Source: The Same Old Deal
Claremont Review of Books
April 04, 2013
In a 2006 essay for the Washington Monthly, “Why Conservatives Can’t Govern,” political scientist Alan Wolfe ascribed the setbacks of conservative governance under George W. Bush to right-wingers’ aversion to governance. Conservatives, that is, cannot resolve the tensions inherent in “managing government agencies whose missions—indeed, whose very existence—they believe to be illegitimate.” They fail when in power due to a “learned incompetence,” born of their belief that government, especially the federal government, has no business undertaking many of the tasks it now discharges.
This theory of the case, resting on motive, has an obvious corollary. If conservatives govern badly because they stand outside the borders of modern government yelling Shrink, liberals should govern brilliantly, since their raison d’être is to vindicate the activist state’s right, duty, and capacity to handle all the responsibilities entrusted to it over the past century, and then to assign it still more. In reality, Wolfe allows, liberalism “left unchecked, tends towards wasteful bureaucracy.”
Michael Grunwald makes the same point in The New New Deal by writing that Barack Obama was elected president at a time “when government wasn’t supposed to be able to run a one-car funeral.” Grunwald’s thesis is that the American Recovery and Reinvestment Act of 2009—widely known and derided as “the stimulus”—made dramatic yet unheralded strides in dispelling myths about governmental incompetence, while improving the government’s performance in many areas where it really was deficient. Moreover, the Recovery Act succeeded in its explicit, urgent purpose: preventing a second Great Depression. Grunwald, a reporter for Time magazine, admits that “there’s no way to run a double-blind study of an alternative U.S. economy,” but contends, “If there’s no smoking gun to prove the stimulus helped stop the free-fall, the ballistics certainly match.”
These governmental and economic triumphs must be balanced against the Obama Administration’s inexplicable political shortcoming: the inability—or refusal—to defend the Recovery Act persistently and persuasively. The “Republican campaign to brand the stimulus as a big-government failure” was “an overwhelming success,” writes Grunwald. Barack Obama was supposed to be a brilliant orator, “a words guy,” but Grunwald doesn’t take issue with dismayed Democrats’ belief that Obama did “a horrible job selling the stimulus,” thus necessitating a book about the hidden change the president wrought.
* * *
In the author’s telling, however, even this failure attests to the moral gulf separating Obama from his scuzzy antagonists. “There was an assumption that in a time of national emergency you could get bipartisan support,” Obama’s political advisor David Axelrod told Grunwald about the administration’s expectation, soon after the 2009 inauguration, that as many as half the Republican senators would end up voting for the stimulus bill. (Ultimately just three did, one of whom, the late Arlen Specter, promptly quit the GOP to complete his term as a Democrat.) The administration was immediately disabused of the earnest belief that its good-faith efforts to rescue the economy would be reciprocated, as Republicans started and never really stopped a dishonest, cynical, and relentless effort to “destroy” Obama by using the stimulus to portray him “as a spread-the-wealth big-government radical.” Former Democratic congressman Tom Perriello, defeated in the 2010 Tea Party election, blame-praises his party for giving voters and Republican leaders too much credit, never anticipating the former’s susceptibility to the latter’s mendacity. He laments to Grunwald:
We think we can just tell people something once, and the facts will tell the story. They understand that you have to repeat your message over and over again: socialism, socialism, socialism. Factually, it’s ridiculous. But it works.
It even works on journalists. During the time he was filing appreciative stories about the Recovery Act for Time, Grunwald felt like he was covering “an alternative universe stimulus,” since the subject somehow turned other reporters who covered it “into runaway prosecutors, desperate to pin something on their target.” But there Grunwald stands; he can do no other. After all, “the facts were the facts.”
* * *
They still are. Grunwald sometimes conveys and interprets facts, however, in ways that leave alert readers uncertain they can count on him for the truth, the whole truth, and nothing but the truth.
* * *
Grunwald can shade things even while scolding others for being empirically adrift. He is capable of writing, “The rising fury about government is curiously disconnected from the facts,” before stating in the same paragraph, “The federal deficit is high, but it hasn’t increased under Obama.” The chart below, from the Office of Management and Budget historical tables that accompanied President Obama’s 2013 budget, provides the facts about our non-increasing deficits. (Dollar amounts are in billions; thus, $2,472 = $2.472 trillion. “Federal debt” excludes the amount the federal government owes to its own accounts, such as the Social Security Trust Fund.)
