caught by surprise. It was hard to imagine a more complex legal and technical issue with higher financial stakes, raising thorny questions about natural monopolies, wireless spectrum, network neutrality, and the inalienable right of all Americans to download stupid cat videos. It would pit cable companies against telecoms against satellite operators; broadband providers against content providers; big against small; urban against rural.
“And we didn’t have a plan,” recalls Blair Levin, who oversaw broadband issues for the transition.
Levin held a series of meetings with various telecom players, who all seemed to agree that the stimulus should help them a lot and their competitors not at all. He then helped float a plan to expand rural wireless, but some of his colleagues doubted the moderate speeds would justify the massive investment. The transition team also looked into preserving a slice of the spectrum for public safety agencies, but half a dozen Capitol Hill committees started battling over who would control it. And even though health IT and high-speed rail had gotten a pass, Obama’s economists insisted that broadband stimulus should actually provide stimulus.
Ultimately, the transition team settled on a multibillion-dollar competitive grant program that would let providers apply for subsidies to extend service to underserved areas, an effort to connect Americans to the Internet the way FDR’s rural electrification program had connected Americans to the grid. There would also be money for the FCC to complete a long awaited national broadband map, which would document in granular detail the state of American high-speed access.
“Ideally, you’d do the map first, and then a plan based on the map, and then you’d spend the broadband money based on the plan,” Levin says. “But we couldn’t wait until 2013.”
Race to the Top. After David Obey’s tantrum over school reform, Phil Schiliro and David Axelrod were hesitant to pick that fight in the Recovery Act.185 But Rahm and Obama’s policy advisers wanted to press forward anyway. The president-elect agreed, and the vague plan that had sent Obey into a tizzy soon became a bold competitive grant program called Race to the Top. States would be judged according to their plans to adopt rigorous standards; build data systems to measure student improvement and teacher effectiveness; recruit and retain top teachers and principals; promote innovation; and turn around their worst schools. The winners would get big checks. The losers would get nothing. Axelrod was not looking forward to the political fallout of saying no to governors while alienating unions, but Obama insisted he wanted to prioritize kids over adults. The status quo wasn’t working for kids.
Obey still resisted, dismissing Race to the Top as “walking-around money” for Secretary Duncan, trying to divert its funding into traditional programs for low-income schools. “You don’t know what the hell you’re talking about!” Rahm shouted at him. “This isn’t your bill, you prick! This is the president’s bill—and this is his priority!”
In his inaugural address, just before that laundry list of commitments he would honor through the Recovery Act, Obama declared a new era of seriousness in Washington. “We come to proclaim an end to the petty grievances and false promises, the recriminations and worn-out dogmas that for far too long have strangled our politics,” he said. “We remain a young nation, but in the words of Scripture, the time has come to set aside childish things.”
That was one more false promise right there. Washington would remain a political Toys “R” Us during the Obama era, a superstore for childish things.
Another critique of the stimulus has been that it perpetuated the old Washington politics that Obama had pledged to change, tarnishing hope and change out of the gate. There’s some truth to that, too. The brawls over the Recovery Act made it instantly clear that petty grievances and worn-out dogmas were still strangling American politics. And with jobs vanishing at a heart-stopping pace, the bill was rushed through the chaotic legislative process that existed, not the pristine legislative process that reformers wanted. Rahm recalls negotiating that line item for waterworks from $1 billion to $9 billion during a ride to Capitol Hill: “We ended up at $6 billion—but still!” Congressman McDermott says the Recovery Act reminded him of the adage that a camel is a horse put together by committee.
“It was helter-skelter, everyone running into the room and saying: ‘You’ve got to put this into the bill!’” McDermott recalls.
But the Recovery Act would make inroads toward a different kind of Washington change that Obama promised in his inaugural: “Those of us who manage the public’s dollars will be held to account, to spend wisely, reform bad habits, and do our business in the light of day.”
For starters, at Obama’s insistence, the stimulus would be the first spending bill without legislative earmarks in decades. There was one fairly egregious quasi-earmark inserted by Senate majority whip Dick Durbin, a $1 billion clean-coal grant that was clearly designed to revive “FutureGen,” an Illinois carbon-capture project that had gotten so expensive that even the coal-friendly Bush administration had pulled the plug before construction. A few other almost-earmarks would inspire a barrage of gotcha journalism—$50 million for restoration of the San Francisco Bay watershed, $25 million for Smithsonian renovations—but they paled in comparison to the six-thousand-plus pet projects in the last highway bill. Journalists tortured the definition of “earmark” beyond recognition to try to cast doubt on Obama’s claims; a short list compiled by ProPublica included an amendment to boost transit funding, because the sponsors hailed from states with transit systems.186 That’s quite different from the earmark for that snowmobile bridge in Onamia, Minnesota.
