The Magazine

The Stimulus Lesson

Having seen meager results and huge deficits that the stimulus produced, voters are skeptical of Obamacare.

Aug 10, 2009, Vol. 14, No. 44 • By MATTHEW CONTINETTI
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Let's stipulate that Congress may yet pass some sort of health insurance overhaul by the end of the year, that the future in politics is never a straight-line projection from the present, that President Obama is a savvy and charismatic guy, that Democrats control both houses of Congress, and--yadda, yadda, yadda--that the climate for "reform" has never been better. Still: One can't help noticing that the more Obama talks about his health plan, the less the public supports it. Why?

Partly because voters have connected the dots between the American Recovery and Reinvestment Act of 2009 and Obamacare. They have seen the meager results and huge deficits that the stimulus produced, and can't come up with a good reason to embark on yet another government shopping spree. For the public, the stimulus was bad economic medicine. Now Obama wants it to try another, unapproved experimental drug.

Nor do voters think health care is an urgent problem. The vast majority are satisfied with their insurance and see health coverage as peripheral to larger concerns such as jobs, the economy, and the federal debt. In last week's Wall Street Journal poll, for example, health care ranked third in the list of the public priorities, around where it typically resides.

The big takeaway from the NBC News/Wall Street Journal survey, of course, was that pluralities disapprove of the way Obama is handling "health reform," 46 percent to 41 percent, with 47 percent calling Obama's plan an--uh oh--"bad idea." Buried in the Journal's write-up, though, was the equally bracing news that support for the stimulus has fallen to 34 percent. Only a third of the country, in other words, is willing to say that the recovery plan is doing its job. Meanwhile, many more people--43 percent of the respondents in the Journal poll--say the trillion-dollar-with-interest emergency spending bill was another "bad idea."

They have plenty of reasons to say so. In the months since February 17, when Obama signed the stimulus, the economy has hardly improved. Unemployment stands at 9.5 percent, one-and-a-half percent higher than the White House predicted in January. The money that the White House assured us had to be spent in a "timely" manner to "get our economy moving again" has hardly been spent at all: According to the official website, as of July 24, only about a tenth of the stimulus--$70.2 billion, to be precise--had been "paid out." The 2009 deficit? It rose to $1 trillion in June. Gravity won't be enough to pull it back to earth.

Saddling the budget with a massive deficit is only one of the ways that the stimulus hurt Obamacare's prospects. The White House missed a huge opportunity last winter to recast American politics and put Republicans in a bind. If Obama had forced Nancy Pelosi to include GOP ideas such as a payroll or corporate tax cut or increased defense expenditures in the final recovery bill, he would have guaranteed bipartisan support, and both parties would bear some responsibility for the stimulus and its consequences. Instead Pelosi and Harry Reid rejected the conservatives' good ideas and turned the stimulus into one giant early Christmas present for every Democratic special-interest group in the country--and a stocking full of coal for those bad little Republicans.

The stimulus was a huge wealth transfer from future taxpayers to today's alternative energy and social service industries. The Republicans thus had no reason to support it, and the stimulus passed without a single House Republican vote. Only three GOP senators voted for the bill--and one of them has since become a Democrat. A little surprisingly, considering Obama's high numbers in February, none of the anti-stimulus Republicans paid any real price for their opposition. This freed them to criticize both the stimulus and Obama-care, and to argue that the administration has done little to promote economic recovery.

The stimulus also lulled the White House into a false sense of security. The recovery act was the centerpiece of Obama's economic agenda; it is really the only tangible domestic achievement of his presidency to date; and with it passed, the president clearly felt he could move on to other priorities, such as the budget, cap-and-trade, health care, and education policy. Cap-and-trade was punted over to Congress, where on June 26 the House passed a bill that has no chance in the Senate. The budget and education debates await us in the fall.

That left the health plan, and Obama has campaigned vigorously for its passage, setting deadlines that will not be met, and criss-crossing the country in a so-far unsuccessful attempt to rally support. As he goes about his business he must be scratching his head in puzzlement. Why isn't the message gaining traction? He needn't look any farther back than February, when he signed a bill into law that's become a political liability, and hasn't fixed the economic crisis that brought Obama to office. He didn't know it at the time, but Obama's signature would bring into being an anti-deficit constituency that would confound his ambitions to expand government, and sever the connection between his rhetoric and economic reality. And thus the stimulus paved the way for the failure of Obamacare.

--Matthew Continetti