Only if we interpret “hasn’t increased under Obama” to mean “hasn’t increased since the start of fiscal year 2010, and in comparison with 2009 and no previous year” is Grunwald’s characterization accurate. Ordinarily, newly elected presidents do indeed turn their attention to the budget for the fiscal year beginning after their inauguration, which would have been FY 2010 for Obama, beginning on October 1, 2009. But the subject of The New New Deal, the Recovery Act, is a special case. Signed into law on February 17, 2009, it increased spending and cut taxes immediately to jump-start the flagging economy. As a result, according to the Congressional Budget Office, the $787 billion stimulus increased the deficit for FY 2009, which closed on September 30, 2009, by some $200 billion.
The federal deficit, then, did increase, both in nominal dollars and relative to federal spending and Gross Domestic Product, after Obama took office and because of his policies, even if we use the portion of FY 2009 unaffected by the Recovery Act’s spending increases and tax cuts as our basis for comparison. If we broaden the comparison, contrasting Bush’s entire second term to Obama’s first, the contention that the deficit hasn’t increased under the incumbent becomes even more dubious, as does the argument that Obama’s deficits are largely the result of Bush’s wars and tax cuts, both of which were ongoing when federal debt was less than 37% of GDP in 2005-07. That old normal of deficits equal to 3% or less of GDP, and federal debt equal to 40% or less, has been replaced by a new and very different normal since 2009. And this new, much higher plateau is the baseline from which America will confront the grave fiscal challenge of enrolling the enormous baby boom generation in Social Security and Medicare over the coming two decades. Grunwald clearly believes that a president elected and inaugurated in the midst of an economic free-fall had no option but massive, countercyclical deficit spending, the Keynesian “textbook response to a sharp downturn.” It’s incoherent, however, to say that Obama did well to increase deficits he did not increase.
Federal outlays, receipts, deficits and debt, 2005-2012.
|Deficit, % of Outlays||12.9%||9.3%||5.9%||15.4%||40.2%||37.4%||36.1%||35.0%|
|Deficit, % of GDP||2.6%||1.9%||1.2%||3.2%||10.1%||9.0%||8.7%||8.5%|
|Federal Debt, % of GDP||36.9%||36.6%||36.3%||40.5%||54.1%||62.8%||67.7%||74.2%|
* * *
Whether Grunwald is right to treat the Keynesian protocol as a settled question, “about as controversial in the economics profession as antibiotics in the medical profession,” is a separate matter. One would never suspect from The New New Deal that economists “are still deeply divided on the validity and utility of the basic Keynesian paradigm,” as N. Gregory Mankiw, Harvard economist and chairman of the Council of Economic Advisors under George W. Bush, wrote in National Affairs in 2010. For one thing, the idea of the economy as a vast but simple machine that will run better if the government pours more fuel into it ignores the psychology of expectations. Government countercyclical measures help form people’s ideas about the future, the basis on which they make decisions about spending, saving, and investing in the present. If Keynesian deficits leave people anticipating higher inflation or interest rates, those fears could affect their economic behavior, mitigating the intended stimulative effect.
Moreover, there’s the question of “multiplier effects,” the new economic activity an additional dollar of government spending generates, compared to the amount catalyzed by the additional dollar injected into the economy through a tax reduction. In the early congressional fencing over the Recovery Act, Nancy Pelosi urged John Boehner “to work with Democrats on the stimulus, making an impassioned case that spending programs had higher Keynesian multipliers than tax cuts,” Grunwald reports. Sadly but predictably, “Boehner didn’t believe in Keynesian theories any more than he believed in global warming or the tooth fairy.”
