Sharon Yang Ms. Lauve APLAC-7 6 Feb.

2013 Following the Money Section I: Introduction and Context The American Recovery and Reinvestment Act of 2009 has many names, from the initialism ARRA, to the shorter moniker The Recovery Act. However, it is most widely known and reviled when referred to as the stimulus (OBrien). The goal of Michael Grunwalds second book, The New New Deal: The Hidden Story of Change in the Obama Era is to clear the stimuluss name. At a time in which the stimulus is often confused with TARP (Troubled Assets Relief Program), a bill of similar proportions but completely different purposes, Grunwald delves deeply into the details of the stimulus, bringing readers back to the early days of 2007 and 2008, when the first hints of stress in the financial system began to appear (Nutting). In a tome of over four hundred pages, Grunwald is able to extensively and exhaustively examine the full history of the stimulus, from the Keynesian reasons that prompted its inception to the present day programs it has put in motion. Grunwald writes almost as if the story of the stimulus is a detective novel, leading readers on a long and eye-opening journey through evidence that may have been distorted by political rhetoric and fading memory. Section II: The Authors Background Grunwald is an experienced journalist who was raised in in Long Island, and went on to graduate from Harvard College (Michael Grunwald). Shortly thereafter, he became a reporter for The Boston Globe, moved to The Washington Post in 1988, becoming the New York Bureau chief, and settled down with Time in 2007, becoming the Senior National Correspondent (About the Author). Grunwald is a prolific writer,

Yang 2 contributing regularly to Times online political blog Swampland.com in addition to several other sites. He currently lives in Miami, which influenced his first book, The Swamp: The Everglades, Florida, and the Politics of Paradise. In combination with his energy column in the print editions of Time, this background reveals Grunwalds environmentalist tendencies, which are reflected in the emphasis on the clean-energy achievements made by the ARRA (Grunwald 352-379). In the words of his colleague James Poniewozik, Grunwald is an advocate of progressive government programs. From his regular posts at Swampland.com and in Time, Grunwald seems to lean markedly left, but political bias does not mean he is not credible. The New New Deal is grounded in extensively researched facts drawn from over 400 interviews he conducted in addition to further research (462). Section III: The Books Argument Grunwalds main argument is essentially laid out on the cover of his book, The New New Deal: The Hidden Story of Change in the Obama Era. The stimulus, regarded as so politically toxic the White House instituted a moratorium on the word that was not lifted until just two weeks before Election Day, has been extremely unpopular with the general public (Nichols). Grunwald seeks to reveal the hidden story of how the stimulus quietly succeeded in a dire economic environment, and the reasons as to why it became so unpopular with the general public. Separated into three distinct sections, the book follows a largely chronological order, first addressing the developing economic crisis, then the formulation of a response between various political players and bureaucrats, and finally the stimuluss many

Yang 3 effects. By telling the story of the Recovery Act in a linear fashion, he helps readers understand the reasons driving the need for what he calls timely, targeted, and temporary investment in the American economy, outlines the various proposals that came from politicians on both sides of the aisle so as to show why the ARRA was the best compromise that conceivably could have passed through Congress, and detail, extensively, the eventual results (Grunwald 60). Grunwald relishes in detailed facts. Throughout the book, he relies extensively on statistics and lists to convey his argument that the stimulus was indeed, effective. This not only appeals to the readers sense of logos, but also helps establish him as nonpartisan. Facts are facts, and Grunwald positions himself simply as a revealer of truths that have gone unnoticed. By basing his arguments firmly in evidence, he preempts any arguments of bias that could be brought against him. There are entire passages in The New New Deal that revolve around numbers, such as the following excerpt in which Grunwald details the effect the ARRA had in one state, Pennsylvania: The Recovery Act had resurfaced 940 miles of Pennsylvania roads. Its clean energy-projects would power 36,000 Pennsylvania homes, and its efficiency investments would save enough to power another 16,000. It was bringing broadband to 255 health providers, 142 libraries, and 939 schools. It had filled a $2.6 billion gap in a $28 billion state budget, avoiding a fiscal blood bath. (416) Passages like these dominate the majority of Grunwalds book, helping to further his argument that, in contrast to common knowledge, the stimulus worked.

