The New New Deal Page 15

  The team’s suggestion of a $675–$775 billion overall price tag did draw a few gasps. “The first look we’d get was, ‘That’s crazy, there’s no way,’” Schiliro recalls. The team hinted strongly that the final number ought to be even higher, suggesting that markets might react badly to anything below $800 billion. By the end of the day, Democrats “appeared willing to do whatever number we thought was appropriate,” the memo said. They also accepted Obama’s general principles for what should go into the stimulus: items that would create jobs, avoid permanent tails, spend out reasonably quickly, and advance sound policies. The three-T test would be the main test, although there might be a few deviations for the core of Obama’s agenda.

  “We have communicated our willingness to work within these parameters as closely as possible and urge all offices to do the same,” Reid’s chief of staff wrote to Senate Democrats.141 When it came to the broad strokes, most Democrats seemed willing to follow their new leader.

  “We didn’t have the lawyers or the staff to do the drafting, but everyone knew this was our bill,” Nabors says. “There wasn’t that much disagreement.”

  A Moving Vehicle

  Democrats on the Hill didn’t love everything in Obama’s plan.

  For starters, $200 billion worth of aid to states sounded like a truck-load of political spinach. Partisanship aside, why would members of Congress want to write checks that would make them look like bigger spenders and their governors look like better stewards? State aid was especially unappealing to Democrats from states with conservative Republican governors who were unlikely to use their windfalls to preserve services for the poor or save the jobs of state employees. They had slashed taxes irresponsibly when they were flush; why help them avoid the consequences now that they were broke?

  “A lot of us were saying: Don’t give the governors slush funds!” recalls Congressman Xavier Becerra of California, the vice chair of the Democratic caucus.

  Hill Democrats weren’t interested in giving Obama slush funds, either. The transition team wanted large pots of money with minimal strings attached, so the administration could steer the cash where it could create the most jobs and drive the most reform. But steering cash is what legislators do. Letting presidents make spending decisions was not the kind of change Congress tended to believe in.

  “We came in saying, look, we want some flexibility, we want to fundamentally transform education, we want better transportation projects,” Nabors says. “They felt like flexibility had been abused under Bush. They wanted constraints.”

  The one clear nonstarter in Obama’s plan was an infrastructure bank, which he had proposed during the campaign to promote merit-based funding for public works. Most lawmakers preferred the existing system of pork-based funding. The seventy-four-year-old chairman of the House Transportation and Infrastructure Committee, Jim Oberstar, had bragged about snagging fifty-seven “high-priority projects” for his rural Minnesota district in the bloated SAFETEA-LU bill, including a bridge for snowmobiles in Onamia, population 878, and a $3 million road to ease the notorious congestion between County Road 565 in Hoyt Lakes and the intersection of Highways 21 and 70 in Babbitt.142 Oberstar had first joined the committee as an aide in 1963. He wasn’t about to surrender its power now that he had the gavel.

  Democrats were willing, though not eager, to accept Obama’s demand for an earmark-free stimulus. They saw how it could be awkward to let 535 lawmakers lard up a bill with pet projects during a crisis. But they still expected to plus up their pet programs, proposing over a hundred different line items for infrastructure alone. Committee chairmen all saw pressing needs in their jurisdictions. When would there be a better time to buy the Coast Guard a new polar icebreaker, or install the next generation of airline security, or prepare for a flu pandemic? Wouldn’t House Agriculture chairman Collin Peterson of Minnesota know if the Farm Service Agency needed new computers? Arkansas senator Blanche Lincoln wanted emergency aid for catfish farmers suffering from high feed costs; didn’t catfish farmers need stimulus, too?

