Chapter Thirteen
Obama Unleashed

ON THE LAST DAY OF AUGUST 2011, PRESIDENT OBAMA STOOD AT a podium in the Rose Garden in the midmorning sunshine.

Standing beside him were David Chavern, executive vice president of the Chamber of Commerce, and Richard Trumka, president of the AFL-CIO. The two men didn’t say anything; they were props, there to help Obama push a bill stalled in Congress that would provide funds for highway construction, bridge repairs, mass transit, and other projects. This was part of the president’s newly revitalized—post-debt-ceiling—focus on jobs and more jobs. In a week’s time, Obama would deliver a speech to Congress outlining a jobs package.

After finishing his remarks, Obama grabbed Trumka and pulled him into the Oval Office for an unscheduled chat. No staff, Obama said to the labor leader.

Days earlier, Trumka had been the guest at an on-the-record breakfast with reporters. Referring to a meeting he’d recently had at the White House, Trumka told the journalists he had fervently urged Obama to draft a comprehensive jobs blueprint, not a collection of watered-down half measures designed to pass in the Republican-dominated Congress. If Obama in his much-anticipated jobs speech did not “propose bold solutions on the jobs crisis,” and was only “nibbling around the edge,” Trumka huffed, “history will judge him and I think working people will judge him.”

Accusing Obama of limiting his proposals to “those little things that he thinks others will immediately accept,” Trumka was essentially calling the president a small and spineless leader. And he tossed out a threat: if the president came up short, the AFL-CIO might be better off spending its money on projects other than Obama’s reelection in 2012.

The president didn’t appreciate preemptive potshots or speculative threats from his allies. He didn’t like being doubted—which he had been for months during the debt-ceiling debate and the near government shutdown.

In the Oval Office, he chewed out Trumka.

You’re losing our guys, Trumka countered.

Don’t blast me in public, the president said. Obama had told Trumka and his union buddies to have faith in him—and he had meant that.

After Trumka left the Oval Office, he didn’t say much about the meeting. But the next week—three days before Obama was to unveil his jobs initiative—Trumka was with the president in Detroit for a Labor Day rally. Speaking to the upbeat crowd of thousands before Obama appeared, Trumka hailed the president as “the man who worked with auto workers to save America’s auto industry. That’s the kind of bold, courageous action that we need right now.”

And Obama was planning to be bold again that week.

A MONTH EARLIER, AS SOON AS OBAMA WAS CLEAR OF THE DEBT-ceiling tar pit, he had ordered Gene Sperling to bring him a major jobs plan by the next week. Be bold, the president said. And be credible.

Sperling had already been preparing for this. Through the spring and summer, as the president and his aides watched the job-growth numbers plummet, they had realized that as soon as they could extricate themselves from prevent-catastrophe negotiations they would have to do something major about jobs.

In mid-June, Bill Daley had convened a senior White House staff retreat at nearby Fort McNair, and he reserved a stretch of time for Sperling to explain possible jobs proposals the president could soon unveil. At the top of his list was extending the payroll tax cut and unemployment insurance benefits, which were each set to expire at the end of the year. At the retreat and in other meetings, White House aides had reminded Sperling that he had claimed that the payroll tax cut, the big-ticket item in December’s tax-cut compromise, would provide a big boost. So why was the economy still sputtering?

Sperling answered that the payroll tax cut had cushioned the blow caused by the steep rise in gas prices. He was again stuck with the economic team’s mantra: “It would have been worse. . . .”

In August, Sperling and his economic squad crunched numbers and evaluated options. With the economy still in a slump and perhaps heading toward a turn for the worse, Sperling estimated that the jobs package had to be at least $350 billion to have a shot at lowering unemployment significantly and pushing growth higher than 3 percent.

David Plouffe and Dan Pfeiffer were not happy about this large price tag. Yet they accepted the economic reality at hand. You couldn’t move the sluggish economy without a sizable kick. Obama, too, saw that.

White House staffers held numerous meetings—with and without Obama—as they pondered assorted provisions Sperling had lined up: continuing the payroll tax cut and expanding it to cover the amount paid by employers; funding an infrastructure bank; developing a school modernization program. Everyone agreed that the individual parts of the plan should have attracted bipartisan support in the past and should be able to stand on their own, if necessary.

In one of the meetings, Obama asked Sperling, “Put Congress and politics aside. If you were trying to fix the economy what would you do?”

Spend money to help states hire and retain teachers, Sperling said. This would help preserve consumer demand in the short term and prevent the education system from deteriorating and becoming a drag on the nation’s future prospects.

Why isn’t that in the plan? Obama asked.

The Republicans won’t pass it, Sperling said.

Let’s decide what we believe is best, Obama said. He soon after agreed to support a major teachers provision—and Biden suggested adding police officers, firefighters, and first responders to this part of the under-construction package.

In other meetings—and in e-mails and phone calls—Obama requested that Sperling and the economic team increase the amount of money for infrastructure projects and incorporate a summer jobs program. He thought his policy advisers were being hemmed in by the politics of the possible and pushed them toward a bigger plan.

At the same time, Sperling and the economic team were concocting a specific and comprehensive deficit-reduction blueprint that Obama would release after unveiling the jobs bill. It would essentially be the president’s submission to the supercommittee that would be struggling to cook up Part II of the debt-ceiling settlement.

The main issue for White House aides was whether the president’s deficit plan should include the concessions Obama had offered during his doomed attempt at a grand bargain.

Some argued the president was already half pregnant when it came to raising the Medicare eligibility age and altering the Social Security COLA. If he included these policy changes in the plan, he would demonstrate (once again) seriousness to the deficit hawks of Washington and please the ever-important markets. Others maintained that embracing these measures without extracting anything from the other side was a poor negotiating strategy. And this was no longer a negotiation.

WITH THE JOBS PLAN COMING TOGETHER, OBAMA AND HIS AIDES considered the timing of its release and whether or not to rush it out. The economy seemed to be tanking. Some economists were telling the White House that there was a fifty-fifty chance of another recession.

It was mid-August, and later in the month the president would be heading to Martha’s Vineyard for a family vacation. Geithner and others asked how Obama could go a few weeks without taking decisive action. This was a bad photo-op waiting to happen.

But Plouffe was determined that Obama’s job-creating initiative penetrate the public. To achieve that, the White House needed to mount a sustained effort over time, with various events and appearances.

There was simply not enough runway in August to launch what was now the most important project of the Obama presidency. If Obama couldn’t convince the public he was sweating for jobs, jobs, jobs, not much else would matter. And who in Washington or elsewhere pays attention to anything in the middle of the summer? It would be an act of reckless negligence to kick off an economy-saving (and presidency-saving) endeavor in the dog days.

“The world never rewards political incompetence,” Plouffe argued.

Pfeiffer suggested they announce that after Labor Day the president would deliver a major economic speech unveiling a jobs plan. There would in the meantime be leaks about the initiative and the internal discussions. But that was not too high a price to pay for conveying the message that the president was back on the jobs beat.

