The New New Deal: The Hidden Story of Change in the Obama Era

Michael Grunwald’s The New New Deal offers a unique, journalistic view on the opening act of the Obama administration, comparing the American Recovery and Reinvestment Act of 2009 to the legacy of the original New Deal. Authored by Time magazine senior national correspondent Michael Grunwald, this book offers a glimpse of the inner-workings of the Obama administration, arguing that Obama’s Recovery Act offers ambitious and far-reaching initiatives as bold as those of FDR’s New Deal.

Grunwald is clear in his argument that while the stimulus package and, in fact, the entire first term of the Obama administration carries with it shades of New Deal Progressivism, Obama and FDR are as often divergent in their characters and approach to political problems as they are similar. Even calling the stimulus a “New New Deal,” concedes Grunwald, is a bit of a stretch – though large in terms of actual dollar amount, the stimulus did not result in the creation of new government programs and did not do much for the millions of unemployed in the Great Recession. While the stimulus was successful in updating some of our decaying infrastructure and keeping the economy from falling off a cliff, governors receiving aid for stimulus projects were not required to post signs acknowledging the source of the funding. Furthermore, Obama’s programs failed to include the kind of direct job-creation programs included in the first New Deal.

The lack of a jobs program might explain, in part, a theme that Grunwald articulates throughout the book — the Obama administration’s constant struggle with articulating the need for a major initiative to help stabilize an economy in freefall. Unemployment sailed into double digits — we are reminded — just as the stimulus started to take effect. It is as though Obama woke up in the oval office in the midst of a nightmare mirroring that described by John Maynard Keynes. Credit was frozen. The private sector was holding onto dollars. The economic death cycle of stalled investment would soon lead, predictably, to job layoffs and deepening anxieties. Certain lessons of the Great Depression were clear, while others were still hotly contested by economists and historians, and some were entirely forgotten – much to the regret of liberals.

In many respects, the coming of the Second World War, credited with bringing back the American economy, was also the great ratification of Keynesian ideas. The rapid growth of the military industrial complex during the war proved to be the ultimate investment and job creator to stimulate the economy, but the war also worked to obscure the effects of infrastructure development that took place during the original New Deal — in all likelihood helping to drive both the rapid pre-war and massive post-war growth of the US economy. While the administration sought to find certain lessons from the Great Depression, it was clear that the Great Recession was a new crisis in many respects – based on new kinds of flimsy investments and worsened by new forms of debt.

Grunwald details the many questions facing the new administration in 2008: how should the administration respond to the deepening crisis? What political deals were actually possible at that moment? Where was the administration most effective in its earliest efforts and what battles were lost? Based on his careful reading of published accounts and his own interviews – Grunwald’s offers answers to these and other questions embedded within his rich narration surrounding the stimulus.

The first step in the original New Deal was to fix the banks; this appears in the context of the Obama administration as well. Grunwald portrays Obama’s efforts to fix the banking, mortgage, and housing crisis as bearing some success. He concedes, however, that Obama was unable to fully reform the financial sector in an effort to avoid catastrophes similar to 2008. Following bank reforms, the original New Deal launched a series of experiments–some, historians agree, less successful than others. The Supreme Court, in a series of decisions, declared other New Deal experiments to be unconstitutional. Ultimately, while the New Deal ran on two legs — reform and stimulus, on the one hand, and direct jobs programs, on the other — Obama’s program is mainly relied on the stimulus.

While the American Recovery and Reinvestment Act mirrored some of the longer term projects emerging from the PWA (1933-1943) and projects requiring the expertise of skilled laborers, it has yet to produce a more comprehensive series of jobs programs. Original New Deal programs like the he Civilian Conservation Corps (CCC), National Youth Administration (NYA) and Civil Works Administration (CWA) are missing from the political landscape today.  Programs like those hired laborers with fewer skills for shorter term projects, from reforestation in Yosemite to part-time jobs for youth in libraries.

Arguably the most successful aspects of the New Deal were the investments in human and built infrastructure. This argument might even be considered sympathetically by one of the major characters in Grunwald’s story, former Berkeley professor, super-nerd, and Secretary of Energy Steven Chu, who is said to boldly call for his team to be comprised of “game changers only.” Grunwald argues that bold new efforts for clean and renewable energy as a major and necessary component of the New New Deal –perhaps a modern day equivalent to the electrification projects of the 1930s, such as the Tennessee Valley Authority.

This book walks the reader through many of the less obvious developments that unfolded in the first years of the Obama administration, taking a closer look at what has been repeatedly and aggressively labeled by critics the “Failed Stimulus.” Grunwald even notes that Obama himself stopped referencing “the stimulus” as such because the program had become so unpopular.

A former congressional correspondent for the Washington Post, Grunwald brings an insider’s view to the opening months of the Obama presidency. In an entertaining anecdote offered in the opening pages of the book, Grunwald offers as background that while the president himself proved an elusive interview, the long-winded and affable Vice President Joe Biden proved more than happy to speak to the author on several occasions, touting the accomplishments of the president.

Grunwald concludes that while disappointing to a great many, Obama’s willingness “to take the ham sandwich when he couldn’t get the whole hog,” has potentially resulted in a mixed legislative result. “2012,” Grunwald concludes, “won’t just be about litigating the new New Deal. It will also be about relitigating the old New Deal.” He adds, “The New Deal established the principle that Americans ought to take care of each other in hard times. Yet here we are, four years after the genius of an unconstrained free market brought the global economy to its knees, still unsure whether government ought to try to reshape our direction or just get out of the way.” Through a readable and insightful narrative, this book reminds us of some of our most hard fought accomplishments and — in outlining what is still missing — may provide some inspiration moving forward.

Reviewed by Samuel Redman

Dr. Sam Redman is an Academic Specialist at the Regional Oral History Office (ROHO) at The Bancroft Library at the University of California, Berkeley.
By Michael Grunwald | New York: Simon and Schuster | 2012

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New Deal Maps

Check out our latest map and guide to the work of the New Deal in Washington, D.C. It includes 500 New Deal sites in the District alone, highlighting 34 notable sites, and includes an inset map of the area around the National Mall which can be used for self-guided walking tours.

Take a look at our previous guides, equally comprehensive, covering key New Deal sites in San Francisco and New York City.