Free The New New Deal by Michael Grunwald Page A

Republicans who had whined about Pelosi’s speech and Emanuel’s antics—as if they had voted to sink the financial system because their feelings were hurt—also helped focus minds. On Wednesday, the Senate passed TARP, sweetened by some tax breaks for racetrack owners, arrow manufacturers, and the like. On Friday, the House reversed course andpassed it as well. Obama lobbied dozens of Democrats and persuaded several to flip to yes by promising a new push for stimulus. The Wall Street rescue, he told them, was like patching a hole in a sinking boat to get it to port. When he replaced Bush, Washington would finally help Main Street, and give the boat some proper repairs.
    And yes, he meant when, not if.
    McCain’s erratic response to the crisis, along with his embrace of a suddenly discredited philosophy, sank his candidacy. Obama helped his cause by remaining steady while the world fell apart. But if there were any doubt that 2008 was a change election, it evaporated when the world fell apart. The seventy-two-year-old Republican who had spent half his life in Congress did not look like change.
    “Are we sure it’s too late to hand this pile of shit to McCain and the party that created it?” Obama bantered with one of his advisers in October.
    Probably, the adviser replied.
    “Well,” Obama cracked, “at least we’re buying low.”

— FOUR —
“We Were Staring into the Abyss.”
    O bama’s campaign trip to Toledo in October 2008 is best remembered for his run-in with a bald, strapping, tax-averse plumber named Samuel J. Wurzelbacher, who got him to admit he wanted to “spread the wealth around.” 82 McCain name-checked “Joe the Plumber” nineteen times during the next debate, and Republicans still repeat the sound bite as proof of Obama’s socialism. In fact, his argument for a more progressive tax code was about as socialist as school uniforms are fascist. He told Wurzelbacher he wanted to cut taxes for everyone with an income below $250,000—which included a certain plumber, before the five-minute chat catapulted him onto the conservative lecture circuit—while merely restoring Clinton-era rates on higher earners. Obama also explained that his wealth-spreading philosophy was about economic growth, not just economic justice, that in a demand-driven economy, there’s no consumer demand when consumers have no money. It’s the opposite of a trickle-down philosophy.
    “My attitude is that if the economy’s good for folks from the bottom up, it’s going to be good for everybody,” Obama said. “If you’ve got a plumbing business, you’re going to be better off if you’ve got a whole bunch of customers who can afford to hire you. Right now everybody’s so pinched that business is bad for everybody.”
    That’s the time for stimulus, which was what Obama came to Toledo to talk about. The next day, he unveiled his “Rescue Plan for the Middle Class,” an expansion of his January stimulus plan. 83 For all the talk of socialism, its major new feature was a hiring tax credit for businesses, $3,000 for every new full-time employee. “It’s a plan that begins with the word on everyone’s mind. It’s spelled J-O-B-S,” Obama said.
    The plan didn’t get much attention, partly because plans make for dull copy, partly because media etiquette disguised how ambitious the plan was. Reporters described it as a $60 billion proposal, about the same size as the stimulus bills that Pelosi and Reid pushed during the TARP debate. 84 But that’s only because the press wasn’t counting elements of the plan that Obama had unveiled earlier. Journalistic conventions aside, Obama was proposing to inject $175 billion into the economy, three times as much as the Democrats in Congress.
    “By October,” Furman says, “the world had changed.”
    The hole in the economy now looked like a canyon, so more stimulus would be needed to fill it. And recessions sparked by financial distress are much nastier and longer than