It’s fairly well known that Obama bailed out U.S. automakers, enacted an enormous economic stimulus package, signed the most sweeping rewrite of financial rules since the Great Depression, killed the Keystone XL pipeline and issued historic carbon regulations to fight climate change. But how many Americans are aware of his administration’s harsh regulations
cracking down on for-profit diploma mills, inefficient industrial motors and investment advisers with conflicts of interest? Everyone knows the Obamacare website was a disaster, but few realize that Obama got some of the Silicon Valley techies who fixed it to stick around and start up a
U.S. Digital Service, a groundbreaking effort to bring government tech into the 21st century.
I’ve spent a lot of time studying Obamaworld’s obscure policy changes. I wrote a book about that Obama stimulus,
The New New Deal, and I helped former Treasury Secretary Tim Geithner with his memoir. But even though the subtitle of my book was
The Hidden Story of Change in the Obama Era, I didn’t realize the scope of the change before I reviewed hundreds of pages of reports and interviewed dozens of his current and former aides for this article. I remember President Bill Clinton crusading for the Food and Drug Administration to regulate tobacco, but I somehow missed that Obama finally
made it happen. I was aware that Obama was doubling fuel-efficiency standards for cars, and I even knew he was pushing a flurry of lower-profile efficiency mandates for appliances. But I had no clue that just one of those rules, for commercial air conditioners, will singlehandedly reduce U.S. energy use by 1 percent.
Internally, Obama has made a point of distinguishing his approach from Clinton’s “small ball,” telling aides he didn’t seek the job to promote school uniforms. Take that $800 billion stimulus, which set the tone for his swing-for-the-fences presidency in his very first month. Its main goal was saving the economy, but as his first chief of staff, Rahm Emanuel, liked to say, it was also stuffed with an entire administration’s worth of accomplishments. By contrast, Clinton fought unsuccessfully early in his presidency for a mere $16 billion stimulus, just enough to fund the high-speed broadband and high-speed rail initiatives in Obama’s package. One veteran of both White Houses summed up the difference by telling me Clinton’s put out more fact sheets touting its work, while Obama’s has been too busy doing work.
nearly $1 trillion, and Medicare’s long-term solvency has been extended by 13 years. The resuscitated auto industry produced 11 million vehicles in 2014. Federal contractors can no longer discriminate against gays, women can now serve in combat and the rich are paying higher taxes. A new Consumer Financial Protection Bureau is policing unscrupulous mortgage brokers, payday lenders and other rip-off artists, and the financial system has much less risky leverage.
Before Obama, Americans were using more energy every year;
now we use less energy overall, and more of that energy is clean. Oil imports are down 60 percent from 2008 levels,
more than a third of America’s coal plants are shutting down and sales of LED bulbs have increased 50-fold. Health care inflation and the uninsured rate have fallen to their lowest levels in half a century, and doctors now use iPads instead of clipboards. Student borrowers can now ratchet down their monthly payments to 10 percent of their discretionary income and get their loans forgiven after 20 years, rules that are gradually and almost silently easing the student debt crisis. Nine of 13 federal appeals courts now have a majority of Democratic-appointed judges; in 2009, it was one of 13.
Americans might not agree how much Obama can personally take credit for all of it, or whether that’s Change We Can Believe In. But it’s change.
***
Early in his presidential transition, Obama led a brainstorming session with his policy team about first-term accomplishments. Geithner offered a downer of a reality check: “Your accomplishment is going to be preventing a second Great Depression.”
“That’s not enough for me,” the president-elect shot back. “I’m not going to be defined by what I prevented.”
That attitude defined Obama’s first two years in office, which featured the most energetic flurry of legislation since the Great Society. He wanted to do stuff, not just avoid stuff. He wanted to be a Ronald Reagan of the left. And he believed, as Emanuel put it, that the crisis would be a terrible thing to waste.
