The New New Deal

by Grunwald, Michael

  Republicans never bothered to explain how $715 billion could be good public policy while $815 billion was freedom-crushing socialism. In the minority, they didn’t have to.

  Getting Their Mojo Back

  “I am tempted to ask the chair: What year is this?” It was 2009—January 28, to be exact—and Obey was on the House floor, fending off a Republican effort to slash spending before the final stimulus vote. “Yeah, I didn’t think it was 1933,” Obey said. “You know, they don’t look like Herbert Hoover, but there are an awful lot of people in this chamber who think like Herbert Hoover.”

  Grumpy and weary, his voice hoarse from weeks of stimulus defense, Obey ranted about the Republican “mosquitoes” who had turned a historic debate into a trivial spat over sod and condoms that weren’t even in the bill. Yes, the arts money was still there, but Obey, who played harmonica in a bluegrass band, was not about to apologize for saving arts jobs; the Baltimore Opera Company had just gone bankrupt, and Florida was slashing its cultural funding in half. His larger point was that the economy was losing over 100,000 jobs a week. The blizzard of rhetoric about imaginary earmarks for polar bear exhibits couldn’t obscure the need for a government rescue.

  “The rubber band has finally snapped,” Obey said. “The markets are in chaos, people are panicked, and we’ve got to do something to stabilize the situation. Sooner or later, we have to recognize this is not Herbert Hoover time.”

  Most of the Republicans who spoke on the floor agreed something needed to be done—just not this. They quoted Summers about poorly designed stimulus, Orszag about the slow pace of public works, Romer about the power of tax cuts. They called state aid an “unfunded mandate”—when most of it was unmandated funds. They warned that the Recovery Act could siphon money to the left-wing community activists at ACORN, the latest Fox News bugaboo. They claimed that the “emergency fund” for the down-and-out would reverse welfare reform, even though Ron Haskins, the former Republican congressional aide who wrote the 1996 welfare reform bill, says it did no such thing. “I was extremely worried that Democrats would try to undermine welfare reform, but they didn’t,” Haskins says.

  No matter. The Republicans attacked the stimulus as “one of the worst abuses of power in the history of Congress,” “the most colossal mistake in the history of Congress,” “a steamroll of socialism being forced down the throats of the American people,” a blob of climate change research and digital TV converters.

  Republicans then introduced their tax cut alternative, claiming it would create twice as many jobs at half the cost of the House bill.213 Democrats noted that the Republican record of economic forecasting and fiscal stewardship did not inspire confidence in that claim. And Obey noted that after all the Republican rhetoric about infrastructure, the alternative had not one dime for transportation: “Those jobs go blooey.” Ditto for the grid, broadband, and health IT: “Those jobs go blooey.”

  Predictably, the House rejected the $478 billion alternative, with only two Blue Dog Democrats voting yes and nine moderate Republicans voting no.214 Without skipping a beat, the Republicans introduced their $715 billion substitute, which doubled Democratic spending on highways and quintupled spending on the water projects of the scandal-plagued Army Corps of Engineers. It failed, too, with thirteen Blue Dogs voting yes and thirty-one conservative Republicans voting no.

  So more than three fourths of the GOP conference voted for a plan with no infrastructure as well as a plan with extra infrastructure. Really, the only thing the plans had in common was that they weren’t the Democratic plan. “The Republicans were never burdened by principle,” says John Dingell of Michigan, who had served in the House since 1955. “I’ve never seen it this partisan and nasty. You almost saw the country collapse, but they didn’t give a damn about anything but power.”

  In the end, every single House Republican voted against the Democratic bill, along with eleven Democrats. It still passed easily, but as Cantor had hoped, the only thing bipartisan about the vote was the opposition.

  “They just wanted us to do this ourselves, so they could beat the living hell out of us afterwards,” Dingell says.

  Some White House aides still thought some Republicans would end up voting for the bill on final passage, to avoid accusations of doing nothing as the economy unraveled.