Perhaps the tax-cut multiplier is considerably higher than Pelosi assumed, however. One economist who raised that possibility, according to Mankiw, was Christina Romer, in a paper co-authored months before she became President Obama’s first chairman of the Council of Economic Advisors. Other economists, in Mankiw’s words, have concluded that “tax cuts are about four times as potent as increases in government spending” for the purpose of stimulating the economy. Still another study of every stimulus plan enacted from 1970 to 2007 by the 30 nations belonging to the Organisation for Economic Co-operation and Development found better results from plans that “cut business and income taxes, while those that evidently did not succeed had increased government spending and transfer payments.” (The final allocation of the Recovery Act’s $787 billion was 37% in tax cuts and 63% in additional spending: 45% by the federal government directly, and 18% spent by the states after funds were transferred to them from Washington. This mixture,The New New Deal shows, resulted from the correlation of political forces shaping the stimulus bill’s passage rather than any synthesis of economic prescriptions.) Grunwald has no obligation to take one side or the other in the economists’ taxes-versus-spending multiplier debate, but puts his thumb on the scale by shielding readers from the complicating awareness that there even was such a debate.
* * *
Another aspect of the politics of deficit spending shows Grunwald being, again, a better cheerleader than a sportswriter. The overarching theme of The New New Deal is that the Recovery Act was Barack Obama’s called shot: he raised audacious hopes and then fulfilled them. When Obama announced his improbable presidential campaign in February 2007, barely two years after being sworn in as a U.S. senator, his speech identified the four challenges facing America he was determined to address if he became president: First, “dependence on oil that threatens our future.” Second, a “health care crisis.” Third, “schools where too many children aren’t learning.” And finally, “families struggling paycheck to paycheck despite working as hard as they can.” Two years later, by signing the Recovery Act after four weeks as president, Obama “made tremendous progress on his agenda for energy, health care, education, and the economy,” according to Grunwald. Clearly, this is a rare politician whose words deserve careful attention.
Except, apparently, when he’s talking about fiscal policy. Grunwald notes that Obama “hosted a ‘fiscal responsibility summit’ a week after signing the stimulus, and vowed to slice the deficit in half by the end of his first term.” In his 2010 State of the Union address, the president proposed a three-year discretionary spending freeze that would start in 2011, and announced the formation of a deficit commission, which became the exercise in futility directed by Erskine Bowles and Alan Simpson. On the basis of such gestures Grunwald reports favorably on the president’s interior life. Deficit reduction suited Obama’s “self-image as a centrist, a maker of hard choices, a cleaner of Bush-era messes; he joked about his ‘inner Blue Dog.'” A White House economist tells Grunwald, “[I]n his heart, I think the president was a deficit hawk.”
Whatever may be in President Obama’s heart, it would be instructive to know whether anything in his actions supports the idea he is fiscally prudent rather than cavalier. In 2009 the president directed his Cabinet to go through the budget to identify $100 million in savings. That Obama howler is the exception that flunks Grunwald’s otherwise endlessly abeyant laugh test:
Huh? After spending $787 billion-with-a-b on a stimulus, then unveiling a $3.6 trillion-with-a-t budget plan, Obama was proposing $100 million-with-an-m in rollbacks? That was supposed to restore confidence in government?
These mocking rhetorical questions lead Grunwald to conclude…well, nothing. He doesn’t take the president’s fiscal policy pronouncements seriously, and doesn’t mind that Obama himself fails to take fiscal policy seriously. After passing the Recovery Act, Grunwald reports, Obama’s team believed “the ideal approach would be more short-term stimulus, along with a credible commitment to medium-term deficit reduction—gas now, brake later.” The evidence accumulated by the beginning of his fifth year in office, however, argues that Obama’s medium-term commitment is really a very long-term one. That “later” when he wants to take his foot off the gas and hit the brakes keeps getting later, and “later” for a president now in his second term-meaning he will be in office for less time than he’s already been in office—can’t get much later without becoming “never.”
* * *
Grunwald makes clear that Americans shouldn’t obsess over solvency, or obsess over their president’s fecklessness about it. What matters is that the “gas now” part of the president’s approach, the one his actions show he truly does care about, is effecting historic improvements. Grunwald applauds Obama for not letting the 2009 economic crisis go to waste. Rather, by passing the Recovery Act, “a Trojan horse for Change We Can Believe In,” the new president took his “one shot to spend boatloads of money” on his energy, health care, education, and shared prosperity agenda.
