March 18, 2021 at 4:08 pm #100002302zpodiumKeymaster
“We are about to have a boom,” McConnell said last week after the Biden bill passed. “And if we do have a boom, it will have absolutely nothing to do with this $1.9 trillion.”
As a message, this amounts to “Things Would’ve Been Just As Great Without It”—an even less appealing bumper sticker than Barney Frank’s.
It may be an overstated political cliché that if you’re explaining, you’re losing. But you’re almost certainly losing if you’re explaining, ahead of time, why the economic boom you’re expecting on your opponent’s watch shouldn’t be attributed to your opponent. One lesson of the volatility of the past dozen years is that fairly or not, the president’s party tends to get the credit or blame for the economy—or at least for the way people perceive the economy. Biden is visiting swing states this week to sell American Rescue Plan’s focus on giving Americans vaccines and money, but with economists across the ideological spectrum forecasting explosive growth, many veterans of the 2009 stimulus wars believe the economy will be all the sales pitch the bill needs.
“We’re going to see some fairly amazing economic numbers, and I imagine for the next few years, people will look around and say: ‘This is pretty darn good!’” says American Enterprise Institute fellow James Pethokoukis, a conservative economist who believes the Biden stimulus is somewhat excessive. “I’m sure Republicans will try to spin this, and I have long-term concerns myself, but the reality of a crazy strong expansion will be tough to spin away.”
Democrats seemed to have learned a bunch of lessons from the backlash against the Obama stimulus—that it’s important to sell your own product, that it’s even more important not to trash your own product, and that it’s supremely important to make sure your product works as well as possible. Even though the Obama White House pushed for the biggest possible stimulus it could get out of a bailout-weary Congress in 2009, most economists believe the $800 billion American Recovery and Reinvestment Act would have produced a stronger recovery if it had been even bigger. Biden was determined to make sure his relief act didn’t undershoot as well, even if that meant he would face criticism for ignoring the budget deficit and failing to attract Republican votes.
Republicans, by contrast, seem to have learned one major lesson from the Obama stimulus—the power of No. Three Republican senators did vote yes in 2009, but the rest of the party consistently and vociferously trashed the “porkulus” as a deficit-busting big-government goody bag, a message that helped the GOP reclaim the House in a landslide in 2010.
This time, not a single congressional Republican voted for the Biden bill, even though the party overwhelmingly supported five earlier relief bills under President Donald Trump.
So far, though, political history is not repeating itself. The approval rating for Obama’s recovery plan dropped more than 20 points from his election until he signed it into law three months later, even though Obama himself remained quite popular at the time. By contrast, the Biden stimulus is polling in the 70s, while Biden himself is polling in the fifties. If the pandemic ends and the economy roars, as independent forecasters like J.P. Morgan are predicting, the rescue plan could get even more popular, and the strategy of No could get even more difficult.
“It worked in 2009, when the economy was still struggling, but I don’t see how it works if we get mammoth job creation numbers,” says Republican strategist Tony Fratto, a former assistant Treasury secretary in the Bush administration. “Maybe you could say the economy is running too hot, but I don’t think ‘the Biden bill was too effective’ would sell too well.”
So what changed?
There are obvious differences between 2009 and today.
The Great Recession was a complex economic implosion caused by a systemic financial panic triggered by a national mortgage meltdown. The pandemic was different: America lost even more jobs and economic activity during the initial Covid lockdowns, but that downturn was a relatively straightforward economic problem caused by a virus. As Obama’s former communications director, Dan Pfeiffer, points out, there’s no vaccine for a housing and banking crisis.
Obama also took office at a time when job losses were accelerating and the economy was hurtling toward the abyss, while Biden took office well after the abyss, as job losses were starting to ease. Obama faced massive economic headwinds, and while Biden didn’t inherit tailwinds—he inherited a pandemic that was continuing to spread—he did take the oath during a bit of an economic lull.
