The New New Deal

by Grunwald, Michael

  There is no bigger thing being done in this country than the California high-speed rail project, a shoot-the-moon effort to connect San Francisco to Los Angeles in less than three hours. It will have to overcome seismic faults, rugged mountain passes, and ferocious opposition from deep-pocketed homeowners and farmers who don’t want trains whipping through their communities. Ultimately, it could take more than twenty years and cost as much as $100 billion to complete. It’s often described as a political football, which seems wrong. Footballs get tossed and carried and fumbled, while the rail project just seems to get kicked—and not only by Republicans eager to embarrass Obama. California Democrats have also churned out reports questioning its route, costs, and sketchy ridership projections. But thanks to Governor Scott, it’s Obama’s only bullet train that still has a chance to be built. And thanks to the money diverted from Wisconsin, Ohio, and Florida, its first phase of construction will no longer be a train from nowhere to nowhere in the Central Valley. It now has enough cash to get from Fresno to Bakersfield—not exactly Paris–Lyon, but at least recognizable names on a map.

  “You’ve got to start somewhere,” explains Fresno mayor Ashley Swearengin, a Republican who has bucked her party to support the project.

  Yes, but in Fresno? The city began as a depot on the Central Pacific railroad, and as high-speed rail officials point out, it’s about the size of Lyon. But its downtown is now a dismal collection of boarded-up buildings, pawn shops, botanicas selling cheap statuary, check cashers, and, incongruously, a bronze Renoir sculpture of a washerwoman next to a Payless shoe store. And Bakersfield will never be confused for Paris. It’s got the nation’s least educated population, according to Brookings, and worst air quality, according to the American Lung Association.395 In 2010, Fresno and Bakersfield had the nation’s third- and fifth-highest Latino unemployment rates.

  Swearingen envisions high-speed rail as an economic redevelopment engine that could help revive both cities, and help connect the fast-growing Central Valley to the rest of California. But that’s not the real reason the project is starting in the middle, hundreds of miles from its target markets in L.A. and the Bay Area. The Central Valley, with its flat terrain and sparse population, is the easiest and cheapest place to get started, and the project’s boosters are desperate to get it started before critics can stop it. As New York’s master builder Robert Moses used to say about public works, once you sink that first stake, they’ll never make you pull it up. Fresno–Bakersfield would be ludicrous as a stand-alone, but it’s a nice foot in the door. By contrast, building tracks in congested urban areas would be much more disruptive and expensive, and the trains would have to travel much slower; the wide-open Central Valley is where they can hit 220 mph.

  “It makes no sense to start in the Central Valley if we’re not serious about finishing. It’s like designing a moon mission to go a quarter of the way there,” says Roelof van Ark, the former head of California’s high-speed rail agency. “But if we’re serious, that’s the place to start. If we start at the ends, we’ll never do the middle.”

  Even in the Central Valley, it won’t be easy to sink that first stake. I went to a public meeting in the small farm town of Hanford, where high-speed rail was seen as a federal assault on rural culture. The proposed route sliced through high-value crops—almonds, walnuts, grapefruits, a cherry orchard—as well as a local subdivision, and the residents didn’t want compensation. They wanted blood. John Tos, a fruit and nut farmer with six properties in the path of the train, warned the project’s officials that they would take his land over his dead body. “You know what it’s called when you take something without permission?” asked Tos, a fourth-generation farmer with fiery blue eyes and a gray Abe Lincoln beard. “RAPE!” The consensus in the room was that high-speed rail was a snobby metropolitan plot, designed to boost urban hellholes like Fresno at the expense of communities with bedrock values, financed by a liberal president on a borrowing binge. “The federal government is nothing but a Ponzi scheme!” shouted Tos, pronouncing “Ponzi” to rhyme with “bonsai.”