On August 13, the New York Times published an attention-grabbing front-page story claiming that the White House was engulfed by a civil war, divided between aides who favored modest and low-impact economic ideas that could pass Congress (Plouffe and Daley) and those aides (Sperling and his crew) who advocated bigger, pie-in-the-sky ideas.

The article was wrong—there had not been major disagreement over the package—but it set off tremors, especially among Democrats and progressives. Here we go again, they thought: Obama was going to punk out.

The night the Times story hit, Pfeiffer called one of the two journalists who wrote the story. “You’re going to be embarrassed,” he said.

Days later, as Obama was on a campaign-style bus tour in the Midwest—blasting Congress for doing nothing to create jobs—the president disclosed that he would announce in September a “very specific plan” to create jobs. And if lawmakers wouldn’t act, he added, “we’ll be running against a Congress that’s not doing anything for the American people.”

That week, his Gallup approval ratings sank below 40 percent for the first time—and only 26 percent had faith in his handling of the economy. Congress’s approval rating, however, fell to 13 percent.

AFTER OBAMA AND HIS FAMILY RETURNED TO WASHINGTON from their vacation, the jobs plan had to be finalized. The tab for the package had crept up to $375 billion, and Sperling and others were considering what provisions to shave. Then on September 2, the new monthly jobs report showed no jobs growth at all the preceding month. Zero. Upon hearing the news, Sperling felt as if he had been punched in the stomach.

Obama’s advisers feared a deep economic crunch was at hand. Sperling wondered if $350 billion had been the right amount before, how could an amount near that be the appropriate level now?

He decided they should go with everything under consideration—no shaving—which would hike the cost to $450 billion. In White House meetings, he said such an amount was necessary to hit the 1.5 million jobs target. If we’re serious, he asserted, the package must grow.

He knew this would cause unease among White House aides. At this size, the jobs plan would be more than half the cost of the much-maligned stimulus. That had no policy significance, but it could be symbolic ammo for the Republicans. And with Obama absolutely committed to paying for the package, the bigger it grew, the more difficulty the White House would face in tapping revenues or savings to cover the tab.

At an Oval Office meeting days before the jobs speech, Geithner, who was usually Mr. Fiscal Discipline, backed up Sperling. Plouffe said the larger price tag would make the plan harder to sell, but noted that anyone inclined to blast it would do so whatever the size. Plouffe didn’t try to knock down Sperling’s case.

The final number was Obama’s call. “If you go to Obama and say this is the right thing to do economically, he doesn’t like to say no,” a senior administration official remarked. “Maybe that’s his downfall.”

The president agreed with Sperling. His bold package would become $75 billion bolder.

AS OBAMA WAS POISED TO BUOY HIS DEMOCRATIC AND PROGRESSIVE base—and demonstrate to independent voters he was fixated on jobs—he enraged environmentalists and liberals by killing a proposed EPA standard for ground-level ozone, pollution caused by power plants, industrial facilities, and vehicles, commonly known as smog.

This rule would have forced states and cities to reduce local air pollution or be hit with federal penalties. (Smog poses a serious health risk to children, seniors, and people with chronic lung diseases.) House Republicans, led by Eric Cantor, and industry groups had been on the warpath about this pending regulation for months.

In a statement, Obama noted that his EPA had issued other standards that had removed billions of tons of pollution from the nation’s air, but he said this particular rule should be yanked because it would be up for reconsideration in two years. The president maintained that it would be unreasonable to ask state and local governments to implement a new standard that could soon change. This was part of his ongoing effort, Obama said, to reduce “regulatory burdens and regulatory uncertainty.”

Republicans had been claiming that the administration’s excessive regulation was a primary cause of the nation’s economic woes—though the Obama administration had issued fewer regulations than the Bush administration. The GOP had no data to back up the charge that these regulations—as opposed to a severe lack in demand—were impeding businesses. Still, as Congress returned to town at the end of the summer, Cantor sent out a memo outlining the House Republicans’ two-part jobs agenda. The first priority was repealing “jobs-destroying regulations”; the second was cutting taxes.

Earlier in the year, Obama had signed an executive order calling for a government-wide assessment of rules in search of outdated regulations that stifle businesses. As this regulatory review proceeded, a former senior Obama White House aide noted, “If Obama wants anyone in the business community to believe he’s serious about regulatory reform, he’s going to have to make an example of a regulation people on his side like.”

Whether or not that was Obama’s intention, the smog case fit the bill. His decision to dump the new smog standard came as a shock to environmentalists. This was a complete win for industry. White House aides claimed that the smog decision did not signal a wider surrender on environmental regulation—and assured environmentalists that Obama still stood behind administration efforts to bolster standards governing air toxins. (In December, Obama’s administration would finalize tough new curbs on mercury and other poisons emitted by coal-fired utilities.)

For some liberals, the death of the smog safeguard was another indication that Obama was too willing to sell out. “I have no idea what Barack Obama—and by extension the party he leads—believes on virtually any issue,” Drew Westen, a psychology professor and messaging consultant to Democrats and progressive groups, had written in a New York Times op-ed slamming Obama as a weak and temporizing leader days after the debt-ceiling battle. Yet the smog decision had come just as Obama was preparing to take one of the more progressive strides of his presidency.

THE FIRST APPLAUSE LINE IN OBAMA’S JOBS SPEECH, DELIVERED to a joint session of Congress on the evening of September 8, 2011, referred to the debt-ceiling madness of recent weeks: “The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy.”

Senators and House members clapped; some cheered. Obama’s intent was clear: it was time to move on.

“We felt liberated,” a senior administration official said. “Through the summer, we were dealing with House Republicans who were both irresponsible and incompetent. It was like you handed a nuclear bomb to inept and useless people. They couldn’t count votes. They didn’t know what would pass. And anything we said could blow everything up.”

Obama went on to describe the American Jobs Act that Sperling had assembled for him. To help small businesses hire and grow, Obama proposed cutting the employer portion of the payroll tax (and eliminating it for new hires) and extending tax breaks for businesses that build new plants and purchase equipment. The payroll tax holiday for workers enacted the previous year would be extended and expanded, which would mean an extra $1,500 for a family earning $50,000. Unemployment benefits would be extended, and tax credits offered to employers who hire out-of-work veterans. States would receive $35 billion to prevent layoffs of hundreds of thousands of teachers, firefighters, and police officers.

The president proposed investing $30 billion in school infrastructure to modernize at least 35,000 public schools, with some of this money underwriting science labs and Internet-ready classrooms. There would be $50 billion to fund highway, transit, rail, and aviation projects; $25 billion for rehabilitating and refurbishing vacant and foreclosed homes and businesses; and $10 billion to capitalize an infrastructure bank. And there was more: tax credits for hiring long-term unemployed workers, a youth summer jobs program, and expanding access to high-speed wireless services in remote rural communities.

