The New New Deal Read online

  Thank you for purchasing this Simon & Schuster eBook.

  * * *

  Sign up for our newsletter and receive special offers, access to bonus content, and info on the latest new releases and other great eBooks from Simon & Schuster.

  CLICK HERE TO SIGN UP

  or visit us online to sign up at

  eBookNews.SimonandSchuster.com

  — CONTENTS —

  Introduction: Things That Never Were

  PART ONE: The Campaign for Change

  Chapter 1: A man With a Plan

  Chapter 2: The Four Pillars

  Chapter 3: The Collapse

  Chapter 4: “We Were Staring into the Abyss.”

  PART TWO: Making Change

  Chapter 5: Ready Before Day One

  Chapter 6: The Moment

  Chapter 7: The Party of No

  Chapter 8: “Wow. We Can Actually Do It.”

  Chapter 9: Shirts and Skins

  Chapter 10: From Zero to Sixty

  Chapter 11: Done Deal

  PART THREE: Change in Action

  Chapter 12: Ready or Not

  Chapter 13: Tea Leaves

  Chapter 14: Change is Hard

  Chapter 15: Gas Versus Brakes

  Chapter 16: Green New World

  Chapter 17: Political Recovery

  Chapter 18: Not Quite Done

  Chapter 19: The Legacy

  Epilogue: The Choice

  Acknowledgments

  Note on Sources

  Photographs

  About the Author

  Notes

  Illustration Credits

  Index

  To Cristina,

  my stimulus

  — INTRODUCTION —

  Things That Never Were

  Change begins with a leap of faith—not a fairy-tale faith that tomorrow will always turn out better than today, or a rah-rah faith in the inevitable destiny of God’s most favored nation, but a more practical belief that the past is not necessarily prologue, that the future doesn’t have to look like the present. It’s progressive in the literal sense, not the polite-way-to-say-liberal sense, a simple faith in the possibility of progress. This basic notion that there’s nothing preordained about the status quo can sound corny, and it doesn’t make change happen. But it makes change possible.

  This is what Barack Hussein Obama meant by “the audacity of hope.” And this was the wind behind his 2008 campaign, the promise of not just the change we always hear about but Change We Can Believe In, the idea that a skinny black guy with an inconvenient name and a thin résumé could ride a dream to the White House. It was easy to mock his Yes We Can hubris, his grandiose vows to transcend the pettiness of our politics and bridge the partisan divide, his messianic pledges to slow the rise of the oceans and usher in a new birth of freedom.1 But he inspired people. After eight exhausting years of George W. Bush—the partisan warfare, the nonexistent weapons of mass destruction, the surpluses alchemized into record deficits, the inept response to a drowned city, and finally the epic financial and economic collapse—millions of Americans were ready for a leap of faith.

  What happened to that change—and that faith—is the central story of the Obama administration.

  The prevailing narrative has emphasized the unfulfilled promise, the change we’re still waiting for, the gap between the lofty poetry of Yes We Can and the transactional tawdriness of If We Can Round Up The Votes. The partisan divide remained un-bridged, the pettiness of our politics un-transcended. And the economy stubbornly refused to comply with Obama’s rhetoric of revival, setting the tone for a narrative of disappointment: Wasn’t the audacity of hope supposed to make people feel better? Hadn’t he promised to “reinvent the economy to seize the future”?2 What happened to the strong middle class and the new American century and all those other nice things that were supposed to materialize after his historic election? “Hope and change” became a partisan punch line, the wink behind Sarah Palin’s sly taunt: “How’s that hopey-changey stuff working out for ya?”

  In the 2010 congressional elections, Americans gave a preliminary answer, voting to change the change, smacking down Democrats, rewarding Republicans for resisting the Obama agenda. Even the president toned down the hopey-changey stuff as his approval ratings slumped, reminding supporters that he was elected to make things better over time, not to make things perfect overnight.

  “We’ve always known that lasting change wouldn’t come quickly or easily,” he wrote in the strangely muted email announcing his reelection campaign. “It never does.”

  That’s part of the story: Change is hard.

