Stimulus is battleground for 44’s legacy

The fifth anniversary of the stimulus law has launched the first significant battle to define President Obama’s legacy, little more than a year into his second term.

For most Republicans, the $787 billion American Reinvestment and Recovery Act remains the Obama administration’s original sin, a bloated exercise in big government that failed to deliver on its central promise.

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The White House has issued a new report defending the law, and independent economic studies have largely deemed it effective in stopping the free fall of the recession and beginning a period of uninterrupted, if slow, economic growth. 

But with the passage of time, members of both parties have taken a more nuanced view of the legislation that passed Congress within a month of Obama’s inauguration.

“It was a fact-acting and effective piece of work that simply didn’t last long enough,” said Jared Bernstein, who served as Vice President Biden’s top economic adviser when the stimulus took effect.

“It hit hard and it hit fast, but politics pivoted away from stimulus towards deficit reduction too soon,” added Bernstein, who is now at the left-leaning Center on Budget and Policy Priorities. 

Bernstein’s lament is one shared by several Democrats interviewed by The Hill who argued that the White House and the party’s congressional leadership performed admirably despite the combination of factors working against them: the near-blanket opposition of Republicans and a miscalculation of the depth of the economic collapse. 

“We did the best we could given we didn’t have the votes to do what was fully needed,” said former Rep. David Obey (D-Wis.), who as chairman of the House Appropriations Committee was a principal author of the bill.

Republicans to this day point to the law’s failure to meet the White House’s now-infamous pledge that it would keep the unemployment rate from topping 8 percent. Not only did the jobless rate break that barrier, it reached 10 percent in the fall of 2009 and did not fall below 8 percent until shortly before Obama’s reelection.

“I believe that the stimulus actually lengthened the recovery, and we’re still undergoing that, and deepened the recession,” said Rep. Tom Price (R-Ga.), who in 2009 led the conservative Republican Study Committee in the House. “If one is objective about it, I don’t think anyone could conclude anything other than that it was an abject failure.” 

Supporters of the stimulus hold the opposite view, arguing that with the benefit of hindsight, the stimulus needed to be higher than $1 trillion, with more money directed to infrastructure and state aid.

Ray LaHood, a former Republican congressman who Obama tapped to be his Transportation secretary, said lawmakers of both parties have told him the $48 billion portion of the law allocated to roads and bridges should have been as much as 10 times higher.

“We could have cleaned up an amazing backlog of infrastructure needs at the lowest possible historic cost because interest rates were so low,” Obey said. “That was a missed opportunity.”

Yet the idea that Obama and Democratic leaders could have gotten more in early 2009 is wishful thinking, according to Michael Grunwald, author of The New New Deal, which examines the stimulus.

While three Republicans in the Senate, Susan Collins (Maine), Olympia Snowe (Maine) and the late Arlen Specter (Pa.) voted for the bill, GOP leaders in the House mobilized their entire conference against it. 

“They couldn’t have gotten more money,” Grunwald said. “It wasn’t just the three Republicans. There were eight or nine Democrats in the Senate who said absolutely no more than $800 billion. That was their line in the sand.”

Former Rep. Steve LaTourette (R-Ohio), a centrist who was an ally of then-Minority Leader John Boehner (R-Ohio), called the legacy of the stimulus “a mixed bag.” He said that Democrats could have gotten his vote and perhaps a few dozen other Republicans if they had focused on traditional infrastructure projects instead of areas like energy and education.

“Even five years later, if you look at unemployment and look at the economic recovery and everything else, it wasn’t the silver bullet that people thought it was going to be,” LaTourette said. “Did it help? Yes. I don’t think it hurt anything, but at the end of the day it didn’t produce the result that the president would have hoped for.”

Along with the healthcare law, the Recovery Act will surely be central to Obama’s domestic legacy.

But it is the billions of dollars in stimulus spending on green energy, electronic medical records, the “Race to the Top” education program and other areas that, Grunwald argues, could help define the Obama presidency in the decades to come.

“They did a few hundred billion dollars of it in his first month in office,” Grunwald said, “and some of that has had already had an outsized impact that historians will be looking at for a long time in terms of changing the course of the country.”

The White House made its pitch for the stimulus in a report issued Monday by its Council of Economic Advisers. 

The study said the Recovery Act, by itself, “saved or created” 1.6 million jobs a year through 2012 and added between 2 and 3 percentage points to the Gross Domestic Product from late 2009 to mid-2011. And taking aim at a Republican charge, the report said the law added to long-term growth “while having little impact on long-term debt” because of its temporary nature and because the economic gains would outweigh the projected cost.

Yet Obama and congressional Democrats have struggled to sell the stimulus as a success for five years, and the president’s economic legacy remains a matter of fierce debate.

“Everything didn’t get better right away, instead things got bad less quickly,” Bernstein said. “It’s very hard to sell, ‘It could have been worse.’ ”

Obey said Obama faced “impossible choices” and was hampered by the fact that, unlike Franklin Roosevelt at the outset of the Great Depression, he took office before the economy had hit bottom.

“He took over in the midst of the crash so a lot of people in the public never really understood where Bush stopped and Obama began,” Obey said. “The political opposition exploited that confusion.”

Analyzing the economic recovery of the last five years, Obey reminisced about a winter road trip he took in his district years ago. The car he was driving began to falter, and when he checked the fuel tank, he saw they had put in kerosene rather than diesel. The car started “to chug and slow down, and slow down.”

“We made it,” Obey recalled. “But it took forever, and it was perilous.”