The House Republicans, greatly reduced by the 2006 and 2008 elections, were now as a whole more conservative than they’ve been in a generation—moderate Republicans having been reduced to a mere dozen or so. There were signs from the outset that the Republicans had no intention of cooperating with Obama. Lacking the leverage to affect policy, or the votes sufficient to defeat Obama’s stimulus plan, they could do what they wanted, however short-sighted, without being saddled with responsibility for killing it. Moreover, they concluded from their losses in 2008 that they hadn’t been conservative enough ; they had come under a great deal of criticism for having presided over too much spending. The House has been particularly polarized for decades: when each party gains the majority, it takes revenge for having been, as they see it, mistreated by the other. Since House Speaker Nancy Pelosi was rushing the bill through the House, it was easy for Republican leaders to get their followers worked up against it. Emotion —over issues, over procedure—plays a larger part in parliamentary politics than people may realize.
Almost all the House Republicans come from conservative districts and hold safe seats. And in the House and the Senate, Republicans could, and did, resort to the often successful ruse of saying that they voted against the bill not because they were against what it’s trying to do—heavens no—but because it wasn’t good enough. The Republicans believed that they were taking no great gamble in opposing the stimulus bill: they figured—perhaps mistakenly—that since the 2010 election was far off, their votes would likely be forgotten. (The Democrats are already running ads against some of them.) They also figured that if the economy began to recover by then, Obama would get all the credit anyway. So, two hours before the new president was to go to the exceptional length of traveling to Capitol Hill to meet with the House Republicans to discuss the stimulus bill, Minority Leader John Boehner sent word to his ranks to oppose it.
This should have signaled to the White House what was to come. The Republicans in Congress do not want Obama to be a successful president, perhaps dooming their party to minority status for quite a while. And Obama sought Republican support for his bill not solely out of an idealistic desire for bipartisanship itself, but for pragmatic reasons as well: he wanted “cover”—as politicians often do in order to claim broad (however defined) support for their initiatives, especially controversial ones. The Republicans understood this, and they had no interest in helping him out. But Obama also knew that his elaborate courtesies to the Republicans—meeting with them, having them over for cocktail parties and the Super Bowl—looked good to voters. In doing these things, he was talking to the greater public.
Most of the Democrats weren’t inclined toward bipartisanship either. They’d won, and they had a Democratic president, so they now had a long-awaited opportunity. When House Speaker Nancy Pelosi said, “We won; we wrote the bill,” the Republicans’ outrage was entirely phony; Pelosi, whom they paint as “the San Francisco Democrat,” had given them a talking point. The bill that came before Congress was a sprawling hodgepodge of proposals, as Democrats jumped at the chance to put in provisions, of varying soundness, that hadn’t stood a chance for eight years. This raised the question of why the White House allowed itself to get stuck with this bill. Obama wasn’t even president when the bill was drafted, and was in no position to send one to Congress and demand that it be passed. The congressional Democrats insisted on their prerogatives as members of a coequal branch. Still, Obama’s aides had been working with congressional Democrats on the stimulus proposal since before Christmas; one congressional aide said, “Rahm was a constant presence.”
The two-year bill produced a gold rush because, as an “emergency” measure, it wasn’t subject to the House rule that new spending has to be offset by cuts elsewhere. The money had to get into the economy quickly—this was an opportunity not to be passed up. Rahm Emanuel said, “You never want a serious crisis to go to waste.” Not everything that went into the bill was closely examined.
Obama and his advisers also seized the opportunity to put in the bill “down payments” on some of the President’s priorities. Among these were funds for developing alternative energy; weatherizing buildings; updating school libraries and laboratories; building an electric grid to transmit new forms of energy; expanding broadband services; and providing funding for the computerization of health records—or Health Information Technology—an idea that had been around for many years but had foundered on questions of how to make the computers compatible and to ensure the privacy of electronic records. (Daschle had wanted it in the bill as a way to save health care money in the long run.)