  But there’s more to the story: Change is happening.

  It isn’t happening because a politician waved a magic wand. It’s happening the way change happens in American democracy, through legislation that Congress passes and a president signs and bureaucrats implement.

  This is the story of Obama’s most ambitious and least understood piece of legislation, the purest distillation of what he meant by change. It aimed to repair a broken economy while reforming our approach to energy, health care, education, taxation, transportation, and more. It’s starting to change our cars and our trains, the way we produce and consume electricity, the way our schools teach, our doctors practice, and our government spends our money.

  It’s even trying to change photosynthesis, which is as good a place as any to begin the story.

  Sure, photosynthesis has been working reasonably well for 3.5 billion years, making plants grow, releasing the oxygen that sustains life on earth. But at the dawn of the Obama administration, it wasn’t working well enough for the president’s hard-charging energy secretary, Steven Chu, a quantum physicist who had won a Nobel Prize for trapping and cooling atoms with lasers.3 Chu had the toothy grin, dorky glasses, and wispy build of a tech nerd, but he had a steely side, too. He didn’t accept that problems were unsolvable unless there was scientific proof.

  Chu was at the vanguard of a new brigade of egghead elites—a new, ultra-confident Best and Brightest—who marched into Obama’s Washington because they believed all that hopey-changey stuff. At sixty, he was a renewable energy source in his own right, exuding the boyish enthusiasm of a junior high geek dissecting his first frog. He worked eighty hours a week trying to rev up the sluggish Department of Energy, then spent his spare time doing the kinds of things geniuses do, like trying to cure cancer with nanotechnology, and using an atom interferometer to confirm a key prediction of Albert Einstein’s theory of relativity.4 His mere presence at this perennial backwater of a bureaucracy felt surreal, as if Einstein had reported for duty as labor secretary. Most of his predecessors had been obscure politicians or businessmen, and one had been a dentist. But after three decades playing with gamma rays and quarks at Bell Labs, Stanford, and Berkeley, Chu honestly believed he could help Obama cure America’s addiction to oil and help save the planet from global warming. He was a tone-deaf politician, but he quickly became Obama’s most compelling green evangelist, preaching the gospel of clean energy, sharing the good news of solar power, geothermal heat pumps, and energy-saving white roofs.

  He wanted biofuels in his scripture, too. Fuels derived from biomass had been hyped as the great green hope, the renewable key to a world without oil. As a farm state senator, Obama had always portrayed ethanol and other biofuels as miracle elixirs. But Chu suspected they would never outcompete fossil fuels as long as they relied on photosynthesis. It was a chemistry thing. Harvesting sunlight to grow corn or switchgrass or even algae was just an awfully circuitous strategy for producing fuel, like a journey from New York to Washington via San Francisco. More than 99 percent of the solar energy was wasted along the route. “Photosynthesis,” Chu liked to complain, “is too
damn inefficient.”

  Fortunately, a new agency called ARPA-E had just been created inside Chu’s department to solve problems like photosynthesis.

  The Advanced Research Projects Agency-Energy was a government incubator for high-risk, high-reward, save-the-world private energy research, the kind of place where Q from the James Bond movies would want to work. Modeled after DARPA, the legendary Pentagon agency that fathered the Internet and GPS technology, it was designed to finance out-of-the-box, early-stage experiments that probably wouldn’t pan out, but just might point the way toward truly clean coal or a truly smart grid or a truly green economy if they did. Chu was ARPA-E’s intellectual godfather; he had proposed the agency while serving on a National Academy of Sciences panel on U.S. competitiveness.5 He had handpicked its first director, his former Berkeley colleague Arunava Majumdar. And he had set its reach-for-the-stars tone, making it clear that ARPA-E wasn’t about incremental improvements. The agency’s mantra was: Game-changers only.