  “It’s an old playbook,” Obey said on the floor. “It’s exactly what they did to FDR on Social Security. When they couldn’t beat it, they joined the parade. … They went along so people wouldn’t know they tried to kill it in the first place.”

  Other Democrats wondered: Which part of zero didn’t Obey understand? Any Republican who voted for Porkulus would be begging for a primary challenger.

  “The Republicans had a concerted strategy to oppose everything. They were betting on the failure of the economy,” says Chris Van Hollen of Maryland, the head of the House Democratic campaign committee. “If that wasn’t totally obvious before the zero vote, it should have been obvious after it.”

  House Republicans had voted against tax cuts for 95 percent of the country; unemployment benefits for laid-off workers; Head Start for kids and Meals on Wheels for seniors. They had rejected aid to save the jobs of teachers, cops, firefighters, janitors, and school nurses. They had marched in lockstep against special education, levees, and highways, wind and solar farms, cancer research, crime victims, border security, and high-speed Internet. They had tried to stop Democrats from sending $250 checks to senior citizens and disabled veterans.

  “Washington insiders and media pundits thought it was insane to oppose so popular a president on a bill that spread so much money around,” Cantor wrote later.215

  In a memo the next day titled “The Republican Problem,” Pelosi’s office suggested the GOP was committing electoral suicide, voting against jobs in their own communities during a jobs crisis.216 “The House Republican leadership put its members in another politically untenable position yesterday,” the memo said. Van Hollen predicted that in 2010, Republicans would pay for rejecting the stimulus. A coalition of liberal groups and unions immediately ran ads pummeling Republicans for opposing Obama’s plan, a move that Cantor unironically declared would “undermine our nation’s desire for bipartisanship.”

  The GOP’s doom-and-gloom rhetoric and unified opposition reminded Pelosi of the war over Clinton’s 1993 budget, which then Minority Leader Newt Gingrich had predicted would “kill jobs and lead to a recession, and … actually increase the deficit.” The budget passed without a single Republican vote, and actually helped usher in an era of vibrant growth and record surpluses. Now once again, Democrats were trying to clean up a Republican mess without Republican help.

  “There’s a pattern here,” her memo said.

  Pelosi wasn’t the only politician thinking about 1993. The next day, Gingrich addressed a House Republican retreat at a posh resort in the Virginia mountains, and said the stand against the stimulus brought back the same memory.217 What he remembered about the Clinton budget’s aftermath was not the spectacular failure of his economic predictions, but the Republican political revival that culminated in his rise to power the next year. Now he made a more accurate prediction: Boehner would become speaker “at a speed that will shock the Democrats.”

  The Republicans were not behaving like a team that had just gotten pasted. They felt like insurgents who had just pulled off their first ambush. Boehner replayed the C-SPAN video of the vote, prompting a standing ovation. “I know all of you are pumped about the vote the other day,” Cantor said.218 “We’ll have more to come!” Pence showed a clip from Patton of the general rallying his troops against their Nazi enemy: “We’re going to kick the hell out of him all the time and we’re going to go through him like crap through a goose!”

  That night, Cantor had his whip team sign a celebratory bottle of red wine, not to be uncorked until Republicans took back the House.

  “I was very confident the country was heading in the wrong direction,” Cantor told me. “I
thought if we stayed the course, we could earn back the majority.”

  There was one discordant note when Boehner suggested that the stimulus was so egregious it had practically whipped itself, prompting Cantor to pull him aside and tell him not to rewrite history. “We had to send a little message: ‘Uh, we worked our asses off for that vote,’” says one Cantor aide. “Holy cow! We just had two million people show up in D.C. saying: ‘Yes, We Can!’ The pollsters were saying America had shifted underneath us. The president was wildly popular, even with Republicans. Don’t sit there and say it was an easy victory.”

  Otherwise, the mood was buoyant. The Republicans had said no to Obama, and it felt good. In a later roundtable discussion, the Young Guns Cantor, Kevin McCarthy, and Paul Ryan, all agreed that the stimulus woke up the Republicans and launched their comeback.219

  “It became a very defining moment for this conference,” Cantor said.