The author contends that Obama’s bet has paid off in two crucial ways: big improvements in the four policy areas that both matter most to the president and are crucial to America’s future; and re-vindicating the old New Deal conviction, besieged since Lyndon Johnson’s presidency collapsed, that “government can be a force for positive change, reining in the excesses of the free market, making strategic investments to help the nation and its people compete.” The Recovery Act showed that not only can government run a one-car funeral but “fund over 100,000 projects through 275 separate programs at 28 federal agencies,” and do so “on schedule and…under budget,” with “unprecedented transparency and scrutiny,” relying in many cases on competitive grants programs that “really did seem to promote a culture of responsibility, forcing bureaucrats to use judgment instead of just checking boxes.”
* * *
Journalism, the saying goes, is the first draft of history, which means journalists who write those drafts should avoid declarations about the ultimate meaning of developments that are still unfolding. If facts are facts, then they are nottrends, possibilities, expectations, or hopes. Grunwald deals with this challenge, not by prudently forgoing breathless assessments, but by putting verbs in the Cuisinart, then pouring out a mélange of transpired, ongoing, and prospective occurrences, homogenized and equated. Here’s a sampler, with emphasis added:
Very little history has passed since The New New Deal was published in August 2012, but what there is of it has already been unkind to Grunwald’s credulous accounts of stimulus triumphs. Nothing elicits greater enthusiasm from him than the Recovery Act’s programs to introduce more and better information technology into the health care system. The “stimulus-funded revolution in health IT is hard to miss” he writes. It’s “the reason our health care system no longer manages patient data with the same technologies Hippocrates used,” but is instead “developing new ways to improve care and coordination,” which will “change medical care in countless ways no one has thought of yet.”
As the New York Times reported in January, however, the Rand Corporation has already concluded it was far too optimistic in a 2005 report that anticipated an $81 billion reduction in the nation’s health care spending through greater use of information technology. In fact, according to the Times, “evidence of significant savings is scant, and there is increasing concern that electronic records have actually added to costs by making it easier to bill more for some services.” The article notes a “chorus of concern about the cost of the new systems and the haste with which they have been adopted.” That haste, in turn, appears to have at least some connection to the carrots and sticks the Obama Administration employed to get the technology adopted before the bugs had been worked out, before the end users had figured out how to integrate and operate all the new hardware and software—and before the 2012 election. Obama “wanted his White House to behave more like the Aspen Institute than Tammany Hall,” Grunwald declares, but the Aspen Institute never has to worry about being voted out of office.
* * *
Grunwald is equally unpersuasive when portraying the stimulus as a quantum leap toward effective and efficient government. One of his book’s heroes is Claire Broido Johnson, an investment banker hired by Energy Secretary Steven Chu to run the department’s Office of Weatherization and Intergovernmental Programs. The Recovery Act allocated $5 billion to a three-year program to weatherize 600,000 low-income families’ homes through such prosaic enhancements as better windows, insulation, furnaces, and air conditioners. The effort was snake-bit from the start. Johnson took over the weatherization office-known informally as the “Turkey Farm” for the number of subpar civil servants sent there over the years when no other agency would take them—at a time when it had finished the program’s first year of operation by weatherizing not 200,000 but 30,252 homes. Johnson came into the job “like a hurricane hitting the building,” setting goals for every agency receiving money from the program, holding weekly calls to monitor progress, and creating a call center where staffers helped local officials navigate the elaborate procedures for getting and spending stimulus dollars.
It worked. “The program ultimately surpassed its goal of 600,000 homes three months early,” Grunwald reports. The success story convinced Mark Schmitt, former editor of the American Prospect, that with “one of the two best books ever written about government,” Grunwald has shown how the Obama Administration made “government more responsive, imaginative, tough on failure but supportive of promising ideas.”
But even one of Grunwald’s most inspiring stories has an equivocal moral. Predictably, Johnson “was not hailed at the Turkey Farm.”
Early on, when she asked all of the division’s staffers what they were accountable for, two responded: “You can’t make me accountable for anything.” One employee buried his nose in a newspaper whenever she approached. When she chastised another lifer for napping on the job, he filed a union grievance.
Increasingly frustrated, Johnson launched a secret “Operation Cupcake” to try to fire the worst laggards, but she never stood a chance against the cupcakes. They knew that political appointees come and go, but civil servants are forever. They call themselves “WeBe’s,” as in “We be here, you be gone.”
