Stimulus

Americans Too Dumb to Vote, Says Time National Correspondent

A 500 page defense of the stimulus fails to make the case that Obama is just misunderstood.

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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 New New Deal

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. 

Christina Romer, or "Christy," as Grunwald calls her. (He also refers to Rahm Emanuel as "Rahm" throughout.)

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

President Obama signs The American Recovery and Reinvestment Act in February 2009.

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. 

Solyndra tubes another happy customer.

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. 

Leave aside that Grunwald never considers that those GDP numbers include government spending as GDP growth and would logically be inflated by massive spends such as ARRA. Given the three years of economic stagnation that followed, Grunwald here is ignoring the real story, arguably the most important news story of our time: The credit unwind never ended. As noted above, since the putative end of the recession, the suffering of Americans at the level of the street, the family, and the retail store has continued unabated, and over a greater time duration (another calculation Grunwald doesn't engage).

Have the Democrats sunk this low since the days when Bill Clinton felt our pain? A president who mocks the private sector as a hive of undertaxed God and gun nuts, and his prolix apologists in the mainstream media? 

Though he preposterously positions himself as a Beltway outsider (he worked in D.C. for The Washington Post and now writes for Time, but he moved to Florida at some point), Grunwald has no time for the people who actually vote for Republicans. The Tea Party is pathologized throughout, and Grunwald forms his picture of the GOP largely through the plaintive pleas of lukewarm RINOS who got taken out in the 2010 primaries by grassroots challengers. (Luckily for Grunwald there are plenty of those.) 

Not Michael Grunwald's complete source list.

This setup is I think designed to solve the narrative problem of the 2010 elections, which were a landslide for not just Republicans but a particular class of spending-averse, small-government Republicans. Grunwald could attempt to engage with that landslide, but why bother? Republicans are a "very narrow party of angry people" who engage in "groupthink" and have "said good riddance to the center." Dealing with Republicans is like "diplomacy with the Iranians." So their victories against Democrats must not be a true reflection of rational voter will. The people in the voting booths only feel like they're unemployed, overtaxed, overindebted, or all three. It's not possible that Grunwald's all-star sources (whose own grasp of Keynes' general theory is never to be assumed) have sold him a bag of shinola. 

No, it turns out "the voters had a skewed view of what Obama had done, which suggested a failure to communicate." 

Grunwald believes the overselling of stimulus "jobs" promises is at the root of that communications failure. (By the way, that theory—that we just don't understand how Obama has helped us—is one you've already heard a few times prior to this week's Democratic National Convention and will probably hear again over the next few days.) 

So what should they have been selling instead? In the book (I warned you it was a long one!), all the above is crudely stapled to an argument that the real value of the stimulus is in the "change" it will bring us. Some examples: 

bullet trains designed to connect Los Angeles to San Francisco in under three hours, broadband cables designed to bring rural towns into the wired world, electronic health records designed to drag medical bureaucracy out of the leeches era, smart dishwashers designed to run when electricity is cheapest, automated factories that will manufacture electric trucks in Indiana instead of China, the first U.S. testing facility for wind turbine blades as long as football fields…research into a new generations of "space taxis" that might replace NASA's shuttle someday.

Many of these game-changers will be incubated by the book's unlikely killer app: Secretary of Energy Steven Chu. According to Grunwald, the Energy Department's newly created ARPA-E, which takes only 0.05 of the Recovery Act's budget, is a "new Manhattan Project in a rounding error." And if all that doesn't convince you that Grunwald writes the kind of prose you'd expect to find in a Biden campaign mailer, note that all the usual economic clichés—"Armageddon," "catastrophe," "virtual lockdown," "last line of defense," and so on—are deployed throughout the book. 

There's chutzpah in writing with a straight face that the Recovery Act's green energy pork was the best thing about it. That portion of the book may remain unique. The rest is not really distinguishable from the messaging the president laid out in his interview with Time—a vague excuse about how things could have been worse. In this case, I think the president's preference not to discuss any topics that might begin with S and end with O-L-Y-N-D-R-A is the wiser choice. 

The New New Deal has already generated a few headlines thanks to its very first words, a dedication in which Grunwald refers to his wife as "my stimulus." When a New Republic writer had some fun with that line, Grunwald replied, "Wow. Some no-heart, no-humor dude @tnr attacks the DEDICATION of my book. Damn right Cristina's my stimulus. And FU."