  “Very much so,” Ryan chimed in.

  “I think that’s when we got our mojo back,” McCarthy agreed.

  The new leader of the free world seemed a bit mojo-deficient. His honeymoon was over before it had started, and he was already losing control of the stimulus narrative. “Republicans—short on new ideas, low on votes, and deeply unpopular in the polls—have been winning the media war over the president’s central initiative,” the liberal Washington Post columnist E. J. Dionne wrote.220 A Politico news story drew the same conclusion: “Obama Losing the Stimulus Message War.”

  Obama was sending mixed stimulus messages: It’s my bill, but I don’t like everything Congress is doing with it, and this flawed legislation needs to pass right away. He was peddling a short-term rescue but also long-term change, an immediate fiscal fiesta but an eventual shift to fiscal responsibility. He was trying not to oversell the crisis, because his economic team feared that talking down the economy could depress confidence and deepen the slump, but he didn’t want to undersell it, either, because his legislative team wanted Congress to feel a sense of urgency.

  Republicans had a much simpler narrative: No.

  It was resonating. In the week after the House vote, support for the stimulus sank from 52 percent to 38 percent.221 Polls showed that the closer respondents were following the debate, the less likely they were to support the stimulus.

  To try to seize control of the narrative, Obama’s team summoned the anchors from all five major news networks to the Oval Office for one-on-one interviews. This would be the president’s best chance to pitch the stimulus directly, to get his conversation with the public back on track. “We really wanted to drive the message, to compete against all the myths,” Phil Schiliro recalls. But the morning of the sit-downs, Tom Daschle withdrew from consideration for health secretary because of unpaid taxes, so Obama’s sit-downs with Katie Couric, Anderson Cooper, and the rest of the media elite focused almost entirely on the botched nomination. “That was a key moment,” Schiliro says. “He didn’t get to rebut all the false information out there.”

  Instead, the big news from the interviews, replayed for days, was Obama’s assessment of the Daschle snafu: “I screwed up.”

  Obama couldn’t afford to screw up the Recovery Act. The economic carnage was worsening by the day. January was the worst month yet, with 800,000 more job losses, including mass layoffs at iconic firms like Microsoft, Boeing, Home Depot, and Starbucks. It felt like an economic 9/11, without the bipartisan determination to fight back. Somehow, he had to find sixty senators willing to follow him into battle.

  In his diary, the Republican consultant-turned-congressman Tom Cole speculated that the president was already saying to himself: “And I asked for this job?”

  “Obama is finding that controlling his party’s large majorities is tough—and reining in the GOP is tougher,” Cole wrote. “As he knows, he will own the economy at some point. Once he does, we will clobber him in the midterms.”

  — TEN —

  From Zero to Sixty

  Bipartisanship can become a habit, which is one reason the Obama team wanted the new Congress to start with two motherhood-and-apple-pie bills that already had some Republican support. The Lilly Ledbetter gender equity legislation followed the script perfectly, and Obama got to host a bipartisan signing ceremony in the East Room. The S-CHIP children’s health expansion turned out to be trickier.

  In the last Congress, Senate Finance chairman Max Baucus of Montana and ranking member Chuck Grassley of Iowa had cut a deal to cover four million more kids, but Bush had scuttled it. Now Baucus, a moderate Democrat from a ranching family, and Grassley, a conservative Republican from a farming family, wanted Obama to make it law. Baucus and Grassley were more than “my good friend from Iowa” friends; their mutual admiration bordered on old-man bromance. “We’re family,” Grassley says. Their alliance looked like a starting point for the kind of deals that could attract eighty votes in the Senate, maybe even for comprehensive health reform.

  But their relatively modest deal on children’s health soon ran into trouble. The problem was that the deal had excluded noncitizens, to make it palatable to more Republicans. Now Democrats had larger margins in Congress, and no longer needed a two thirds majority to override Bush’s veto. So the Obama team insisted on covering legal immigrants. To Grassley and other Republicans, this was a defining moment, proving Obama’s rhetoric about cooperation was just rhetoric.