Eventually, those enemies got their boss in trouble with Energy’s inspector general when they reported that she circumvented cumbersome hiring procedures preventing the appointment of an urgently needed deputy. The investigation “ended Johnson’s career at the department,” and left her vowing never to work for the federal government again.
So, yes, 600,000 homes got weatherized in three years after it looked like it might take 20. But the official who made it happen be gone and is never coming back. Meanwhile, the turkeys who were making it not happen be there and are never going away. Johnson also left behind and intact the maze of regulations so conducive to getting nothing done, slowly and expensively, and so lethal to responsive, imaginative, and efficacious government. The extent to which renewed confidence in the activist state is justified by the attainments of prodigious high-achievers like Johnson, who overcome government dysfunction before being overcome by it, is highly debatable.
* * *
Even as Grunwald presumes to know more than he can about the future, his book reveals he knows less than he should about the past. It makes sense that the new president promising hope and change would encourage the hope that government’s performance can change for the better. Depending on how the various Obama initiatives work out, we might someday look back on 2009 as the turning point toward reestablishing the proposition that government really can solve pressing national problems. Faith in that outcome would be easier to summon, however, if the sweeping Obama reforms sounded less similar to sweeping reforms by previous Democratic administrations to make sure Big Government is also Good Government. In his 1993 speech announcing the creation of the National Partnership for Reinventing Government, President Clinton said:
Our goal is to make the entire federal government less expensive and more efficient, and to change the culture of our national bureaucracy away from complacency and entitlement toward initiative and empowerment. We intend to redesign, to reinvent, to reinvigorate the entire national government.
Set the dials on the time-travel machine to 1977, and the new Carter Administration is promising to make government as good and competent as the American people through innovations like zero-based budgeting and “sunset” provisions that force programs and agencies to justify their continued existence or go out of business by default. Go back one more decade and the bold, self-assured pioneers of the New Frontier and Great Society are dazzling gullible journalists with the sort of precise metrics that are catnip for Grunwald, all of them showing dramatic improvements aborning. Their confident predictions about the exact number of months needed, at the going rates of progress, to end poverty in America and war in Vietnam revealed, of course, that impatient, visionary change agents like Sargent Shriver and Robert McNamara were self-deluded fools and frauds. The New New Deal never asks why, if any of the past half-century’s heralded transformations in American governance were even quasi-transformative, successive Democratic presidents keep finding it necessary to start their administrations by pushing what sounds like the very same boulder up what sounds like the very same hill. Because Grunwald either doesn’t know or care about this discouraging history, he never addresses the question of why we should expect Obama to triumph over the governmental dysfunction and self-dealing that defeated Johnson, Carter, and Clinton.
* * *
This analytical lapse doesn’t just mar a book but raises an important political question. If the Americans committed to building and defending the activist state continually find it necessary but impossible to whip it into shape, they may be confronting a problem too fundamental to be solved by a can-do spirit and bold administrative reforms. Perhaps what the activist state needs are not more bright ideas and energetic managers but more caution about compiling government’s to-do list, thereby sparing it from tackling assignments that it will end up performing badly, not for lack of better flow charts but because they are missions that, realistically, cannot be done well.
Such restraint was the defining quality of the constitutional order Progressivism and the New Deal challenged and defeated. In it, federal powers were “few and defined” according to The Federalist, while those retained by the states were “numerous and indefinite,” encompassing “all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.” That division of labor, and the people’s attachment to the Constitution, confined the federal government within what the late James Q. Wilson called “legitimacy barriers.”
Beginning around the time of the Constitution’s centenary, its critics set to work to establish the proposition that the legitimacy barriers of 1787 were no longer appropriate for a nation grown much larger and more complex. Their critique could have taken the form of arguing we should relocate the barriers so they were more capacious, authorizing the federal government to do some things formerly impermissible while continuing to proscribe others. Instead, it has amounted to a long, successful campaign to demolish legitimacy barriers as such in favor of an electorally accountable but otherwise plenary government.