The plan offered tax cuts, which conservatives could like, and noncontroversial stimulus projects—though Obama didn’t use that word. In a few days, Obama would call for financing the plan by limiting itemized deductions for individuals earning more than $200,000, ending subsidies for oil and gas companies, and changing the depreciation rules for corporate airplanes. (Senate Democrats—some weren’t fans of killing oil firm subsidies or capping charitable deductions—would eventually replace these “pay-fors” with a 5.6 percent surtax on millionaires, sure to irritate Republicans.) The total cost: $447 billion.

In his speech, Obama noted that most of these provisions had previously been supported by Republicans. Over a dozen times, he urged Congress—meaning the Republicans—to pass the bill. Referring to the pressing need to rebuild America, he cited a “bridge that needs repair between Ohio and Kentucky”—that is, a project important to Boehner’s congressional district and McConnell’s home state.

He tried to box in the Republicans on the payroll tax cut: “I know that some of you have sworn an oath to never raise any taxes on anyone for as long as you live. Now is not the time to carve out an exception and raise middle-class taxes.”

Perhaps the most powerful moment came when the president voiced a populist-tinged sentiment: “Should we keep tax loopholes for oil companies? Or should we use that money to give small business owners a tax credit when they hire new workers? Because we can’t afford to do both. Should we keep tax breaks for millionaires and billionaires? Or should we put teachers back to work so our kids can graduate ready for college and good jobs? This isn’t political grandstanding. This isn’t class warfare. This is simple math.”

And this was not an angry populism of class resentment. It was, as could be expected with Obama, a calm populism: there’s a rational choice to be made, there’s only so much money—do we protect the pocketbooks of the well-to-do or invest more in education?

The president was delivering a passionate defense of government—a perspective that had been overwhelmed throughout the year by the Tea Party invasion of Washington and the subsequent negotiations, shouting, and headlines concerning spending cuts, deficit reduction, and the national debt.

At a time of economic challenge, Obama said, the “notion that the only thing we can do to restore prosperity is just dismantle government, refund everybody’s money, and let everyone write their own rules, and tell everyone they’re on their own—that’s not who we are. That’s not the story of America.”

True, Americans are rugged individualists and self-reliant, but “there’s always been another thread running throughout our history—a belief that we’re all connected, and that there are some things we can only do together, as a nation.”

This was not a speech to persuade the audience sitting before him. The Tea Partiers would not be moved. But as he had done with the anti-Ryan speech in April, Obama was setting up the counternarrative to the Republican claim that government was the problem and had to be gutted for the economy to rebound.

His jobs plan was part of this overarching story—which he would be telling for the next fourteen months, until he faced the voters once again. And he was picking a fight: “This plan is the right thing to do right now. You should pass it. And I intend to take that message to every corner of this country.”

Here was an unfettered Obama who had moved from the negotiating table to the boxing ring. His aides insisted this was not a politically calculated pivot; it was driven by circumstances. He could no longer work the inside game with Republican leaders who were held hostage by the extreme ranks of their own party; he had to go to the outside and apply pressure. He had not needed to be talked into this strategic shift, his aides recalled.

“You will see more energy and more passion,” a top Obama strategist remarked. “He feels it.”

WITH POLLS SHOWING THE PUBLIC DISGUSTED WITH CONGRESS, John Boehner responded to Obama’s speech cautiously and in a noncombative manner, noting, “The proposals the president outlined tonight merit consideration.”

Eric Cantor was also respectful: “It’s time for Washington to come together and produce results.” But he added that Obama’s intent to pressure Congress to pass the package in its entirety was not “the right approach.” Reince Priebus, chair of the Republican National Committee, was not shy about telegraphing the inevitable GOP attack: “Despite one failed stimulus, the president wants even more deficit spending.”

Democrats on Capitol Hill tended to cheer now that Obama was on the offensive. “A light has gone on at the White House,” a senior House Democratic aide said. “Any expectation that you can establish bona fides by governing with these Republicans is gone.”

There was, however, the to-be-expected moaning. “Senate Democrats were ticked off at the White House for not consulting with them sufficiently on the composition of the bill, and running against a do-nothing Congress, rather than running against do-nothing and crazy Republicans, thus lumping Senate Dems in with the Republicans,” a senior Democratic Senate aide remarked.

In pundit land, the hard-to-please Paul Krugman wrote, “It’s much bolder and better than I expected. President Obama’s hair may not be on fire, but it’s definitely smoking; clearly and gratifyingly, he does grasp how desperate the jobs situation is. . . . Mr. Obama may finally have set the stage for a political debate about job creation.”

The plan also passed establishment muster. Moody’s Analytics predicted Obama’s proposal would add 2 percent to GDP growth, create almost two million jobs, and lower the unemployment rate by 1 percent.

OBAMA HIT THE ROAD TO PROMOTE THE JOBS BILL. AFTER THE midterm elections, he and his aides had concluded that in the first two years the president had not escaped the Beltway confines often enough. They had resolved for him to get out more. But the Arab Spring, budget negotiations, and the debt-ceiling quarrel had forced him to stay in Washington. At last, he was free to roam.

The first stop was the University of Richmond, which happened to be in the swing state of Virginia and also in Cantor’s congressional district. (Just a coincidence, White House aides insisted.) At a rambunctious rally, Obama proclaimed, “There are millions of unemployed construction workers across America ready to put on their tool belt and get dirty. I don’t know about you—I don’t want the newest airports, the fastest railroads, to be built in China. . . . I want them to be built right here in the United States of America.”

The crowd chanted, “USA, USA, USA.” A speech focused on deficit reduction would not have elicited such an outburst of patriotism.

Four days later, the president was at Fort Hayes High School in Columbus, Ohio—not too far from Boehner’s district (again, coincidentally)—for another rally. “Budget cuts are forcing superintendents . . . all over the state to make [teacher] layoffs they don’t want to make,” Obama declared, adding, “Tell Congress to pass the American Jobs Act so we can put our teachers back in the classroom.”

The next day, in Raleigh, North Carolina, Obama said there were 153 structurally deficient bridges in the state. If Congress passed his jobs plan, money would be available to repair many of them, and the typical working family in North Carolina would pocket a $1,300 tax cut.

Obama was finally doing what some of his Democratic and progressive allies had long urged: taking his case to the American public in a sustained fashion, applying pressure on obstructionist Republicans, and championing policies that addressed immediate economic concerns.

In the coming weeks, he would take his “pass this bill” tour to Denver, Colorado; Mesquite, Texas; Pittsburgh, Pennsylvania; Asheville, North Carolina; Hampton, Virginia; Manchester, New Hampshire; Scranton, Pennsylvania; and elsewhere—with practically each stop in a battleground state that would be crucial to Obama’s electoral fortunes the following year.

Obama’s conservative critics were right—he was beginning the campaign of 2012.

