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What Obama Should Have Done in 2009

By Sean Trende - June 12, 2012

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Regardless, by July of 2009 the unemployment rate was at 9.5 percent, half a point higher than the rate envisioned by Christina Romer and Jared Bernstein without the stimulus. By November, around the time the House was preparing to vote on the health care bill, the unemployment rate was at 10.2 percent, a 26-year high.

In other words, even though job losses were slowing, it was clear either that (a) the stimulus wasn’t having its desired effect and/or (b) the disaster of 2008 was much worse than we’d anticipated. In other words, by August of 2009 or so we knew that the assumptions upon which the stimulus was founded were flawed and that, even when fully implemented, it wouldn’t bring the unemployment rate down to bearable levels by the 2010 midterms.

2. If the Congress could be persuaded to pass health care reform, it also could have passed a second stimulus.

I’ve always found the argument that there was no political will for a second stimulus, or even a larger first stimulus, to be particularly lacking. It’s true that Olympia Snowe, Susan Collins and Arlen Specter shrunk the first stimulus as a price for moving it through the Senate, prior to Al Franken’s arrival as the 60th Democratic vote in that chamber.

But I’m not certain that $787 billion was a magic number for them. I suspect that they didn’t want the political heat for killing the bill outright, especially at a time when the president had 60 percent approval ratings and had recently carried their states by double digits. My guess is they just needed the bill to be smaller than the opening bid, whatever that opening bid might have been, to give them some cover with their bases at home.

I’m more certain that a second, sizeable stimulus could have been passed once Democrats had their filibuster-proof majority. Why? Because they were able to pass health care reform. From July of 2009 through the end of that year, only a handful of polls ever found the bill with even a plurality support. By November it had become widely unpopular, with people routinely disapproving by double-digit margins.

And yet it passed. It was ugly, and took a lot of arm-twisting, but it passed. If the Democrats could pass a massive health care bill that was opposed by a majority of the American people, that was perceived as increasing the deficit and that managed to touch just about every hot-button issue under the sun, from immigration to abortion, they could have passed another stimulus. They might have had to exempt Nebraska in order to do it, but they could have done it.

In fact, I think the pitch would have been pretty simple. Show congressmen and senators the Romer-Bernstein chart, as adapted by conservative bloggers. Note that the dots were well above the worst-case scenario before the stimulus went into effect. And convey to them that, without more stimulus spending, those dots were going to remain above that worst-case scenario line well past the November midterms and that their opponents would be featuring this chart non-stop in 30-second ads beginning in September of 2010.

Finally, recall that Congress actually did pass a number of smaller stimulus measures during the 111th Congress, which collectively spent a not-insubstantial amount of money. These included: the Helping Families Save Their Homes Act of 2009 ($8 billion spent from 2009 through 2014); the Worker, Homeownership, and Business Assistance Act of 2009 ($6 billion spent from 2010 through 2014; $33 billion in tax cuts in 2010); the Travel Promotion Act of 2010 ($750 million spent from 2010 through 2014, offset by revenues from increased travel); the Hiring Incentives to Restore Employment Act of 2010 ($11 billion from 2010 through 2015); and the Small Business Jobs and Credit Act of 2010 (about $30 billion in spending and $55 billion in tax cuts in 2011).

Many of these bills were estimated to pay for themselves over the course of the decade, but in the short-to-medium term, they represented additional deficit spending, and a nice jobs agenda. Why didn’t the American people ever hear about this? It’s hard to avoid the conclusion that the nine-month battle over health care, and the aftermath, played a pretty big role.

3. Obama might have gotten more by playing small ball.

That last point illustrates a deeper problem with the entire Obama approach to governance in the early months of his presidency.  In my book, “The Lost Majority,” I use Obama’s first two years in office as a sort of case study for why there aren’t permanent majorities in American politics. In short, the talk of a 40-year stint in the wilderness for Republicans that was so prominent in 2008 and 2009 should have been seen as bunk rather than received as conventional wisdom.

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Sean Trende is senior elections analyst for RealClearPolitics. He is a co-author of the 2014 Almanac of American Politics and author of The Lost Majority. He can be reached at strende@realclearpolitics.com. Follow him on Twitter @SeanTrende.

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