It was a stretch to claim that all of the measures put in the bill would stimulate the economy. The problem of writing a coherent stimulus package is that the various people involved have their own priorities, and there are few certainties as to what will actually work. Among Democratic economists and politicians, it’s generally agreed that giving money to the poor and the near poor—through food stamps and extended unemployment compensation—is more likely to result in spending, since these people have real needs to spend on. There’s also agreement that aid to the states would alleviate layoffs and help them pay their Medicaid bills.
Beyond that, there are numerous opinions on what will most effectively—which is not the same as most quickly—stimulate the economy. The Democrats increased money for college scholarships (Pell Grants), on the grounds that these would enable America to be more competitive internationally; but it was hard to argue that they’d have an immediate stimulative effect.
Economists have debated for years over the extent to which infrastructure projects stimulate the economy, partly because such projects can take many months to get underway, partly because of government regulations. But the country badly needs to improve bridges, roads, and dams, and eventually there are solid objects to show for this investment. While their stimulative effect may be spread out—as the projects take time to complete—it’s also deemed important to prevent an “air pocket” at the end of two years, when people are out of work again. After some internal deliberation, the administration decided to put into the bill its middle-class tax cut—in the form of rebates rather than changes in the tax brackets—that Obama had promised in the campaign. Those workers who do not earn enough to pay taxes would receive payments. Because the 2008 rebates were mostly saved rather than spent, the administration decided that this time the money will be doled out with each paycheck—on the theory that people are more likely to feel that they have more income and begin to spend it. That’s just a guess.
By mocking some provisions of the stimulus bill, the Republicans sought to undermine public support for the whole thing. With the help of cable television —with its preference for controversy and its hours to fill—they had some success. And even after Obama asked that some of the more politically vulnerable parts of the bill, such as expanding a family planning provision —which Boehner happily pounced on as a program to distribute condoms—be eliminated, Republicans continued to make fun of it. The same held true of programs to prevent sexually transmitted diseases and to get people to stop smoking. But the Republicans also succeeded in making a joke of a $200 million proposal to clean up the once- glorious National Mall—the foundations of the Lincoln and Jefferson memorials are crumbling; the reflecting pools are dirty; grass has turned to mud—by saying it was simply to lay down sod. Thus, they managed to get a perfectly worthwhile, in fact important, job-producing project dropped. (According to press reports, which Gibbs declined to deny, Emanuel encouraged third parties, including a conservative Democratic House member, to criticize the bill and Pelosi.)
After a while, Obama and his aides had enough of the Republicans’ attacks putting the bill’s supporters on the defensive, and so he changed course and struck back. (This was not dissimilar from a pattern during the campaign.) In an appearance before the House Democrats in Williamsburg, on February 5, Obama looked more relaxed and happy than he had since he entered the Oval Office. He reverted to his own preferred mode of attack: mockery. He didn’t get personal. To the Republicans’ repeated charges that the bill wasn’t a stimulus bill but a “spending bill,” he retorted, chuckling, “What do you think a stimulus is? That’s the whole point.”
Most Democrats agree with liberal economists such as Paul Krugman and Robert Reich that the $787 billion stimulus bill that emerged from Congress isn’t large enough—though it is only one part of the administration’s plans to try to restore the economy, the others being to get banks lending and to alleviate the housing crisis. The issue is whether, in the world in which Obama had to function, he could have done a great deal better. Last year’s expensive efforts to stimulate the economy—the $600 one-shot rebate plan in February 2008 and half of the $700 billion bailout plan for financial institutions approved in early October—were widely seen as failures, so much of the public was leery of new, big, expensive plans.
A prominent House Democrat told me that the decision, reached before Obama was sworn in, that the stimulus bill should be limited to $825 billion “was made from a political perspective, not for economic reasons.” He said, “I think the economic argument for going over $1 trillion is pretty good, but we feared that $1 trillion would produce sticker shock. We feared it would frighten off the Blue Dogs [conservative Democrats] and that Republicans would attack it.” It was assumed that the number would rise as the stimulus bill went through Congress, since that’s what normally happens with spending bills. Of course the Republicans attacked the lower number anyway.
