Tuesday, September 11, 2012

The long game of an economy built to last

Ezra Klein recently interviewed Michael Grunwald, author of The New New Deal - a book about the American Recovery and Reinvestment Act. Regular readers here know that I have been talking about Grunwald's contribution to this subject for quite a while now. But this interview helped me understand the link between President Obama's long game and this particular legislation.

First, some background. One of President Obama's themes has been the idea of "an economy built to last." When he says that, what I hear is that he understands that an awful lot was wrong with our economy even before the financial crisis hit in the fall of 2008. He usually talks about stagnant middle class wages and increasing costs - especially related to college tuition and health care.

I remember all of that happening - especially building up during the latter half of the Bush administration. You would hear analysts on networks like CNBC and Fox talking about how wonderful things were because the stock market was going up. But anyone actually living on "main street" knew that things were tough and getting tougher. The financial crisis of 2008 didn't happen in a vacuum...it was the culmination of all of that.

So what President Obama is saying is that in order to truly recover from that crisis - we need to reinvest in an economy built to last - not simply go back to the way things were. Hence...the American Recovery and Reinvestment Act.

One of the points Grunwald is making with this book is that we often overlook the "reinvestment" part. Klein actually articulated it best in the interview with a couple of his questions.
That gets to one of the central political problems the stimulus had, I think. It was called the Recovery and Reinvestment Act. The Reinvestment side was composed of long-term investments to jump-start tomorrow’s economy. But since it’s thought of entirely as a stimulus bill, those investments, which in another context would be huge accomplishments, are seen as a distraction from the central work of the law...

One problem for the Obama administration, in my view, is that the stimulus included five or six or arguably even 10 or 12 bills that, if passed on their own, would be major achievements that the administration would be bragging about today. A standalone, $29 billion bill to digitize the country’s medical records is a big deal. A $90 billion investment in jump-starting renewables is a big deal. But because it’s all grouped under “stimulus,” Republicans see those projects as distractions, and most liberals are more focused on the idea that it was too small. So there’s really been no political home for the law.
And here's how Grunwald describes it.
I think it was the purest distillation of what Obama meant by change we can believe in. If we’re going to spend $800 billion, let’s spend it on the things we promised we’d spent it on...

People really hadn’t paid that much attention to Obama’s policy agenda. They were interested in his race and Jeremiah Wright and his fight with Hillary, and to some degree, the agenda wasn’t that interesting — it wasn’t all that different from Hillary’s agenda. But it was this coherent agenda. Health care was too expensive, schools suck, we shouldn’t be boiling the planet, the tax code is screwing the middle class, our infrastructure is falling apart — Obama had made an economic case for all that. Health-care costs were destroying the economy, there were opportunities for millions of new jobs in green energy, unless we had an educated workforce we couldn’t compete in the 21st century economy, unless the middle class had money the economy wouldn’t work — and then, in the stimulus, he went ahead and did it. So I think it’s fair to complain he used the stimulus to keep all his campaign promises. But it’s a little unfair to be surprised about it.
So what were some of those reinvestments designed to build an economy that lasts?
The long-term reinvestment part is working. It spent $90 billion for clean energy when we were spending just a few billion a year. It’s doubled renewable energy. It’s started an electric battery industry from scratch. It jump-started the smart grid. It’s bringing our pen-and-paper medical system into the digital age...

By the end of 2008, that industry [wind farms] was dead in the water. The day after the stimulus passed, one of the major wind companies, which was pulling out of America entirely, turned around and announced a $6 billion investment in the United States.

Health IT is another example I love. That’s one of the few where even they would admit there was no pretense of stimulus. The money didn’t go out the door till 2011. But right now, according to the Bureau of Labor Statistics, health IT is America’s fastest growing industry.
Yep, all that sounds like something our President would do...play for the long game. And its paying off in slow incremental steps toward the future of a stronger economy built to last while tackling some of our biggest challenges.

It also might be important to mention that President Obama signed that bill 28 days after he was inaugurated and then went on to tackle health care reform - the other pillar in building an economy to last.

I am SO done with Republican complaints about his policies not working and the left's myopia about the stimulus not being big enough.  Yes, there is more work to do. But the American Recovery and Reinvestment Act will go down in history as one of the most powerful bills ever promoted by a President. And we have Michael Grunwald to thank for helping us all understand that.


  1. David Simon was on Real Time with Bill Maher and stated, "What we need is a political culture where somebody plants a fuckin’ olive tree, which doesn’t even give you an olive for seven years. That’s how you fix an economy…When that olive tree becomes an orchard."

    What Simon doesn't understand is the Republicans in 1980 did just that except it was a deregulated, deferred income grove designed to provide billions of olvies to the very, veyr rich while they told the 99% a few olives would trickel down to the rest of us.

    All we got were the pits.

  2. "You would hear analysts on networks like CNBC and Fox talking about how wonderful things were because the stock market was going up. But anyone actually living on "main street" knew that things were tough"

    As opposed to nowadays, when you're more likely to hear that specific argument from the President's reelection allies...