The New New Deal

by Grunwald, Michael

The niceties ended there, as Boehner changed the subject to the $815 billion stimulus bill that House Democrats had just unveiled.207 “The bill Congressional Dems have written is not focused on jobs or tax relief. It’s focused on slow and wasteful Washington spending,” he told his members. Boehner said it would spend too much, too late, on too many Democratic goodies. He wanted to see members trashing it on cable, on YouTube, on the House floor. “It’s another run-of-the-mill, undisciplined, cumbersome, wasteful Washington spending bill,” he repeated.

  “I hope everyone here will join me in voting NO.”

  Cantor’s whip staff had been planning a “walk-back” strategy where they would start leaking that fifty Republicans might vote yes, then that they were down to thirty problem children, then that they might lose twenty or so. The idea was to convey momentum. “You want the members to feel like: Oh, the herd is moving, I’ve got to move with the herd,” Rob Collins explains. That way, even if a dozen Republicans defected, it would look like Obama failed to meet expectations.

  But when he addressed the conference, Cantor adopted a different strategy. “We’re not going to lose any Republicans,” he declared. His staff was stunned.

  “We’re like, uhhhhh, we have to recalibrate,” Collins recalls.

  Afterward, Cantor’s aides asked if he was sure he wanted to go that far on a limb. Zero was a low number. Centrists and big-spending appropriators from Obama-friendly districts would be sorely tempted to break ranks. “We had people who were really being Nervous Nellies,” Collins says. Take Anh Cao, a Vietnamese American who had just won a fluke election in a heavily African American New Orleans district after the Democratic incumbent was caught with cash bribes in his freezer. Why would Cao want to use his first big vote to defy a president his constituents revered? If Cantor promised unanimity and failed to deliver, his team warned, the press would have the story it craved: Republicans divided, dysfunction junction, still clueless after two straight spankings.

  But Cantor said yes, he meant zero. He was afraid that if the Democrats managed to pick off two or three Republicans, they’d be able to slap a “bipartisan” label on the bill. And he figured leaders ought to lead.

  “We can get there,” Cantor said. “If we don’t get there, we can try like hell to get there.”

  Shortly before 11 A.M., the AP reported that Boehner and Cantor had urged Republicans to oppose the stimulus.208 Press secretary Gibbs handed Obama a copy of the story in the Oval Office, just before he left for the Hill to make his case. Here we were, making this real effort to go talk to them as a group,” Gibbs says. “You know, we still thought this was on the level.” Axelrod says that after the president left, White House aides were buzzing about the insult. And they didn’t even know that Cantor had vowed to whip a unanimous vote.

  “It was stunning that we’d set this up and before hearing from the president, they’d say they were going to oppose this,” Axelrod says. “Our feeling was, we were dealing with a potential disaster of epic proportions that demanded cooperation. If anything was a signal of what the next two years would be like, it was that.”

  Republicans point out that the House bill was scheduled for a vote the next day; did the West Wing expect them not to have a position? “It’s not so much a rebuke against Obama,” one leadership aide says. “It’s recognizing the sky is blue.” But if Obama’s aides thought the fix was in, they were right. Congressman Mike Castle, a moderate Republican from Delaware, says his leadership and most of his colleagues were always determined to fight Obama no matter what he did.

  “The caucus had decided we weren’t going to give Obama a bipartisan victory on this,” Castle says.

  Obama’s hour-long visit with the House Republicans was cordial enough. Some of them asked for his autograph. Many were impressed with his command of policy details. He got a cheer when he said he was running late to a meeting with Senate Republicans—and they could wait. But he didn’t win any converts. There was an ideological divide in that conference room, and an undercurrent of hostility. Republicans didn’t need to hear the professor-in-chief lecture them about change. They didn’t like his insinuations that they didn’t know what was in the bill, and they resented his suggestion that they ought to be happy with his tax cuts, as if he knew what they wanted better than they did. Some of them were annoyed that he mentioned his legacy, which seemed a tad presumptuous after a week in office.

  “When Bush talked about his legacy in his seventh year, people started ripping on him,” recalls Representative Mike Rogers, the former FBI agent.