Obama began with a stimulus larger than the entire New Deal in real dollars. Widely ridiculed as Porkulus at the time, it is now widely credited by economists with helping to end the Great Recession with short-term economic adrenaline: record aid to the vulnerable that directly boosted 13 million Americans out of poverty; record aid to states that averted 300,000 teacher layoffs; hard-hat projects that upgraded 42,000 miles of road, 2,700 bridges and 6,000 miles of rail; and roughly $300 billion worth of tax cuts for businesses and families.
But with little fanfare, the stimulus also poured cash into Obama’s long-term agenda for reshaping the country. It transformed the U.S. clean-energy sector, blasting an astonishing $90 billion into renewables and other long-neglected green priorities, while birthing a new research agency
called ARPA-E. The only investment that got much press was a failed $535 million loan to a solar manufacturer called Solyndra, but that same loan program financed nine of the world’s largest solar farms, among other projects; the overall portfolio is thriving. The green stimulus helped quadruple U.S. wind power, put the first 400,000 electric vehicles on American roads and began a low-carbon transition that helped the United States lead the push for a bold global climate deal in Paris.
Meanwhile, the Race to the Top competition had an even faster impact on education, inspiring almost every state to embrace at least some of Obama’s preferred K-12 reforms—removing caps on charter schools, expanding testing, adopting tougher standards like the Common Core—just to improve their chances for a grant. There is now a growing backlash against excessive testing and the Common Core, but in the words of Obama’s outgoing education secretary, Arne Duncan, “The Race changed the game in education before the Race even started.”
In the same vein, a $25 billion incentive program in the stimulus for health information technology has helped drag a pen-and-paper medical system into the digital age, with adoption soaring from about 10 percent of hospitals and 20 percent of doctors in 2008 to about 80 percent of hospitals and 80 percent of doctors today. E-prescriptions are ubiquitous, and digitization is already reducing fatal errors and unnecessary tests caused by sloppy handwriting and inaccessible files. There have been problems getting electronic systems to talk to each other, sparking a backlash of sorts from irritated doctors, but Farzad Mostashari, Obama’s former health IT czar, is confident online medicine will inevitably produce the efficiencies common in online banking and dating. He says the griping reminded him of Louis C.K.’s “Everything’s Amazing, Nobody’s Happy” riff, where the comedian mocks airline passengers who whine about slow Wi-Fi instead of appreciating the miracle of flight.
“Come on, in five years, we changed an approach that had been dominant in medicine for 4,000 years,” Mostashari says.
The stimulus also offered an introduction to Obama-ism. Purity was not a priority. He needed three GOP senators to avoid a filibuster, so he caved to their demands, including an $800 billion cap and the removal of a $10 billion initiative to renovate America’s schools. But popularity was not a priority either. He constantly browbeat his policy advisers to tell him what would work and leave the politics to him. He expected his wonks and hacks—what Emanuel dubbed his Aspen Institute and Tammany Hall—to stick to their respective knitting.
But Obama’s guiding political assumption—that data-driven, evidence-based policy, at least in its center-left form, would inevitably turn out to be good politics—ended up being seriously flawed. A stark example from the stimulus was Making Work Pay, an $800 tax cut for most workers. His economists wanted to dribble out the cash to recipients a few dollars a week in their paychecks, because studies showed they would be less likely to spend the windfall if they realized they were getting it. His political advisers argued that it would be insanity to conceal middle-class tax cuts rather than send Americans fat envelopes with Obama’s name on them. But Obama sided with his policy team, and later surveys showed that less than 10 percent of the public had any clue he had cut their taxes.
“SIFI surcharges” and a new oversight body known as
“FSOC” have reduced the risk of future bailouts, but the bottom line is that financial behemoths no longer enjoy much of a “too-big-to-fail subsidy.” They used to borrow at much lower rates than small banks because lenders correctly assumed the government would rescue them in a panic. Not anymore. And Obama’s new consumer bureau may be the most influential new regulatory agency since the EPA, already collecting more than $10 billion in fines from financial players that used to enjoy relative impunity.
Nevertheless, Republicans have savaged Obama’s financial policies as a command-and-control assault on free enterprise that will inevitably lead to more bailouts. Many liberals have dismissed them as a craven sellout because they didn’t break up the mega-banks. And if Obama was disappointed by the public’s lack of appreciation for his role in ending the financial crisis and reducing the risk of another one, well, the public hasn’t been too enthusiastic about the signature achievement that bears his name, either.