At the risk of inviting more angry tweets, I'll engage Grunwald's very last words, when he closes his Note On Sources by saying, "I'm confident that this book is the truth. But again, I realize it's not the whole truth." 

Thanks, Grunwald. I think we already got that. 

NEXT: Remember Back When Democrats Criticized Republicans for Exploding the National Debt?

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  1. the payroll taxcut stimulus is a success.

    1. It was a lot more than that–as if a slight cut in the payroll tax is going to make a lick of difference to a vastly over-levered society–but why quibble about details?

    2. Actually, if you want a stimulus abolish the employer portion of the payroll tax and leave the employee side in place at the same level.

      1. that’s racist

        jk.

  2. “Scott Walker got elected to the Senate by the only state that has directly experienced Obamacare…”

    Pretty sure that was Scott Brown.

    1. Them Scotts all look alike

    2. Thanks, and goddammit to hell. Fixt.

  3. Look, every economic model that Keynesian economists ran indicate that without the Stimulus, the economy would have collapsed, the US would have been invaded by Cuba, Canada, and killer cyborgs from the future. An asteroid impact would have wiped out all life on earth. And Michael Bay would have directed the Avengers.

    None of that stuff happened, so how can you call the Stimulus a failure?

    1. Well, when you look at it THAT way…

    2. Radishes? They keep the wolverines off my land.

    3. Bay might as well have directed The Avengers, it was terrible enough.

      Therefore, your entire point is refuted, Hugh.

      1. Didn’t know you’d seen it–sucked?

        1. It’s horrible. I recommend you watch it to understand how horrible. And because I will enjoy the pain it causes you.

          1. Well, okay. I’d heard it was good, and, well, Joss Whedon, but I’m open to it sucking long and sucking hard. I mean, it is a 21st century movie.

            1. No, read my response to Hugh below. The Whedon one is perfectly fine, I’m just super bored with superheros at this point.

              1. It would be nice to see something else for a change.

                1. Some good space opera sci-fi would be nice.

                  Also, stop remaking Paul Verhoeven movies. The gritty remake of Showgirls starring Michael Fassbender with more CGI is just going to be awful.

                  1. The fact that Richard Morgan’s Takeshi Kovacs series hasn’t been put to film is beyond retarded. It’s like he wrote them to be turned into fucking awesome movies, and probably did. They’re optioned, but no action on them as far as I know.

                    1. It’s unbelievable how many excellent books–particularly in science fiction–have been optioned and aren’t being made. All while we have reboots of reboots of reboots every fucking summer now. Well, to be fair, there are also the TV show, toy, and video game-based movies.

                    2. They are making a movie based on Ender’s Game. Granted, they’ll probably turn it into a tale of teenage love, angst and sparkly fairies hanging out in the woods who will call ‘vampires’, but maybe not. One can hope.

        2. Epi is just upset because they cast Scarlett Johansson to play Black Widow instead of Robin Williams.

          Despite his excellent point that Williams’ tits are bigger, I still think they made the right call.

          1. I just realized we have been having a hilarious misunderstanding. I was talking about this Avengers, not the new Joss Whedon one. Which was fine, though I’m pretty heavily bored with superheros at this point.

            Look, Hugh, Williams would have been great for that role and you know it. Besides: Cobie Smulders.

            1. Ohhhhhh. Well, that’s different. I remember when it came out, I was thinking, “Well, this can’t suck.” But the suckitude was so enormous than I never even thought about watching it. I felt a great disturbance in the Suck, as if millions of voices suddenly cried out in terror and were suddenly silenced.

              1. Yes, it permanently altered the suck coefficient in the known galaxy. It is now much easier to suck since that movie was made.

                1. But that’s a violation of the law of suckodynamics! The equations must balance! What are we missing?

                  1. We didn’t factor for the incredible suckiness of Terra Nova and it’s thrown everything off.

                    1. According to my calculations, this means that some unknown awesomeness must exist on Earth. Anything really great in the movie pipeline? Not seeing anything to explain this. Could be a film on one of the Alpha Centauri woulds–might be close enough to balance the Suck.

