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South Beach-Based Author Michael Grunwald Is Changing D.C.'s Mind About the Stimulus

In our nation's capital, real consensus happens as often as a noncreepy Rick Scott grin. Yet for the past couple of years, everyone in Washington, D.C., has agreed on this: President Obama's mammoth 2009 stimulus was kind of laughable. Green-energy initiatives? Saving America from financial ruin? Hah!

Last week, though, that conversation turned on a dime. The reason? A new book from a writer based about as far, culturally speaking, from the Hill as possible: the heart of South Beach. The New New Deal, a 495-page tome from Miami-based Time magazine writer Michael Grunwald, argues that the stimulus not only saved us from the financial abyss but also revolutionized everything from energy policy to education.

Keep reading for a full Q&A with Grunwald.

The Daily Beast proclaimed the book will "change how you look at President Obama's stimulus forever." The Economist demanded that Republicans read it. Grunwald says living in the Magic City was actually key to shaking up D.C.'s conventional wisdom.

"The groupthink is so powerful there," he says. "Just the idea of writing a book about the stimulus up in D.C. would be ridiculous, because everyone there knows what the stimulus is: It's a joke."

Grunwald moved to Florida to research his 2006 book, "The Swamp," a history of the Everglades, and ended up staying after meeting his wife, Cristina Dominguez, here. For a D.C. policy wonk, it wasn't the easiest transition.

"At first, it was kind of nice to be around people who weren't talking about Abu Ghraib all the time," he says. "But it took time to find friends who knew that Abu Ghraib isn't a fashion designer."

When Obama passed his stimulus in January 2009, Grunwald decided it deserved deeper reporting. After all, the act was four times bigger than any passed by FDR.

Grunwald's narrative, built from interviews with more than four hundred sources from Joe Biden down, tells how the GOP united to oppose every piece of the bill, and highlights Florida's own idiocy, including Scott's insane decision to turn down a high speed rail between Tampa and Orlando.

But it's not a partisan screed; the book presents evidence that in a few decades, we may look at the stimulus as a watershed.

"It's going to be hard for anyone to look at this (book) and not say, "Look, this dude did a shitload of reporting,'" Grunwald says. "They may not like the conclusions I reach, but there are a lot of facts in here."

Click through for a full Q&A on why America still doesn't get the stimulus, how Rick Scott screwed us on high speed rail and why Marco Rubio doesn't understand the government's role in encouraging development.

 

New Times: One of the main themes in this book is how wide the gulf is between what the stimulus has actually done and what most of the public thinks it did. Why is there such a gap?
Grunwald: There are four factors for why the public doesn't understand what the stimulus was all about. One is this deliberate, clever, diabolic strategy by Washington Republicans that they were going to fight and destroy this deal with one unified message from the very beginning: This is a big-government mess. They've been spectacularly disciplined in sticking to that message and repeating it over and over.

Secondly, Obama and the Democrats have not at all had that same kind of discipline. Obama has made a lot of communication errors and some strategic errors that I detail in depth in the book, and Democrats, particularly in the original stimulus debate, were all over TV complaining about the parts they didn't like. And their messages were very complex: it's short-term stimulus, but it's also long-term reinvestment in energy, education, health care, and other national priorities; it's spending, but also tax cuts; it's bigger deficits now, smaller deficits down the road. The Republican message was simple: No.

Third, the media really screwed the pooch in covering this. They did a really bizarrely horrible job of covering the stimulus, because this was a real nitty, gritty public policy bill and the national media is allergic to public policy. They want every story to have "two sides," and Republicans realized that in this he-said she-said culture there would be no evaluation of the bullshit coming from one side. Most of what's in the stimulus had been uncontroversial, bipartisan stuff, but the Republicans knew that as long as they could keep it controversial it would be covered as a controversy. Journalists are reluctant to spend the time sorting out the truth. I was fortunate to have the time to do a book to do that.

Now that I've said all that, I'm not entirely sure any of those other three reasons made all that much difference. The truth is this was a jobs bill that was passed at a time the economy was hemorrhaging jobs at a terrifying, stultifying rate. No matter what he'd done, this wasn't like FDR taking over at rock bottom, this was when the Road Runner had just stepped off the cliff while holding the anvil. He'd just barely started to fall. I really do believe there was stuff Obama could have done to make the optics marginally better -- they shouldn't have positioned this just as jobs bill -- but at the end of the day, this was an economic recovery package that did a terrific job of turning Depression-level economic levels into just bad economic numbers. So they were set up to fail.

People who say he screwed up the stimulus, or health care, there's no way to run a counter-factual political study on that. You can't do a double-blind study to prove the economy would be better with no stimulus or a bigger stimulus. But there's strong evidence that without stimulus, we would have gone over the cliff. Some White House people at the time even recognized the problem. There's a funny scene in the book where Ron Klain, the VP's chief of staff, is talking to Larry Summers, who is the top economic adviser, and he says essentially, You know, we're telling everyone we're in this crisis because banks were gambling with money they didn't have and home owners were taking out bigger loans than they could afford. And our solution is to borrow 800 billion more dollars to pump into the economy. Larry just shrugged and said, You gotta do what you gotta do.