***
Obamacare has unleashed America’s biggest expansion of health care access since the creation of Medicare and Medicaid. It has already extended medical coverage to some 18 million uninsured Americans. It also closed loopholes that insurers used to deny coverage to insured Americans when they got sick. And it
eliminated co-payments for quit-smoking programs, birth control pills, certain cancer screenings and other preventive care. As Obama has suggested, it’s what he was talking about when he talked about change.
But behind the headlines about access, Obamacare had another set of even more transformative goals for the system. For years, U.S. health inflation had far outpaced general inflation, inflicting crushing burdens on patients and companies while gravely threatening the federal government’s budgetary future. America’s long-term fiscal problems were almost entirely health care problems, and Obama was determined to “bend the cost curve” of Medicare and Medicaid spending projections that were sloping upward at a scary angle.
He faced two obstacles, the first political. “Controlling costs” sounded like a euphemism for rationing care, and GOP opponents made Obamacare sound like a plot to pull the plug on granny, portraying an independent board that could recommend cost-effective tweaks to Medicare as a bureaucratic “death panel.” And many Democrats preferred the giveaway provisions expanding access—one Obama aide called them “candy for the left”—to the spinach-like takeaways that threatened to reduce income for doctors, hospitals and other influential lobbies.
The other obstacle to cost control was that no one was sure how to do it. There were dozens of ideas floating around, like reduced Medicare reimbursements to providers, increased competition that could drive down prices, and incentives to promote home visits and generic drugs. The holy grail was finding alternatives to the longstanding fee-for-service system that rewards providers for providing more care instead of better care, like “bundled payments” to a single provider to cover entire medical episodes, or “accountable care organizations” that would receive fixed payments to coordinate care for specific patients. But no one knew whether any of those approaches would work, because none of them had much of a track record.
Obama insisted on including almost all of them. Less than one-fourth of the bill was devoted to access. The rest was stuffed with almost every cost-control idea in circulation, from new competitive bidding rules for wheelchairs to a government Innovation Center to test new payment models to a “Cadillac tax” on pricey employer-sponsored plans. “We did a smorgasbord of just about everything people thought could conceivably help,” says Peter Orszag, Obama’s former budget director.
And so far, the cost curve is bending even faster than White House officials had dreamed. Health care is still getting more expensive, but since 2010, the growth rate has slowed so drastically that the Congressional Budget Office has
slashed its projection for government health spending in 2020 by $175 billion. That’s enough to fund the Navy for a year, or the EPA for two decades. “We wanted to throw a whole bunch of stuff against the wall to see if any of it would stick, which probably sounded bogus,” Orszag says. “But if these results continue, they’ll fundamentally change the fiscal trajectory of the country.”
Some of the see-what-sticks cost experiments also seem to be improving care. One recent report found that infections and other “hospital-acquired conditions” have declined 17 percent since 2010, when Obamacare created financial incentives for hospitals to avoid them. That reduction saved an
estimated 87,000 lives and $20 billion. A similar effort to incentivize better management of discharged patients has coincided with a decline in hospital readmission rates that’s keeping 150,000 more Medicare patients at home every day, according to Meena Seshamani, director of the administration’s Office of Health Reform.
Under Obamacare, about one-fifth of Medicare patients have already shifted into alternatives to fee-for-service, and the goal is to get half the system paying for value rather than volume by 2018. Maryland’s hospitals are now paid through “global budgets” that include outpatient care, so they no longer have incentives to admit patients just to keep their beds full. A recent
New England Journal of Medicine article found the state’s hospital costs increased at less than half the expected rate in the program’s first year, saving Medicare $116 million. There are signs that Obama’s convoluted jumble of changes may be starting to rationalize an irrational system. Patrick Conway, the director of the new innovation center, told me about a new Independence at Home experiment that coordinates nurse and doctor visits for frail and disabled patients—and saved Medicare
$3,000 per beneficiary in its first year. One elderly diabetic who had 19 hospitalizations the previous year had only one after enrolling in the program.
