The New New Deal

by Grunwald, Michael

  Truth wasn’t the point. Republicans ginned up all kinds of press about projects to build Frisbee parks, skateboard parks, and corporate jet hangars that were on the Conference of Mayors list, just because they conceivably could receive funding. When Congress added language specifically banning the use of stimulus funds for casinos, aquariums, zoos, golf courses, or swimming pools, Republicans just asked: What about mob museums? What about water slides? What about the Sunset View Dog Park in Chula Vista, California?

  “We were in full kill-the-bill, let’s-make-everything-famous mode,” Kan says.

  The Republican spinners understood that Americans would form their impressions of the stimulus long before fact checkers sorted the myths from reality. So they rebranded a previously uncontroversial disaster aid program for livestock as “honeybee insurance.”190 They accused Democrats of trying to spend $248 million on “government furniture,” a wild distortion of an ongoing project to build a new Department of Homeland Security headquarters. The Drudge Report had a field day with similarly bogus charges that Pelosi stuffed $30 million into the stimulus to save an endangered mouse. “In fact, there’s no money in the bill for mice,” PolitiFact’s truth squadders concluded.191 Republicans kept harping on the mouse anyway.192

  The point was to paint the Recovery Act as a potpourri of silliness masquerading as stimulus, forcing Democrats to defend dozens of hilltops at once. In reality, National Mall repairs would be just as stimulative as road repairs, and arts grants could save jobs that were vanishing at symphonies and theater companies just as surely as state aid could save jobs that were vanishing at schools and police departments. Upgrading the federal fleet’s efficiency would be textbook stimulus, pumping cash into the ailing auto industry quickly while reducing government vehicle purchases and fuel costs down the road. The CBO concluded that the family planning money would also increase short-term spending while decreasing long-term spending, by reducing pregnancies and postnatal care.193

  There were certainly some questionable items, like $198 million in payments to Filipino veterans of World War II. Senate appropriations chairman Daniel Inouye inserted them to honor a promise made by FDR, but sending money to old men in Manila wouldn’t provide much stimulus for Milwaukee. Still, none of the outrages on Kan’s lists were indefensible. Some were easily mockable, like “rehabilitation of all-terrain vehicle trails” or “removal of small-to-medium-sized fish passage barriers.” Others were unremarkable, like “alteration of bridges” and “military construction.” Quite a few were more complex than they seemed, like a $246 million tax break for the film industry. It sounded like a crass giveaway to the Hollywood elite, but it merely aimed to reverse a crass takeaway by a Republican lawmaker, who had excluded the industry from a Bush tax break as a punishment for hiring a Democrat as its chief lobbyist.194 Kan also thought “hybrid vehicles for the military” sounded goofy—“That’ll really scare Al Qaeda,” he wrote—but the Pentagon was desperate for energy-saving solutions. Fuel was one of its top costs, and convoys to fetch fuel were getting soldiers killed in Iraq.

  In any case, most of the contentious items amounted to a tiny slice of the stimulus; the arts money, for instance, was less than 0.01 percent of the package. All together, though, they sounded like a smorgasbord. And Democrats made them sound worse by dismissing them as “a trifle,” in Durbin’s words. “Let me say this to all the chattering class that focuses on those little, tiny, yes, porky amendments: the American people really don’t care,” said New York senator Chuck Schumer. Fox News replayed that quote for days.

  “The Republicans played such a cynical game,” Obey says. “This was not Democrats saying, ‘Oh, goody, goody, we get a chance to spend money.’ We were desperate to find programs that would spend out fast and actually put people to work.” But Obey became a convenient poster child for goody-goody liberalism, especially when he declared the stimulus ought to be even bigger. “I got scalped: Good God, it’s not enough, he wants to spend a trillion!” Obey says. The conservative Washington Times even trumpeted an “exclusive” suggesting Obey had steered cash in nefarious directions: “Stimulus Has Plum for Lawmaker’s Son.”195 The “plum” was funding for national parks; Obey’s son was a lobbyist for a parks advocacy group.

  It helped that Republicans had access to the ideological network that Hillary Clinton famously dubbed the “vast right-wing conspiracy,” which was almost as effective as paranoid left-wingers imagined. A private listserv served as the stimulus wing of the VRWC, injecting Republican talking points into the media bloodstream. Kan and a few other Hill aides would post information about government supercomputers, abandoned mine cleanups, and other stimulus flotsam and jetsam to a Google Groups file, so they could be launched into the conservative blogosphere by writers like Michelle Malkin, think tanks like the Heritage Foundation and Cato Institute, and activist groups like the National Taxpayers Union and the Club for Growth. Soon they would become fodder for Drudge, Fox celebrities like Glenn Beck and Sean Hannity, and the Limbaugh brigade of talk-radio hippie-bashers.

  “The idea was to create an echo chamber about the wastefulness,” Kan says.