  “The biggest issue is less the reaction to our topline numbers and major components but the very large number of miscellaneous requests,” the Obama team’s memo said.143

  Many of these requests were worthy, and perfectly defensible as stimulus. New border stations and child care centers on military bases could inject money into the economy just as effectively as new highways. Workers hired for nuclear waste cleanups and wildfire management would be just as likely as construction workers to spend their paychecks at local grocery stores. In fact, because of the diminishing returns problem, sprinkling stimulus money through multiple funding streams would have an even greater impact on aggregate demand than pouring it all into a few simple buckets. And realistically, who was going to tell House majority whip James Clyburn of South Carolina, the top-ranking African American in Congress, that he couldn’t reserve $15 million—2 cents out of every $1,000 in the Recovery Act—for job-creating historic preservation projects at black colleges?

  It just seemed messy. Rahm worried that all these “cats and dogs,” as the Obama team described random congressional desires, would make the Recovery Act look like spending on steroids—money here, money there, money everywhere. Summers huffed and puffed about “the Democratic moment,” the danger of using the stimulus to reward every Democratic constituency, scratch every Democratic itch, and revive every long-neglected Democratic program. This was what Jack Lew and the shadow team had warned about, the risk of losing control of the stimulus and letting Congress turn it into a grab bag.

  The chum of a must pass mega-bill was already creating a feeding frenzy, as lobbyists for shoe companies, telecoms, zoos, student lenders, ethanol refiners, and anyone else who could afford their retainers scrambled to rebrand their client wish lists as stimulus proposals. The tourism industry wanted a loan to promote the United States as a destination. The maritime industry highlighted the deplorable condition of seaports, while the airline industry spotlighted the deplorable condition of airports. The concrete lobby pushed for longer-term infrastructure projects that tend to be more transformative, and use more concrete, while the asphalt lobby pushed for shorter-term road repairs that tend to be more stimulative, and use more asphalt. The U.S. Conference of Mayors identified $180 billion worth of locally approved projects that could go into a stimulus, including a $350,000 fitness center in New Mexico, a $1.5 million water slide in Florida, and a $4.8 million polar bear exhibit in Rhode Island.144

  One less inspiring legacy of the New Deal was the word “boondoggle,” a reference to leather knickknacks made by unemployed Americans in federally funded arts-and-crafts classes. Obama hadn’t run for president to build water slides, and he repeatedly warned his staff that modern boondoggles would discredit the stimulus, his fledgling administration, and government activism in general.

  “I know it’s Christmas,” Biden said after a December 23 meeting with the economic team. “But President-Elect Obama and I are absolutely determined that this economic recovery package will not become a Christmas tree.”

  This was also important for legislative reasons. Obama needed at least two Republican votes to break a filibuster in the Senate, and he wanted more to set a post-partisan tone. A Democratic Christmas tree would alienate potential aisle crossers. Obama also had to make sure Blue Dogs in the House and centrist Democrats in the Senate didn’t jump ship; they were already sounding alarms about runaway spending. Indiana senator Evan Bayh had voted against his party’s modest stimulus package in the fall, and he went on Fox to warn that Democrats were already misinterpreting their electoral wave, assuming voters wanted Washington to start squirting cash in all directions.145

  “My concern was that if you let Congress draft this, it becomes a laundry list of long-deferred desires,” Bayh recalls. “The old adage in Congress is that you get your stuff attached to any vehicle that’s moving. This was moving!”

  Obama’s political aides figured that once they had their Democra
tic ducks in a row for the Recovery Act, some Republicans would be likely to follow. GOP leaders had called for tax cuts and infrastructure; Obama’s blueprint had plenty of both. And once Democrats agreed on a basic vessel, it could always be tweaked to lure more Republicans on board. Why would an unpopular minority want to block a popular new president’s jobs bill during an existential crisis? Who would want to vote against unemployment benefits, highways, and middle-class tax cuts? Democrats had just put aside partisanship to help Bush pass a Wall Street bailout two months before the last election; why wouldn’t Republicans help Obama pass something for Main Street twenty-two months before the next election?