 

Obama's always clearly believed that good policy ultimately equals good politics. Does the stimulus' reception prove he's wrong?
Even Obama would tell you he overestimated how true that is. So yeah, there's some truth to that. But I would push back in a couple ways, though. This was a really unusual situation. Larry Summers says that FDR was lucky by comparison because things had hit bottom under (Herbert) Hoover, so there was never any doubt about who's fault this was.

So that's one thing I'd push back on, that this was an extraordinary situation when they passed the stimulus. Also, I'd point out that when you think about it, Obama isn't in that horrible a shape going into the election, considering how many straight months of however high the unemployment has been. People don't want to string him up, and he's still a heck of a lot more popular than Democrats or Republicans in Congress. To some extent, people aren't thrilled with how things are going but it seems like in general they think Obama's done the best he could. I always hear people talking about how Obama messed up the politics but it's also possible that the black guy who won the White House even though his middle name is Hussein didn't suddenly become a political idiot on January 20, 2009.

Let's get a little Florida-centric -- can you talk about some of the more subtle changes the stimulus has wrought in the state? The smart utility readers installed by FDLE are a good example. There's a particularly interesting incident where the last Orange Bowl was seconds away from blacking out but was saved by these new grids.
The smart grid is a perfect example of the stimulus, and in a way is a little microcosm of the entire stimulus package. It was something that Obama wanted go huge on at first. He and Biden had talked about spending $100 billion and just doing it, just building an entire national smart grid. For complicated policy reasons, you can't just go build a smart grid. You want to put in policies and seed money and have the utilities do it. There's a quote from (economist) Peter Orszag about the sense of frustration: "Here's the first African-American president with this big mandate, the economy has fallen off a cliff, history is calling, and I can't just go build a smart grid?"

So instead they put $11 billion into the smart grid, which compared to the $10 million or so the feds had spent before, is still an enormous amount. It really provides a huge jump start, and the first jump start is these smart meters. FPL got $200 million.

But the program got off to this incredibly slow start, to the point where Rahm (Emanuel) is just flipping out because no money is being spent. He just wants the utilities to hurry up and just give everyone a fucking smart meter already. There are these dorks form the DOE who have to come tell him, well, we can do it, but there are limits to when grid is able to handle and we need to update the synchrophasers and these other technical terms. I think it's a hilarious, because Rahm eventually backs down and says, "OK, do it your way, but hurry up and I never want to hear the word 'synchrophaser' ever again." 

So they go ahead and do it, and the smart meters, they're one of the most visible ways the stimulus touches ordinary lives. But with a dumb grid and dumb pricing that has yet to catch up, they're really limited. You can go online now and see how much energy you're using, but not how much each appliance uses. Most of the good things they're doing, you don't see directly. Things like that Orange Bowl story, where the transformers that used to be checked once a year to see if they're in danger of blowing instead get checked every couple of minutes under a smart grid. It sniffed out the problem and fixed it before this big embarrassing blackout. But people don't know that. The only tangible impact is that don't need meter readers anymore, which will lower costs but it also means meter readers are getting laid off. So it's a beautiful microcosm of the stimulus: good policy, making incremental but really important changes that can be a tough sell to the public.

Reading the section about Gov. Rick Scott floundering about what to do with the stimulus' high speed rail money made me want to punch a wall. Why did he turn it down?
Well, putting the best possible spin on what happened, Scott just doesn't believe in high speed rail. He doesn't believe in trains. So he went looking for a study, any study, that would say that rail deal was bogus, and he found one and ignored the tons of actual studies that showed it wouldn't be bogus. He got this joke of a study from a libertarian think tank. Then he said that, well, his real concern was that Florida would have to foot the bill for the project. In reality, the Obama people had bent over backward to make sure Florida wouldn't pay a dime for this project. They even had rail companies set to cover any cost overruns. There was no risk to the state. This was the most shovel-ready project in the whole country, because they had land along Interstate already set, they had permits, and this thing was going to be good to go.

But he just didn't want to do it. This was right when the new governors of Wisconsin and Ohio had just killed their own train projects under the stimulus. Scott knew these things are really popular among the business community in Tampa and Orlando, so he was always a little leaving wiggle room before his election on the issue. I did an interview with Ron Klain after the Wisconsin project and the Ohio project had both been killed. He was spinning the story, saying, can you imagine how this is going to play in a couple years, when they're building this thing in Florida and they can run ads saying, "Thanks for the jobs, Wisconsin!" In the end, it ended up being California's gain and the Midwest's gain. It's going to be a real change in the Midwest and it's being underplayed. They're building a train network there that's eventually going to be better than cars. They're already slicing off an hour on the Chicago to St. Louis route.