Yang 4 Despite all of the statistics, Grunwald still manages to make his book accessible by using informal diction and tone, and often resorts to popular slang. He describes Rahm Emanuel, the then Chief of Staff as looking like he was about to pass a kidney stone after hearing how large the stimulus needed to be, and sums up the then budget director Pete Orszag as a nerdy-chic budget hawk (115). By alternating between dense paragraphs of statistics that even Grunwald calls gulp-inducing and light-hearted observations, he ensures that readers do not get lost in the fine print details of the stimulus (270). Additionally, Grunwald sprinkles in personal anecdotes about a huge, rotating cast of politicians and bureaucrats throughout The New New Deal, purposefully keeping readers interested and engaged. For example, he writes about how Christina Romer, Obamas first Chair of the Council of Economic Advisors drove into downtown Oaklandand began dancing in the street on election night in 2008 (85). By doing so, Grunwald strategically positions himself as an author who can write in a widely understood manner, but also as one whose arguments are backed up with solid data. Finally, Grunwald is able to recreate an accurate portrayal of the environment during the development of the stimulus and in its aftermath because he draws upon firsthand accounts from the majority of the players involved at the time. Although Grunwald was not granted an interview with him, when Grunwald mentioned to the President that he was writing a book about the Recovery Act, President Obama said Youve gotta talk to Biden (qtd. in Grunwald 462). Vice President Joe Biden, the White Houses pointman on the stimulus, offers readers a rare glimpse at the Obama Administrations intentions (Scherer). The wealth of information gleaned from similar on-the-record

Yang 5 interviews with prominent Congressmen and members of the federal bureaucracy gives Grunwalds book unique scope and reinforces his credibility. By allowing readers to see what officials said, Grunwald again positions himself as a journalist who is simply laying out the facts for all to see. Because Grunwald is writing a book that counters conventional wisdom, it is imperative that he is able to establish his credibility, so that others cannot simply cast away his arguments with cries of political bias. Grunwald is able to make an effective argument with his book because it is absolutely filled with evidence, but is also an entertaining read that is not bogged down by the facts and figures. Section IV: Opposing Points of View The stimulus has been unpopular with not only the general public, of which over two-thirds disapproved of the stimulus in 2010, but also with politicians, pundits and journalists on both sides of the political spectrum (OBrien). Much of the general public simply believes that the majority of the $787 billion dollars included in the original ARRA has simply been fettered away. Just 29 percent of people in one national survey believed that stimulus money had been spent wisely (October Election Update). Grunwald counters this idea, stating, the Recoverys Act unprecedented transparency and scrutiny made it an uninviting target for crooks (Grunwald 445). Biden himself described fraud as the dog that hadnt barked, with losses to scams totaling around $7.2 million, just under 1% of the total stimulus package (qtd. in Grunwald 445). Another reason that Grunwald points to as a cause for the criticism from the general public is that, quite simply, the general public didnt notice where stimulus

Yang 6 money was going. Grunwald describes how most Americans would get an extra $16 per week slipped into their paychecks, but polls would find that fewer than 10 percent of them were aware of the largest middle-class tax cut in a generation (126). He goes on to say that: Incredibly, that was the point. Studies in behavioral economics have shown that were more likely to save money when it arrives in a big chunk. When we receive the same windfall without noticing it were more likely to spend it without thinking. So Summers and the rest of the economic team argued for leaking out the tax cuts without fanfare, to mainline more cash into the economic bloodstream. (126) Rahm Emanuel would go on to describe this economic strategy that torpedoed the White Houses political strategy in this way: The geniuses on the economic team wanted the money dripped out so nobody fricking saw it (Warren). Criticism from Republicans in the House and Senate, as well as conservatives in the media is well documented in The New New Deal, as Grunwald cites Republican obstructionism as one of the reasons why Obamas 2009 stimulus wasnt any larger than it was (Grunwald 140-160). Republicans often complained about how the stimulus did not include enough tax breaks, and yet over one third of the ARRA was made up of tax breaks, one of the fastest methods of getting money directly into the pockets of consumers (Hossain et. al.). Grunwald goes on to document the numerous Republicans, including Speaker of the House John Boehner and Senate Minority Leader Mitch McConnell, who, after aggressively fighting against the passage of the stimulus, turned around and asked for stimulus money once it was passed:

Yang 7 Fire-breathing Tea Party Republicans like Michele Bachmann of Minnesota and Joe You Lie! Wilson of South Carolina made multiple requests to multiple agencies. Senate minority leader Mitch McConnell wrote at least five letters pushing transportation projects, House minority whip Eric Cantor lobbied for a high-speed rail line to his hometown of Richmond, and [e]ven Boehner said the bill would fund shovel-ready projects that [would] create much-needed jobs. (Grunwald 282) However, criticism of the stimulus was not limited to just Republicans. It drew ire from Democrats as well. Chuck Schumer (D-NY), in charge of messaging for Senate Democrats, began howling that 80 percent of the stimulus grants for wind projects had gone to foreign manufacturers (383). Yet the truth of the matter was that those foreign manufacturers spent those stimulus funds on plants in the United States by hiring American workers. Liberal commentators such as Paul Krugman, who won the Nobel Prize for Economics in 2008 and is an established economist who writes for the New York Times, dedicated an entire chapter of his book End This Depression Now! to what he calls an inadequate response (109). He criticizes the ARRA as too small to effectively avert the negative of the effects of the recession. Krugman argues that the slowness of the recovery has largely been due to the inadequate size of the stimulus. Grunwald references these criticisms by writing that it was politically impossible to pass a bill any larger than the Recovery Act, and that Obama even managed to pass $100 billion dollars in additional stimulus in his latter 3 years in office (Grunwald 447). Rahm Emanuel argues in a similar