  ARPA-E felt more like a high-tech start-up than a federal bureaucracy, with a foyer cluttered with intimidating textbooks on “tribology,” “constructal theory,” and “nanostructure physics,” and walls dotted with dreamy Yes We Can messages from Martin Luther King Jr. (“We are confronted with the fierce urgency of now”), John F. Kennedy (“We need men who can dream of things that never were”), and Chu himself (“Resist the urge to accept the status quo”). It was exempt from the usual civil service rules, and it attracted an absurdly high-powered staff of brainiacs: a thermodynamics expert from Intel who had published sixty-five scientific papers, an MIT electrical engineering professor who had founded two start-ups, a clean-tech venture capitalist who also taught material science at MIT. Majumdar, a world-renowned energy expert, had run Berkeley’s nanotechnology institute before Chu persuaded him to leave his tenured chair—as well as his wife, two children, and a yellow Lab—behind in California to make change in Washington. His deputy, Duke biochemistry professor Eric Toone, was also a biotech entrepreneur who had helped develop a promising glaucoma drug.

  None of these men—they were all men—were in public service because they needed a job. They were the kind of dreamers President Kennedy had in mind, imagining things that never were: wind turbines shaped like jet engines, man-made substitutes for rare-earth minerals, electrical transformers the size of suitcases instead of kitchens. They saw energy as the challenge of their era, and ARPA-E as their moon mission. They were practical men who understood that even elegant laboratory advances in batteries or biofuels had to be scalable and affordable to be useful, but they were also true believers in the church of progress, confident they would reach those moons in due time.

  “We chemists would say energy is a kinetic problem, not a thermodynamic problem,” Toone says. “There’s always a way around kinetic problems.”

  Toone had never studied biofuels, but he took on the photosynthesis problem. It was a real problem; just about all our energy was ultimately derived from photosynthesis, including the hydrocarbons in gasoline and other fossil fuels, even including the carbohydrates we break down when we pedal our bikes. But Toone had an epiphany after consulting with two groups of scientists who shared his inexperience in the energy field: the synthetic biology community, which manipulates cells and molecules, and the “extremophile” community, which studies microscopic organisms in exotic eco-niches like hot springs and ocean floors. Some of those organisms had evolved to absorb energy without photosynthesis, subsisting on hydrogen, ammonia, or even electric current. But none had been studied for fuel production. Toone realized that with the proper tinkering and the proper funding, it might be possible to train the kind of bacteria that eat electricity for breakfast to fuel our transportation sector someday. In October 2009, he hosted the first ever workshop on the topic, bringing together big brains from far-flung fields and encouraging them to imagine the possibilities.

  “It was amazing how fast everyone went from ‘This is nuts!’ to ‘Hmmm,’” he recalls.

  Soon Toone presented his findings to the ARPA-E team. Majumdar had a knack for gouging holes in talks like this, pulverizing tenured hotshots into stammering grad students. This time he just sat in silence.

  “Holy shit,” he finally said in the lilt of his native Calcutta. “We’re talking about an entirely new scientific discipline.”

  At a brainstorming session at ARPA-E’s unofficial watering hole, a D.C. dive bar called the Ugly Mug, Toone came up with the new discipline’s name: electrofuels. Within a few months, ARPA-E received 120 electrofuels proposals from scientists in all kinds of fields. And in April 2010, at a cabinet meeting led by Vice President Joe Biden, Chu unveiled thirteen electrofuels grants.6 A Boston firm planned to engineer E. coli into “a chassis for iso-octane.” A University of South Carolina team would study “electroalcoholgenesis-bioelectrochemical reduction of CO2.” Biden’s staff had invited me to sit in during the meeting—I’m a journalist for Time magazine—and as Chu explained a Harvard Medical School team’s plan to create a “bacterial reverse fuel cell,” I could almost see a “WTF?” thought bubble forming over the vice president’s head.

  Then Chu started talking a language everyone could understand; as a kid on Long Island, before his own circuitous journey from New York to Washington via San Francisco, he had been a baseball statistics nerd. “We’re swinging for the fences,” Chu said. “We’re going to strike out a lot, but we’ll hit a few grand slams.” Most of ARPA-E’s experiments would fail, but one successful project could kill off the internal combustion engine, or slash the cost of air-conditioning in half. Someday, electrofuels could be ten times as efficient as biofuels.

