The first contention—that from beginning to end Obama has chosen the path he thought would minimize new shocks to the economy—accords with normal political logic, since the worst threat to a sitting president is exactly the kind of slowdown Obama has tried to avoid, with mixed results at best through his first three years. It also makes sense of an otherwise disparate pattern of decisions, starting with his administration’s apparent coddling of Wall Street in 2009. This early failure of accountability is the main theme of Ron Suskind’s Confidence Men, and virtually everyone I spoke with said that it created a substantive and symbolic problem the administration has never fully recovered from. Substantive, because of the “moral hazard” created by using public money to guarantee the bonuses and repay the losses of people who had been so recklessly destructive. Symbolic, for all the reasons that eventually came to a head with last year’s Occupy movement.
An official familiar with the administration’s economic policy told me: “The recapitalization of the banks was a good idea, and necessary. But we did not put enough conditions on [their] getting the money. Ultimately not being tougher with the guys that got the money is the thing that overthrows the government twice—in 2008 [in a reaction against Bush’s TARP plan] and again in 2010.”
Keeping the system going was the guideline during the early days of financial rescue, and again later during the argument over government shutdowns and the raising of the debt ceiling. During the initial rescue, Obama’s response was of course shaped by the technocrat circle that guided the effort. From their experience with Asian and Latin American financial panics during the Clinton era, the likes of Summers, Geithner, and Orszag understood that their task was akin to emergency-room medicine, or firefighting. They had to contain the emergency first, because otherwise there was no telling how dire the consequences could be, and worry about anything else later. “Larry, Tim, Peter—when they heard about restricting bonuses or compensation, they would think, These are people’s contracts, we can’t change their contracts,” a member of the executive branch said. “But really it was the idea that the problem was enormous, the economy is in big trouble, do we want to make enemies while we’re putting out the fire? Usually they opted for whatever they thought would keep the economy going.” This rings true about the mood in the middle of an emergency, and also about the cultural tone-deafness that can affect people who all come from the same rarefied world.
So too during the showdowns with Congress over keeping the government funded, or raising the debt ceiling to prevent a default on Treasury notes. After the Republicans gained control of the House in the 2010 midterms, the negotiating team on the administration side was heavy on Clinton-era veterans who had been through previous dealings with a Republican Congress. Gene Sperling, who succeeded Summers as head of the National Economic Council and had held the same job during the Clinton years, and Jacob Lew, who succeeded Peter Orszag at the Office of Management and Budget and then William Daley as chief of staff, had dealt with Speaker Newt Gingrich and his new Republican majority in the 1995 budget battle that led to a government shutdown. Jason Furman, now Sperling’s deputy at the NEC, was a young staff economist on Clinton’s Council of Economic Advisers at about the same time.
As they tried to arrange budget agreements with Speaker John Boehner and his new majority, they seemed to be the last people in Washington to recognize how different the circumstances were. The 54 new Republican representatives who arrived with Newt Gingrich mainly owed their positions to him. Or they thought they did: Gingrich’s “Contract With America” had been the unified nationwide platform for the GOP surge that year. When Bill Clinton sat down to negotiate with him, a deal made with Gingrich was a deal that would stick.
But the Obama team got clearer and clearer signals—first in budget negotiations in the spring, then in votes on the debt ceiling in the summer, and then in the confrontation over the payroll-tax holiday just before Christmas—that Boehner was a leader without a following. The 63 Republican freshmen owed him nothing; many had run against Washington business-as-usual practices that included the GOP establishment. “The Tea Party didn’t want a deal,” Austan Goolsbee told me. “The world understood that default was crazy and would destroy the economy. But hitting the ceiling would force big parts of the government out of business. That’s what they wanted. They weren’t bluffing.”
If keeping the economy growing was so central for Obama, why was the initial stimulus “only” $800 billion? “The case is quite compelling that if more fiscal and monetary expansion had been done at the beginning, things would have been better,” Lawrence Summers told me late last year. “That is my reading of the economic evidence. My understanding of the judgment of political experts is that it wasn’t feasible to do.” Rahm Emanuel told me that within a month of Obama’s election, but still another month before he took office, “the respectable range for how much stimulus you would need jumped from $400 billion to $800 billion.” In retrospect it should have been larger—but, Emanuel says, “in the Congress and the opinion pages, the line between ‘prudent’ and ‘crazy spendthrift’ was $800 billion. A dollar less, and you were a statesman. A dollar more, you were irresponsible.” The three Republicans who voted for the stimulus bill—Susan Collins and Olympia Snowe of Maine, and about-to-be-Democrat Arlen Specter of Pennsylvania—all complained that it was far too large, as did Jim Webb and many other Democrats.
Can Obama Play Truman?
The second, related argument is that Obama’s passive, even withdrawn-seeming stance as “the only adult in the room” has positioned him better for reelection—and thus for his best chance to lock in the gains he has made—than a more directly combative approach would have. Not until Obama writes his post-presidential sequel to Dreams From My Father, and perhaps not even then, will we know all the sources of his seeming horror of partisan conflict. His above-the-fray pose was certainly the key to his rise in the first place. I was in the arena in Boston when he declared in his 2004 convention speech, “There’s not a liberal America and a conservative America; there’s the United States of America.” The house erupted in cheers, and America’s first black president could not have gone on to win had he struck a more strident or divisive tone.
But lines like that described an ideal, not an operational reality, and once Obama entered office, his opponents didn’t buy them. Late last year John Barrasso, a Republican senator from Wyoming, explained to me that his colleagues would have been “only too willing” to work with Obama, if he had not, in Barrasso’s view, “frozen us out” by listening only to Nancy Pelosi and the extreme-liberal base.