There were also consequential political differences between the past and the present. Obama had to push for stimulus after Congress had already bailed out the Wall Street banks that sparked the crisis in 2008, which, Pfeiffer quips, was like asking for money today after Congress had already given a trillion dollars to Covid itself. By contrast, Biden had the luxury of seeking relief after Congress had passed several popular bipartisan relief bills in 2020. Most importantly, Obama needed to round up 60 votes in the Senate to overcome a filibuster, including the three Republicans and half a dozen fiscally conservative Democrats who refused to spend more than $800 billion. Biden engineered his bill to pass through a budget process called reconciliation, so he only needed only the 50 Democrats in the Senate.
The Recovery Act was by far the largest economic stimulus in history at the time, and it helped end the Great Recession and get the economy growing modestly again within a few months. But it was smaller than it needed to be to plug the rapidly expanding hole in the economy. Unemployment kept rising toward 10 percent, and the White House assumption that Congress would keep spending as long as people kept hurting turned out to be mistaken, as the deficit soared and the Beltway narrative echoed Republican demands for austerity. Biden was determined not to repeat that mistake, vowing to go “a hell of a lot bigger” to create more jobs and more economic activity. Even though a $15 minimum wage and a few other provisions got stripped out of the bill, he got the entire $1.9 trillion he wanted to pump into the economy, with only one House Democrat voting no.
“My fear was that Democrats would again self-limit the size of the package to appease the deficit hawks who sat around the ‘Morning Joe’ round table, and they just didn’t,” Pfeiffer says. “For all the talk about how to sell the bill, they learned the lesson that what matters most is the facts on the ground. There’s no good message for double-digit unemployment.”
That said, Biden himself believes that marketing matters. He said last week that he urged Obama to take a “victory lap” after signing the Recovery Act, but that Obama focused instead on his emergency plans to fix the housing market and the banking system as well as his longer-term effort to reform health care. On Tuesday, Biden kicked off his own “Help Is Here” tour with an event at a minority-owned flooring business outside Philadelphia, touting a rescue plan that will ramp up vaccine distribution, extend unemployment aid, dramatically expand tax credits for parents and low-income workers, bail out state and local governments, help schools reopen, subsidize rent and health insurance, and send most Americans $1,400 checks.
Vice President Kamala Harris pushed a similar message at a school for baristas in Las Vegas, emphasizing the importance of telling Americans what they’re entitled to receive from the stimulus. “It’s not selling it; it literally is letting people know their rights,” Harris said. “Think of it more as a public education campaign.”
Many of Biden’s aides served in the Obama White House, and they’re keenly aware that it’s politically counterproductive to let people know Washington is spending lots of money without letting them know the money is being spent on them. Obama dribbled out his stimulus tax cuts to most Americans through an inconspicuous withholding mechanism that few Americans noticed, a decision Biden’s chief of staff, Ron Klain, has called “stupid.” Many Democrats are still irritated that the infrastructure projects in the Obama stimulus had signs touting “ARRA” or “TIGER” or other incomprehensible acronyms that ordinary people had no reason to connect to the stimulus, or Obama, or Democrats.
Most economists believe the Recovery Act saved or created millions of jobs, and its longer-term investments helped launch a clean energy revolution, digitize health care, and reinvigorate government-funded scientific research. But as House Minority Leader Kevin McCarthy accurately pointed out last week, the percentage of Americans who believed in 2010 that it had created any jobs was lower than the percentage of Americans who believed Elvis was alive.
It was the British economist John Maynard Keynes, who first articulated how deficit spending by the public sector can help revive an economy when the private sector slumps, creating a virtuous cycle in which families start spending again and businesses start hiring again. But while Keynes emphasized that any deficit spending is helpful, even hiring unemployed workers to dig holes and fill them back up again, Keynes didn’t have to worry about public opinion polling. Jared Bernstein, who was Biden’s chief economist in the Obama White House and is now a member of Biden’s Council of Economic Advisers, recently told me that “the one thing they never taught in grad school was how to message Keynesian stimulus.”