Obamacare remains largely unloved, even though periodic Republican efforts to repeal it are unpopular, too. GOP critics have hammered away at Obama’s false promise that all Americans who liked their plans would be able to keep them, at an Obamacare adviser who suggested voters were stupid, at the fiasco with its website, at the unpopular “individual mandate,” at problems with exchanges and co-ops and other new planks of reform. Patients have complained about high deductibles and heightened uncertainty; many providers are unhappy about reduced reimbursements; a frenzy of mergers is reshaping the entire industry. The recent bipartisan budget deal suspended the Cadillac tax, as well as Obamacare’s tax on medical devices—setbacks for cost control. Meanwhile, much of the left is still upset that Obama didn’t push for the “public option,” a government-run insurer that could have helped cut costs by competing with the private sector but that didn’t have 60 votes in the Senate.
The result of all this dissatisfaction with Obamacare, as well as the Obama recovery and Obama’s financial reforms, was a Republican landslide in the 2010 midterms, returning the House to GOP control. In a divided government, the president no longer had the power to advance his agenda through legislation—and his opposition had no interest in helping him.
But he was still president.
***
Washington is obsessed with the White House bully pulpit, but that’s not what’s driven change in the Obama era. Obama has certainly had memorable rhetorical moments: his rendition of
“Amazing Grace” in Charleston, his meditation on civil rights in Selma, even his observation that Trayvon Martin could have been his son. Polls suggest his “evolution” on gay marriage helped build popular support, and his
rainbow-lit White House after the Supreme Court upheld it was powerful symbolism. Some Americans have surely been inspired by Obama’s history-making firsts: appointing the first female Fed chair, the first drug czar in recovery, the first gay Army secretary, the first transgender White House staffer, the first black man and woman to serve as attorney general and, of course, the fact of his own skin color. His aides also argue some of his bully-pulpit crusades have inspired change outside Washington. For example, 21 states raised their minimum wages after Obama elevated the issue.
But his minimum-wage push stalled in Congress, as did his public pushes for universal pre-K, free community college and paid parental leave. Obama made some of his most eloquent speeches after the massacres in Tucson, Newtown and Charleston, but the gun control bills he pushed went nowhere. He simply lacked the votes. The same problem stalled his American Jobs Act, a package of tax cuts, infrastructure projects and other goodies he announced in a prime-time address to Congress in 2011. Pundits had been scolding him for neglecting his bully pulpit, so he embarked on a national barnstorming tour to build support, leading crowds in chants of “Pass the bill!” Congress did not pass the bill.
Obama’s aides sometimes wondered if his outspoken advocacy for his priorities made them less likely to happen, since supporting Obama’s priorities was dangerous politics for the GOP. That’s why he took the opposite approach to immigration reform, keeping relatively quiet so that Republicans who considered him toxic wouldn’t reflexively reject reform. But again, nothing happened, because, again, reform lacked the necessary support in Congress. The outside game has been vastly overrated in the Obama era. For all the change he’s driven, there hasn’t been much in the hearts-and-minds arena.
“fiduciary rule” that will require financial advisers to serve the best interest of their clients, and changing overtime rules to ensure that firms can’t deny time-and-a-half to workers making less than $50,000 a year by classifying them as managers. And he just announced a new effort to expand background checks for gun purchases, a modest attempt to achieve through executive action what he could not through legislation.
While his
slogans have varied—“we can’t wait,” “pen and phone,” “Year of Action”—his incremental move-the-needle strategy hasn’t. It just became more obvious in 2015, when Republicans took back the Senate and he began joking about his
“rhymes-with-bucket list.” The day after the election, in a low-key not-quite-pep talk that was quintessential Obama, he told his staff to take an hour to mope, then get back to work.
“We still run the largest organization on the planet, with the largest capacity to do good,” he told them.
