Michael Grunwald, The New New Deal: The Hidden Story of Change in the Obama Era (New York, 2012)
“But we also believe in something called citizenship.” As thunderous applause rolled across the Charlotte arena, President Barack Obama insisted that citizenship was at “the very essence of our democracy…that the country only works when we accept certain obligations to one another, and to future generations.” Offering examples of Americans who recognized in practice that citizenship entails “responsibilities as well as rights,” he continued: But if you, the American voters, turn away now from these collective obligations, be aware that “other voices will fill the void…with the $10 million checks…trying to buy this election….”
This is the Obama we see relatively little of in Michael Grunwald’s thorough new book, The New New Deal: The Hidden Story of Change in the Obama Era. A senior national correspondent for Time Magazine, Grunwald examines the first three years of the Obama administration in detail, addressing issues of energy, health care, and education. But his primary aim is to explore the complex politics and personalities involved in the Obama administration’s response to the economic collapse it inherited from George W. Bush. Thus the history of the American Recovery and Reinvestment Act of February 2009, the $787 billion stimulus bill, is the centerpiece of the book. Change is hard, Grunwald writes, but it happened, and he terms the Recovery Act as “the boldest countercyclical push in U. S. history.” But, he might have added, making a sausage is never pretty.
Grunwald begins his story in the last weeks of the 2008 campaign. Beneath the growing euphoria that victory was in hand lay a deep concern: No one in politics, finance, or the think tanks yet had an inkling of the extent of the economic crisis. At this moment Obama brought together a “shadow” economic team to discuss policy options apart from, and even unknown, to, other advisors. It was chaired by John Podesta, Bill Clinton’s former chief-of-staff, and filled largely with Clinton’s former economic advisors. Their final report to Obama, just 8 days following the election, recommended a stimulus package of some $335 billion. It was a sign of just how ferocious the economic crisis was that the November figure more than doubled the campaign’s estimate of the month before—and that the November figure would be less than half the final figure agreed to in the Recovery Act three months later. As the “shadow” advisors decamped, the president-elect named his official economic team who, with the exception of Christine Romer and Jared Bernstein, shared at least one relationship in common: All had worked in the Clinton administration, perhaps under Secretary of the Treasury, Robert Rubin, or for Rubin in the private sector—or both. “[A] virtual Rubin constellation is taking shape,” the New York Times reported. This led liberal Nobel economist Joseph Stigiltz to ask: ”Why would Obama want them in a crisis like this?”
Grunwald’s detailed discussion of the debate that ultimately led to Congressional approval of the Recovery Act on February 13, 2009 is sobering. From the president’s left came a barrage of advice and criticism urging a much larger stimulus package. Paul Krugman and Robert Reich were persistent in their New York Times and Huffington Post commentaries, as were numerous other commentators. Within the administration Romer and Bernstein pushed for a $1.2 trillion bill, and claimed in a report made public 10 days before the Inauguration that an effective stimulus bill would reduce unemployment to 7 percent by 2010. It was, Grunwald suggests, “the most politically damaging document of Obama’s first term,” for the version of the bill that did pass has not brought official unemployment under 8 percent to this date. Amid an ”increasingly fractious” internal political debate some months later, Romer’s recommendation for a second stimulus met a stern-faced President’s one word retort: “Enough!”
Part of the reason for these contentious exchanges lay with the politics of the Congress. While the Democrats had a commanding lead in the House (257-178) following the November 2008 elections, their position in the Senate was far shakier. Although they held a 58-41 majority (the Minnesota senatorial race would not be decided until summer), the Democrats fell short of the 60 votes needed to close debate. Thus politics required that the administration go searching for potential supporters across the aisle within what Grunwald calls Republican Senate Minority Leader Mitch “McConnell’s army of NO.”
Grunwald’s detailed analysis of the Republican response to the Recovery Act is a chapter in the ongoing transformation of the GOP from a moderate-to-conservative party into the intransigent party of the right symbolized by CNBC commentator Rick Santelli’s 2009 on-air outburst against the Recovery Act which sparked the formation of the Tea Party. In this process McConnell especially played a critical role. In a pre-Inaugural meeting of Senate Republicans, McConnell laid out the strategy: Rejecting both open hostility toward or working with Obama, McConnell instructed his troops to appear to be cooperative while raising questions about the details of the Recovery Act at every turn. The point was not to appear partisan while keeping the public’s attention on the “controversial” nature of the Obama bill. As Republican Senator George Voinivitch of Ohio told Grunwald, McConnell “wanted everyone to hold the fort. All he cared about was making sure Obama could never have a clean victory.” It was into this swamp that Obama and Senate Democratic leaders searched for votes needed to pass the bill; and it was here that the trading got ugly. Ultimately three Republicans negotiated with Obama: Susan Collins and Olympia Snow of Maine, and Arlen Spector of Pennsylvania. (The vote of the conservative Democratic senator, Ben Nelson of Nebraska, further complicated Obama’s negotiations.) To a large extent the final parameters of the Recovery Act were determined by these senators operating against the backdrop of the implacable opposition of the majority of Republicans. “We didn’t have the luxury to say to the Senate, our way or the highway,” the President would later explain.
