My new book about the Obama administration and its stimulus package, The New New Deal, has a provocative subtitle: The Hidden Story of Change in the Obama Era. My new story in the magazine, adapted from the book, takes a shot at the question: Why was it hidden? It’s a combination of relentless Republican distortion, awful Democratic messaging, mindless media coverage, and the inherent difficulty of selling a jobs bill while jobs were disappearing. The Obama team made marketing mistakes, too, and one of them was pushing wonk-approved policies that were politically daft. My favorite example, which will make Democrats reach for anti-anxiety pills, is after the jump.
In 2008, President Bush signed a stimulus bill consisting mostly of tax rebate checks for most American workers. Obama promised similar Making Work Pay tax cuts during his campaign, but his economic team persuaded him it would be better stimulus to dribble them out a few dollars a week through reduced withholding, because behavioral studies show we’re more likely to save a windfall when it arrives in a big chunk. We’re more likely to spend it when we don’t notice we’re getting it.
But politically, when you give people a tax cut, you want them to notice it and appreciate it and remember it. This felt like sending flowers to a romantic interest without signing the note. Former Obama chief of staff Rahm Emanuel argued that “we’re denying ourselves an Ed McMahon moment,” the grateful squeal of Publishers Clearinghouse pleasure that would greet an envelope from Obama.
“The economists thought it was important to do it their way,” Emanuel told me later. “The president correctly sided with them on policy grounds.” His rolling eyes and gritted teeth did not suggest a deep belief that Obama had in fact decided correctly. The Making Work Pay tax cuts went to 95 percent of American workers, and fewer than 10 percent of them realized that Obama had cut their taxes.
“The political theory was if you do the right thing, and you get results, that’s good politics,” recalled Ron Klain, Vice President Biden’s former chief of staff.
Then he winced.
“In retrospect, it just seems stupid,” Klain said.