OBAMA HAD SHIFTED TO A JOBS-FIRST MESSAGE. BUT WITH THE supercommittee set up by the debt-ceiling deal kicking into gear, he still had to tend to deficit reduction. The recent fight had resolved little, and the policy and political reasons that had driven Obama to accept deficit reduction as a priority remained. So once again he had to put forward a plan.

Almost two weeks after the jobs speech, Obama entered the Rose Garden to announce a detailed road map for smiting deficits.

The blueprint was basic: $3.2 trillion in deficit reduction over ten years, with $1.5 trillion to come from heftier taxes on the wealthy. Obama would pull the plug on the top-bracket Bush tax cuts and limit tax breaks for those making more than $250,000. He would close loopholes for special interests, such as oil companies, and his plan would adhere to the “Buffett Rule”—named after billionaire investor Warren Buffett—ensuring that people making more than $1 million a year would not pay a smaller share of their income in taxes than middle-class families.

On the cutting side, Obama would slice $250 billion out of excessive Medicare payments (not benefits) and the same amount from assorted non-health-care mandatory programs (such as farm subsidies). His plan pocketed the $1 trillion savings associated with the wind-down of the Iraq and Afghanistan wars.

Obama had tossed aside the concessions he had offered Boehner weeks earlier. And he was giving up on his relationship with Boehner—which had not paid off. The president slammed the speaker for having recently proclaimed that the supercommittee could only contemplate spending cuts, not revenues: “The speaker says we can’t have it ‘my way or the highway,’ and then basically says, ‘my way—or the highway.’ ”

Worse, Obama noted, Boehner was putting the nation at a disadvantage: “That means slashing education, surrendering the research necessary to keep America’s technological edge in the 21st century, and allowing our critical public assets like highways and bridges and airports to get worse. It would cripple our competitiveness and our ability to win the jobs of the future.”

This set up the predictable showdown with Republicans. That day, Boehner told Fox Business Network, “I don’t think I would describe class warfare as leadership.”

Republicans started whining that Obama’s plan was the “largest tax hike in US history.”

It did seem at last that Obama was in a fair fight, no longer hamstrung by the burdensome responsibility of preventing Tea Party Republicans from shutting down the government or causing a financial crisis. New Yorker writer Ryan Lizza zapped out a half-snarky tweet: “This may be the first time in a major negotiation with Repubs where Obama didn’t give away everything in his opening bid.” The New York Times reported that Obama was in a “new, more combative phase of his presidency.”

THIS TIME OBAMA DID NOT THROTTLE BACK, AS HE HAD AFTER the anti-Ryan speech in April. At a fund-raiser in Manhattan, he dismissed the “moans and groans from the other side about how we are engaging in class warfare and we’re being too populist.”

In Cincinnati, Ohio, Obama stood before the Brent Spence Bridge—the one he mentioned in his jobs speech—and noted that this public work, which had been declared functionally obsolete, “just so happens to connect the state that’s home to the speaker of the House with the state that’s home to the minority leader of the Senate. Sheer coincidence, of course.”

At the annual convention of the Congressional Black Caucus, Obama wagged his finger at allies who might have become discouraged with him: “I don’t have time to complain. I am going to press on. . . . Take off your bedroom slippers, put on your marching shoes. Shake it off. Stop complaining, stop grumbling, stop crying. We’re going to press on. We’ve got work to do.”

Obama was not put off by the continuing accusations of class warfare. David Brooks, the White House’s favorite conservative columnist, had claimed that Obama’s “populist cries” will “fire up liberals but are designed to enrage moderates.” (This was an absurd charge—that Obama and Plouffe were purposefully trying to anger independents.)

Mark Penn, who had been Hillary Clinton’s strategist and pollster in 2008, warned that Obama, with his “class warfare,” was “abandoning” the center. Yet at a Democratic Party fund-raiser in Seattle, Obama proclaimed, “If asking a billionaire to pay the same tax rate as a plumber makes me a warrior for the middle class, I’ll wear that as a badge of honor.”

OBAMA WAS NO LONGER SEEKING TO BE THE COMPROMISER IN chief and the reasonable adult in Washington’s unruly sandbox. That might have once been an effective strategy for appealing to independents. But it made no sense if pursuing bipartisan collaboration resulted in Obama looking ineffectual. “The only option was to take our argument to the country,” a senior administration official said.

But Obama and his aides were not giving up on their effort to win back independents. They believed the president had attempted mightily to govern in a bipartisan manner and had been rebuffed—and that many independents now thought the Republicans had behaved unreasonably and irresponsibly.

“We accomplished that,” a senior administration official said.

As Axelrod saw it—after poring over reams of data from polls and focus groups—achieving above-the-frayness was not the only way for Obama to impress independent voters. These voters wanted cooperation in Washington, but they also yearned for results. If Obama fought vigorously for a jobs bill containing a variety of popular provisions—many of them centrist in nature—his standing among independent voters would likely improve.

“The Republicans,” Axelrod maintained, “have locked themselves into a bad economic theory that neither independent voters nor Democrats accept—that the trickle-down thesis is more fresh and new than the last decade or the 1920s.” And focus groups of independent and Democratic voters especially liked the moment in the jobs speech when the president declared he would take the fight for the jobs bill “to every corner of this country.”

OBAMA’S POLL NUMBERS DID NOT SHOOT UP AFTER THE JOBS speech and the subsequent barnstorming. White House aides claimed they were not worried—at least not too much. “We need good numbers in October 2012, not October 2011,” a senior administration official said.

Plouffe was a practitioner of the long game, and he, Pfeiffer, and the rest of the political team had developed several objectives to enhance the president’s standing with voters, particularly those fickle independent voters—and each one they believed was within Obama’s reach.

The first aim was to bolster voters’ faith that Obama was focused on jobs. “This was always a problem for us,” a senior administration official conceded, especially during Obama’s push for health care reform. Through the past year, Obama and his aides realized, the public had rarely seen Obama striving to create jobs. When he reached their living rooms, via the media and the Internet, it was because of uprisings in the Arab world, the bin Laden operation, or the near government shutdown and subsequent debt-ceiling dispute. If he now zeroed in on jobs, jobs, jobs, his advisers believed, he could indeed strengthen voters’ impression that he fully shared their top concern.

Another goal was to persuade voters that Obama had an effective and ambitious plan and the Republicans did not—and that the other side was more interested in thwarting the president than in forging bipartisan compromises that would address the jobs deficit. The debt-ceiling dustup had indicated that Obama could register gains in public sentiment relative to the Republicans.

A third aim was to address, as one senior administration official put it, “the narrative that Obama was weak through the debt fight.” White House aides believed that this impression was not widespread within the electorate. But they recognized it was a common gripe among elite Democratic, progressive, and media circles—and thus could spread to a wider audience. To try to beat back this sentiment, Obama and his aides were looking to throw some hard punches at the Republicans.

A major shift in voter perception of Obama would not happen immediately. This was a blueprint to address voter attitudes in a pragmatic and gradual fashion.

