WASHINGTON — As President Obama and Congress barrel toward the latest emergency program to resuscitate the American economy, one question is looming over their search for a cure: Can the government fashion a fast and efficient economic stimulus while also seizing the moment to remake America?
For now, Mr. Obama and his aides are insisting they can accomplish both goals, following their mantra of using the urgency of the economic crisis to accomplish larger — and long-delayed — reforms that never garnered sufficient votes in ordinary times.
In fact, at various times in American history, moments like this one have been used for big programs, from integrating the armed forces to creating Social Security and, later, Medicare. So it is little wonder that everyone with a big, stalled, transformative project — green energy programs, broadband networks that reach into rural America, health insurance for the newly unemployed or uninsured — is citing the precedent of Franklin D. Roosevelt, and declaring that a new New Deal is overdue.
But the question that the Senate will begin debating Monday is whether grand ambitions are getting in the way of pulling the country out of a nose dive. And so for every comparison of this moment to Roosevelt’s first hundred days, there are warnings that much of his social experimentation did not have a big impact on America’s economic recovery, which took years.
“When you are filling a hole this big and adding to America’s debt on such a large scale, you need to make sure every dollar is aimed for the economic boost you need,” said Martin S. Feldstein, a Harvard economist who warned more than a year ago that the United States economy was about to be hit between the eyes.
Mr. Feldstein has provided the economic arguments behind Republican objections that Mr. Obama is starting a long-term expansion of government, after decades in which the United States has relied on market solutions and encouraged nations around the world to do the same.
The economic arguments mask, for some, a primal fear that this is 1933 all over again, the beginning of a 21st century liberal resurgence.
The comparisons to 1933 are sure to resound even louder in the next week. Much as Roosevelt imposed a “bank holiday” in his first days in office to stop the run on American financial institutions, Mr. Obama promised in his weekly address to the nation on Saturday that Treasury Secretary Timothy F. Geithner would soon announce “a new strategy for reviving our financial system that gets credit flowing to businesses and families.”
That is bound to revive the question of whether anything short of nationalizing some of America’s biggest banks, even briefly, can get the job done.
Taken together, the economic stimulus plan and the banking bailout have quickly melded into a bitter political and ideological clash, barely two weeks into the Obama presidency.
Some of what is going on might best be called a classic case of pent-up demand — demand by Democrats for the kinds of programs that they could never get passed during the Bush years.
After years of battling with a White House that questioned the science behind global warming, Democratic lawmakers see a chance to begin programs aimed at environmental protection, using economic justifications for efforts like developing low-emission cars. And with a Democrat in the White House, they also see an opening to push for increased spending on education.
The efforts are fueled by a liberal base that supported Mr. Obama’s promise that he would tackle the biggest issues. That same base is concerned that the long slog ahead will force a delay or an abandonment of those ambitions.
As a result, there is $54 billion in the House bill for new forms of “American energy,” a phrase with an air of nationalism, along with a series of “Buy America” requirements of dubious legality under trade treaties; $141 billion for education; $24 billion for lowering health care costs; and $6 billion for broadband service, the digital equivalent of Lyndon B. Johnson electrifying the Hill Country in Texas.
(Some critics of that effort say it is pitifully small, too small to fulfill Mr. Obama’s campaign promise that all Americans should enjoy “the highest form of broadband access.”)
To those who argue that many of the programs will take years to get rolling, their advocates have replied, “So what?”
“It’s not as if we can just fix what’s wrong and go back to normal,” said James K. Galbraith, an economist at the Lyndon B. Johnson School of Public Affairs in Austin. “Can you overdo? Maybe, but it’s easier to pull back later than to make up for the fact that you did too little.”
But the result is that a piece of “emergency” legislation that would spend heavily to stanch the killing of jobs is now transforming into a series of long-term commitments that are sure to add enormously to the national debt, and keep adding to it long after the Panic of 2008 and the recession — or worse — that it set off are consigned to history.
Republicans see a chance to do something they could do only quietly, and rarely, until President George W. Bush flew out of the city 11 days ago: protest huge deficit spending. Now, they are freer to complain — as Senator Mitch McConnell of Kentucky did on Saturday in the Republican response to Mr. Obama’s address, when he argued that “permanent spending would be expanded by about $240 billion” in the House, which would “lock in bigger and bigger deficits every year.”
(Mr. McConnell was less vocal in his opposition when President Bush declared that the combination of 9/11, a downturn and the expansion of the military budget required deficit spending.)
The Republicans have been joined by a small band of Democratic fiscal conservatives whose message does not seem to match the party’s mood.
“Because we’re doing this outside the budget process, it means no one has to talk about what the long-term effects of any of this might be,” said Alice M. Rivlin, an economist at the Brookings Institution and a former member of the Federal Reserve, who supports a major stimulus package. She testified recently in Congress about the need to separate short-term economic stimulus from a broader agenda — which embraces everything from fixing America’s schools to improving health care for children.
“We seem to be counting on the Chinese to keep investing to pay for this,” Ms. Rivlin said, referring to the huge amount of United States government debt held by China, “and we’re assuming that the rest of the world isn’t going to lose confidence once we use this moment to spend on a whole range of programs. And I’m just not sure that’s the right assumption.”
Ms. Rivlin raises what may turn out to be the most urgent question of all in a few months.
When Roosevelt took America down new roads, he financed it at home. Mr. Obama does not have that luxury: He must persuade not only Congress and the public but also world financial markets, which must decide whether — and at what interest rate — they are willing to finance his plan.
That is the three-dimensional chess game the administration must play as it tries to mount the biggest economic rescue plan in more than seven decades.
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