The Big Deal

By Dan Morgan
Sunday, February 1, 2009

To truly appreciate the historic scope of the $819 billion stimulus package moving through Congress, it helps to have covered the Hill when passage of the whole domestic budget could be stalled by something as picayune as a fight over $30 million for Alaska's pollock fishermen.

From the mid-1980s to the early 2000s, when Congress and the White House had a tight leash on the domestic budget, I wrote hundreds of stories for The Post about spending programs and the congressional appropriations committees. It wasn't always the most exciting of jobs. A long line of lobbyists would snake down the corridor outside the committee room in the Rayburn House Office Building, hoping for a crumb for their clients: an agriculture research grant here, a bridge project there. Inside, lawmakers sat at long tables and battled over relative nickels and dimes. At one memorable session in 1995, then-House Appropriations Committee Chairman Bob Livingston, a Louisiana Republican, showed that he was serious about cutting spending by brandishing an alligator skinning knife called a "Cajun scalpel." In case that wasn't adequate, he warned, he had also come equipped with a machete and a Bowie knife, nicknamed an "Arkansas toothpick."

So I had to pinch myself last week when I looked at the breathtaking numbers in the House-passed stimulus measure and contemplated the vast ambition behind them: $11 billion to upgrade the nation's electricity grid; $2.8 billion to extend broadband Internet service to every nook and cranny of rural America; $2.4 billion to develop power plants that don't spew carbon into the atmosphere -- a step that could help America use its vast supply of cheap coal far into the carbonless future. Along with that were billions of dollars to repair dams, improve water quality and fix the U.S. Department of Agriculture's Stone Age computer system, famous for crashing during the crucial harvest period.

"It's raining money," complained Rep. Michael C. Burgess of Texas, expressing the Republicans' opposition. But the partisan bickering on which the media has tended to fixate masks the sheer boldness of the stimulus package. Unlike the narrowly focused spending bills I reported on over the years, this behemoth is predicated on a vision that reaches beyond pork-barrel politics. It seeks not only to jolt the economy, but also to turn a corner, partially redressing decades when investments in U.S. economic competitiveness were often starved for funds. It aims to reverse a slide in the importance of federal spending on domestic programs relative to the size of the whole economy. That slide has meant that returned Iraq war veterans have been housed in substandard barracks, post-doctoral medical researchers have been turned down for grants to pursue promising work, and truckers have risked their lives on dangerously eroded bridges.

"We did a number of bold things in the 1950s and '60s, like the GI Bill and the national highway system, that carried the U.S. economy for fifty years. But if you go back forty years from here we haven't done much," said Scott Lilly, former Democratic staff director of the House Appropriations Committee. "In many ways, the investments that fueled the technology revolution of the 1990s came out of much earlier government spending -- on the space program, the National Institutes of Health, the National Science Foundation and DARPA [the Defense Advanced Research Projects Agency]. What you see now is the first real attempt in forty years to leverage government to create a more sophisticated economy."

House Appropriations Committee Chairman David R. Obey of Wisconsin ordered his staff to scrub out anything parochial. The goal, according to a committee report written under his direction, is to "transform our economy with science and technology," create "clean, efficient American energy," "modernize roads, bridges, transit and waterways" and lower health-care costs by providing $4.1 billion for preventive care. And unlike some blue-sky position paper from a think tank, a version of the far-reaching House bill is almost certain to become law.

One irony is that these investments in the U.S. future may well be financed by loans from our global economic rivals. Foreigners, especially the Chinese, helped finance the U.S.-led war in Iraq. Now, with economies melting down everywhere, global investors seeking safety continue to gobble up U.S. Treasury assets, providing plentiful foreign capital at very low interest rates. The hope is that this will continue long enough to finance the recovery plan.

But there is no guarantee that foreigners will keep playing this game. And the numbers in the package are big enough to be scary, given the nation's already precarious fiscal situation. The package earmarks about $260 billion for domestic projects -- not including money for refurbishing U.S. military housing and providing relief to state and local governments. That's the equivalent of increasing the $425 billion that the federal government spent last year on discretionary domestic programs -- programs that, unlike entitlements such as food stamps or Medicaid, must be approved every year -- by more than 60 percent.