  The basic problem was that House Republicans didn’t want a new New Deal. Most of them didn’t think much of the old New Deal. During the Q-and-A, eighty-two-year-old Roscoe Bartlett of Maryland told Obama he was six when FDR took office, old enough to see that government couldn’t spend its way to prosperity.

  “I don’t remember that Roosevelt’s spending had anything to do with bringing us out of the Depression,” Bartlett said.

  At the time, the must-read book in Republican circles was The Forgotten Man, a revisionist history of the Depression by the conservative columnist Amity Shlaes.209 “That book caught fire,” one House leadership aide recalls. GOP leaders like Boehner as well as right-leaning pundits like George Will were flogging its argument that FDR, the New Deal, and fiscal stimulus actually made the Depression worse. But Shlaes relied on a slew of skewed statistics and selective anecdotes to make that case; her employment data, for instance, left out work-relief jobs at New Deal agencies. Most economists agree that some New Deal initiatives unrelated to fiscal stimulus were unhelpful, and the Depression didn’t end until World War II took fiscal stimulus to new extremes. But as Obama told the House Republicans, there is voluminous evidence that in FDR’s first term, deficit spending helped slash 25 percent unemployment almost in half. Then in 1937, after FDR’s shift toward austerity, the recovery stalled and unemployment spiked. The New Dealers, Obama suggested, didn’t spend enough.

  Republicans weren’t buying what he was selling.

  “Mr. President, I don’t think there’s any precedent in history that says this will work,” Bartlett said. The conference burst into applause.

  The Republicans were just as irate about process as they were about substance. Before Obama left, conference chairman Mike Pence asked him to remember three things. First, House Republicans would pray for him. Second, he was welcome back anytime. The third message was less pleasant.

  “Several times, you talked about ‘the bill that was negotiated in the House,’” Pence said. “There was no bill that was negotiated in the House, because Democrats didn’t negotiate with us.” Once again, the Republicans cheered.

  Rahm Emanuel was Obama’s fixer, doing deals, putting out fires, offering his two unexpurgated cents on strategy, policy, and anything else that had occurred to him within the last second or two. He was basically, as it said on a nameplate in his office—which, he liked to point out, was bigger than Biden’s office—the Undersecretary of Go Fuck Yourself. He set the frantic pace for Obama’s first two years in the White House. He always seemed to have a million contradictory ideas in his head, and that head often seemed like it was about to explode.

  While Obama was visiting the Republicans, Rahm was in Hoyer’s office meeting with Blue Dog Democrats, who were almost as critical of the House bill. They didn’t like Obey, who called them “bed wetters,” and they believed in fiscal discipline, although some of them seemed to forget that when it came to weapons systems, farm subsidies, and other goodies. In any case, they were tired of waiving pay-as-you-go rules to pass deficit-busting bills. In Congress, Rahm had shared their policy concerns about drunken-sailor spending and their political concerns about out-of-touch liberalism; he had persuaded many of them to run in the first place. Now Baron Hill of Indiana, one of his recruits, told him the Blue Dogs wouldn’t vote for Obey’s money pot without some changes, and without a firm presidential commitment to rein in the deficit once the crisis passed.

&
nbsp; “You motherfuckers!” Rahm screamed. “You mean to tell me you’re going to vote down the very first piece of legislation the president puts forward?”

  “Rahm, I’m sympathetic,” Hill replied. “I’m just the messenger here.”

  Rahm eventually persuaded most of the Blue Dogs to back off the ledge, assuring them Obama cared about budget discipline as much as they did. He had already agreed to kill the money for contraception and the Mall. Rahm also promised that Orszag would write a letter pledging the White House’s commitment to pay-as-you-go.

  “The Recovery Act wouldn’t have happened without Rahm,” Orszag says. “He was pure energy, banging heads, freaking out. Just a force of nature.”