Obama’s most aggressive uses of Washington’s levers of power have involved energy, most visibly his Climate Action Plan to avoid 6 billion metric tons of carbon through 2030. Its highest-profile element is his carbon rule for power plants, which aims to slash power-sector emissions by 32 percent. But a slew of lesser-known restrictions on soot, mercury, sulfur dioxide, smog and other coal-fired pollutants have already helped force nearly one-third of America’s coal plant capacity into retirement, getting the sector more than halfway to its carbon goal before the carbon rule was even announced. The stimulus-launched clean energy revolution is also helping; the administration has already approved 57 renewable power projects on federal land, 57 more than every previous administration combined.
However, the most ambitious plank of the
Climate Action Plan, accounting for half of its emissions goals, has been practically invisible. It’s an energy efficiency effort known as “appliance and equipment standards.” It’s on track to slash 3 billion tons of emissions by 2030; that’s the equivalent of taking every car off America’s roads for two years, or shutting down every power plant for a year and a half—a striking behind-the-scenes example of the Obama administration taking matters into its own hands.
Since 1979, the Department of Energy has set standards to cut energy waste from all kinds of products sold in the United States, reducing electricity consumption while saving consumers money on utility bills. The standards have worked; the average refrigerator sold today, though considerably bigger and cheaper than 1970s models, uses one-fourth as much power. But the program sputtered to a virtual halt in the Bush administration. In his third week as president, Obama visited DOE and pledged to wipe out the growing backlog of overdue standards. “We’ll lead a revolution in energy efficiency,” he said. He talked about efficiency with such enthusiasm while the economy was falling apart that Jon Stewart
did a riff on
The Daily Show making fun of the president’s priorities. At an event at a Home Depot later that year, the president actually declared energy efficiency “sexy.”
DOE has responded by completing new standards for 39 separate products, from pool heaters to clothes dryers. It finalized more than twice as many rules in 2014 as it finalized during the entire Bush administration, and it still hopes to complete as many as 20 more. Obama’s new standards for industrial motors and fluorescent lighting have each produced record electricity savings—and the upcoming rule for commercial air conditioners will surpass them by far. Most of the new rules even drew support from the manufacturers who must comply, although lately they have
pushed back.
That’s because DOE’s rule-making pace has gone from hectic to frantic since Obama made the standards so central to his climate plan. One industry official told me the regulatory process since then has been “an
I Love Lucy-type conveyor belt.” Ernest Moniz, Obama’s second-term energy secretary, oversaw appliance standards as a DOE official under President Clinton, and he’s made it abundantly clear they’re a top priority now.
“They’re hell-bent to ram through as many rules as they can, as fast as they can, at the highest levels they think they can justify to a judge,” says Stephen Yurek, president of the Air Conditioning, Heating and Refrigeration Institute. But like it or not, the barrage of strict new rules is a key reason why U.S. power demand, after decades of growth, is now virtually flat, averting the need for new plants while saving consumers billions of dollars.
written a paean titled
Show Me the Evidence: Obama’s Fight for Rigor and Results in Social Policy.
But any evaluation of Obama’s policy legacy has to grapple with the fact that it’s been a political debacle for most Democrats who aren’t named Obama. The GOP now has an iron grip on the House and a solid majority in the Senate; compared with 2009, there are 10 additional Republican governors and some 900 additional Republican state legislators. This isn’t just a political problem: It had an instant impact on his agenda—for example, crippling his vision for a national high-speed rail network. America’s first bullet train was supposed to be operating by now in Florida, but after riding a Tea Party wave into office in 2010, GOP Governor Rick Scott killed the project. And congressional Republicans have refused to approve a penny for high-speed rail since then.
The resurgent Republicans made spending cuts their top priority, threatening to shut down the government or force it into a catastrophic default if Obama didn’t agree to a retrenchment. He grudgingly accepted a deal that included the deep cuts known as the “sequester,” reducing discretionary spending to its lowest levels since the Eisenhower era. That fiscal squeeze, along with Obama’s tax hikes and the economic recovery, has helped reduce deficits from an unsustainable 10 percent of GDP to a relatively stable 3 percent. But it also threatens the future of Obama’s progressive project—things like infrastructure and health care and education cost money.