  The echoes quickly ricocheted into the mainstream media. For example, just before Obama’s inauguration, GOP leaders cherry-picked a preliminary Congressional Budget Office analysis to claim that only 7 percent of the stimulus would go out the door that fiscal year.196 The liberal group ThinkProgress chronicled eighty-one mentions of the “report”—which wasn’t even a report—on TV news during Obama’s first few days in office, even though it was mostly meaningless. The CBO had limited its analysis to discretionary spending, ignoring faster-acting tax cuts, unemployment benefits, and state aid. And the fiscal year ending in eight months was an arbitrary milestone; Orszag pledged that 75 percent of the entire stimulus would go out within eighteen months, a more relevant time frame, and the CBO confirmed that in an actual report.197 But the too-slow-for-stimulus meme was already established. The Associated Press ran an “analysis” headlined “Stimulus Bill That’s Not All Stimulating.”198

  “First impressions tend to be lasting,” says former senator Evan Bayh. “What the Republicans knew, and our people didn’t believe, was that the public is highly skeptical that government spending works.”

  ThinkProgress later documented that cable networks interviewed Republican lawmakers twice as often as their more numerous Democratic counterparts during the stimulus debate.199 (GOP leaders gleefully circulated the analysis as proof that “Republicans have owned the airwaves.”) And while Republicans pushed a consistent message about Washington-as-usual waste, Democrats and progressive activists tended to focus on their own quibbles with the Recovery Act. For example, environmentalists attacked a provision authorizing an additional $50 billion worth of loans for new nuclear reactors—even though the Bush administration hadn’t made any loans with its existing authority, and the economics of nuclear construction were imploding.200 They had a point, but the Recovery Act was becoming toxic without surrogates to defend it. Even Obama kept talking about the importance of trimming the fat out of the bill, and one Blue Dog, Jim Cooper of Tennessee, let slip that White House officials had encouraged him to add to the drumbeat about unnecessary spending.201

  “They know it’s a messy bill, and they want a clean bill,” Cooper said.

  The problem is, it’s not easy to sell a bill while calling it a mess.

  Obama was genuinely surprised by the intensity of the attacks and wall-to-wall coverage of the attacks. He hadn’t expected a lovefest, but he hadn’t expected an economic emergency to trigger a national debate over honeybees and fish ladders. His new White House just wasn’t ready to respond to the onslaught. There were perfectly valid rationales for Mall repairs and contraceptives, but they weren’t the ground Obama would have chosen to defend.

  “Suddenly, you’re in charge of the country,” says Dan Pfeiffer, Obama’s deputy communications director at the time. “The phone starts ringing, and you don’t know where t
he bathroom is, and oh, by the way, the banking system might crash anyday now, and the market might drop 3,000 points if the Recovery Act doesn’t pass. You’re not having the strategic discussions you’d have if there was time to think.”

  The good news for Obama was that the Republicans usually focused their fire either on the general size and composition of the Recovery Act, or on the random additions at its margins. They mostly ignored the transformative stuff that would advance his agenda. “It was unintentional misdirection,” says Jason Furman, the White House economist who helped design the stimulus. “They were so obsessed with condoms and grass on the Mall, they didn’t notice the biggest unemployment insurance reforms in history.” And after a call from Obama, Pelosi reluctantly agreed to take family planning and the Mall out of the bill to blunt the partisan attacks. She refused to remove the arts funding—she had received a call from Robert Redford, too—but the top two Republican targets were out of the bill.

  “All of a sudden, the logic of the Republican argument fell apart,” Furman says.

  But the Republican argument was never about logic. It was about creating the impression of a mess. Republican leaders argued that the Recovery Act was too slow to be stimulus, but also that it needed more infrastructure projects, which would make it slower. They argued that it would expand the deficit, but also that it needed permanent tax cuts, which would expand the deficit even more.

  “They were always falling off both sides of the same horse,” Obey grouses.

  Republican leaders didn’t view Obama’s concessions as signs they could work with him. They viewed his concessions as signs they could beat him. After condoms and sod were removed from the legislation, they moved on to new targets, like programs to prevent sexually transmitted diseases and help smokers quit. When Obama got those items removed as well, Republicans found new things to complain about. Sometimes they continued to complain about condoms and sod.

  “A Fight We Could Win”

  The same day the House Republican leaders held their news conference, Eric Cantor met with his whip team to share a poll he had commissioned.202 Some of the results were unnerving: Americans overwhelmingly approved of Obama, 71–14, as well as his recovery plan, 64–19. But they still disliked Pelosi. And their responses to the poll’s leading (and often misleading) questions designed to test-drive potential Republican messages suggested public support for the stimulus was unusually soft.

  When asked which would be better for the economy, increasing spending and running trillion-dollar deficits or reducing spending to cut deficits, Americans chose austerity over stimulus, 63–28. By a similar margin, they thought cutting taxes was a better way to create jobs than, as the poll phrased the alternative, “increasing federal government spending for government programs.” And after hearing the stimulus cost $250,000 per job, most respondents agreed it was “seriously flawed.” Dollars-per-job was a misleading test of the Recovery Act; the dollars would not just finance jobs, but subway cars, solar arrays, food stamps, and whatever recipients of the tax cuts used them to buy. But political messaging is not about fairness. The whip team used its eighteen-page poll summary to assure wavering Republicans that opposing Saint Barack’s economic recovery bill wouldn’t be political suicide, because Americans were still suspicious of big government.