  To which some Democrats replied: Because they’re Republicans! Rahm’s former colleagues in the ultra-polarized House were especially dismissive of Obama’s post-partisan promises; Barney Frank of Massachusetts quipped that they were giving him post-partisan depression. “You’re not going to get anything from the Republicans,” Frank told Rahm. “Everything’s a holy war for them.” Why would partisans who had just spent months attacking Obama as an America-hating socialist want to help him pass his tyrannical left-wing agenda? Their only likely rewards would be primary challenges from the right in 2010.

  There were already signs that after nearly derailing TARP, House Republicans planned to embrace their inner obstructionists. They were closing ranks against a bailout for GM and Chrysler, even after Vice President Cheney warned they might cement the GOP’s reputation as the party of Hoover. And most Republican appropriators—usually considered the likeliest targets for bipartisan cooperation on spending bills—boycotted Chairman Obey’s first stimulus hearing. The old saying that there were three parties in Washington—Democrats, Republicans, and appropriators—no longer seemed to apply.

  Rahm understood the radicalization of the GOP and the cutthroat culture of the House as well as anyone, but he figured that if business groups like the U.S. Chamber of Commerce could be persuaded to endorse the Recovery Act, Republicans would follow. He suspected they wouldn’t want to oppose a jobs bill. Their eagerness to get home for Presidents Day recess—“the smell of jet fuel at National Airport,” as Rahm put it—would help, too. “Start those airplane engines, they’ll fucking figure out a way to get to yes really quickly,” he explains.

  Obama seemed even more likely to pick up Republican votes among his recent colleagues in the Senate, where “bipartisan alliance” was not yet a complete oxymoron. Senators didn’t face reelection every two years, and running statewide tended to encourage moderation. Schiliro was spreading the word that the stimulus could attract as many as eighty votes in the Senate.146 “There was an assumption that in a time of national emergency you could get bipartisan support,” Axelrod says.

  The Obama team made plenty of faulty assumptions—underestimating the scale of the downturn, overestimating their ability to go back for more stimulus, expecting the initial stimulus to expand on the Hill—but that was the faultiest.

  — SEVEN —

  The Party of No

  Republicans were talking about change, too.

  How could they not? They had just followed George W. Bush into political oblivion. After preaching small government, balanced budgets, and economic growth while producing bigger government, exploding deficits, and economic collapse, they had gotten pasted for the second straight election. And the electorate was getting less white, less rural, less evangelical—in short, less demographically Republican. Just a few years earlier, books like One Party Country and Building Red America had heralded Karl Rove’s plan for a permanent Republican majority.147 Now publishers were rushing out titles like The Strange Death of Republican America and 40 More Years: How the Democrats Will Rule the Next Generation.148 If the GOP brand were dog food, one retiring congressman warned, it would get pulled off the shelves.

  “We were in disarray,” recalls Congressman Pete Sessions of Texas, who had just taken over the House Republican campaign committee. “People were comparing us to cockroaches, saying we weren’t even relevant. We had to change the mind-set.”

  Beltway conventional wisdom held that chastened Republicans would be forced to cooperate with a popular new president during a national emergency. But Congressman Eric Cantor of Virginia, the new minority whip, thought chastened Republicans should start acting like Republicans. Cantor, an ambitious forty-five-year-old conservative who was the only Jewish Republican in Congress, summoned his whip staff to his condo building that December to plot strategy for the coming year. In a word, the strategy was: Fight. The liberal media might want Republicans to roll over and give Obama a honeymoon, but the base didn’t. Why have an opposition party if it wasn’t going to oppose?

  “We’re not here to cut deals and get crumbs and stay in the minority for another 40 years,” said Cantor, a Richmond lawyer with a genteel Southern accent and sunken cheeks. Cantor dripped with disdain for get-along Washington Republicans who happily supported Democratic bills as long as they extracted a bit of pork for themselves. “We’re not rolling over,” he said. “We’re going to fight these guys. We’re down, but things are going to change.”