  The Central Valley route should only affect about three thousand acres of farmland, a pittance compared to the thirty thousand acres the area already loses to sprawl every year. Passing trains aren’t the main threat to Hanford’s rural character. But they do represent change. California expects to add twenty million residents over the next few decades, and there are only so many freeways and airports it can build. Schwarzenegger and his Democratic successor, Jerry Brown, both see high-speed rail as a big bet on a new era of American mobility, with California leading the way for trains just as it did for cars. “You’ve got to imagine the possibilities,” Schwarzenegger says. Valuable runway slots currently used to shuttle travelers between Northern and Southern California could be opened up for flights to Shanghai and Seoul. Intrastate trips would be comfortable, and the hours billable.

  The problem is funding—or, more precisely, uncertainty about future funding. The feds have provided $3.6 billion in cash, and California voters have approved nearly $10 billion in bonds, more than enough to complete the Central Valley leg. But private firms, which see L.A.–San Francisco as a gold mine, are unwilling to provide financing without assurances the entire line will be built. And the California legislature is reluctant to start spending without assurances of continued federal support. When Obama unveiled a six-year, $53 billion plan to expand high-speed rail, Washington Republicans proclaimed it dead on arrival.

  “The big challenge is convincing people this is a long-term project,” says van Ark, a former executive with several European train manufacturers. “This can’t be built in one election cycle. We need long-term vision.” Unfortunately, van Ark told me, the U.S. political system doesn’t work that way: “Asia has a long-term mentality. Europeans have a medium-term mentality. Americans are now, now, now.”

  The state plan still calls for construction to begin in late 2012, Fresno–Bakersfield to be done by 2017, and the whole line to be running around 2030. Its fate may depend on the November election. No one wants to go a quarter of the way to the moon.

  In California, high-speed rail is still a debating point, a futuristic vision of a new way to travel. In Illinois, the TRT-909—or Track Renewal Train, affectionately known as the “yellow beast”—is already laying the groundwork for higher-speed rail. The TRT is a noisy mobile factory that replaces tracks as it trudges along them, pulling up old wooden ties and rails, putting down concrete ties and sturdier new rails. I watched the TRT clattering along the St. Louis–Chicago line near Normal, Illinois, and it was mesmerizing. Thanks to the yellow beast, an initial section will be upgraded from 79 mph to 110 mph this year, and travelers will save an hour when the project is done in 2014.

  “It’s going to be an unbelievable boon for us,” says Normal mayor Chris Koos.

  Trains are already so vital to Normal that its dumpy little yellow-brick Amtrak station—unaffectionately known as the “Amtrak shack”—is the fourth-busiest in the Midwest, behind only Chicago, Milwaukee, and St. Louis. And the town won a $22 million TIGER grant to replace it with an eco-friendly multi-modal station that will anchor its New Urbanist downtown revitalization. The station is rising next door to a children’s museum, a stone’s throw from a new nine-story Marriott with a conference center. Koos says the new downtown has attracted over $200 million in private investment, including an upscale restaurant founded by a Chicago chef, a gourmet coffee shop selling $5 caramel-vanilla lattes, and other telltale signs of revival. Normal is the home of Illinois State University—originally a “normal school” for teachers, which is how the town got its name—and the promise of fast access to Chicago is already helping with faculty and student recruitment as well. As we watched workers pour concrete for the station’s ticketing area, Koos told me the Recovery Act was transforming his town.

  “People will start appreciating the stimulus when things start coming out of the ground,” he said.

  Whether or not people appr
eciate it, the Recovery Act is already renovating train stations in cities like Portland, San Jose, St. Paul, and yes, Wilmington, where the newly improved Victorian station has already been renamed for Amtrak Joe Biden. Amtrak’s high-speed rail projects are under way in states like Missouri, Michigan, and Maine, where the Downeaster service is being extended twenty-six miles to Brunswick; like Normal, the town is enjoying a train-related boom, with $100 million worth of investments in retail, office, condominiums, and a hotel near the station. Thanks in large part to funds diverted from Florida, the Recovery Act is also financing improvements to the Northeast Corridor, including a new electrical system that will increase speeds in New Jersey, a new bypass that will unclog a choke point in Manhattan, and extra tracks that will allow faster trains to pass in Delaware and Rhode Island.