OBAMA’S NEW TACTICS, NOT SURPRISINGLY, WERE NOT HAVING much impact on Capitol Hill. In early October, Cantor said that the House Republicans would not afford the president a floor vote on his full package.

At a Texas rally, Obama excoriated the House majority leader: “I’d like Mr. Cantor to come down here to Dallas and explain what in this jobs bill does he not believe in. . . . Does he not believe in rebuilding America’s roads and bridges? Does he not believe in tax breaks for small businesses, or efforts to help our veterans? . . . Tell small business owners and workers in this community why you’d rather defend tax breaks for folks who don’t need them—for millionaires—rather than tax cuts for the middle-class families.”

Two weeks later, Senate Republicans mounted a filibuster and blocked the American Jobs Act, which was backed by a narrow 51-vote majority.

That day, two senior White House officials held a background briefing for reporters and claimed it was “a very dangerous moment for the Republican Party.” They pointed to polls that showed support for components of the jobs bill in the 60 percent to 80 percent range. Yet the Republicans still seemed intent on thwarting much of it—perhaps even the payroll tax cut.

The notion that the Republicans can “oppose everything and not suffer is wrong,” one of the officials maintained. Listing the elements of the package—teachers, construction workers, unemployment insurance, rebuilding schools, tax cuts for small businesses—one of the aides noted, “We’re going to have thirteen months of political debate: How much do we value these things?” Would voters next year “want to support a candidate who believes we should starve education, starve our infrastructure, and give huge tax cuts to millionaires paid for by senior citizens?”

OBAMA WAS BACK ON THE BUS. IN ASHEVILLE, NORTH CAROLINA, he visited the regional airport and highlighted the need to renovate its sole runway. The $50 billion in the American Jobs Act for infrastructure included $2 billion for airports. At West Wilkes High School in Wilkesboro, North Carolina, Obama emphasized preventing teacher layoffs. The jobs bill provided funding to support nearly 400,000 educator jobs nationwide. North Carolina, he noted, would receive funds to cover 13,400 teachers and school workers across the state. And so on.

For months, Plouffe had been telling nervous Democrats that reelection could be won, even with an awful economy, if Obama’s crew developed customized organizing, communications, and policy strategies for targeted swing states. This was the beginning.

AS OBAMA ADOPTED A MORE POPULIST MESSAGE, HE AND HIS political aides were watching the burgeoning Occupy Wall Street movement against corporate greed, an inchoate protest that had led to encampments and demonstrations in New York City and elsewhere. Obama publicly noted that he sympathized with the demonstrators’ broad grievances covering income inequality, unemployment, and economic injustice. The White House said Obama was looking to protect “the interests of the 99 percent of Americans,” acknowledging, if not adopting, the rallying cry of the Occupy Wall Streeters.

“We knew from focus groups and polling that people had never been more angry about inequality and Wall Street,” a senior administration official said. “The sentiments behind Occupy Wall Street were what we hear all the time: the system is rigged, the rich get richer, Wall Street screwed up but it ended up okay. Some of that is directed at the president. But on a comparative basis with the Republicans, we do well on those issues.”

Obama’s foes on the right, though, were using the Occupy movement as a club against the president and his supposed promotion of class warfare. In what was perhaps the most outlandish of these efforts, the Wall Street Journal published an op-ed by David Moore, the CEO of a Wall Street holding company, who was appalled when a New York City panhandler refused his offer of a single dollar and shouted at him, “You Wall Street fat cats.” Who was responsible for this great offense? The president, of course.

Moore angrily contended that “the president’s incendiary message has now reached the streets” and that would “seriously undermine the chances for reasonable compromise.”

The chances for reasonable compromise had evaporated during the debt-ceiling negotiations. And the Republicans were now not showing much interest in the components of Obama’s jobs package. Senate GOPers blocked—via filibuster—the first breakaway legislation from the American Jobs Act, a bill to protect teachers and first responders from layoffs. Two weeks later, they did the same with legislation embodying the infrastructure measures in the jobs plan.

OBAMA COULD KEEP PRODDING THE REPUBLICANS TO PASS HIS jobs plan or parts of the package. Yet in the 24/7 world of the Internet and cable news, how often could the president swat the Republicans before his demand, politically popular or not, would become stale and he might appear impotent? He needed a second act for his revival mission.

In a meeting with aides, Obama casually mentioned, “I’m not going to sit around and do nothing while they sit on their hands. The country can’t wait. We can’t wait.”

He told his staff he wanted to start issuing as many executive orders as he could.

His advisers told him the policy changes he could accomplish with executive orders would be small compared with the scope of the economic troubles confronting the nation.

Obama argued back: “What I can say is that I’m pushing Congress to do this. But we can’t wait, so we’re doing these other things.”

And he began a flurry of other things. In late October 2011, during trips to Las Vegas and Denver, Obama announced a series of We Can’t Wait initiatives he was implementing by executive order. The first was a rules change that would help underwater homeowners refinance their mortgages. The administration’s foreclosure programs, riddled with assorted problems and failing to reach many in-trouble homeowners, had been disappointing, even for Obama (who had acknowledged during a Twitter town hall the previous July that his administration had erred in not moving more vigorously to address the mortgage crisis). The new rules, though, could help up to 1.6 million homeowners.

The second action was a set of rules that would permit more than one million people who had borrowed money to pay for college to reduce their monthly payments and allow six million students and recent college graduates to consolidate loans and reduce interest rates.

In the weeks ahead, Obama would wield his executive power to direct community health centers to hire thousands of veterans, government agencies to curb wasteful spending (no unnecessary BlackBerrys or agency swag!), and the Food and Drug Administration to reduce drug shortages. Under the We Can’t Wait banner, the White House would also announce stronger fuel economy and greenhouse gas pollution standards for cars and trucks.

This whole campaign had a touch of hype to it. Obama was issuing executive orders at about the same pace as the past two occupants of the White House. None were world-changing. But each order could affect thousands here or a million or so there—and that would add up.

This continuous promotion of initiatives, a Democratic strategist who worked with the White House noted, “showed that Obama was not just a captive of congressional dysfunction. . . . If the Republicans are crazy and intractable, you’re going to keep working every day. You can’t spend thirteen months saying you have to pass my jobs package.”

In terms of winning over voters—that is, winning them back—Obama was seeking progress inch by inch. Fighting for the payroll tax cut for the benefit of 160 million Americans, decrying a do-nothing Congress, issuing executive orders to help homeowners, students, and veterans—the political benefit would be cumulative.

In early November, a Washington Post–ABC News poll suggested that this strategy could pay off. Half the people surveyed agreed with the proposition that Obama had been “making a good faith effort to deal with the country’s economic problems, but the Republicans in Congress are playing politics by blocking his proposals and programs.” Forty-four percent cut the other way: Obama had not “provided leadership on the economy, and he is just blaming the Republicans in Congress as an excuse for not doing his job.”

