Political lessons from Obama's stimulus
A sign stands posted alongside a road construction project funded by the American Recovery and Reinvestment Act on May 21, 2009 in Littleton, Colo. Did the American Recovery and Reinvestment Act do its job and was President Obama successful in selling the stimulus program to the public?
One the most polarizing topics in this year's presidential race is the nearly $800 billion economic stimulus package passed by Congress in 2009.
The bill, known as The American Recovery and Reinvestment Act, was meant to jump-start a struggling economy through massive government spending.
Michael Grunwald, senior correspondent for Time magazine, has written a new book detailing how that $800 billion package came to be. It's called "The New New Deal: The Hidden Story of Change in the Obama Era."
Grunwald says the stimulus plan did stimulate the economy: "Certainly all the objective economists who have looked at it, there is overwhelming consensus that it certainly did create jobs and it certainly did promote growth after a terrifying freefall."
And though he says that many of the stimulus programs are actually popular with the public, the idea of government spending continues to be a tough sell.
"It turn out that most of the actual things in the stimulus -- the tax cuts, infrastructure projects and the clean energy -- people actually like them, they just don't like the stimulus," says Grunwald. "There's a reason that even President Obama won't say the word any more and it really has become toxic. "
Kai Ryssdal: If there's one moment of original sin in this year's presidential race, one key point of economic disagreement, it's to be found in the pages of the American Recovery and Reinvestment Act -- the stimulus program passed a month after the Obama administration took office. Michael Grunwald covered the stimulus for Time magazine, where he's a senior correspondent. He's turned that work into a book about how all $831 billion worth of that package came to be and what effect it had. It's called "The New New Deal." Welcome to the program.
Michael Grunwald: Thanks for having me.
Ryssdal: Can we stay as an objective fact that the stimulus plan actually did stimulate?
Grunwald: Yeah, I think we can. Certainly all the objective economists who have looked at it, there is overwhelming consensus that it certainly did create jobs and it certainly did promote growth after a terrifying freefall. The job losses peaked the month before it passed and right after it passed, it was the largest quarterly improvement in economic growth and jobs that they'd had in 30 years. There's no smoking gun because you can't run a double blind study of an alternative U.S. economy to see how it would perform without stimulus, but certainly the ballistics match.
Ryssdal: And other unfortunate metaphors, I guess, I don't know. It was sort of advertised as a jobs bill, but it was really so much more. There was a lot of stuff crammed into this thing.
Grunwald: It was called the American Recovery and Reinvestment Act. Short-term recovery was a very important part of it -- there was state aid for that, tax cuts, and a lot of aid to victims of the Great Recession. But there was also this long-term reinvestment part that people don't understand. There was $90 billion for clean energy at a time that we were spending a few billion dollars a year. You know, the factories to make all that green stuff in the United States. You also had Race to the Top, which people know as this game-changing education reform, but they don't know that it was part of the stimulus.
Ryssdal: You are -- it is clear in this book -- a fan of the stimulus bill. You think it was necessary and it did its job. I wonder, though, if there's any sympathy on your part for the countervailing argument that piling on debt in an American economy that is already in recession is not, the Republicans would say, a good thing to do.
Grunwald: Well, the stimulus isn't perfect. It was put together by imperfect human beings through an extremely imperfect legislative process. There's some stuff in it that doesn't stimulate and this did pile $800 billion onto the debt and at the time it added to the deficit. But of course, deficit spending is what you need at a time when the private economy has essentially shut down. When the economy goes to hell, people don't have profits, corporations don't have profits so they're not paying taxes and people don't have jobs so they're not paying taxes. That's how you get a deficit.
Ryssdal: It's interesting. You have an interview, or you sat down and talked with Evan Bayh, former senator from Indiana, and he said at some point that this is the last stimulus package we're ever going to see in this country.
Grunwald: That's right. He said that could be the last sentence of my book and it almost was. But we'll see. Even Mitt Romney has, on the trail, sometimes people ask him what he wants to cut and he'll say you don't want to cut spending too fast because that will hurt the economy.
Ryssdal: How much blame does the president get for -- if I could sort of paraphrase you here -- screwing up the sales job on this thing?
Grunwald: There's a funny scene in the book about when they were putting together the Making Work Pay tax cuts and it turns out that less than 10 percent of Americans know that they got it and that's because they sort of dribbled out the tax cuts by diminishing your withholdings, so you maybe got $8 or $9 in your paycheck a week and nobody had any idea about it. Now Rahm Emanuel was telling me that he was kind of raising hell about this while it was being put together. He said, 'We're denying ourselves an Ed McMahon moment,' that kind of squeal of Publishers Clearing House pleasure when you get your envelope in the mail. It turn out that most of the actual things in the stimulus -- the tax cuts, infrastructure projects and the clean energy -- people actually like them, they just don't like the stimulus. There's a reason that even President Obama won't say the word any more and it really has become toxic.
Ryssdal: Michael Grunwald is a senior correspondent at Time magazine. His most recent book is called "The New New Deal," about the Obama stimulus program. Michael, thanks a lot.
Grunwald: Thanks so much for having me, Kai.