If Obama really thought that America had moved past partisan division, then he was too innocent for the job. But part of political leadership is being able to project a positive idealism that you know is at odds with the real world. I am ready to believe that Obama adopted this faux-harmonious tone, apart from its being his natural register, as a way to win the election, and as a marker for what he hoped America could become, and—crucially—that once in office, he maintained it as a sound position for himself as he moved toward reelection. Late last year, he also applied it with chess-master skill against the congressional Republicans, in daring them to let the widely popular payroll-tax cut expire at the start of an election year. They backed off, and when the dust settled, the Republicans found themselves at an unaccustomed political disadvantage. Having secured an agreement on government funding for the rest of the year, Obama had taken one of their favorite tools, the threat of a government shutdown, out of their hands through the campaign season. And after three years of seeming to shy from “partisan” rhetoric, he began linking the slate of GOP presidential contenders to the Tea Party–dominated Republican Congress, whose approval ratings were far worse than his own.
The payoff for Obama in a strategy of remaining Mr. Reasonable is the prospect of occupying the acceptable center, as the Tea Party spins the Republican Party off to the extreme. The risk is that even if the Republicans make themselves unpopular through filibuster and obstruction, they make Obama look weak—and that’s worse.
Obama’s future, and his effectiveness, depend on that balance, whose results we will see this year. My impression from recent evidence is that he has found his footing, and has come to understand how to use the constrained but still real powers of a president facing congressional opposition—just in time. The most enlightening document I found for assessing Obama’s recent moves turns out to be 66 years old.
This is a memorandum that James H. Rowe Jr., a Harvard-trained lawyer who had been Oliver Wendell Holmes’s last law clerk on the Supreme Court and after World War II was a young official at the Bureau of the Budget, wrote to President Harry Truman soon after the midterm elections of 1946. In that election, the Republicans gained 55 seats in the House and 12 in the Senate, to take control of both houses for the first time since before the New Deal. Truman was if anything less prepared, for more overwhelming responsibilities, than Obama was. Three months after he unexpectedly became president upon Franklin Roosevelt’s death, he had to decide on the use of atomic weapons whose very existence FDR had never let him know about. After that came management of post-war Europe and Asia. But the fundamentals of Truman’s political situation, as described in Rowe’s memo, are amazingly similar to those Obama now faces.
Rowe tells Truman that, with the Republican victory, he should be prepared for obstruction and nonstop partisan stalemate, not because of strategic mistakes on his side but because this is the basic nature of the American system. Anyone who thinks that American politics is more embattled “than ever,” as I am often tempted to, should read this memo (and Samuel Popkin’s exegesis of it, in The Candidate).
Rowe points out that when an opposing party holds Congress, it will always view weakening the president as its paramount goal. It will launch as many congressional investigations as possible, in hopes of finding scandal in an administration or at least distracting its appointees. It will block nominations and try to frustrate a president’s attempts to keep the executive branch operational. Its leaders will define “compromise” as the president’s accepting all of their demands and abandoning his own. If the leaders of Congress do finally strike a deal with the administration, a president should be wary. The “simple fact” about most deals with a congressional opposition, he writes, is that “they just won’t work under the American two-party system”:
For “cooperation” is a one-way street. The President can discipline the Executive Branch sufficiently by exercising his right to hire and fire; he can force it to cooperate. The Republican leaders may agree to have co-equal responsibility for executing the agreements reached on policy but they do not have co-equal power “to deliver” … [Congress] has no parliamentary discipline … for a very simple reason—Congressmen are not representatives of all the people; they represent only their own districts or sections and the particular pressure groups within those sections which are vital to them. No Congressional leader can commit his party because no commitments are binding upon the Members except those they may personally make to their own sections.
Negative discipline, of the kind that Mitch McConnell has exercised to keep Senate Republicans voting as a bloc against Obama’s proposals, is easier to maintain than positive discipline, of the kind Newt Gingrich wielded temporarily over his Republican majority. That is the exception. A president “should first of all accept the inevitability that formal cooperation is unworkable,” Rowe concludes. “Despite his sincere desire to cooperate, he should accept the verdict of the politicians, of history, and of the disinterested students of government.”
And so Rowe offers his recommendation. With legislative ambitions blocked, with many appointments left to languish, with rear-guard battles under way to uphold vetoes and fend off investigation, a president should resort to the only tool that is uniquely his: the ability to speak to all of the public. He should prepare the ground by sounding reasonable and conciliatory, in light of an unquenchable if unrealistic belief that parties should be able to get along. (“Public demand for bipartisan cooperation will probably continue. The realpolitik of the situation requires that there be some gestures toward cooperation.”) Then, with his bona fides established, the president can move into the next election, making a clear case for his side.
If Barack Obama loses this fall, he will forever seem a disappointment: a symbolically important but accidental figure who raised hopes he could not fulfill and met difficulties he did not know how to surmount. He meant to show the unity of America but only underscored its division. As a candidate, he symbolized transformation; in office, he applied incrementalism and demonstrated the limits of change. His most important achievement, helping forestall a second Great Depression, will be taken for granted or discounted in the dismay about the economic problems he did not solve. His main legislative accomplishment, the health-care bill, may well be overturned; his effect on America’s international standing will pass; his talk about bridging the partisan divide will seem one more sign of his fatal naïveté. If he is reelected, he will have a chance to solidify what he has accomplished and, more important, build on what he has learned. All of this is additional motivation, as if he needed any, for him to drive for reelection; none of it makes him any more palatable to those who oppose him and his goals.
And for those who supported him the first time, as I did? To me, the evidence suggests that given a second term, he would have a better chance of becoming the figure so many people imagined.