  That same night, Rahm hosted some Rust Belt House Republicans in his spacious new office, which was still full of unpacked boxes. Rahm was an avid practitioner of pre-post-partisanship, but he had cultivated good relations with this group of moderates as a congressman, working together on Midwest issues like Great Lakes restoration, meeting for Tuesday lunches at the Monocle restaurant on the Hill. Now Rahm told his Monocle pals that Obama wasn’t just lip-synching bipartisanship. They told him the House bill was a strange way to show it. The final text had just been released yesterday, with the vote scheduled for tomorrow. Members had submitted over two hundred amendments, and Pelosi was only allowing votes on eleven. It felt like a typical spending bill fast-tracked under the pretense of stimulus, freezing Republicans and even rank-and-file Democrats out of the process.

  These were the kind of Republicans who wouldn’t be automatically opposed to stimulus. Their industrial districts were being crushed, and they weren’t violently antagonistic to federal spending. “Everybody at home wanted something done,” says Steve LaTourette of Ohio. A businessman in his Cleveland district had walked up to him and said: “If you don’t think we need stimulus, you’re a jackass.” But LaTourette wanted to see more infrastructure in the bill. Others wanted more tax cuts. At the same time, the Republicans were all unnerved by an $815 billion price tag so soon after TARP.

  Eventually, Rahm stopped bathing his guests in four-letter words long enough to get to the point: Were Republicans going to support this or what?

  Probably a few, they mumbled.

  Anyone here?

  Uh … no.

  Rahm figured it was still early in the game. These guys could vote no on the initial House bill, then switch to yes on the final bill after it was worked out with the Senate. But so far, the scoreboard didn’t look the way he had hoped.

  “The Dogs Just Didn’t Like the Food”

  Cantor’s whip team wasn’t sure it could persuade the entire conference to march in lockstep. “You had a popular president, a financial melt-down, people talking about whether there was going to be a Republican Party,” recalls Patrick McHenry of North Carolina, another deputy whip. “I thought half the Republicans might vote for the stimulus.” But the whip count cleaned up quickly, with only five problem children the day before the vote. Louisiana’s Anh Cao was the only “Lean Yes.”

  What brought the Republicans together were the Democrats. Obama’s “I won” and Pelosi’s “we wrote the bill” helped rally the troops. Some Republicans thought their best whip was Obey, whose smarter-than-thou bombast helped persuade members to be against anything he was for. The actual content of the bill was a unifying force, too. The whip team portrayed it as Democratic overreach and an undemocratic outrage, the kind of hodgepodge no Republican could support.

  “It was larded up with every Democratic policy wish since they lost the House in 1994,” McHenry says. “It was so big and atrocious, we couldn’t be for it.”

  For example, many Republicans were willing to extend unemployment benefits. But the Recovery Act seemed to plus up every antipoverty program under the sun: food stamps, food banks, Head Start, Early Head Start, public housing, plus a new “emergency fund” for families on welfare. Not to mention $87 billion to help states keep people on Medicaid. It sounded like a Liberals Greatest Hits album.

  “What Republican was going to vote for all that?” Tom Cole asks. “It’s not virtue if you’re not tempted.”

  The Democrats had beaten most of the Republicans who might have been tempted. And Cantor included LaTourette and several other moderates on his working group, keeping them inside the partisan tent. But the whip team was still worried about centrists like John McHugh of New York, who later became Obama’s army secretary; Peter King of New York, who had carried water for public employee unions pushing for state aid; and Fred Upton of Michigan, who had delighted environmentalists by leading the fight to phase out incandescent light bulbs. The whips applied pressure, but mostly they supplied information, sending out memos reminding the conference that the NEA recently spent $190,000 on “various artistic endeavors in San Francisco,” that the STD prevention program had once advertised HIV testing at a transgender beauty contest in, yes, San Francisco.210 Castle was planning to run for Biden’s Senate seat in blue-state Delaware, and he found his party’s knee-jerk opposition to Obama unnerving; he had said the stimulus should be about $800 billion. But he never came close to voting yes.

  “It felt like an ordinary appropriations bill,” he told me. “I mean, school construction, I couldn’t vote for that in a stimulus. And handing states all that money, it seemed like a government takeover kind of thing.”