And even then the Democrats’ majorities weren’t sufficient to give Obama all that he wanted. The stubborn fact remained that the Senate rules require sixty votes to pass anything of importance (to ward off a filibuster, or even the threat of one), and, with the Minnesota Senate race still unsettled, the Senate Democrats numbered fifty-eight. (And that counted on the ailing Edward Kennedy’s arriving to vote, as he valiantly did on the stimulus bill.) So this gave the upper hand to the three moderate Republican senators willing to break with their party—Maine’s Susan Collins and Olympia Snowe, and Pennsylvania’s Arlen Specter.
A larger number of bipartisan moderates—about nineteen of them came and went—cut $100 billion from the Senate bill, and the Senate adopted their revision because they had the leverage. In the end, the three critical Republicans were in a position to dictate the terms of the final bill. They did so—in round-the-clock meetings with the Senate leaders and with Emanuel deeply engaged—cutting aid to the states by half, and eliminating a new federal program for school construction. (A compromise was later reached on these issues.) Specter insisted that the final bill go no higher than $789 billion (later adjusted to $787 billion), even as he demanded $6.5 million more for cancer research (Specter has cancer). Thus, most unusually, the final amount was less than that voted for in either the Senate or the House (who normally compromise their differences in a final bill). Obama got about as much money for the stimulus bill as the political traffic would bear.
Because of the speed with which the sprawling 1,071-page bill was passed, new discoveries of what’s in it will be made for some time. Already it’s clear that it establishes strict caps—beyond what the White House wanted—on executive pay and other expenditures by banks that accept federal help. The Democrats used the opportunity to loosen the work requirements of the welfare overhaul passed during Bill Clinton’s presidency. The bill includes a worrisome plan to have a council on “comparative effectiveness,” to determine the most effective way to treat specific medical conditions. This was no way to legislate. Also, though the White House bragged that there were no earmarks in the bill, numerous provisions funding facilities that can only be built in one place (for example, $1 billion for an experimental “clean coal” plant in Illinois, or a National Computer Center in Maryland) were the moral equivalent of earmarks. In the hope of warding off embarrassing projects, Obama warned the nation’s mayors against using the money for “wasteful” spending.
A question arising from the stimulus bill episode is whether, in perpetuating the idea that he could win considerable bipartisan support for it, Obama was naive, or engaged in wishful thinking—or both. Aides simply miscalculated: they thought that Republicans wouldn’t dare vote against a stimulus bill in the midst of a recession that was bordering on a depression. But they had surprisingly poor intelligence, and didn’t realize that though the bill did contain some tax cuts, it was essentially a Democratic bill that went against the Republicans’ deeply held beliefs. One error Obama and his aides made was to try to win Republican backing by at the outset putting in the bill a tax break for corporations, without checking with the Republicans to see if that would win their support. Obama later made clear that he had learned his lesson from this.
But Obama was also setting up the Republicans: if they opposed him after he had so visibly gone to great lengths to meet and talk with them, they would look bad. He got what Washington terms “the optics” right. Before the election one of Obama’s advisers told me that the new president would be extremely deferential to the Republicans—and his cabinet members were ordered to do likewise —but if that didn’t work Obama would just go ahead and fight for his bills.
A highly troubling result of the fight over the stimulus bill is that it could make getting another one—which might well be needed—through Congress extremely difficult. To show fiscal prudence, while the stimulus bill was being considered, Obama announced he’d hold a “fiscal responsibility summit” and would take on the problem of entitlements. (Later, he proposed to cut the budget deficit in half in four years, in part by winding down the war in Iraq and in part by allowing Bush’s tax cuts for the wealthy to expire in 2011. None of this will be easy.) His address on February 24 mixed a stern reckoning of the failures of responsibility that had led the country to “difficult and uncertain times” with a call “to act boldly and wisely.” His agenda included a program of caps on carbon pollution and more investment in alternative sources of energy; health care reform (but not universal coverage); a call for at least one year of higher education for everyone; and rewards for teacher performance (highly controversial in his own party).