Obama also made sure the stimulus included the most stringent transparency and accountability measures in history, creating a new independent oversight board, empowering existing watchdogs (and giving them $250 million in extra funding) to provide unprecedented scrutiny, and letting the public follow the money online. Even though wasteful projects are no worse than worthy projects when it comes to providing stimulus—safeguards that make it harder to spend money badly make it harder to spend money quickly—Obama was determined to avoid screwups or scandals that could tarnish the entire enterprise. Politicians always rail about waste and fraud—plus “abuse,” whatever that is—but Obama warned his staff that he was serious.
“There was such a tight focus on trying to demonstrate that government could work,” recalls Seth Harris, who oversaw the transition’s Labor Department review team and later oversaw the department’s stimulus programs as deputy secretary. “It’s so far from the caricature.”
There was also a quiet bureaucratic revolution embedded in the stimulus, through programs like Race to the Top and the broadband grants, an effort to harness the power of competition to award tax dollars to the worthiest applicants. That may not sound radical, but usually the federal government spreads cash around the country like peanut butter, making sure every state gets its share through quality-agnostic, check-the-box formula programs. That’s a fast way to move money, and a safe way to avoid scandal, because it strips subjectivity out of the process. If your project meets the eligibility criteria, you get your money. The only problem with this entitlement mentality is that your project might not serve any national purpose.
“Fill out the forms in triplicate, do your air quality models, show you’re in archaeological compliance—congratulations! We’ll give you a grant,” says Roy Kienitz, Obama’s undersecretary of transportation for policy. “We don’t ask if your project makes any sense.”
The Obama team used the Recovery Act to create dozens of results-oriented competitive programs, for everything from lead paint removal to health care job training to fire station renovations. Money for battery factories, the smart grid, and ARPA-E was distributed competitively as well. And while Obama’s plan for a merit-based infrastructure bank was dead on arrival on the Hill, a Senate staffer named Peter Rogoff—soon to become
Obama’s transit administrator—drew up a merit-based grant competition for innovative transportation projects called TIGER. These programs were arguably riskier and more vulnerable to shenanigans than automatic formulas, and much easier to second-guess. But they were much likelier to produce good projects.
All in all, the Recovery Act would devote about $150 billion to long-term change.187 (That doesn’t include basic public works or the Making Work Pay tax cuts, which were part of Obama’s long-range agenda, but only incremental steps toward better infrastructure and a fairer tax code.) Most of it would be swept into law with little debate. This was not because Democrats limited debate, although the legislative process was extremely rushed. It was definitely not because Republicans embraced the Obama agenda, although there was a history of bipartisan support for renewable energy, the smart grid, electric vehicles, health IT, school reform, and other Recovery Act innovations.
No, the Republicans simply preferred to debate other things.
— NINE —
Shirts and Skins
Republican leaders didn’t want to talk about clean energy or education reform. They definitely didn’t want a public fight over Obama’s middle-class tax cuts. As Congress took up the American Recovery and Reinvestment Act, they wanted to debate cats and dogs. The day after Obama’s inauguration, House GOP leaders held a news conference to denounce the emerging bill as a grab bag of boondoggles and bailouts, a typical Washington assault on taxpayer wallets. It had no formal earmarks, the usual definition of pork, but they portrayed it as a pork platter for the ages.
Their Exhibit A was a $200 million line item for revitalizing the National Mall. The bulk of the money was to repair collapsing seawalls and prevent the Jefferson Memorial from sinking into the Tidal Basin, but in Republican talking points this provision would henceforth be known as “Sod on the Mall.” Boehner also seized on a measure expanding family planning services for low-income women. “How can you spend millions on contraceptives?” he asked. “How does that stimulate the economy?” On the Senate side, Derek Kan, the budget aide with the reading habit, compiled lists of dubious-sounding provisions for McConnell, including the census (“Failed Census Bailout”) and digital TV coupons (“DTV Transition Bailout”), as well as Amtrak upgrades (“Failed Passenger Rail Bailout”) and fuel-efficient cars for the federal fleet (“More Auto Bailout”).188 Republicans also had fun with a $50 million increase for the National Endowment for the Arts, a modest throwback to the New Deal’s subsidized murals and music. Eric Cantor claimed that it would direct $300,000 to a Miami sculpture garden, which simply wasn’t true.189
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