  Castle has intellectual-looking glasses and a quiet decency that make him seem thoughtful, but he couldn’t explain why repairing schools wouldn’t create jobs, or how preventing layoffs of state workers would produce a government takeover of anything. In fact, he complained that the aid to states only saved time-limited jobs, as if he would have preferred a more permanent expansion of government. When I tried to explore these contradictions, he backtracked: “I don’t know. It was just too much to swallow.” He simply had a bad feeling about the stimulus, solidified by Republican groupthink and Democratic high-handedness.

  “The dogs just didn’t like the food,” Cole says. “And once you get down to just a few dogs still sniffing around the food, they start thinking: ‘How come none of the other dogs are eating the food? Maybe it’s poisoned.’”

  Cao was sniffing the hardest. Obama had vacuumed up 75 percent of the vote in his district, and Cao didn’t think much of his constituents’ ability to judge his positions on the merits. “I was in a very difficult position,” he said later. “I represent an African American district; all of them wanted to support a black president. Obviously, they wouldn’t know whether or not these bills are good for them.” But Cao didn’t want to alienate his new Republican colleagues by breaking ranks, either; Boehner had written a memo titled “The Future Is Cao.” Cantor and his whip team called Cao constantly, while arranging additional lobbying calls from McCain (who had a fund-raiser in common with Cao) and Newt Gingrich (who had, bizarrely, offered to help Cao with African American outreach after his victory). Cao, who had joined the Transportation and Infrastructure Committee, became convinced the bill was too heavy on social services and too light on public works.

  “Traditionally, when you look at federal programs that create jobs, it’s road construction, infrastructure rebuilding,” Cao says. “The bulk of the stimulus went into Medicaid, unemployment benefits. It was essentially a massive spending bill.”

  In fact, state aid and unemployment benefits were solid stimulus, too. But quite a few Republicans wanted more infrastructure spending, especially the thirty Republicans on Transportation and Infrastructure. They saw nothing partisan about filling potholes, cutting ribbons, and posing with oversized cardboard checks. “You know the one thing that brings Democrats and Republicans together?” Rahm says. “Concrete!”

  As the House vote approached, that created a dilemma for Republican leaders.

  Cantor and Mike Pence were both part of the conservative Republican Study Committee as well as the leadership team. But as one aide put it, Pence rolled out of bed thinking about being a conservative, while Cantor woke up t
hinking about being a leader. Infrastructure reflected the difference. In leadership meetings, Cantor argued that the Republican stimulus alternative should go big on public works, so Cao, LaTourette, and other GOP concrete lovers would feel comfortable voting against the Democratic bill. His aides were afraid that if Democrats added a lot of extra infrastructure, dozens of Republicans might support the stimulus. Pence pushed back: Aren’t we supposed to be against government spending?

  “You can’t say spending does nothing for economic growth and then on the other hand, let’s put it all in highways,” one conservative leadership aide recalls.

  Why not? Many Republicans liked highways, and John Mica of Florida, the ranking Republican on the transportation committee, kept complaining that only 8 percent of the House bill went to infrastructure. He wasn’t counting cyber infrastructure like broadband, health IT, and the smart grid, or even veterans hospitals, park roads, and other traditional infrastructure that didn’t flow through his committee. But Mica wanted more. He claimed that every $1 billion invested in infrastructure “creates or sustains” thirty thousand jobs, the kind of Keynesian argument the GOP ridiculed when Democrats made it.

  Cantor wasn’t making Keynesian arguments. He just didn’t think the centrists would join the crusade against the stimulus unless they could vote for something that moved dirt. “I have no memory of hearing principled arguments,” says one conservative House aide. “It was all just retail politics. ‘Well, this is a state we could win in the future.’ Not the kind of arguments that sat well with ideology-based thinkers.” Pence, the most ardent ideology-based thinker in the leadership, kept insisting the GOP should not try to out–New Deal the Democrats.

  Ultimately, the leaders decided to fall off both sides of the horse. The official $478 billion Republican alternative consisted entirely of tax cuts and an extension of unemployment benefits.211 But the GOP also crafted a second $715 billion substitute that included far more traditional infrastructure than the supposedly lavish Democratic bill.212 That way, moderates like Cao and Castle who couldn’t back the right-wing alternative could vote yes on something other than the actual bill.