But 54 percent of independents had a favorable impression of Obama’s effort, compared with 40 percent who did not.

This was incremental change Plouffe could believe in.

IN MID-NOVEMBER, THE REPUBLICANS JOINED DEMOCRATS IN voting for a small slice of Obama’s jobs package—legislation that offered tax credits to companies that hire unemployed veterans and repealed a tax on government contractors. But this represented less than 0.5 percent of the total jobs bill.

Obama and his aides believed the GOPers would have to yield on the payroll tax cut before Congress left town at the end of the year, and the president kept pounding the Republicans for not supporting this part of the package. But the Tea Party–dominated Republicans were not coming around.

Some GOP lawmakers were searching for a substitute for the millionaires’ surtax or considering what payoff they could extract in return for passage of this tax cut; other GOPers simply didn’t want the extension at all. They remained stuck in a world where cutting spending, bulldozing government, and protecting the rich from higher taxes were the avenues to economic expansion.

IN LATE NOVEMBER, THE INEVITABLE HAPPENED: THE SUPER-committee failed. Hours before the midnight deadline, the Democratic and Republican cochairs of the supercommittee released a statement saying they were “deeply disappointed” the committee could not produce an agreement. If nothing intervened, in January 2013 the trigger would go off: $1.2 trillion in automatic cuts, half within the Pentagon.

The supercommittee had been doomed from the start. Before its members could put on their green eyeshades, Boehner had declared that all deficit reduction had to come from slashing federal agency spending and shrinking entitlements—no revenues.

Obama and his aides had reasonably concluded that the Republicans would never accept significant revenues—and who would know better?—and presumed the supercommittee would end a flop. So the president had kept his distance—and had deftly avoided being ensnared in yet another unwinnable debate over deficit reduction and becoming tainted again by Washington failure.

The day the supercommittee crashed, Obama hit the briefing room. He did not blame a dysfunctional Congress, as many commentators rushed to do—or as he might have done earlier in the year. Instead, he pointed an accusatory finger at congressional GOPers: “There’s still too many Republicans in Congress who have refused to listen to the voices of reason and compromise” and who continue to protect “tax cuts for the wealthiest 2 percent of Americans at any cost, even if it means reducing the deficit with deep cuts to things like education and medical research. Even if it means deep cuts in Medicare.”

And he issued a threat: “I will veto any effort to get rid of those automatic spending cuts to domestic and defense spending. There will be no easy off-ramps on this one.”

The Republicans predictably blamed Obama for somehow not leading the supercommittee to the promised land—even though Republicans on the panel had privately requested he stay away. Obama had obviously made the right call, and this moment undercut what had become a familiar complaint: that Obama was a terrible negotiator.

Earlier in the year, the president had been unable to escape the debt-ceiling trap that reaffirmed the GOP mantra that deficit reduction was the most pressing economic priority of the day. But by shrewdly negotiating a trigger with more than half a trillion dollars in military spending cuts, Obama and his aides might have pulled a fast one on the Republicans—just as they had done during the tussle over the 2011 spending levels.

Now, hawkish Republicans would be looking to escape the deal. And with his vow to veto any attempt to defuse the automatic cuts, Obama was becoming Washington’s fiscal enforcer, who would not let the Republicans squirm their way out of their commitment to blot up Washington’s red ink. This would be a major turnaround.

Obama could expect to face protests within the military about this across-the-board slash. Leon Panetta, the new defense secretary, was already hollering about the potential impact of the automatic cuts. And Pentagon-protecting Republicans, no doubt, would try to undo or remake the trigger—and warm up talking points casting the president as a weak-on-defense Democrat. But having dispatched Osama bin Laden and other al-Qaeda leaders, as well as launched the military action that ended Qaddafi’s regime, the president was in a good position to beat back this traditional Republican assault. Moreover, Obama could declare, “A deal’s a deal”—and offer the Republicans a way out only if they would raise revenues to cover the military funds they wished to defend.

In the deficit-reduction wars, Obama had what his aides considered another advantage: the expiration of the Bush tax cuts. They were scheduled to disappear at the end of 2012. If Obama did nothing, he could reduce the deficit without touching Medicare, Medicaid, or Social Security benefits. The end of the Bush tax cuts along with the trigger (presuming it was not uncocked) would produce a flood of deficit reduction.

Republicans might again try to hold the extension of middle-class tax cuts hostage to preserve the tax breaks for wealthy Americans. But Obama was determined not to be held captive next time. He had declared in private and public that the tax-cut compromise of December 2010 was a onetime shot. And he was now telling his aides that he would veto any legislation sent to him—before or after the 2012 election—that continued the Bush top-bracket tax cuts.

“He will send it back to the Republicans until they break,” a senior administration official remarked.

The deficit wars that defined Obama’s third year in office were far from over. The biggest disputes had only been delayed. In early 2013, the three most explosive clashes would converge. The Bush tax cuts would die, the automatic cuts would kick in (threatening the Pentagon), and the nation’s debt would be reaching the limit set in the August deal. It could be a storm of fiscal and political commotion. Obama would confront all this after the November election, either as a lame-duck president or as a reelected chief executive.

It was nothing for him—or anyone else—to look forward to.

FOR SEVERAL WEEKS, OBAMA HAD BEEN THINKING OF UPDATING a speech he delivered in 2007 as a presidential candidate at Nasdaq’s corporate headquarters in New York City.

In front of about 150 Wall Street executives, Obama had asserted that corporate excesses (such as extravagant CEO compensation and the subprime mortgage fiasco) undermine American capitalism. He told the financiers that in the modern economy the fortunes of Wall Street and Main Street were interconnected. He called for a “re-appraisal of our values as a nation.” This was a prescient address, with Obama warning that the subprime debacle and similar Wall Street shenanigans could set off a larger crisis—which was precisely what happened a year later.

Perhaps the Occupy Wall Street movement had caused Obama to consider reprising this speech. And a Congressional Budget Office report on income inequality years in the making had caught his eye. It noted that the income of the wealthiest 1 percent in the United States had nearly tripled since 1979. In that period, the after-tax income of middle-class Americans rose only about 1 percent a year. The rich were boosting their annual take at about seven times the rate of average American families.

For years, Obama had been thinking and speechifying about the loss of economic security for the middle class and the apparent decline of social mobility. Reviving the American Dream for middle-class families had been one theme of his presidential campaign. The president now wanted to return to it.

On December 6, 2011, Obama flew to Osawatomie, Kansas, a small town (population 4,447) with two claims to history. In 1856, abolitionist John Brown and a few dozen comrades mounted a losing fight there against a 250-man pro-slavery militia that attacked the town. And on August 31, 1910, as part of a two-day commemoration of John Brown, President Teddy Roosevelt, then out of office but still deeply involved in politics, delivered a speech there defining a “New Nationalism.”

