The New New Deal by Michael Grunwald, Simon & Schuster, 518 pages, $28
"The question is whether, while we're still digging ourselves out of this hole that we found ourselves in, the facts will win the day," President Obama said in an August 30 interview with Time magazine.
Actually, there are several questions: Is it possible to get yourself out of the hole before you know what the facts are? Are you digging in the right direction to get out of this particular hole? And can a president who seems to spend so much time on a higher plane, where Terran gravity does not apply, even tell?
The answer to all of those questions is No. There are no data to support the idea that the president's policies have helped Americans rebuild or even preserve a portion of their wealth since the nearly 40 percent decline [pdf] in household net worth began in 2007. Most of the worst economic effects took place after Obama took office, and most of those after the ostensible end of the recession. These include but are not limited to another decline in personal savings rates; an acceleration of the long-term decline in the equity portion of real estate owned; a 7 percent drop in household income (that's just since the technical recovery began in June 2009); cumulative inflation of more than 10 percent during the longest period of sideways economic growth since at least the 1970s; a below-population-growth rate of private sector hiring that has been credibly tied to federal recovery spending; and most famously, an unemployment rate that has not gone below 8 percent since Obama's American Recovery and Reinvestment Act (ARRA) was signed in February 2009.
Michael Grunwald's grand subject is the ARRA stimulus. Because he seems to believe the only argument against ARRA is that high unemployment rate (which has been consistently higher than erstwhile Obama administration economic advisers Jared Bernstein and Christina Romer predicted it would be without the stimulus), he should have light work in mounting his counterargument.
Unfortunately, he tries to ride four or five horses with one behind, and his book goes on for nearly half a thousand frequently repetitive pages of text, all explicating a convoluted set of theories. While the impulse to go beyond soundbites and catchphrases is admirable in some circumstances, the book's essential premise (that the stimulus will be viewed as a success in the long term) is too simple and the arguments in support of that premise are too rambling. Even a Foreign Policy article in which Grunwald attempted to boil down his thesis ran on for 4,000 words.
Fear an author who brags about how much research he did, because you will end up reading 100 percent of that research. Sure enough, The New New Deal's dust jacket notes that Grunwald is working from "new documents and interviews with more than 400 sources on both sides of the aisle," and the book itself contains such stemwinders as a two-page narrative of future Council of Economic Advisers head Romer's election night dinner in 2008—she and Mr. Romer hosted Nobel laureate George Akerlof and future Federal Reserve vice chair Janet Yellen—along with the Romers' postprandial celebration of Obama's victory. Grunwald neglects to tell us what the two couples ate.
That "both sides of the aisle" is also telling. To Grunwald there are only two versions of the story: the airtight case for the stimulus and the Republicans' opposition to it. Only one of those sides is legitimate, but Grunwald is willing to canvas both parties for evidence that the Democrats answer to reason (logos) while Republicans grovel to fantasy (mythos). And yes, he actually types mythos and logos.
Grunwald happens on good points. Many people confuse the roughly $787 billion ARRA stimulus with the Troubled Assets Relief Program, the $700 bailout of both retail and investment banks that was passed by congressional Democrats and signed by President George W. Bush in 2008. Grunwald refers to members of congress who make this error, but does not name names. (The confusion is understandable, given that TARP money was expropriated for other ends, such as propping up the failed automotive manufacturing conglomerates; while ARRA is giving at least $75 billion to banks through its mortgage "rescue" packages.)
Grunwald argues believably that the Republican Party's decision to focus on regaining control of the House of Representatives and attempting the same with the Senate allowed Obama to pursue his legislative agenda with a remarkably high success rate. But what would the GOP have gained by endorsing even a compromised version of Obama's agenda? More importantly, what would the nation have gained? There is no compromise that would have made the 2010 Patient Protection and Affordable Care Act (ACA or Obamacare) anything but a monstrous birth. Republicans who voted for it lost their seats. So did Democrats who voted for it. Scott Brown got elected to the Senate by the only state that has directly experienced Obamacare (in the form of Mitt Romney's system of universal coverage with an individual mandate) in part because Massachusetts voters hoped to give the Republicans a strong enough minority to block Obamacare in reconciliation.
This kind of rotisserie league party wonkery is the one subject Grunwald really warms to. He seems to have no knowledge of economics beyond what figures in headlines, which is probably worse than knowing no economics at all. His universe of experts in this field begins and ends with First Baron John Maynard Keynes. (He does use the phrase "creative destruction" at one point.)
This makes following Grunwald's narrative a particular chore. At one point we're with Jared Bernstein (top economic adviser to Vice President Joseph Biden, who, I thank Grunwald for reminding me, is the nominal chief executive of ARRA stimulus disbursement) as Bernstein delivers another month's worth of bad news to the president. Grunwald foreshadows some good news ahead: "Bernstein didn't have the evidence to prove it yet when he ventured into that hostile briefing room, but the Recovery Act's medicine was already stabilizing the patient."
For an instant, I put my head up. What could that probative evidence be? Nothing but a second slight uptick in quarterly GDP growth, which allowed the National Bureau of Economic Research to declare the recession over in June 2009.