Along with this, the House-passed bill, drafted in close collaboration with the Obama administration, includes a significantly expanded role for the federal government in both education and health care. There is $150 billion in new federal spending on schools, child-care centers and colleges. There would be $29 billion to subsidize private health insurance and $11 billion to finance Medicaid for unemployed workers. The New York Times last week called attention to the expanded federal role with a headline reading: "Stimulus Plan Offers Road to Retooling Social Policy."

If it doesn't do the job, there will be plenty of finger-pointing. In an op-ed in last Thursday's Washington Post, Harvard economics professor Martin Feldstein warned that the package contains too large a tax cut for individual taxpayers while also misdirecting spending to long-term projects that will provide too little immediate stimulus. Spending on energy projects, for example, will not peak until 2011, and some outlays will occur as late as 2018.

There is also a danger that some of the biggest projects could end up on the scrap heap of embarrassing government boondoggles. That was the fate of such trial runs as the Synthetic Fuels Corp., a short-lived government-funded entity set up in 1980 to create a market for liquid fuels made from coal. The current legislation allocates $2.4 billion for research on how to capture and store the carbon-dioxide emissions from coal and natural gas power plants. Such greenhouse gas emissions would be injected into vast underground geologic formations for permanent storage or passed through carbon-absorbing algae. The idea -- strongly backed by the politically powerful coal industry -- is highly controversial because it involves daunting technological hurdles. But pushing forward into the wild blue yonder holds the promise of breakthroughs that could pay enormous dividends.

That is the case, too, with the $4.5 billion allocated to the "smart grid investment program." While it will be up to the Energy Department to decide how to use the money, some of it is sure to be used to ensure that clean energy from new renewable sources -- such as wind farms that are beginning to be set up in the High Plains -- can reach the market. One beneficiary could be Texas oilman T. Boone Pickens, who has announced plans to build the world's largest wind farm in the Texas panhandle. "Smart grid" funds will also be used to eliminate bottlenecks -- literally gridlock -- in the existing electricity network that have led to summer blackouts in the Northeast.

The $2.8 billion rural broadband program has a New Deal ring to it. Rural electrification was one of the signature achievements of President Franklin D. Roosevelt's stimulus plan in the 1930s. Today, most homes have electricity, but vast areas connect to the Internet at snail speed, hampering economic development. The House program aims to benefit 7,600 rural communities and 3.6 million residents and businesses, creating 119,000 new jobs.

Along with these initiatives, funding for the National Science Foundation would be doubled in seven years, and an injection of $2.5 billion would "immediately" provide grants to support an additional 3,000 research grants involving 12,750 graduates and undergraduates.

"A huge part of this package is simply accelerating the time period in which we deal with problems that are going to have to be faced," said Lilly. An example is the $7 billion to upgrade military housing and facilities, an amount equal to more than half the usual annual military construction budget. Some soldiers back from Iraq or Afghanistan are being housed in barracks where the plumbing no longer works. Fixing such pent-up problems now could reduce pressure to fix them later. That could take some of the strain off future budgets and make it easier to return to fiscal solvency, officials say.

In that sense, the stimulus is a once-in-a lifetime opportunity for Congress and the president. In normal times, the appropriations committees operate under a rigid budget allocation that creates a zero-sum game: Increasing one program requires reducing another to stay under the spending ceiling. But under the emergency rules now in place, the lid is off.

As a veteran of the era of brutal budget battles, I never thought I'd see the day. Which brings me back to the Alaska pollock fishermen. Pollock are a favorite dinner for the endangered Steller sea lion, and in 2000, the Clinton administration was determined to bar pollock fishing in the sea lion's habitat. Sen. Ted Stevens, the powerful Alaska Republican who then headed the appropriations committee, would have none of it. Only when the administration agreed to give the fishermen $30 million to compensate for their lost haul did Stevens relent and clear all the bills needed to fund the government for a year.

It proved that a lowly $30 million can get things done. Now the president and his congressional allies are betting that $819 billion can move the nation in a new direction.

Dan Morgan, a former Washington Post reporter, is a fellow at the German Marshall Fund of the United States.

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