Where the Recovery Act Worked

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JONATHAN COHN AUGUST 11, 2011

Where the Recovery Act Worked

We interrupt our regularly scheduled conversation about what President Obama hasn't done for the economy to bring you a reminder of what he has. And it comes in the form of a visit to Holland, Michigan, that Obama is making on Thursday afternoon.  

The visit is to a new factory that's building batteries to run electric cars, like the Chevy Volt. If you have a sense of déjà vu, that's because you have a good memory. A little over a year ago, Obama presided over the plant's groundbreaking. And I was there, sort of. I didn't see Obama speak but I did spend some time in Holland, interviewing local business owners.

The experience was emblematic of what's happening across the country. Like the rest of Michigan, Holland has benefited substantially from Obama Administration policies:

it’s hard to make the case that Holland, like the rest of America, isn’t much, much better off because of the recovery package in its entirety. Economists disagree over the precise impact of the stimulus, but the vast majority think it did some good and most think it did a lot of good. And that’s to say nothing of the impact of the rescue package for Chrysler and General Motors, particularly here in the Midwest. Had Washington let Detroit go into unstructured bankruptcy without financial help, as many conservatives and even some liberals were urging, job losses could have numbered in the millions, according to credible estimates. Bankruptcies--by individuals, businesses, and whole cities--would have become an epidemic. Unemployment in Holland and communities like it might have reached 20 percent, instead of 15.

But unemployment remained high in Holland and the business owners I met had nothing good to say about the administration's policies: They figured the administration's interventions were not helping and quite possibly hurting. And if things could be a lot worse, they told me, they could also be a lot better.

I couldn't make it to Holland today so I have no idea what those people are thinking right now. But I'd be surprised if their sentiments had changed, and not simply because it's one of the most conservative parts of the state (not to mention that I was talking to a particularly conservative subset of them). Unemployment in Michigan has fallen quickly -- more quickly, in fact, than in any other state. But it's still high. The domestic auto industry seems to be on the rebound, but that's partly because it went through such a substantial, and painful, downsizing.

And yet... the case for Obama's policies here remain strong. Time's Michael Grunwald explains why, mixing snark and substance:

...the Johnson Controls lithium-ion battery factory that Obama is visiting in Holland, Mich., was financed by his 2009 stimulus bill. Yes, that’s the pathetically tiny stimulus bill that any good liberal can tell you pumped a mere $800 billion into the free-falling economy—more than the entire New Deal in inflation-adjusted terms, and enough to prevent a depression, but still, a pittance compared to what it undoubtedly would have done if only Obama had properly and vigorously explained Keynesian economics. ...

Before 2009, the U.S. was supplying less than 2% of a tiny global market in advanced batteries. When the stimulus-funded factories are all complete, they’ll have the capacity to supply 40% of a rapidly growing global market, about 500,000 batteries a year. The stimulus will also boost our supply of electric-vehicle charging stations by more than 3,000%. And the Obama administration has provided loans to help Tesla, Fisker and Nissan build electric-car factories in the U.S., all part of Obama’s pledge to put 1 million plug-ins on the road by 2015. That is what change looks like, even if the President doesn’t beat his chest and call for mass beheadings on Wall Street while it happens.

Grunwald acknowledges the legitimate worries about misguided industrial policy and the limited impact of this particular investment: The plant created just 150 jobs, at least directly. But he also notes that the electric battery program is part of a broader strategy to fight climate change, including recently announced fuel mileage standards, even though Obama doesn't mention the issue in his speeches these days. As Grunwald says,

I can see why the White House’s failure to mention the climate crisis would be annoying to people who spend their days trying to raise awareness about it. But would you rather have a President who talks about climate change, or a President who does something about it?

Make no mistake: Obama needs to be a lot more audacious about the economy, never mind Republican opposition to virtually every idea that might actually work. And that goes for the politics as well as the policy. A three-day Midwest bus tour, followed by a vacation in Martha's Vineyard -- that's the extent of the August jobs push? Seriously?

But that shouldn't obscure the fact that the administration's policies so far have had a significant impact, particularly in places like Holland that desperately need the help. 

Update: More on government's role as innovator from Jennifer Bradley at The Avenue.

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posted in: jonathan cohn, politics, detroit, washington, chrysler, general motors, the netherlands, michael grunwald, michigan

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