  Cantor’s chief of staff, Rob Collins, had invited two pollsters to address the group, and no policy experts. That’s because he recognized that House Republicans were now communicators, not legislators. They didn’t have the numbers to stop Pelosi from steamrolling Obama’s agenda through the House. They needed better PR strategies, not better policies. “They’re just going to ram right over us anyway,” Collins explained. When House Republicans had the numbers, they had done the same thing. Now their battle was in the arena of public opinion.

  To win that battle, Cantor believed, the whip team had to keep Republicans united, so Obama wouldn’t be able to brag about bipartisan support for his agenda. That would require picking fights carefully, focusing on stark conflicts that could define their party and the president. There was no point in whipping Republicans against a children’s health bill like S-CHIP—and maybe hurting them back home with voters who liked the sound of children’s health—now that Obama was sure to sign it into law. Whips didn’t have much power to enforce unity anyway, especially minority whips. They had few carrots and fewer sticks. They could only build team spirit, so Republicans would voluntarily stick together on more fundamental legislation—not to block it, but to send a message about its flaws.

  The challenge would be developing a consistent message of No without looking like a reflexively anti-Obama Party of No. The whip team agreed that at first the targets should be Pelosi and “Washington Democrats” rather than Obama. The president-elect was riding a wave of goodwill, while Pelosi remained unpopular, especially among the independent voters who had abandoned Republicans in November. There was little upside to whacking “Saint Barack” now, and little downside to attacking ancient Democratic power brokers like Ways and Means chairman Charlie Rangel, a nineteen-term Harlem liberal with a raspy voice, slicked-back hair, and an ongoing ethics investigation. Cantor also insisted that Republicans needed to offer solutions—not with the delusion that they’d be implemented, but to give members something to say yes to while voting no on the Obama agenda. He’d begin by recruiting thirty-three colleagues, nearly one fifth of the conference, to an Economic Recovery Working Group that would draft a GOP alternative to the stimulus. Its details would matter less than its existence.

  But the main theme of the meeting was that the fetal position was for losers. Cantor and his deputy, Kevin McCarthy, represented a new generation of GOP leaders who looked like Wall Street traders and projected the same lean-and-hungry vibe; along with Paul Ryan, the budget wonk of the caucus, they were known as “The Young Guns.” They weren’t interested in playing footsie with Democrats, and they didn’t intend to spend decades out of power. “That was the relentless focus: We’re going to do everything we can to take this thing back,” Collins recalls.

  The Purpose of the Minority

  In early January, the House Republican leadership team held a retre
at at an Annapolis inn. Pete Sessions, the new campaign chair, opened his presentation with the political equivalent of an existential question:

  “If the Purpose of the Majority is to Govern … What is Our Purpose?”149

  Not to govern, that was for sure. His next slide provided the answer:

  “The Purpose of the Minority is to become the Majority.”

  The team’s goal would not be promoting Republican policies, or stopping Democratic policies, or even making Democratic bills less offensive to Republicans. Its goal would be taking the gavel back from Speaker Pelosi.

  “That is the entire Conference’s Mission,” Sessions wrote.

  House Republicans were now an insurgency—an “entrepreneurial insurgency,” Minority Leader Boehner declared—and Sessions thought they could learn from the disruptive tactics of the Taliban. The key to success in this asymmetrical warfare, he argued, was to “change the mindset of the Conference to one of ‘offense,’” to take the fight to the enemy. The Democratic landslides of 2006 and 2008, while decimating the Republican conference, had created a target-rich environment for Republican artillery. There were now eighty-three Democrats representing districts Bush won in 2004, and Obama-Pelosi liberalism was unlikely to help any of them politically. Michigan’s Mike Rogers, a brash former FBI agent who had been tapped to play bad cop for Sessions on the campaign committee, says that PowerPoint served as a wake-up call, a reminder that Democratic control of Washington could be the Republican ticket back to power.