  “Wow!” Biden crowed. “We’re talking about research that will literally revolutionize American life!” (Biden often says “literally,” or “literally, and I mean literally, not figuratively!” when he means “figuratively.”) He then veered into a soliloquy about American ingenuity, then a shaggy-dog story about an energy-efficient lighting firm, then on to other business. But afterward, Biden was still jazzed. “Was that mind-blowing or what?” he asked, throwing his arm over my shoulder as if we were lifelong pals, when we had just been introduced moments earlier. “This is the exciting part of my job: We’re building tomorrow!” We chatted for a minute about ARPA-E, and how it was a pretty striking example of the change Obama had promised during his campaign.

  “That’s what nobody gets about the Recovery Act,” Biden said.

  Yes, ARPA-E was launched by the American Recovery and Reinvestment Act, President Obama’s widely ridiculed $787 billion “stimulus” package. The audacity of hope made change possible. The Recovery Act is making change happen.

  President Obama signed the stimulus into law on February 17, 2009, less than a month after his inauguration, just a few months after the meltdown of the global financial system. The U.S. economy was in freefall, and Americans were desperate for change. Obama’s approval ratings were around 70 percent, Democrats had expanded their majorities in Congress, and talking heads were suggesting the Republican Party might be lurching toward extinction.7 Meanwhile, the rest of the world’s major powers were also preparing stimulus packages to defibrillate their flat-lining economies.

  Yet Obama’s 1,073-page response to the worst crisis since the Great Depression swiftly became a national laughingstock—and the launching pad for the Republican revival. It was the Ur-text of the Obama administration, a microcosm of policy and politics in the Obama era. “No question about it, the stimulus was the defining moment,” says former Republican senator Mel Martinez of Florida. “The Recovery Act set the tone,” agrees David Axelrod, Obama’s top political adviser.

  Within a year, the percentage of Americans who believed the stimulus had created any jobs was lower than the percentage of Americans who believed that Elvis was alive.8 Resurgent Republicans mocked the law as “Porkulus,” a bloated encapsulation of everything wrong with the Obama presidency. “Failed-stimulus” became a fourteen-letter GOP buzzw
ord of choice, repeated incessantly in floor speeches, press conferences, and attack ads. Senate minority leader Mitch McConnell snarked that even Tiger Woods and John Edwards, the sex scandal stars of 2009, had better years than the failed-stimulus. A drumbeat of gotcha stories chronicled silly expenditures, like costumes for water safety mascots; silly-sounding legitimate expenditures, like a brain chemistry study of cocaine-addicted monkeys; and fictitious expenditures, like levitating trains to Disneyland or a snow-making machine in Duluth. Even Jay Leno got in a dig about communism, “or, as we call it in this country, a stimulus package.”

  The mockery got so intense that Democrats stopped saying “stimulus” in public. And their sidestepping got so blatant that a reporter confronted Obama about it at a news conference, asking why his aides “avoid the word ‘stimulus’ like the plague.9 Is that because the original stimulus is so deeply unpopular?”

  The president wouldn’t even use the word “stimulus” in his response.

  The stimulus had one overriding public relations problem: The administration marketed it as a measure to prevent rampant unemployment—and then rampant unemployment happened anyway. Americans understood that Obama inherited a mess, but they didn’t understand how horrible a mess, and the stimulus was touted as a job creator at a time when jobs were disappearing at record speed. A politically disastrous January 2009 report by Obama’s economics team intensified this problem by warning that the jobless rate could hit 9 percent without the Recovery Act, while predicting it would stay below 8 percent with the Recovery Act, a gaffe that launched a thousand talking points after unemployment reached 10 percent despite the Recovery Act.10 These were understandable forecasting errors, based on consensus assumptions; it soon became clear that the pre-stimulus situation was much worse and disintegrating much faster than most economists realized at the time. But Republicans recognized the report as a gift that would keep on giving, and have savaged the stimulus ever since as a massive boondoggle charged to our maxed-out national credit card. Meanwhile, the left has griped that it wasn’t massive enough. And the media have repeatedly dismissed it as a failure “by the administration’s own standards.”