Still, the Biden team believes the American Rescue Plan will be much easier to message than the Recovery Act, because it mostly just gives tons of money to families and hard-hit businesses like restaurants and airlines, while pouring cash into vaccines and other public health measures to help end the national nightmare. “Shots in arms and money in pockets,” the White House mantra in recent days, would make a decent bumper sticker.
The Obama stimulus was much tougher to explain; Jon Favreau, Obama’s former speechwriter, likes to joke that “the Recovery Act was divided into three parts” will be emblazoned on his tombstone. It’s actually something of a myth that the Obama White House never bothered to try to sell the Recovery Act. Obama did have a lot on his plate—he announced his foreclosure relief plan the day after he signed the stimulus into law—but visited plenty of stimulus projects, especially after Biden persuaded him to launch a “Recovery Summer” campaign in 2010. But the campaign flopped after two months of weak jobs data suggested the recovery was stalling. The most memorable Obama event turned out to be his visit to a solar manufacturer called Solyndra that later went bust. The White House published a report documenting the Recovery Act’s successes, from keeping 5 million people out of poverty to improving 42,000 miles of roads, but the only Obama stimulus commentary anyone remembers was his lament that supposedly “shovel-ready” infrastructure projects didn’t turn out to be so shovel-ready.
Ultimately, Pfeiffer says, it was impossible to brag about a jobs bill during a jobs crisis. Obama’s political team warned him not to accentuate the positive when people were in pain; nobody cared that the economy was less awful than it would’ve been without the Recovery Act.
“We tested that proposition in focus groups, and people would throw stuff at you,” Pfeiffer says. “I have an interest in saying that communications matter, but no amount of speeches or press events or messaging was going to change the reality on the ground.”
The other reality on the ground in February 2009 was political: The Republican minority was remarkably united in its message that the Recovery Act was a disaster on stilts, while the Democrats who dominated Washington produced a cacophony of kvetching about the stimulus being too big or small, too focused on the short term or long term, too full of pork or too stingy with this or that particular priority. The result was news coverage suggesting bipartisan agreement that the stimulus was a mess.
Again, the current situation is like a photographic negative of 2009. Now it’s the Democrats who are remarkably united in their positivity. Senator Bernie Sanders, Biden’s socialist rival in the Democratic primary, called his relief bill “the most significant piece of legislation to help working people in decades,” while Senator Joe Manchin, the most conservative Democratic senator, called it “what West Virginia needs to put this pandemic behind us once and for all.” Meanwhile, Republicans are flailing around for a coherent message of opposition, and even complaining to POLITICO about their inability to find one.
McConnell, who galvanized the opposition to the Obama stimulus as an un-Republican deficit-buster before Obama even took office, had a tougher task this year—partly because his caucus had already supported $4 trillion worth of Covid relief and $2 trillion worth of tax cuts under Trump without much discussion of deficits, partly because his party was already divided over the January 6 insurrection that had inspired seven GOP senators to vote for Trump’s impeachment and his own wife to resign as Trump’s Transportation secretary.
McConnell did manage to get his entire caucus to vote no on the stimulus, a task made easier by Biden’s decision to blow off a proposal by moderate Republicans for a much smaller bill, and he did reprise some of his 2009 messaging about a “purely partisan” and fiscally irresponsible “liberal spending spree.” But his main message was recognizably defensive, arguing that “Democrats inherited a turning tide” even before the stimulus passed, and that Biden shouldn’t get any credit for the upcoming good times because “the trillions we spent on rescue policies in 2020 have the economy prepped to come roaring back.”
Economically, he’s got a point. But Democrats also had a point in 2017 when they argued that Trump was inheriting an eight-year boom that had begun under Obama and had already reduced unemployment to historic lows. It didn’t resonate politically. Trump still got high marks from the public for managing the economy until the pandemic vaporized 20 million jobs, and he continued to get higher marks on the economy than any other issue afterward.