  “It showed members this was a fight we could win,” recalls Cantor chief of staff Rob Collins. “We’d take them through it: ‘Look at the numbers. America hasn’t changed. This is scary for people!’”

  The poll also suggested strong support for small business tax cuts, while 71 percent said Obama’s plan to “give refund checks to people who don’t pay federal income taxes” was unfair. Of course, the poll didn’t mention that those people pay gas taxes, payroll taxes, and other federal taxes. But this was what Republicans wanted to hear: Voters wanted business-friendly tax cuts, not liberal borrowing and spending.

  Cantor’s whip staffers still expected some Republican problem children to cave and vote with Obama. But they were increasingly confident they could turn the stimulus into an us-against-them moment, a chance for Republicans to stand up against government spending on fuel-efficient government cars and energy-efficient government buildings and aid to state governments.

  “The message was simple: It’s not where the voters are, and it’s not Republican,” says Tom Cole, the former House Republican campaign chair who was now a deputy whip.

  On his fourth day in the White House, Obama hosted congressional leaders from both parties in the Roosevelt Room to talk stimulus. After the president repeated his mantra that he welcomed everyone’s ideas—he often said he had “no pride of authorship”—Cantor asked if he could hand out a one-page list of his working group’s ideas. Meetings tend to focus on someone’s piece of paper, and House Republicans figured it might as well be theirs.

  We’re not going to have a markup, Obama said, but go ahead.

  The president looked over the handout, which included several tax cuts he already supported, including the carryback credit for businesses with big losses. “I don’t see anything too crazy,” Obama said. But he pointed out that the Recovery Act already included significant tax cuts. And when Cantor and his colleagues argued that the refundable Making Work Pay tax cuts for families who paid no income taxes were more about income redistribution than job creation, Obama held firm.

  “On some of these issues, we’re going to have ideological differences,” Obama said. “Elections have consequences. And Eric, I won.”

  He said it in a lighthearted way. “We took it in jest,” Cantor recalls. But “I won” became a rallying cry for Republicans, “a real shirts-and-skins moment,” as one GOP aide put it. When Cantor later described the scene in print, he claimed Obama’s message was: It’s my way or the highway.203 Deal with it.

  “The ‘post-partisan’ president sure had a big partisan streak,” Cantor wrote.

  At the time, House Republicans avoided attacking Obama publicly.

  Oh, they didn’t dare criticize Limbaugh for declaring he wanted Obama to fail; their base would have crucified them. (One Republican congressman who said Limbaugh should “back off” set off such a firestorm he had to apologize the next day for his “stupid comments.”204) But GOP leaders pointedly contrasted the president’s soothing words with the actions of “Washington Democrats.” They praised Obama’s commitment to timely, targeted, and temporary stimulus, sighing that they were so sorry that Pelosi, Obey, and Rangel had defied him by loading up the Recovery Act with pent-up liberal demands. They quoted his rhetoric about bipartisanship, accusing House Democrats of undermining him by writing the bill without Republican input. The speaker provided the perfect talking point for these gripes during her first press conference of the Obama era.

  “Yes, we wrote the bill,” she said. “Yes, we won the election.”

  Both Obey, who wrote the spending section, and Rangel, who wrote the tax section, say Republicans declined their invitations to participate. But the result was a partisan process. There were only a few legislative hearings and markups, and most Republican amendments were defeated on party-line votes. The Energy and Commerce Committee did approve six minor GOP amendments, but three vanished before the bill hit the floor.205 Even Majority Leader Steny Hoyer of Maryland, the most conservative Democrat on the leadership team, thought inviting Republicans to help shape a recovery bill would be like recruiting pyromaniacs to work for the fire department.

  “I am hard put to take the advice of people whose policies have put us deeply in debt and led to the weakest economy since the 1930s,” Hoyer told reporters.

  After a month of all-Democratic planning, Furman and Rob Nabors did hold courtesy briefings for Republican leadership staff, where they talked about conservative economists who favored a big stimulus, and suggested the Recovery Act was bipartisan in spirit because it was heavy on tax cuts. “I remember thinking: You guys are insane,” one senior Republican Senate aide recalls. The Republicans made it clear they w
anted a lot more tax cuts—and real tax cuts, not welfare handouts wearing refundable tax cut masks.

  “There’s nothing we could do that you’d be happy with,” Furman complained.

  Understandably, Republicans rejected the idea that a bill without serious bipartisan input could be bipartisan simply because Obama decided it had bipartisan ideas. “Democrats operated under the assumption that they got to choose what bipartisanship means,” Cantor says. “There was no willingness to work together.”

  It’s a fair point. But Furman had a point, too. Republican leaders did not really want to work together. They were about to make that abundantly clear.

  Getting to Zero

  Boehner opened the weekly House GOP conference meeting on January 27 with an announcement: Obama would make his first presidential visit to the Capitol around noon, to meet exclusively with Republicans about the Recovery Act.

  “We’re looking forward to the President’s visit,” Boehner said.206