Of course, if a Republican succeeds Obama with a Republican Congress in place, the likely result would be far deeper spending cuts. The GOP candidates have proposed trillions of dollars’ worth of tax cuts as well, and they all hope to roll back Obamacare, Wall Street reform and the EPA’s carbon rule. Really, they hope to roll back the entire Obama era.
But that might not be doable anymore. It’s easier to prevent people from getting stuff than it is to take away stuff people already have, and even if Republicans gain full control of Washington, there are signs that they would be reluctant to kick 15 million people off health insurance and remove Obamacare’s insurance protections for everyone else. It’s also unclear that they would be able to reverse the ongoing shift in the health care system from paying for volume to paying for value—or that they would want to. Similarly, the GOP candidates would certainly be less inclined to enforce carbon regulations. But it’s tough to see how they could reverse the larger trends toward cleaner energy that began during the Obama era, as dirty power gets more expensive and clean power gets cheaper. If one lesson of the Obama era is that doing stuff in Washington is hard, another is that undoing stuff is even harder.
Nevertheless, 2016 will be in part a referendum on the Obama era, even if the Democratic nominee is named Clinton, even in the increasingly unlikely event the GOP nominee is named Bush. The Republicans are already running against Obama, attacking his big-government, anti-business, climate-obsessedways. And Hillary Clinton has, at times warily, made the case that economic indicators have improved under Obama, which is true. Unemployment has dropped from a peak of 10 percent in 2009 to 5 percent today. House Speaker Paul Ryan recently called this “the illusion of success,” but if it is, it’s an illusion that includes fewer uninsured, a better housing market and a vastly improved fiscal outlook.
Still, that raises a question: If the Obama brand of change is so great, why haven’t more Americans embraced it? Does he have a larger “Everything’s Amazing, Nobody’s Happy” problem?
When I put this to Obama’s political aides, they acknowledge everything isn’t amazing, especially middle-class wage growth, but they also say plenty of Americans are happy. The president’s approval ratings are hovering just below 50 percent, better than any 2016 candidate’s in this era of rigid partisan polarization. And in their focus groups, Americans respond much more positively to Obama and his achievements when they’re reminded that he inherited an economy contracting at a minus 8 percent annual rate.
GQ interview with Bill Simmons, Obama blamed this on bad salesmanship, saying he wished he had communicated better early in his presidency. “I think a certain arrogance crept in, in the sense of thinking as long as we get the policy ready, we didn’t have to sell it,” Obama said. “One thing I learned through some tough election cycles: You can’t separate good policy from the need to bring the American people along and make sure that they know why you’re doing what you’re doing.”
With all due respect, that’s bogus. I’ve done tons of reporting on Obama’s early presidency, and while his team was focused on policy, nobody in the White House thought they wouldn’t have to sell it. And they tried to.
It just didn’t sell. The question is why, a question I can’t answer, but a question that matters for 2016. At the time, there were all kinds of internal debates about messaging—how much to blame Bush, how much to promise, how much to talk about jobs while jobs were still disappearing, how much to dance in the end zone once the policies seemed to be working but people were still hurting—and none of them has ever been resolved.
But one possibility, a troubling one for Hillary Clinton and the Democratic Party, is that Obama’s activist policies poll badly because people just don’t like them. I thought about this after Obama’s recent Oval Office address about terrorism, when the media consensus seemed to be that he should have announced plans to Do More. Bush was a Do More president in foreign affairs, and by most accounts it didn’t work out too well. But Americans seem to respond well when commanders in chief vow to Do More to keep them safe.
In domestic affairs, however, Americans often react badly to promises to Do More. They seem to suspect that when government acts, it’s probably acting to help someone else. It may be that, just as Americans wanted to Do Less abroad after Bush, they’ll look for someone who will promise to Do Less at home after Obama.
Then again, if Democrats do manage to hold the White House, Obama’s domestic legacy as a Do More guy will be safe. The prevailing media narrative of his era has been all about Washington paralysis, but the prevailing historical narrative is much likelier to focus on social and economic change, for better or for worse. For those of us who follow policy and politics in real time, that gap between perception and reality in the Obama era ought to be a BFD.
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