Roosevelt’s remarks were a bold declaration of progressivism at a time when the country was still undergoing a profound transformation from agrarian society to industrial powerhouse. Before a crowd estimated to be about thirty thousand, T.R. denounced corporate “special interests,” declared that the “citizens of the United States must effectively control the mighty commercial forces,” and called for a “square deal” for workers, which would include rigorous government regulation of the workplace and Big Finance.

Roosevelt’s address was probably the most radical ever delivered by an American president in or out of office. It helped define early twentieth-century liberalism. After his speech in Osawatomie—assailed at the time as “communistic,” “socialistic,” and “anarchistic”—Roosevelt broke with the Republican Party, formed the Progressive Party, and ran against incumbent Republican president William Howard Taft in the 1912 presidential contest, which Woodrow Wilson, a Democrat, would win.

Obama had long admired Roosevelt’s “New Nationalism” speech. And in the midst of his clash with Republicans over the payroll tax cut—the White House had posted on its website a countdown clock marking the time left before this tax break for millions of Americans would expire—the president sought to place the battles of the moment into a larger context.

At Osawatomie High School, Obama noted that the recent economic collapse had precipitated “a raging debate over the best way to restore growth and prosperity, restore balance, restore fairness.” He said this was “a make-or-break moment for the middle class and for all of those who are fighting to get into the middle class.”

On one side of this debate, Obama asserted, was a “certain crowd in Washington” that was peddling a familiar refrain: “ ‘The market will take care of everything,’ they tell us. If we could just cut more regulations and cut more taxes—especially for the wealthy—our economy will grow stronger. . . . Jobs and prosperity will eventually trickle down to everybody else. And, they argue, if prosperity doesn’t trickle down, well, that’s the price of liberty.”

He acknowledged that this “simple theory” speaks to the tough individualism and skepticism toward government that can be found in “America’s DNA.” But this theory, he warned, failed the nation in the 1920s and the 2000s.

The United States, Obama pointed out, had become a nation of greater economic inequality. A child born into poverty today had only a one-in-three chance of reaching the middle class. After World War II, such a child had a slightly greater than fifty-fifty shot.

Obama contended that the Republicans’ let-the-market-rule view would not restore “middle-class security.” He was back to the vision he had presented in his State of the Union speech eleven months earlier: to revive a strong and prosperous middle class, Americans must join together—through government—to educate, innovate, and build. This would require money, and that meant more taxes on those who could bear the burden.

“This isn’t about class warfare,” he said. “This is about the nation’s welfare.”

Obama, whose mother’s family had come from Kansas, was not rabble-rousing, as Roosevelt had done 101 years earlier. His speech hardly matched Roosevelt’s in reach or fierceness. But Obama decried banks that were fighting the new safeguards his administration had imposed on banks and securities firms. He blasted Republicans for blocking Richard Cordray’s nomination to head the Consumer Financial Protection Bureau. (The GOPers didn’t object to Cordray; they despised the CFPB. Weeks later, Obama would place Cordray in the post with a recess appointment that enraged Republicans.) He vowed to back legislation that would create tougher penalties for Wall Streeters caught violating fraud laws.

Most of all, the president called for a vision based on communal advance, not unfettered business, noting this was fundamentally a matter of fairness—a message Obama and his aides believed would play well in the coming year with both the Democratic base and the political middle.

“In the end,” he said, “rebuilding this economy based on fair play, a fair shot, and a fair share will require all of us to see that we have a stake in each other’s success.” That, he added, was a matter of “American values.”

Obama’s six-thousand-word speech, which received only moderate media attention, would not change the immediate political dynamic. Speeches tend not to do so. “Words count for nothing except in so far as they represent acts,” Roosevelt had said in Osawatomie. And this address did not boldly offer new ideas. Obama was not redefining his presidency, reshaping progressivism, or coining a slogan as marketable as “New Nationalism.” But it did provide a full picture of what Obama was thinking.

At the start of his third year in office, the president in his State of the Union speech had declared his vision of how best to prepare the economy for the long run, and throughout the budget and debt-ceiling battles, Obama had often tethered his stands to progressive values. His sharp-edged anti-Ryan speech was a values-based counter to the Republicans’ crusade for spending cuts and government downsizing. But for much of this turbulent year, Obama had not often had a clear shot at voicing his story of America.

This address marked a full integration of his vision and values. Afterward, Jim Messina, Obama’s reelection campaign chief, sent out an e-mail to Obama supporters proclaiming that the approach Obama presented in this speech “will inform every discussion we have with undecided voters over the next year.”

“WHY NOT DO THE RIGHT THING FOR THE AMERICAN PEOPLE even though it’s not exactly what we want?” Boehner said, three days before Christmas. With that ill-advised remark, the speaker surrendered in the payroll tax cut battle Obama had initiated—at least, in the first round.

For weeks, the president had been pounding the Republicans for refusing to vote for legislation that would continue the payroll tax cut and extend unemployment benefits. He repeatedly asked whether the Republicans, who always fought bitterly to protect tax breaks for the wealthy, would let taxes rise on middle- and low-income Americans.

For some Republicans, the answer was yes. Tea Partiers in Boehner’s caucus (and several Senate Republicans) openly said they did not support the payroll tax cut extension—in essence arguing that tax breaks for working-class Americans, as opposed to tax cuts for the rich, do not stimulate the economy. GOPers also did not fancy applying a tax on millionaires to pay for it. In one of the year’s weirder votes, more than half of the Senate Republicans in early December voted against a Republican-proposed bill to continue the payroll tax reduction.

On the House side, Boehner was in another tight corner. He said the payroll tax cut was worthwhile, but his caucus was once again bucking him. So he did what he usually did. He tried to put the squeeze on the president.

Boehner assembled a bill that would extend the payroll tax cut and unemployment benefits for a year and fix a Medicare wrinkle that would lead to automatic cuts to doctors—but only if the Senate and the president accepted a conservative wish list, including various spending cuts (some targeting Obama’s health care overhaul), riders to nullify certain environmental regulations, a boost in Medicare premiums for middle-class beneficiaries, and a provision that would force the administration to decide within sixty days whether to green-light the controversial Keystone XL pipeline (which would run from Canada through the Plains states to the Gulf of Mexico).

Boehner managed to rally his House GOPers to pass this bill on December 13—ignoring Obama’s veto threat and Harry Reid’s warning that the bill would be DOA in the Senate.

With time running short before the Christmas break—and the expiration of the payroll tax cut and unemployment insurance benefits—the White House blasted the Republicans for playing political games. Simultaneously, another squabble over a government spending bill threatened to shut down the federal government during the holiday season. It was a fitting end to the year: more chaos and conflict, much of it driven by the extremist wing of Boehner’s party.

The House and Senate finally managed to vote for an omnibus spending bill funding the government through the following September. At the same time, Harry Reid and Mitch McConnell, realizing they couldn’t forge a full agreement on the payroll tax matter before the holidays, crafted a compromise to extend this tax cut and unemployment benefits for two months.

