Annotations for Speakers: Julian Zelizer

I'm doing well, thanks for having me. It's great to be on the show again.

Well, some of it is the traditional opposition to expanding government doesn't dissipate even in times of crisis. And you'll have various parts of the political spectrum, conservatives in Congress, parts of the business community, which still believe that even in a depression, even in a pandemic, it's better not to increase the obligations of government. It's better not to expand the reach of what Washington does. And maybe most importantly, it's important not to set up a situation where tax hikes are likely inevitable. And so the opposition, believe it or not, will kick in even in the most desperate of times.

I think there's pretty good evidence now, if you look back at the record, that government interventions help. And in many ways, business should be ecstatic about this kind of intervention. It's only government that can save us in times like these.

So obviously, if you go to the 1930s, without the huge intervention of the New Deal, the economy would not have stabilized, it would not have started to move toward a path of recovery, which takes a long time.But the government foundation is essential. And more recently, in 2009, after the financial markets collapsed, and after the economy was in a deep recession, President Obama is able to push through a stimulus plan that's very much on President Biden's mind today, that by all accounts, helped us out of a terrible state, lowered unemployment, led to an economic boom, and was the foundation, again, of the good times that we were able to experience.

Well, most important, the stability of the 1930s, for example, with a banking system that was literally imploding when the President took office, without the measures that the President Roosevelt took to ensure deposits, for example, that system was on the brink of collapse.

And then over the course of the 1930s, there's just many initiatives, more than we can go through, in the course of a question on a show, from federal subsidies to the agricultural sector, to electrification programs, to very importantly, public jobs and public works programs, which start to create the conditions for economic recovery.

And that will culminate in World War Two and all the spending that takes place during the early 1940s.

The Great Society is different in that economic times are pretty good. And the whole premise of Lyndon Johnson's Great Society in the 1960s was that when the economy was growing, and when income was rising, there was no reason not to use a moment like that to address many problems which had been ignored, whether you're talking about entrenched poverty in this country, or the struggles of elderly Americans, who had no health insurance, and often were living in an incredibly vulnerable state, based on the health that they had or didn't have. And so that was less of a stimulus. But again, a very important economic intervention that stabilized key parts of American society, like the health insurance that older Americans now have.

Yeah, it's a good question. And I think different for both of them. I think, in the 1930s, we're looking at a number of important factors. One is just the total complete crisis that the nation was in did create conditions of desperation that undercut some of the opposition. It was harder to oppose the government helping when after four years of President Hoover, it was clear that government assistance was needed. And I think the electorate was certainly in a place where it was easier for FDR to make the appeal. And I think the electorate was certainly in a place where it was easier for FDR to make the appeal.

FDR took those conditions and he moved aggressively, boldly, and didn't hesitate to put forward a pretty big agenda over the first few years. And I think his leadership was obviously important from what he put forward to the way he spoke to the nation. And finally, don't forget that Democrats had control of Congress. And so you had united government. And even though Democrats were deeply divided between Southern Democrats and liberal Northern Democrats, they found ways, often at the expense of African Americans, to create relative party unity over many of the key programs.

Lyndon Johnson faced a different situation. And I'd say what was most important for him were two factors. One was the civil rights movement, which before he came into office, it just created an atmosphere where a status quo that did nothing on race and on other issues was no longer acceptable. And they put pressure from the bottom up in ways that made the conservatives feel as if they were on the defensive. And after 1964, LBJ is reelected against Barry Goldwater in a landslide election.

Democrats have huge majorities on Capitol Hill with the balance of the Democratic Party shifting from conservatives to liberals. And in 1965, it was just very hard for Republicans to say no anymore and very hard for Southern Democrats to stand in the way of these liberal majorities. So the window opens for Johnson for about a year, year and a half, where he can push through lots of programs.

Well, I think it was two histories that were influencing Obama in 2009. One was he is someone and was someone who was very cognizant of the importance of those interventions. He was not hesitant or torn up about the idea that government was essential as the economy was plummeting when he took office. Even before he was president, he had been very important to helping President Bush push through his stimulus package in 2008, which many Republicans opposed. But the candidate Obama giving support to that already indicated he understood that government mattered. He understood his New Deal history. He understood his Great Society history. And he very much came from that tradition.