  “Once they controlled everything, they shoved us off to the side,” Grassley says. “They decided to go partisan. It’s not how you treat a partner.”

  Obama aides found this pique ludicrous. Why should the president throw immigrant children under the bus to preserve someone else’s obsolete deal? “We had just won a landslide, and this was offensive to our values,” one official says. “It’s one thing to compromise if you need the votes, but we didn’t.” The idea that Obama should offend pro-immigrant groups that had supported his election in order to help his political adversaries avoid a political quandary seemed delusional. From Rahm’s perspective, a bill that helped children while putting more Republicans on record against helping children was practically ideal. Obama cared more about bipartisanship than Rahm did, but not for its own sake, and certainly not at the expense of sick kids.

  “These are kids! They’re here legally! Sorry, that busts the deal,” says Congressman Becerra, himself a child of working-class Mexican immigrants.

  Still, Grassley felt burned. He and several GOP allies had gone out on a limb against Bush, only to see it sawed off by his supposedly post-partisan successor.

  “It was a real tactical error,” says one congressional aide. “It let Mitch McConnell go to Grassley and say: ‘See? You can make a deal with Max, but the president is just going to fuck you.’”

  Obama did get his bipartisan victory. The day after he signed the Ledbetter bill, the Senate approved the new S-CHIP by a comfortable margin, even without Grassley’s vote.222 But it left a partisan taste in some Republican mouths.

  “We got screwed,” Grassley says. “It got things off to a terrible start.”

  Reaching Out

  Some White House officials truly believed the stimulus could attract eighty votes in the Senate. The White House official who knew the Senate best was not one of them. Vice President Biden would lead the administration’s outreach to his former colleagues, and he had close friends in the institution of every ideological stripe. But he says that even before the GOP posted its zero in the House, he never thought he could pick off more than a few Republicans in the Senate.

  “Never for one single instant,” he told me.

  Biden says that during the transition, he was warned not to expect any cooperation on major votes. “I spoke to seven different Republican senators who said: ‘Joe, I’m not going to be able to help you on anything,’” he recalls. His informants said McConnell had demanded unified resistance. “The way it was characterized to me was: ‘For the next two years, we can’t let you succeed in anything. That’s our ticket to coming back,’” Bid
en says. The vice president says he hasn’t even told Obama who his sources were, but Bob Bennett of Utah and Arlen Specter of Pennsylvania both confirmed they had conversations with Biden along those lines.

  “So I promise you—and the president agreed with me—I never thought we were going to get Republican support,” Biden says.

  One Obama aide says he received a similar warning from a Republican Senate staffer he was seeing at the time. He remembers asking her one morning in bed: How do we get a stimulus deal? She replied: Baby, there’s no deal.

  “This is how we get whole,” she said with a laugh. “We’re going to do to you what you did to us in 2006.”

  Pillow talk aside, writing off the Senate minority was not an option. Even if all fifty-eight Democrats lined up behind the stimulus—by no means a sure bet—Biden still needed at least two Republicans to break a filibuster. And he soon realized he’d need three, because no Republican wanted to be the sixtieth vote for an Obama victory. So he had to figure out who was truly persuadable.

  The vice president never thought Grassley was likely to bolt, even before his fit over S-CHIP. He saw Grassley as someone who might walk up to the edge of cooperation with a Democratic president, but would never jump. Sure enough, Grassley would become a strident critic of the stimulus, and would later scuttle bipartisan health reform negotiations after stringing the White House along for months. Biden also discounted the usual speculation about his old friend John McCain, the Beltway-celebrated maverick. Even though Obama had hosted a dinner to honor McCain’s record of bipartisanship the night before the inauguration, Biden could tell he was too bitter to help the rival who crushed his dreams. In fact, during the stimulus debate, McCain would clamor for partisan unity behind the scenes, amusing GOP colleagues who had never considered him much of a team player.