It’s just hard to convince the public that the party in power isn’t responsible for the state of the country—a problem Obama learned after inheriting the Great Recession from George W. Bush. Similarly, Trump tried last week to claim credit for the mass vaccinations happening on Biden’s watch in an oddly plaintive statement: “I hope everyone remembers when they’re getting the COVID-19 (often referred to as the China Virus) Vaccine, that if I wasn’t president, you wouldn’t be getting that beautiful ‘shot’ for 5 years, at best, and probably wouldn’t be getting it at all. I hope everyone remembers!” It’s true that the Trump administration was aggressive about funding vaccines, although it was much less adept at distributing them or any other aspects of the pandemic, but the former president probably wouldn’t have repeated his wish twice if he had any expectation that it would come true.
“The economy will probably take off, the vaccines will be available in the checkout aisle at T.J. Maxx, and that won’t be easy to turn against the Democrats,” says Fratto, the Republican operative. “Maybe they’ll find examples of stupid spending like golden toilet seats, they can say your money is being wasted in Chicago or Philadelphia or whatever. But it’ll be tough.”
It has been tough so far. Republicans have attacked the bill’s $350 billion in state and local aid as a “blue state bailout,” but while there’s a reasonable case to be made that states might get more than they absolutely need, there’s broad agreement among economists that helping governments avoid service cuts and tax hikes is good stimulus, and there’s nothing in the bill that favors blue states over red states. Republicans have also attacked provisions that were in previous stimulus bills they supported, like stimulus checks for prison inmates or increased funding for arts organizations, and complained that only 9 percent of the bill goes to fighting the pandemic, which is true only if you don’t count economic relief for a pandemic-battered nation as fighting the pandemic.
Some Republicans have argued that the rescue plan will actually overheat the economy, creating inflation that will boost the cost of gas and groceries. “Democrats are living in a fantasy land where debt doesn’t matter, spending has no consequences, and inflation is impossible,” said GOP senator Rick Scott. Republican predictions of runaway inflation in 2009 never came true, but the conservative economist Pethokoukis says that this time, they’re not necessarily unfounded. It’s not outlandish to think that pumping $6 trillion worth of federal funding into an economy that was only temporarily hobbled by a virus would create real estate bubbles, upward wage pressures and other signs of overheating once the virus is under control—especially since Biden is now hoping to add another $4 trillion in infrastructure spending.
The problem for Republicans, Pethokoukis says, is that it’s hard to see why ordinary voters would object to an overheated economy with upward wage pressures—which, in plain English, means they’re getting paid more and their retirement funds are going up. There would always be the danger of the Federal Reserve spoiling the party by raising interest rates, but until then, voters would probably enjoy the party of robust economic activity—and they might wonder why it happened under a political party that Republicans insisted was addicted to socialism.
“The bottom line is, Trump said if you elect me, you’ll get a super-recovery, and if you elect Biden, you’ll get a depression,” Pethokoukis says. “We’re looking at a super-recovery, not a depression.”
This helps explain why the most consistent Republican message about the Biden stimulus has been to change the subject to the dangers of “cancel culture” or the increased flow of migrants at the southern border. Ever since Trump rose to power, the Republican coalition has frayed on economic issues like trade and government spending that pit traditional corporate-friendly conservatives against populists who want to broaden the party’s appeal to the working class. But Republicans remain united on culture-war issues like political correctness, illegal immigration and the voting restriction bills they’re pushing in many states.
The bad news for Republicans is that Biden’s infrastructure bill could create similar problems for the party. Many GOP conservatives see infrastructure as a euphemism for big government, which is why Trump never got an infrastructure bill done and his numerous Infrastructure Weeks became a running joke, but public works are popular with the electorate. The good news for Republicans is that the country is still so polarized along culture-war lines, the congressional maps are so GOP-friendly, and midterm elections are so historically brutal for parties in power that it might not matter by the time November 2022 rolls around.
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