THE NEW NEW DEAL

A cogent reality check of President Obama’s Recovery Act.

The American Recovery and Reinvestment Act, otherwise known as the stimulus bill, signed into law in February 2009, less than a month after Obama’s inauguration, proved the most important piece of legislation of his administration, yet was quickly excoriated by Republicans and overshadowed by the health care debate. The huge $787 billion injection into the collapsing economy inherited from George W. Bush was called a “massive boondoggle to our maxed-out national credit card” and allowed the ailing Republican Party to get its “mojo back.” In fact, writes Time senior national correspondent Grunwald (The Swamp: The Everglades, Florida, and the Politics of Paradise, 2007) in this detailed breakdown of the bill’s provenance, debate, passage and effects, the “stimulus” (no longer so-called because it became a bad word) contained the seeds of all that Obama had promised in his inaugural message of change regarding energy, health care, education and the economy, and has proved remarkably fruitful despite the bad publicity and slow growth in jobs. The author compares its importance in arresting widespread depression and worsening economic scenarios to Franklin Roosevelt’s New Deal, although the stimulus was much larger. Further, Obama, unlike FDR, did not remain silent during the crucial transition period between administrations but embraced the Troubled Asset Relief Program and the bailout of the U.S. auto industry. Obama’s choice of Rahm Emanuel as chief of staff strenuously communicated the need for urgency in acting, while the president’s stocking his economic team with Clinton insiders underscored Obama’s determination for a Keynesian “prime the pump” approach to saving the economy. Obama’s stimulus launched massive clean energy investments, electronic medicine, infrastructure repairs, high-speed rails, Race to the Top and 100-plus other forward-seeing programs.

A pointed, in-the-trenches study whose thrust will be borne out with time.