The core of Grunwald’s analysis is that, after accounting for all the ugliness of its production, it was Obama’s Recovery Act that stopped the slide toward a serious depression even if it could not magically end the Great Recession. The stimulus had an important impact in funding initiatives in education, energy, and health care, helped stabilize the housing market, and handled vast sums of money with strict accounting and little corruption—a combination that restored at least some sense of trust in government and the economic future. Jared Bernstein, long an advocate of a larger stimulus, stated Grunwald’s overall point directly: “But Paul Krugman in his wildest dreams couldn’t have offset an $8 trillion loss in housing wealth, and trillions more in output. No conceivable stimulus could have offset the Great Receession.”
Yet questions remain. How to evaluate Obama as a leader in the face of these political limitations? Where was the vision that reminded the nation of “the very essence of our democracy,” that expressed its fundamental difference with the singular conservative emphasis on individual freedom? Rhetoric alone would not have influenced McConnell or his “army,” but as both Theodore and Franklin Roosevelt’s understood, as did Lyndon Johnson regarding Civil Rights and Ronald Reagan with conservatism, opposing politicians were not the only intended audience of a president’s words. But Obama resisted the use of the “bully pulpit” the presidency offered and remained, as he stated in 2009, “the eternal optimist” convinced that “over time people respond to civility and rational argument.” This was, perhaps, more in keeping with Obama’s basic personality, what Grunwald calls Obama’s “Vulcan sense of logic,” “hyperrational side,” his “data-loving sensibilities.” Little wonder that Grunwald reports the President as quite comfortable with technocratic, politically centrist elite types such as Lawrence Summers and Timothy Geithner because “[h]e was one of them.” Politics as a technocratic puzzle; persistent bi-partisanship in the face of that steadfast “army of No;” and the inconsistent effort to connect specific issues to a broader vision of democracy’s meaning have marked so much of the Obama era. As some of the disillusionment with Obama suggests, the question is about more than minor personality quirks; it addresses the substance of his leadership qualities.
Finally, there is the issue of Grunwald’s very title. What is a “New New Deal”? In the Introduction, the reader quickly learns that this administration is “ not the New Deal” and Obama “is not a classic New Deal liberal.” Instead, Grunwald offers the idea that “the Recovery Act did update the New Deal for a new era,” for it represented, as the president stated, a moment to “reinvent the economy to seize the future.” Thus “New” does not mean new, but rather something old, updated. Somehow that is not as catchy a title when searching for readers.
But the issue is more important than commercial concerns. There was no singular New Deal in the 1930s but rather at least three efforts with different policies that concluded with the national economic mobilization of World War II. Throughout the New Deal era, labor occupied a central role in both policy decisions and public consciousness. A majority of Americans thought favorably of unions, Gallup polls repeatedly reported, and approximately one-third of non-agricultural workers were union members—the largest percentage ever in American history. While the growth of the postwar state did indeed revitalize a conservative movement, it was at first without the support of most corporate leaders, who were quite happy with liberal government’s seemingly endless supply of Cold War profits to their companies. By the 1970s this began to change. Conservatism grew sharply, spurred by white resistance to African Americans rights and the emergence of cultural issues such as abortion. Simultaneously, the American economy became more aggressively global in its search for profits, as the competition from once-weakened economies of postwar Europe and Asia exerted their power. And then there was Ronald Reagan, who helped bridge the gap between the new conservatives and corporate leaders, even as he received 46 percent of the trade union vote in his post-PATCO strike re-election effort in 1984. In this process labor, once a foundation of liberalism, declined to less than 22 percent in 1975, and to under 12 percent today.
Against this growing conservative tsunami, liberalism itself continued its transformation begun in the late 1930s, marked by an ever closer reliance on a government-corporate partnership. Grunwald’s “new” New Deal is dramatically different from the historical New Deal concerning both policy and popular politics in that it lacks a sustained labor presence and a structural critique of the corporate role in a democracy. Indeed, Grunwald does not even attempt to explain the meaning of these absences that had not so long ago been central to liberalism’s approach. The book remains a detailed programmatic guide to the political maneuvering and horse-trading that resulted in the Recovery Act of 2009. It passes on an opportunity, however, to explore what’s gone missing from progressive interventions in our neo-liberal context.
From October, 2012