BackBiden’s penchant for bold stimulus to test his deal-making skills
President-elect is likely to draw on his financial-crisis experience, when he sought Republican support for economic aid
PremiumWhen Joe Biden takes office in January, a main focus will be pulling the country out of a deep recession. He has been there before, running the Obama administration’s recovery plan as vice president. The priorities Mr. Biden touted during the financial crisis 12 years ago, and the lessons his team learned from that downturn, offer clues to how he’ll handle this one.
“Nobody wants to get crucified on a small cross," Mr. Biden liked to lecture the Obama economic team back then, as Jason Furman, a White House economist at the time, remembers it. Mr. Biden’s point: “They’ll attack you no matter what, so you should go big." The vice president “wanted transformational things people would remember 90 years from now—he cited the New Deal," Mr. Furman recalls.
The president-elect’s instinct for bold stimulus this time will run smack into the constraints of a closely divided Senate that may end up being controlled by Republicans hostile to more big spending. That will test Mr. Biden’s skills at bipartisan deal-making. Through the course of this year’s campaign, he repeatedly cited his experience working across the aisle—citing as one example the 2009 American Recovery and Reinvestment Act.
Leaning on old friends and calling in old chits, the vice president helped secure the GOP votes needed to clear the $787 billion package through the Senate, where he had served the previous 36 years. Mr. Biden also worked to get cooperation from Republican governors who had originally vowed to turn down stimulus money, such as Mississippi’s Haley Barbour.
“Frankly, Biden was the key to getting stuff done when Obama was president," says former Rep. John Boehner (R., Ohio), who was House speaker from 2011 to 2015. “Biden’s a guy who likes to get things done."
Mr. Boehner adds that Mr. Biden has a strong relationship with Senate Majority Leader Mitch McConnell, who may keep that role when Mr. Biden takes office. “Biden and McConnell go back 40 years—they trust and respect each other."
But the plan’s bipartisan appeal only went so far. Even though it included GOP-requested tax cuts, it failed to win a single Republican vote in the House. The cooperating Senate Republicans would only support a package well below $1 trillion. Some administration economists felt that a bigger plan, with more direct spending rather than tax cuts, would have provided a bigger boost to a recovery that turned out to be slower than hoped.
For Mr. Biden, economic policy is more about anecdotes and projects than theory, an instinct he conveyed during early meetings assembling the recovery act. In those sessions, the vice president-elect lobbied to have the package lean heavily into infrastructure spending, especially for clean energy and projects such as high-speed rail.
“He loved manufacturing. He loved building—a kind of muscular, traditional view of how the government would help avoid a depression," says Austan Goolsbee, a member of the Obama Council of Economic Advisers at the time, who has been advising the Biden campaign. “If it were up to him, there would have been lots more infrastructure."
In the end, Mr. Biden’s impact on the plan was relatively modest, those involved say, as policy makers opted for a more diffuse, complex mix of measures aimed at repairing the financial system and the housing market and giving the economy a quick jolt. The “Build Back Better" plan that Mr. Biden rolled out during this year’s campaign is in some ways an updated, fleshed-out articulation of the unfinished agenda he advocated during the last crisis—particularly his $2 trillion, four-year climate-change plan to expand public transit, weatherize homes and promote non-carbon-emitting energy sources.
Once the recovery act passed, President Obama accepted his vice president’s request to be put in charge of tracking the authorized funds and making sure they got spent quickly with minimal waste or fraud. It was Mr. Biden’s first major executive role after a career as a legislator. He threw himself into it with gusto, spending hours calling governors, mayors, even county commissioners, checking on the status of public-works projects.
“He’d say ‘Governor, we have a problem in your state, the sewer grants aren’t going out fast enough,’" recalls Ed DeSeve, who was Mr. Biden’s point-man tracking the funds. He remembers the vice president on another occasion ordering him to reroute a planned highway after a Kansas senator complained it was mapped to run past a toxic Superfund site.
Jared Bernstein, Mr. Biden’s chief economist at the time, traveled to one town where the vice president personally delivered a recovery act check to the mayor, who then theatrically ripped up a pile of pink slips supposedly planned for local teachers.
“His hands-on experience has given him an unusually granular sense of what worked, what didn’t," says Gene Sperling, head of the National Economic Council during Mr. Obama’s first term.
In an attempt to pre-empt a backlash against wasteful spending, Mr. Biden established his own oversight panel with a dozen inspectors general, the Recovery Accountability and Transparency Board, sometimes derisively referred to as the RAT board. Mr. Obama dubbed him “Sheriff Joe," and Mr. Bernstein says he would lecture his staff: “We don’t want people planting dead trees."
Mr. Biden and his advisers portray the recovery act as a successful model for future stimulus. They hit their target of spending 70% of the funds within 18 months, with fewer than 0.2% of all awards facing fraud investigations, well below the government average. Biden aides say that is a contrast with growing complaints of potential fraud in the Paycheck Protection Program creating earlier this year to help small businesses survive the pandemic.
Republican lawmakers at the time highlighted examples of what they considered boondoggles, such as the collapse of solar-panel maker Solyndra after receiving more than half a billion dollars in recovery act loan guarantees. Mr. Biden failed to persuade Republican governors to take the $8 billion he had hoped to apply to high-speed rail.
Economists have offered mixed assessments on the success of the program. “The evidence suggests the economy did indeed grow more than it would have without the stimulus but likely not as much as it might have with a different type," concluded a 2017 study by the Federal Reserve Bank of Philadelphia, saying tax cuts and payments targeted more directly to households would have had more impact.
While defending the substance of the recovery act, Mr. Biden has at times been critical of the marketing, something he’ll be mindful of in the coming weeks, conscious of how an early stimulus plan can set the tone for his administration.
“He felt we didn’t pay enough attention to the politics, that we needed to do more to win over the country politically," says Mr. Furman. The program polled poorly in the early months, as Mr. Biden and others drew criticism for claiming success when the economy remained weak. The recovery act contributed to the conservative Tea Party revolt that helped Republicans win control of the House in the 2010 elections.
Mr. DeSeve recalls a cabinet meeting when Mr. Obama looked in the direction of Messrs. Biden and DeSeve and said: “The only thing more unpopular in this town than me is your program."
This story has been published from a wire agency feed without modifications to the text
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