Their bill dumped the surtax on millionaires—instead the cost of the tax cut would be covered by boosting fees lenders pay to Freddie Mac and Fannie Mae—and it included the Keystone XL pipeline measure. They presumed they’d later find a way to work out something for the rest of the year. On December 17, the measure passed 89–10.

Weeks earlier, Obama had said he would oppose an effort to tie the pipeline decision to the payroll tax cut, but he didn’t complain about the pipeline provision, which didn’t actually force him to approve the project. The Republicans might have even set back the project, for the State Department announced that if it were compelled to issue a decision within sixty days, it would have to withhold approval, given that there would be insufficient time to conduct a review of the pipeline. (A month later, that’s what the State Department would do.)

Obama embraced the temporary extension, figuring that he had won the fundamental debate—whether or not to extend this tax cut in 2012—and that it would be rather difficult for the Republicans to not go all the way when they returned the next year. He hailed the measure as a rousing bipartisan success story—thirty-nine Senate Republicans had endorsed it—and pressured Boehner, noting he expected House Republicans to sign off on it right away.

Boehner seemed to expect that too, at first, and he called the short-term extension a “good deal” and a “victory.”

Then during a private conference call with Boehner, many rank-and-file House Republicans expressed anger at Senate Republicans for ducking a fight. This compromise was missing many of the sweeteners Boehner had earlier used to win over his Tea Partiers. Moreover, a temporary continuation would give Obama more time to bash them for not getting this job done. They let Boehner know that if he pushed them to vote on the Senate bipartisan compromise, there would be an uprising.

The final showdown of the year was at hand. Boehner’s Republicans were in a standoff against their fellow Republican, Mitch McConnell, who was allied with Reid and Obama. And Boehner was isolated—at the mercy of his Jacobins.

The speaker quickly retreated from his support of the Senate compromise (that he actually had empowered McConnell to produce). He and other House Republicans mounted a campaign against the deal, claiming this temporary extension was a gimmick and undermined certainty.

They contended that the Senate and the president should join them in composing a yearlong solution, as they had done weeks ago on their own. (Their arguments were a bit disingenuous; Boehner and other Republicans had earlier derided the payroll tax cut as bad policy and the previous summer had advocated a short-term hike in the debt ceiling.)

If no extension were passed and middle-class Americans saw their tax bill go up on January 1, Boehner and his crew maintained, Obama and the Senate would be to blame.

This was another game of chicken. But Obama and Reid wouldn’t blink. The Senate had essentially ended its session, and Reid refused to call it back to negotiate with the House Republicans. And Obama, sensing an opportunity to slam the House Republicans (whose approval rating had yet to recover from the debt-ceiling debacle), went on the offense.

The White House arranged for administration officials to blast Boehner and the Republicans in interviews with regional, African American, and Hispanic media. It encouraged Americans to send in stories to say what $40 a paycheck—the average amount of the payroll tax cut—would mean to them. (The White House at one point was receiving two thousand responses an hour, many of them heartfelt.) Obama believed the GOP had wildly miscalculated by initially dismissing the significance of what could be $160 a month extra for a dual-income family.

He assailed the House Republicans for not even permitting a vote on the bipartisan Senate measure. In a phone call to Boehner, Obama insisted, as the White House put it, that the “bipartisan compromise passed by almost the entire Senate is the only option to ensure that middle-class families aren’t hit with a tax hike in ten days.”

Obama was again a champion of bipartisan reasonableness. And this was an easy message skirmish for the Democrats to win: the House Republicans were willing to screw over middle-class taxpayers if the Senate and the president didn’t accede to their extreme demands. Though prior GOP hostage taking had succeeded, this time Obama didn’t have to fear economic catastrophe as a possible result and he had a divided Republican Party to exploit.

As the Tea Party–whipped Boehner stood with his comrades and arranged a procedural vote that rejected the Senate bill, he came under fierce attack—from other Republicans. John McCain huffed that the House GOP antics were “harming the Republican Party.” Republican Senator Scott Brown remarked, “It angers me that House Republicans would rather continue playing politics than find solutions.”

The conservative editorialists of the Wall Street Journal chastised Boehner and his team: “We wonder if they might end up re-electing the President before the 2012 campaign even begins in earnest.” Karl Rove, Newt Gingrich, and other Republicans piled on. The GOP establishment was practically in mutiny against Boehner.

On December 22, Obama called Boehner and told him the only way out was for the House to pass the Senate bill. And McConnell gave the speaker a soft kick, issuing a statement that called on the House to pass the temporary extension. But that morning Boehner’s office insisted the speaker was not interested.

In the early afternoon, Obama, surrounded by Americans who had shared their $40 stories, said he was in full agreement with McConnell. Boehner and the House GOPers were the outliers. “The only reason” this tax cut was in jeopardy, the president maintained, was “because a faction of House Republicans have refused to support this compromise.”

As Obama was confronting the Tea Party, Boehner was preparing to cave. He notified Senate leaders that he would bring a temporary extension to the House floor with a few minor technical differences from the Senate bill.

During a conference call with his fellow House Republicans—most of whom had left town for the holidays—Boehner explained that the bill would be brought up under a unanimous consent rule the next day. This meant it would pass without a roll-call vote, unless any member objected. But there was not enough time for many of his Tea Partiers to scramble back to DC.

After being embarrassed, Boehner was finally saying no to the Tea Party. During the conference call, the speaker kept the mute function on. His troops could not talk back to him.

At a wave-the-white-flag press conference later in the day, Boehner remarked, “Sometimes it is politically difficult to do the right thing.”

Obama and his aides—in private—took credit for having trapped Boehner, citing three earlier White House decisions. The previous December, Obama, following Sperling’s suggestion, had made the yearlong payroll tax holiday a central component of the lame-duck tax-cut compromise, realizing it would be tough for the Republicans to resist extending it.

Then, in the summer, Obama had held the line against any short-term lift for the debt ceiling, preventing a rerun of that spectacle from consuming all the political oxygen at the end of the year. This created space for a political scuffle that was to Obama’s advantage. Finally, Obama’s decision to propose and then relentlessly campaign for a large jobs package had placed pressure on the Republicans. In essence, he had provided the House Republicans the opportunity to display once more their rigidity—and they seized it.

The payroll tax cut battle was not over. It would start again in the new year. But as 2011 was ending, Obama had benefited from a profound Republican blunder that he had helped orchestrate.

The next day, Obama came to the briefing room and spoke for five minutes. It was a subtle victory lap. He called on Congress to work—“without drama”—on extending the tax cut and unemployment benefits for the full year.

“This continues to be a make-or-break moment for the middle class,” he somberly noted, adding, “There are going to be some important debates next year, some tough fights. . . . But that’s the kind of country that I’m fighting for—one where everybody has a fair chance and everybody is doing their fair share.”

Boehner and the Tea Party had just handed him another chance to show that.

“Aloha,” he said at the end.

He then left to join his family in Hawaii. He’d have a week off before beginning the final year of his first—and perhaps only—term.