The advocates of this new constitutional order are required to defend the “vision” and moral sensibility of the presidents who secure office by promising to elaborate this new order, since all other constraints on the government’s actions are impediments to progress. Thus, Franklin Roosevelt was a great leader, and the unsettling call in his first inaugural address for Congress to either give him the measures he wanted, or relinquish the legislative power vested in it by the Constitution to grant the president the equivalent of martial law authority, has been forgiven by being forgotten. The people, FDR declared, have “made me the present instrument of their wishes” for “discipline and direction under leadership.” And now Barack Obama is a great leader, despite or perhaps because of an interpretation of the separation of powers that allows the president rather than the Senate to decide when the Senate is in recess; or a protocol for drone strikes, including ones that kill American citizens, resting entirely on the incumbent’s judgment and moral gyroscope.
* * *
It may seem incongruous that the author of a book that reads like a 450-page press release from the Democratic National Committee would take umbrage at being considered a liberal. Reacting on the Time website to a critical review by David Frum of the Daily Beast, Grunwald stipulated his “uneasiness about government meddling in the economy.” He had previously attempted to establish his ideological heterodoxy by opposing government subsidies for the Public Broadcasting System, on the grounds that “those of us who believe the federal government can be a force for good ought to recognize that it gets a bad name butting into areas where it’s not needed.”
In the age of Obama, however, such qualms and fine-print heresies do not qualify but amplify a politically engaged American’s liberalism, an orientation which no longer understands itself as any kind of belief system. In its adherents’ eyes it is, instead, neither more nor less than sheer good sense and empiricism. According to The New New Deal‘s summary ofThe Audacity of Hope (2006), Barack Obama “makes the case for a politics rooted in common ground and common decency, with pragmatism as its lodestar: ‘We should be guided by what works.'” No wonder that Grunwald drew, for Timereaders, a simple lesson from President Obama’s reelection: “DO STUFF!” That is, “When you finally get the keys to the government car, drive it.”
It follows that when liberalism understands itself to have laid claim to all the decency and sense to be had on any and every political topic, what’s left over for conservatives to believe in can only be wicked and stupid. In Audacity Obama “dropped his measured tone,” according to The New New Deal‘s summary, to “shred the modern GOP as a party of zealotry and magical thinking, controlled by K Street and its right-wing base, unswervingly opposed to taxes, regulation, and basic arithmetic.” Or, to use Michelle Obama’s words before a campaign audience in 2008, conservatism amounts to a political force that has made, and is made for, an America that is “guided by fear” and “just downright mean.”
* * *
Accordingly, Grunwald’s frequent attacks on Obama’s unreasonable, obstructionist Republican opponents make clear that the only way to be a reasonable, public-spirited Republican is to be…a Democrat. “One of the enduring criticisms of the stimulus has been that Obama exploited an emergency to do things he wanted to do anyway,” The New New Dealcorrectly observes. And? “It’s true. He thought they were good things to do…. Did his critics expect him to fill out the $800 billion with things he didn’t want to do?” Turn the question around, though. Do Obama’s supporters believe that if Republicans didn’t have anything nice to say about a stimulus bill that was, in the view of one GOP congressman Grunwald quotes, “larded up with every Democratic policy wish list since they lost the House in 1994,” they shouldn’t have said anything at all? It’s one thing for Grunwald to praise the Recovery Act as a Trojan horse for Obama’s entire domestic agenda, but another for him to berate the citizens of Troy for their inhospitality after the soldiers emerged from it.
As The New New Deal sees it, Obama’s “vision of reconstructed liberalism” both “embraced freewheeling capitalism” and called on government to “finance forward-leaning public ventures.” It’s not clear that either Grunwald or Obama appreciates the likelihood and severity of the tensions inherent in the simultaneous pursuit of both imperatives. Grunwald insists that Solyndra, the solar panel manufacturer that declared bankruptcy after receiving a $535 million loan from the Energy Department, is a non-story, an outlier, a “classic Washington pseudo-scandal.” In June 2011 Grunwald reported forTime that no, Solyndra was not on the verge of a “humiliating collapse,” since its “cutting-edge new factory has driven down costs” and a new CEO has “doubled his sales and marketing staff.” Ten weeks later, after the company filed for bankruptcy, Grunwald wrote that the reports of “Solyndra’s death weren’t so exaggerated after all.” His withering self-reproach? “I should have been more skeptical.”
Readers of The New New Deal will lament with every page the author’s failure to heed that sensible advice.
|Previous Article: Against Swedenization||Next Article: The Higher Education Hustle|