Yang 8 vein that Krugman as an economist is not wrong. But in the art of the possible, of the deal, he is wrong. He couldnt get his legislation (Lizza). Krugman in turn, also acknowledges the difficult political environment, but proposes that Congressional Democrats and the Obama Administration could have passed a larger stimulus package through reconciliation. This would have enabled Senate Democrats to bypass the threat of filibuster, and was precisely the strategy used to pass health care reform in 2010. Krugman posits that Democrats on Capitol Hill and in the White House were simply not pushing hard enough for greater stimulus. Section V: Conclusion In good times, the economy is in tenuous equilibrium. Fear can easily upset this balance during an economic crisis such as the one that hit markets in 2008. Fear causes consumers to pull back as they reduce spending and turn to saving. This in turn causes corporations to pull back as well, as their revenue stream dries up as consumers stop buying. When corporations pull back, jobs are the first to go, cutting into consumers incomes, and so consumers pull back even further. This vicious cycle results because the economy is intertwined in every possible way. My spending is your income, and your spending is my income. If everybody pulls back at the same time, the entire situation simply spirals towards depression. At this point, the only way to break out of the cycle is a one-time injection of massive spending, so credit flows freely once more. The only body with the resources to do so is, of course, the federal government. This is the Keynesian logic behind stimulus spending. As Grunwald reveals, the stimulus was a crucial component of not only the economic recovery but also of future growth. It set into motion a massive slate of

Yang 9 reforms, from a shift towards computerized health records to a two-fold increase in domestic renewable energy production. The narrative of the stimulus was undermined early on, and communication failures of the original proponents of the ARRA have led to it being vilified as the perfect example of government excess. It has been used as easy political fodder for Republicans just as Democrats have beaten a hasty and sometimes cowardly retreat from the basic economic principles behind stimulus policy. However, Grunwald is able to effectively cut through to the basics of the massive stimulus bill. The $787 billion dollars kept the American economy from falling into a depression and has built a far more solid foundation for further prosperity.

Yang 10

Works Cited ABC News/Washington Post Poll: October Election Update. ABC News. ABC News Internet Ventures, 5 Oct. 2010. Web. 29 Jan. 2013. About the Author. Michael Grunwald. N.p., n.d. Web. 8 Jan. 2013. Grunwald, Michael. The New New Deal: The Hidden Story of Change in the Obama Era. New York: Simon & Schuster, 2012. Print. Hossain, Farhana, Amanda Cox, John McGrath and Stephen Weitberg. The Stimulus Plan: How to Spend $787 billion. New York Times. New York Times, n.d. Web. 9 December 2012. Krugman, Paul. End This Depression Now!. New York: W. W. Norton & Company, Inc., 2012. Print. Lizza, Ryan. The Gatekeeper: Rahm Emanuel on the Job. The New Yorker. Cond Nast, 2 Mar. 2009. Web. 19 Jan. 2013. Michael Grunwald. Time. Time, n.d. Web. 8 Jan. 2013. Nichols, Hans. Stimulus Back in Obamas Vocabulary After Year on Dont-Say List. Bloomberg. Bloomberg L.P., 25 Oct. 2012. Web. 19 Jan. 2013. Nutting, Rex. Two Dangerous Myths About the Stimulus. The Wall Street Journal: Marketwatch. MarketWatch, Inc., 25 Aug. 2010. Web. 5 Feb. 2013. OBrien, Michael. Poll: Two-thirds Think Stimulus Was a Waste. The Hill. Capitol Hill Publishing Corp., 5 Oct. 2010. Web. 29 Jan. 2013.

Yang 11 Poneiwozik, James. Dead Tree Alert: Big Bird is a Republican. Time. Time, 11 Oct. 2012. Web. 6 Jan. 2013. Scherer, Michael. What Happened to the Stimulus? Time. Time, 01 July 2009. Web. 3 Feb. 2013. Warren, James. The Dirty Money Stimulus (Literally). The Daily Beast. The Newsweek/Daily Beast Company LLC, 2 Dec. 2012. Web. 29. Jan. 2013.