The passage of President Biden’s American Rescue Plan has caused some on the left to second guess the 2009 Recovery Act. Unfortunately, President Biden’s huge success in passing this landmark legislation has caused some to diminish President Obama’s first big victory as president. Let’s take a little trip down memory lane and get the history right.
As a starting point, I want my readers to know that I relied heavily upon two excellent books when I researched the history of the Recovery Act. Jonathan Alter’s “The Promise” did a great job in covering Obama’s first year as president. Alter’s book doesn’t just reference the Recovery Act — it gives the reader an overview of the entirety of Obama’s eventful first year in the Oval Office.
Another helpful book was Michael Grunwald’s: “The New New Deal: The Hidden Story of Change in the Obama Era,” which focused entirely on the Recovery Act. The book didn’t only cover the genesis and passage of the Recovery Act — it also covered its implementation by then Vice President Joe Biden.
Both books highlighted the dire economic situation that Obama faced when he took office. The economy was on the verge of going into a depression and was losing 800,000 jobs per month. In addition, GDP shrank 8.9% in the fourth quarter of 2008. The economy was truly in free fall.
Early in the transition in November 2008, the topline figure for a stimulus bill was $300 billion. Nancy Pelosi’s desire for a $600 billion stimulus bill was considered to be unrealistic at the time.
As the economic picture darkened in December 2008, the figure for a stimulus bill increased to $800 billion to $1.2 trillion. One economic adviser suggested a $1.8 trillion figure as a bit of a hypothetical. This number was quickly knocked down as being utterly unrealistic. Incidentally, the cost of Biden’s Rescue Plan is $1.9 trillion.
The Obama Administration eventually settled on a cost figure of $800 billion since they simply lacked the votes in the Congress for a larger bill. At the time, $800 billion was 5% of GDP. The $800 billion price tag at the time was considered enormous and it pleased key Democratic constituency groups like the labor unions. In contrast, the peak New Deal cost was 1.5% of GDP.
The Obama stimulus bill easily passed in the House thanks to Pelosi’s legislative wizardry but it faced tougher sledding in the Senate because the Democratic caucus contained several moderates and the Democrats ruled out the use of budget reconciliation. I’m not sure taking budget reconciliation off the table made any difference since the votes weren’t there for more money.
In Obama’s search for 60 votes in the Senate, Ben Nelson and three Republican senators held the balance of power. They were adamant about holding the cost of the bill to $780 billion. Nelson also made his vote contingent upon extra Medicaid money for rural states. The Recovery Act passed in the Senate with their support by a 61 to 37 vote.
What turned out to be a much maligned bill was a huge success. According to the non-partisan Congressional Budget Office, the Recovery Act saved 1 to 3 million jobs and ended the deepest recession since the Great Depression. In addition, a panel of distinguished economists at the University of Chicago overwhelmingly agreed that the Recovery Act boosted the economy and reduced unemployment.
Michael Grunwald also touted the success of the 2009 stimulus bill:
“The long-term reinvestment part is working. It spent $90 billion for clean energy when we were spending just a few billion a year. It’s doubled renewable energy. It’s started an electric battery industry from scratch. It jump-started the smart grid. It’s bringing our pen-and-paper medical system into the digital age. It’s got Race to the Top which is the biggest education program in decades. It’s got the biggest middle-class tax cuts since the Reagan era. It prevented seven million people from falling behind the poverty line.”
At the time, the Recovery Act was considered to be the most progressive economic and social legislation in decades. Then Vice President Biden Chief of Staff (and current White House Chief of Staff) Ron Klain said: “The idea that everyone knew this would be too small and we would just punked out, it’s ridiculous. We felt like we were in the deep end of the pool.”
Perhaps the most disappointing aspect of the Recovery Act was that Obama and the Democrats lost the spin war — this law was never popular. One of the problems was that several Congressional Democrats and some progressive commentators were very critical of the bill as it made its way through Congress. The mainstream media played up the divisions amongst Democrats and progressives.
In contrast, the Republicans were united in their opposition to the bill and stayed on message. The ferocity and dishonesty of the GOP opposition took Obama and the Democrats by surprise. For example, the Republicans would continue to repeat lies about the bill even after they had been debunked by the fact checkers in the media.
The lesson to be learned from the Recovery Act is that we Democrats have to aggressively message our victories. Nobody else is going to do it for us. Already, it’s obvious that Biden and the Democrats have learned the lessons of 2009 and are constantly reminding the American people about the benefits of the American Rescue Plan.
As Democrats, we need to message these successes on our social media accounts. The country is on the verge of a huge comeback. Already, my Republicans friends are predicting doom and gloom. They couldn’t be more wrong. We can make a difference. Now let’s get it done!