So it wasn't a surprise in 2009, when he instantly moved forward with the American Recovery and Reinvestment Act. But the other history that was on his mind was the polarized America history. And obviously, he was very aware of that. He became a national figure in 2004, making a speech at the Boston Democratic Convention, saying we didn't have to be a red and blue America and that we could be a United States of America instead. And I think there was a tension in 2009, between his understanding that government was essential, another round of stimulus to get us out of the crisis, but also knowing very well that Washington was an incredibly divided place and Republicans were not particularly eager to support him. And yet he wanted to find a way to get them to support him to break through the fault lines. And I think that tension really shaped how he approached his stimulus.

That's exactly right. There were many people in the administration, economists like Christine Romer, and there were also pundits and economists who write on the op-ed pages like Paul Krugman, who argued that you really needed a stimulus at that point, closer to $1.8 trillion, closer to the number actually that we just saw with the American Rescue Plan. But President Obama and some of his other advisors were really hesitant. They thought that was a number that wasn't a bad number in terms of helping the economy, although some economists like Larry Summers thought it was too much. But it was also a number that would never get Republican support.

And President Obama was very determined to make this bipartisan and to find a way to get Republicans to sign on. And so he lowers the number to the, initially it's kind of the $600 to $800 billion range, which is obviously a lot of money. It's a huge number, but it wasn't nearly enough in terms of what was necessary to stimulate the economy, but President Obama sides with the lower number. And he's hoping that by doing that, he's going to be able to persuade Republicans, particularly in the Senate, to sign on. And many liberals are not happy with this. They believe that this is going to circumvent a full and quick recovery, and that he will end up pushing for something that's controversial anyway, without getting the benefits of a kind of Big Bang stimulus.

Well, I think in many ways, you don't even have to add that they did fail. I mean, the stimulus plan does end up getting the support of three Republicans in the Senate, Senators Collins, Snow and Specter. But that's hardly really evidence of bipartisanship. And those numbers, those small numbers would diminish over the years.

I think the fact was that Republicans were in a place already by 2009, where there was no appetite for compromising with the president. Ideologically, I think the party had moved as a whole to the right so much that they weren't going to accept any significant government intervention other than a handful of Republicans. And I think strategically, Senator McConnell, Mitch McConnell, made it very clear that obstruction was the game plan, and that they weren't going to let this president secure any victories so that they could set up a better situation for winning control of Congress and defeating him.

And there was a story the same in the House that David Obie, who is the head of the Appropriations Committee from Wisconsin, approached Jerry Lewis of the Republican Party, trying to secure his support on the bill. And Lewis was very honest and said that he had orders not to cooperate. And this is something that was repeated in many different interviews and histories that we have of the period.

So I think Obama was very optimistic, overly optimistic, that he could break through to a Republican Party that had no interest in ever working with him. And the criticism is, of Obama, that he kept doing that, and he kept undercutting his own programs in an effort that was never going to work and didn't end up with the kind of legislation that he might have had he just focused on his own party.

Well, I think Republicans in general, certainly since Ronald Reagan was president in 1981, have focused on supply side tax cuts and a combination of that and deregulation as the best path forward to getting markets to work well.

And so in 1981, when we're also in pretty bad economic times, trying to crawl our way out of the 1970s, Reagan's major initiative is a supply side tax cut that basically provides the best benefit to upper income Americans and businesses with the idea that by doing that, you ultimately stimulate the entire economy and the benefits would trickle down to everyone else. President Bush, George W. Bush, did the same both in 2001. And then again, when we were in the middle of war in 2003.

And I think this is the preference for Republicans. And I think this is part of why President Obama structured around a lot of his plan around tax cuts. It was actually heavier on tax cuts than on direct spending, again, to the consternation of many liberals. But part of that was an attempt to appeal, Zachary, to what you're talking about, this preference for tax cuts. But it turned out when it was in a democratic package, that wasn't enough.

Well, look, I'm not an economist and I can't give you as good of an answer as some of the best would. But I think the evidence is that direct spending has just had very beneficial effects on boosting us out of these times. And I think the record is much muddier with the tax cuts, with just using tax cuts as a mechanism.

And I think if you take the 1930s, if you take the 2010, 11, 12 period over time and some other benchmark moments, it's pretty clear that a big dose of government spending is often just what the economy needs. And often it pays off in that it leads to increased tax revenue and helps alleviate some of the fiscal burden of government. And I don't think the record is quite as clear that supply side tax cuts have that kind of effect.

