Agency handling of Recovery Act praised in new book

The still controversial Recovery Act rushed into law in the opening weeks of the Obama administration is the “perfect distillation” of change Obama-style and is given insufficient credit for breaking new ground in federal policy while heading off a potential depression.

So asserted Michael Grunwald, senior correspondent for Time magazine, in a talk Thursday at the liberal-leaning Center for American Progress to promote his just-released book, The New New Deal: The Hidden Story of Change in the Obama Era.

Though conventional Beltway wisdom portrays the 2009 stimulus as ineffective in creating jobs, the historically unprecedented $800 billion package of spending and tax cuts came in “on time, under budget, virtually fraud-free and impressively managed,” unlike the stimulus portrayed in the media Grunwald says. “It’s ironic that what is now seen as the ultimate bad-government program had lots of good government parts to it.”

In what he calls his “revisionist history” based on interviews with many Washington players, the author laments that more Americans think Elvis Presley is still alive than think the stimulus was a success -- even Obama himself shies from mentioning it, Grunwald noted. But the bill pried out of Congress in the face of a wall of Republican opposition “did prevent the American economy from collapsing” by funding infrastructure projects in alternative energy, electronic health care records, high-speed rail and information technology, he said.

“It was the most scrutinized money the federal government has ever spent,” Grunwald said, noting experts expected the government to lose 5 percent to 7 percent of the funds to fraud, but the Recovery Board, led by now-retired Earl Devaney, pulled it off with $7.2 million, or 0.001 percent, in improper payments through 2011. With Obama’s appointees still arriving in February 2009, “career staff did an incredible job in getting Recovery.gov” up and running to make spending transparent to the public, the author said.

Another historic departure, according to Grunwald, is the way the law relied on competition for grants. He cited the Education Department’s Race to the Top program for school reform, for example, and various clean energy projects for which the government “did not pick winners or losers but picked the game” -- encompassing everything from biofuels to a new domestic battery industry to solar and wind to improvements in the internal combustion engine.

Traditionally, federal officials would “check the box” on which grant applicants were eligible, he said, but under the stimulus, “bureaucrats actually had to use discretion and show the purpose.”

The most significant successes of the stimulus are in energy, he said, calling it “the biggest energy bill in history.”

The legislation’s chief failures were in the administration’s communications efforts. While Obama’s team struggled with “nuanced distinctions” between short- and long-term investments, tax cuts and spending, the Republican message was simply to say no, he said. Obama staff also committed an “unforced error,” he added, in predicting the stimulus would reduce unemployment below 8 percent in the second summer.

The poor image of the stimulus law, Grunwald said, is due to a “combination of relentless Republican opposition, incompetent White House messaging, a brain-dead media and unfortunate timing” in that it was passed just before a new jobs report showed the nation losing 800,000 jobs a month.

Grunwald characterized the Republican opposition as political, saying many of the spending projects were acceptable to Republicans before Obama was sworn in. Senate Minority Leader Mitch McConnell, R-Ky., “is an extremely smart man,” he said, but he approached the stimulus coming off of two recent electoral defeats for his demoralized party. McConnell told his party conference that if they voted no on the stimulus and the economy quickly recovered, they would still be reelected in 2010 because of individual stature, the author said. But “if there was no miraculous turnaround, then voting no would be our ticket back” to power, Grunwald said of the thinking.

On the House side, he added, Rep Eric Cantor, R-Va., told his troops that “we don’t do policy anymore, it’s all about messaging.”

Portrayals of the stimulus in the media were distorted, the author said, by political reporters with little interest in policy and a tendency to approach the vast amounts of spending “like runaway prosecutors.” He cited examples of reported uses of funds that turned out to be untrue: sod for the National Mall, condoms, a levitated train to Disneyland, honeybee insurance and $250 million for government furniture were all misreadings of the Homeland Security Department’s budget for headquarters consolidation on former campus of Washington’s St. Elizabeths Hospital.

Grunwald’s book explores in detail the Energy Department’s divisions dealing with weatherization and Solyndra, the failed solar panel company that received a $535 million federal loan guarantee.

Critics have lamented that the legacy of the Obama stimulus includes no dramatic institutions such as the Hoover Dam, Skyline Drive and Fort Knox. But Grunwald equates the launch of a modernization of the nation’s electrical grid to be comparable, adding Health and Human Services Secretary Kathleen Sebelius told him she considers the stimulus to be the “foundation” for the Affordable Care Act, with its funds for electronic health records, comparative effectiveness research and National Institutes of Health research grants.

Grunwald said as a journalist, he is uncomfortable being “an Obama cheerleader,” but he has a passion for facts. Overall, he argued, “The stimulus is making change, not making perfection, but improving lives.”

Politically, he said, Obama “did what he set out to do” with the stimulus: He focused on policy by getting past the “political muck, petty squabbles and Washington gridlock machine.” While the political left blasts Obama as a typical pol who cuts deals, Grunwald added, Republicans hit him as a “eurosocialist radical.” In fact, the author said, “he’s a data-oriented, left-of-center technocrat, a pragmatist.”