  These projects aren’t game-changers. They’re game-adjusters, baby steps toward better service. And they aren’t happening on a stimulus timetable. As they start producing results, shaving minutes off trips, travelers won’t associate them with the Recovery Act. But over time, LaHood says, passenger trains will become a more attractive option.

  “I’ve got nine grandchildren,” he says. “High-speed rail is for them, not for me.”

  “No Es Bueno.”

  No matter how badly a day was going at the White House, there was always one word that could make it go worse: Solyndra. The day after the election, the company announced it was shutting down a factory and laying off two hundred employees. Wait: Wasn’t the stimulus supposed to create jobs?

  Solyndra tried to spin the moves as good news, and in a way they were. The company still had a thousand employees, and was executing new CEO Brian Harrison’s plan to shrink its bloated research division. Shutting down its old factory made sense, too, since its more efficient new stimulus-funded factory was scheduled to come online soon. But White House energy adviser Heather Zichal had a more realistic assessment of the news in an internal email: “No es bueno.” And there was more bad news that Solyndra chose not to announce. It was running out of cash again. Solar prices were still plummeting, and the European crisis was killing its best market.

  Before the year’s end, Solyndra’s investors agreed to one last $75 million loan to stave off bankruptcy, but this time they insisted they had to be first in line for repayment if the company failed anyway. So the Energy Department had a tough decision to make; as Jonathan Silver wrote in an internal document, the loan office first had to “determine if the company still had a viable business.”396 One OMB official noted in an email that politically, it would probably make sense to let Solyndra fail now, rather than risk a bankruptcy during the president’s reelection campaign. “The optics will arguably be worse later than they would be today,” the official wrote. Nevertheless, in January, the department agreed to restructure its original loan to give Solyndra a chance to finish its new factory, execute its new sales strategy, and try to raise new private capital. Even if the company still went under, it would be more valuable in bankruptcy if it had a completed plant.

  “Our goal was taxpayer safety,” Silver told me. “We decided to give Solyndra a fighting chance to succeed.”

  It was a risky move, but it looked like a smart one at first. The factory was completed on time and on budget. Sales steadily increased. Costs steadily decreased.

  “We were executing our plan,” says David Miller, Solyndra’s corporate communications director. “We were so damn sure we were out of the woods.”

  There was even low-level White House discussion about inviting Solyndra’s executives to sit in the First Lady’s box during the State of the Union, to illustrate the president’s theme of “winning the future.” Obama’s events director shot down that idea: “Can’t do Solyndra … they’ve run into some issues recently. :(”

  That particular emoticon was probably appropriate.

  “The stimulus worked!”

  Ed Rendell—two-term Pennsylvania governor, two-term Philadelphia mayor, two-term district attorney, lifelong pol—had five days left in public office. A Tea Party governor was about to take over, and his activist legacy was at risk. At the final meeting of his Stimulus Oversight Commission, he wanted to set the record straight.

  “I know it’s not popular to say it,” Rendell said. He had just been to the dentist, and he couldn’t feel the left side of his face, so he was slurring his words a bit. “I know our citizens think the stimulus failed. But it’s not true! These investments helped us weather the storm. And they are changing the face of Pennsylvania.”

  Rendell’s stimulus commission chairman, a Republican businessman named Ron Naples, had insisted on measurable outcomes; early on, he had bewildered staffers of a stimulus-funded domestic violence program by asking how they calculated their return on investment. So now the governor had numbers to back up his words. The Recovery Act had resurfaced 940 miles of Pennsylvania roads. Its clean-energy projects would power 36,000 Pennsylvania homes, and its efficiency investments would save enough to power another 16,000. It was bringing broadband to 255 health providers, 142 libraries, and 939 schools. It had filled a $2.6 billion gap in a $28 billion state budget, avoiding a fiscal blood bath. The Keystone Research Center, a Harrisburg think tank, estimated the state’s unemployment rate would have reached 14 percent without the stimulus; it was now 8 percent.397

  Yawn. Most reporters hate numbers. When Rendell finished his blizzard of triumphant data, the media didn’t ask a single question about the stimulus. The event barely registered in the statewide press. Philadelphia magazine’s political blogger did file a bit of snark, titled: “Rendell Declares Stimulus a Success. Don’t You Feel Better?”