In a clever move, he endorsed a bill sponsored by Democrat Edward Kennedy and Republican Orrin Hatch that offers college tuition in exchange for national service. He talked tough about keeping the country safe from terrorism and offered “a new era of engagement.” Obama made it clear he understood people’s anger at some of the institutions, such as the banks, that got the country in trouble—“I get it”—but said, “We cannot afford to govern from the politics of anger.” Once again, he showed a sure touch, and such is his popularity that congressional Republicans have avoided attacking him personally. So Obama has begun to bring some “civility” to Washington after all.
The administration’s anxiousness to reassure the country that it would take additional steps to help the economy recover—to induce confidence and get people spending again—is one explanation of why Treasury Secretary Geithner, with great fanfare, rushed out a plan for bailing out the banks and generally restoring the financial sector before it was ready. According to a report in The Washington Post, Geithner changed his plan at the last minute, as he was still struggling with some of the same issues that bedeviled the first part of the bailout: what to do with the “toxic assets” still held by many financial institutions, and how to avoid appearing to be rewarding the miscreants who had helped bring about this crisis.
But the vagueness was in part deliberate: in the midst of the fight over the stimulus bill, the administration didn’t want to ask Congress for more money beyond the $350 billion still to be expended from the bailout fund, and it wasn’t ready to say what it would do with possibly insolvent banks—on the grounds that the public wasn’t ready to hear about nationalizing them, even though a limited amount of that began during the Bush presidency. Yet through the haze one could see the outlines of an ambitious public–private plan, costing up to $2 trillion, to buy up “toxic assets” and to inject more capital (from the Federal Reserve) into banks to bolster lending.
A housing plan was announced on February 18. It would use $75 billion of the remaining funds from last fall’s bailout and allow judges to adjust mortgages downward for those who are in danger of foreclosure. It would also inject $200 billion into Fannie Mae and Freddy Mac to increase the credit available for mortgages and give more guarantees against losses. Exactly who would be eligible for this help hadn’t been worked out yet. Inevitably, this plan smacked against growing populist sentiment gripping the country, with many complaining that people who made bad deals shouldn’t be bailed out. But as in the case of Wall Street and the banks, that argument comes too late.
The White House’s early stumbles won’t matter as long as they don’t become a pattern. Early impressions can fade, and Obama has achieved a great deal in a short period of time. He will continue a war of civility on the Republicans—who underestimate him at their peril. On a flight back to his home in Chicago for the Presidents’ Day weekend he told a group of columnists, “I am an eternal optimist and—that doesn’t mean I’m a sap.” But one of the conclusions that he and his aides reached after the early, bumpy days was that he should go out on the road more. This is a typical reaction on the part of a president’s aides: show him relating to “the people,” get outside “the Beltway chatter.” Presidents need to maintain popular support in order to get things done, and they draw sustenance from the cheering crowds; it’s much more enjoyable than governing.
But the still-new President has a staggering number of challenges before him —an unusually, if not unprecedentedly high number of very difficult decisions to make on domestic and foreign policy. Yet the President was traveling for most of his third and fourth full weeks in office. A little more management may be in order. The recent increased amount of presidential travel—to Indiana, Florida, Arizona, and Colorado—may have been another indication that Obama was not particularly happy in the White House, and that 2012 election politics were already on his and his aides’ minds. John Dickerson, of Slate, said on Washington Week in Review on February 13 that the President’s aides had concluded that it hadn’t been helpful for Obama to be seen participating in the give-and-take of Washington, that “that’s not what he was elected to do.” Yes it is.
—February 25, 2009
A Stimulus for Musical Colleges? May 28, 2009