I think so. I mean, the complicating part about this stimulus relief package is we're still in the pandemic and we're not out of it. And ultimately, this isn't about a recession or depression that happened because of the economic cycle. And then you have a debate, tax cuts versus spending. It's a moment of economic fragility that is being caused by the pandemic and that pandemic isn't over.

So I think, and this is why a lot of Republicans actually not on Capitol Hill, but in the electorate support the bill, the money is probably being targeted in the right places. It's a combination of relief for states and local government. It's money for the vaccination program and it's money to families through the child tax credit or the direct payment. Families that have really been struggling since March of 2020 to make it through this state that we're in.

The problem is the pandemic isn't over and the signs are good. The vaccine program is picking up steam, but all you have to do to get worried is to look overseas at somewhere like Italy and now France and see the kinds of challenges that still lay ahead. So the big question is, does this stimulus work if the pandemic doesn't continue to dissipate? If it gets worse, if it gets worse in certain pockets of the economy, will the targeted spending be enough? And that's just an unknown. And it will play a big role, I think, in determining the political future of President Biden and the Democratic Party going into the midterms.

Well, it's a legitimate argument and it's not always a partisan argument. I mean, there were some Democrats for sure who thought it was too much.

But I think the lesson that Biden learned from Obama's package, which over time proved very effective, but it was much slower than they thought, was that if you're going to do this, if you're going to take the political heat for pushing a big intervention like this, go big, that ultimately going big is still safer.

If the economy is roaring, money will come into the Treasury. That's the important thing to remember because tax revenue goes up. And that ultimately, I think President Biden thought it was the best bet. And even the chair of the Federal Reserve, Jerome Powell, who is not his appointee, wasn't worried about going too big on this, given the state that we're in. So I think that's why those arguments won out. But it's a concern that's out there.

Yeah, they have a miserable outlook for the midterms. And I'm sure Ron Klain, chief of staff, and many of the Biden team are well aware of this. Their margins are as narrow as can be. In the House, they're certainly narrower than they were hoping for. Because of redistricting, Republicans are in a pretty good position to do well in the House. So somehow, Biden has to use his window between now and the midterms to do as much as he can, and hope that there's a way to defy political nature, so to speak. Remember, midterms almost always go poorly for the administration, those first midterms.

So I think the strategy, the only bet that could change this, I think, is if this American Rescue Plan works, combined with the vaccine rollout, helping us avoid the state that Italy's in right now, and actually getting us back to normal.

If you imagine a fall and winter, where the economy's doing pretty well, unemployment is low, you have a lot of growth, and some of the sectors of the economy really hurt by COVID are rebounding. Combined with the normalcy we all hope to have, and that ranges from not fearing these massive death rates anymore, to families being able to get together, to children being able to go to school, to the simple pleasures of just eating in a restaurant inside, and not fearing that something catastrophic will happen. If all that is happening by, say, next winter, you could imagine these midterms might not continue to follow traditional patterns, and that Americans would feel pretty good about the administration and the political status quo. And I think that's the bet that Biden is making. And it's where good policy and good politics occasionally work in the same way.

It's tough. Because of the state of the Republican Party, it's not simply that we're a polarized country. It's, as we've discussed, the Republican Party has moved very, very far to the right in the last few decades. And Republican leaders are not in a place where they're willing to join a consensus of the sort that you're talking about. And I think as we've seen during the pandemic, there are many Americans who refuse to wear a face mask as a political stand, who are not going to be eager to say, I'm persuaded by what the Democrats have done, and let's make this a new foundation for American life.

So it's tough. I think the way that it can happen isn't through persuasion. It isn't through President Biden being able, through fireside chats or televised addresses, to convince Republicans to think in a different way. It's only if the case is made by government policy itself. It's kind of like Medicare, which was controversial when it started. It was hated by a lot of people in the Republican Party and the medical community but ultimately within a decade of its creation in 1965, lots of Americans, red and blue, love the program and had no interest in ever letting it go because they saw what it could do. And they saw how it could heal some of the problems American families faced.

And so the way you might get some sort of consensus, not a consensus. But an acceptance is if the package that went through today, combined with the role of government in public health because of the pandemic, start to create more support in Red America, not just blue America, for the value of government in dealing with the personal challenges we face, you might see expanded support. And that’s maybe why a lot of Republican voters, at least now say they’re fine with the American Rescue Plan. They like it, but it’s going to be really tough. We’re in a place as we have all seen in recent months, where creating a consensus in this country is probably the most difficult challenge that we face.

Thanks so much for having me. It's great to talk to both of you