 

You credit Rubio's rise against Crist in large part to his early opposition to the stimulus. How much of a factor was that stance in driving Crist out of the GOP?
Marco Rubio told me at the time that the stimulus and that famous kiss between Obama and Crist was a clarifying moment for Republicans. If I can back tap myself a little, I made some good and some bad predictions, but Rubio was among my good calls. I wrote a piece when Rubio was down 30 points in the polls saying that Charlie was in deep trouble. It was just Occam's razor. Charlie was a bipartisan guy in a partisan primary. The stimulus became a key issue not because of what it was but because it was Obama's first big move out of the gate, so it set the tone that a "real" Republican was someone who was willing to fight Obama. It wasn't someone who supports the middle-class tax cuts in the stimulus, like Crist. Rubio shrewdly recognized this at the time.

I do tell one Rubio story that I do think really represents the problems with Republican opposition to the stimulus. I'm not some flaming liberal defending every piece of this, but I do think the Rubio is wrong in seizing on this idea. So Rubio in some speech says basically that somewhere in America, there's someone in a garage right now inventing a battery that will change society and doing it without the government's help. There's a real lack of knowledge about the history of technological progress in saying that. There are these unbelievably creative guys who are inventing batteries right now that will someday power an entire city. But in every single case, they're using technology startup funds and grants for demo projects from the government. Ultimately, you need grants to build factories to give unproven technology a chance to succeed. Sometimes, you get a Solyndra (the failed solar panel firm supported by the stimulus), but that's a risk you take in funding innovation. So in that sense, I do think Rubio stands for this sort of Tea Party idea that nothing positive can come from government investment.

It's unusual to write a book that changes the conversation in Washington while living in South Beach, of all places. Does it help you to be so far outside the DC echo chamber, in a place where eight out of ten people probably have never heard of the stimulus, much less Solyndra?
There are pros and cons. I moved down here while working on The Swamp, and I met my wife and ended up moving up down here full time. At first, it was kind of nice to be around people who weren't talking about Abu Ghraib all the time. But it did take some time to find people who didn't think Abu Ghraib was a designer. Eventually, you find like minded people anywhere.

Logistically, I did a lot of reporting all around the country for this book. Sure, it would have been really helpful to be in DC on a more regular basis, instead of scheduling trips every time I needed to do interviews. But I lived in DC for 9 years. I'm a pretty contrarian dude, but I don't think I would have come up with this book if I'd been living in DC. The groupthink is so powerful there. Just the idea of writing a book about the stimulus up in DC would be ridiculous, because everyone there knows what the stimulus is: it's a joke. That's what it is. It's almost impossible to talk about the stimulus without this ironic voice where you're letting everyone know you're in on the joke. If you try to talk about it as serious policy, it's hardy har har.

I was never a cocktail party reporter, but when all your friends are part of this groupthink, it's tough to look objectively at something like this. What' I'm saying about the stimulus in this book, I think will become conventional wisdom up there eventually. But the idea was so crazy, even talking to my bosses, pitching a story about the stimulus, if you've watched Aaron Sorkin's new show ("Newsroom), I felt like that blogger kid pitching his story that Bigfoot is real.

There's a narrative in DC, a narrative, by the way, that always centers around the president. The president is either a hero, a "mission accomplished" hero, or a post-Katrina bumbling idiot. If I was a savvier businessman, I would not have gone out to market this book in the fall of 2010, because I'm trying to sell a book about this "new new deal" at a time when the narrative was that Obama was an idiot. He was a schmuck. How the hell do you sell that?

Lest you think I'm that far-seeing when I was negotiating with publisher, my real worry was that by the time this book came out, the conventional wisdom would already be that the stimulus was a groundbreaking piece of legislation. I remember when I was still at the Washington Post, Tom Ricks told me he was working about the War in Iraq and said the title would be "Fiasco." I was like, "Really? That's ballsy." This was right around the time of "Mission Accomplished" and all that. And he told me, "No, my real fear is it will be conventional wisdom by the time it lands."

I mean, I did a lot of reporting for this book, but it's not like it's based on some spectacular feat of digging. It's not a secret that there's $90 billion in stimulus for energy projects. It shouldn't surprise anyone that putting $90 billion would make a really big difference in our energy policy.

So it's a little bit of both excitement that it hasn't become conventional wisdom yet and worry that I'm setting myself up for a shellacking. But I do think it's going to be hard for anyone to look at this and not say, "Look, this dude did a shitload of reporting." They may not like the conclusions I reach, but there are a lot of facts in here. You can take the facts and put a different spin on them, and there should be interesting debates.

There's a funny scene at the end of the book where I'm talking to Biden, and he's giving me shit about how I was the only one writing anything nice about the stimulus. He's like, "I loved your articles, I took them to bed with me." Look, I've been a reporter for 20 years. I didn't get into journalism to write articles that Joe Biden would want to cuddle with. But there's some truth to that. I felt at times like I was covering this bizarro-world stimulus that nobody else saw: on time, under budget, virtually fraud-free, full of good government reforms, and transforming out national approach to energy, health care, education, transportation, and economic growth. Hopefully now others will see it, too.

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