            2. The fact that you even remember that the Avengers movie was made renders you unfit to use the internet. Obama has dispatched drones to bomb your ISP out of existence.

              But Smulders would have been a good choice, in that she hails from a former Soviet bloc country.

  4. The propoganda, initially, was that the stimulus would maintain enough jobs to get through the bad patch, which would subsequently stimulate greater aggregate spending that would result in more jobs and thus, a return to pre-recession levels. The propoganda AFTER the stimulus was that the economy would have been a lot worse without it, and that it helped maintained the 2007 status quo. The latter, in particular, begs the question that the status quo should have been maintained in the first place.

    The reality is that the Obama administration, in conjunction with the Fed, completely misread the fundamental cause of what is turning into Great Depression II (with food stamps and a steadily dropping labor participation rate replacing bread and soup lines)–speculating that it was due to a lack of liquidity rather than gross systemic debt. Rather than take measures to encourage measures that would reduce the latter, they made a hedge bet that this was a “normal” recession and that throwing funny money at the problem would paper things over long enough for the economy to right itself.

    They lost that bet, and the only things keeping Obama from being completely routed this year are his fanatically loyal personality cultists and his Team Red doppelganger on the other side.

    1. . . .and the media not making sure the whole country understood what a fiscal disaster this president and his party have been. They could even say the other party is just about as bad, but failing to heap scorn is criminal.

    2. Look honey, I know that I screwed 45 anonymous women just this year, and I gave you syphilis and chlamydia.

      But it could have been so much worse! I could have screwed a few hundred people, and given you AIDS!

    3. Basically the stimulus was give the wino a case of Thunderbird to keep him comfortable until he decides to sober up. Never mind that it damages the patient all that much more and puts him further away from ever kicking the habit. If we’re quick about it, we can show everyone that he’s happy now.

      Sounds brilliant to me…

  5. 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.

    Academics and liberal media wonks will do their best to argue this, but in the long run, the stimulus is going to go down as one of Obama’s worst policy decisions when you look at the mathematics. He basically took the huge spending jump that happened during Dubya’s term and made it perpetual–until the credit-papering games of the Fed finally run out of steam, of course.

    1. the stimulus is going to go down as one of Obama’s worst policy decisions when you look at the mathematics

      RACIST!

      1. Math is hard.

    2. Well the stimulus or Obamacare, but I’m betting that Obamacare will be worse in the long run.

  6. The problem with all this Keynesian BS is that people are judging the success before they’ve paid the bills. It’s hard to find programs that look like bad ideas when they are free. Pay the bill for this shit and then tell me it’s still a good idea.

  7. Macroeconomics is now an even-more incoherent mess of competing opinions set forth by high-IQ academics. Grunwald is a fool if he believes he understands whatever is spewing out of his logos. (But one is being too nice to call him a fool.)

    And, by the way, the macro modeling is for shit:
    http://www.bloomberg.com/news/…..cliff.html

    1. Peter Drucker, arguably the most intriguing writer about business and economic trends through most of the 20th Century, basically thought that macroeconomics was bullshit.

      1. (I meant a very long time ago, already, long before the visible failures of Keynesianism and the should-be-embarrassing bullshit of Krugman, today)

  8. st?m?lus , i, m. for stig-mulus, from the root stig; Gr. ?????; v. stilus.
    I. A goad for driving cattle, slaves, etc.

    Of course, it was used figuratively already in Classical Latin, but it’s still good to know.

  9. I think the fact that the Reps and Dems have been trading power for years and both are essentially statist proves that the American voter is not to be trusted

  10. Michael Grunwald – Turdpolisher extraordinaire.

  11. Tim, whatever they pay you to read this BS, it can’t be enough. I don’t know how you do it.

  12. Talk to any so-called Progressive for more than ten minutes, and you’ll find that their definition of “Democracy” begins and ends with you jumping when they say “Frog!”.

  13. “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. ”

    NO, see, that’s NOT what happened at ALL, see, the 1%ers were like . . . waging a War on Women and like . . . well, this is taken completely out of context so like . . . but, but Teabaggers! . . .

    YOU’RE A RACIST KOCHSUCKER!

  14. “$700 bailout” of the banks ?

    I could used a bailout like that when I was twenty something and needed car repairs.

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