  Afterward, Rendell invited me into his office, which was lined with portraits of past Pennsylvania governors.398 He pointed out Ben Franklin, who had held the job in his eighties, but had somehow persuaded the artist to make him look much younger. “Politicians never change,” Rendell mused. His point was that image matters. Politics matters. In a democracy, good works are never their own reward. Rendell showed me the portrait of William Penn, who served thirty-seven years as royal governor; okay, that guy didn’t have to worry about public opinion. But elected politicians do, and Rendell wondered whether Obama thought his policies were so brilliant they would sell themselves.

  “We have a great communicator in the White House, but he failed to communicate,” Rendell said. “I’m not Barack Obama, but if you gave me an hour to explain the Recovery Act to the country, I could’ve made the case!” I suggested that Obama was in a tough spot from the start, because no matter how he had handled the stimulus, jobs would have continued to disappear for months after it passed.

  “Yeah, well, he should’ve explained that, too,” Rendell said. “The White House gets very defensive about this. They’re frustrated they’re not getting the credit they deserve. Okay, but whose fault is that?”

  From the start, he said, Obama overpromised on the Recovery Act’s short-term benefits, and failed to sell its visionary long-term investments. “Even people who keep up with this stuff don’t understand how this is laying a foundation,” Rendell said. “The only time you hear about infrastructure or clean energy, someone’s saying it’s too slow, it’s not stimulus.” I agreed about the overpromises, but didn’t Obama talk about investing in the future all the time? What about his New Foundation speech in April 2009?

  “Too late,” Rendell said. “By that time, the Republicans had already spun the stimulus into the graveyard.”

  We’ll never know how much better messaging would have improved the Recovery Act’s reputation. It’s another unanswerable counterfactual. For what it’s worth, I suspect it wouldn’t have made that much of a difference. It was always going to be hard to sell a recovery package during a tepid recovery. And it’s incredibly hard to recover from financial cataclysms. It’s preferable not to have them in the first place, which, of course, was why Obama had enacted financial reform.

  Anyway, change is always a tough sell. And Washin
gton isn’t the only city with a status quo bias. The day before I saw Rendell, one of his former aides, Philadelphia deputy mayor Rina Cutler, told me about BigBellies, the stimulus-funded, solar-powered compactors that were replacing traditional trash cans in downtown Philly. BigBellies had reduced trash pickups from three times a day to five times a week, saving the city big bucks. And they were cute, painted bright colors to look like garbage-eating monsters. But some residents were outraged. I asked Cutler why.

  “Oh, people love change,” Cutler said. “As long as it looks exactly the same.”

  — NINETEEN —

  The Legacy

  A Year of Sound and Fury

  The first two years of the Obama presidency were two of the most productive years in modern political history. Then in 2011, nothing happened.

  Okay, that’s an exaggeration. The president did order the raid that killed Osama bin Laden. He brought the last combat troops home from Iraq, as promised. And he helped lead a NATO intervention against Libyan dictator Muammar Gaddafi, which critics predicted would become a quagmire. It didn’t. It didn’t end well for Gaddafi, either.

  On the domestic front, though, it was a year of sound and fury, signifying very little. Politically, divided government produced constant drama, as House Republicans engineered a series of new hostage negotiations that made Washington look nuttier than ever. At times, there seemed to be an imminent danger of a chaotic government shutdown, or even a catastrophic government default. At other times, there seemed to be real hope for a bipartisan deal to rein in long-term deficits. The GOP rallied around a radical plan to reinvent Medicare and shrink spending, and Obama floated a new stimulus plan to inject $450 billion into the economy. But none of those things came to pass. Substantively, the clashes of 2011 produced a stalemate.