IT WAS THE FIRST SATURDAY MORNING OF DECEMBER 2010. President Barack Obama was in the Oval Office with Vice President Joe Biden, surrounded by his top aides: message guru David Axelrod, press secretary Robert Gibbs, acting chief of staff Pete Rouse, longtime friend and adviser Valerie Jarrett, Treasury secretary Timothy Geithner, National Economic Council chief Larry Summers, budget director Jack Lew, economic adviser Gene Sperling, and others. Once again, the nation’s chief executive had a tough presidency-defining decision to render.
A month earlier, Obama had experienced what he had accurately dubbed “a shellacking” at the polls: in the first midterm elections of his presidency, the Republicans had won sixty-three seats in the House of Representatives, seizing control of that body. In the Senate, the GOP had also advanced, cutting the Democrats’ edge by two-thirds. With unemployment still terribly high—the ongoing result of the financial collapse that had occurred during George W. Bush’s administration—the president and his Democratic comrades had been soundly repudiated by the voters, with an electoral loss greater than many observers had predicted and far worse than Obama and his team had anticipated.
Whatever ideas Obama had for bolstering the still-flagging economy, for funding his preferred public investments for the future, for responding to climate change and other challenges, the House Republicans—dominated by the extremist, Obama-hating Tea Party wing of their party—would be there to thwart him.
Yet the president was determined to demonstrate that he was still a leader who could deliver results and, yes, hope. And this weekend morning, he and his aides had gathered in his office to consider a private—and politically risky—proposal the vice president was bearing.
FOR MONTHS, A BATTLE HAD BEEN BREWING OVER A FUNDAMENTAL political and policy question: Should wealthy Americans, at this time of economic peril, continue to receive the generous tax-cut bonus Bush had awarded them in his first term? The Bush tax cuts were due to end on December 31, 2010. If Obama and Congress did nothing, taxes would not only go up on the wealthy—but also on middle-class Americans covered by the Bush cuts. That would cause personal hardship for millions of Americans. Worse, Obama and his economic team worried, this would likely damage the tenuous economic recovery that was sputtering along.
Obama had been unambiguous: he favored continuing the lower rates for middle-class earners, and allowing the top-income rates to return to the pre-Bush levels of the 1990s (when the economy was zipping along rather well). Smothering the Bush tax cuts for the well-to-do had been a prominent promise—and a major applause line—during his 2008 run for the presidency.
But the filibuster-wielding Republicans were not interested in decoupling the middle-class cuts from those for the rich. They wanted to see all the Bush tax cuts extended. They were willing to hold the middle class hostage: no cuts for these Americans, unless the extra breaks for those making over $250,000 a year continued—even if the tax cuts for the rich would add an estimated $700 billion to the deficit over the coming decade.
Obama knew many of his Democratic allies on Capitol Hill and progressive activists and commentators were spoiling for a fight—particularly in the aftermath of the midterms debacle. Such a confrontation would define the difference between the parties; it could revive Democratic prospects. If it could be won. Obama and his aides had long wondered whether enough House and Senate Democrats would stand fast in this sort of face-off and resist the hackneyed GOP charge that Democrats favored tax hikes. Not likely, Obama and his crew had concluded. They assumed a standoff would probably be lost due to Democratic weakness. (“There’s one thing I know,” Biden told the president more than once, “and that’s the Senate, and I’ve never seen the Democrats hold all together on a tough tax vote.”)
Another factor was shaping Obama’s thinking: he was the president of all Americans—even those who had not voted for him—not merely the leader of a political party. He had to take into account the immediate well-being of millions of citizens. He was playing dice with their money—and he was reluctant to gamble on a fight that could end up with no agreement and, consequently, higher tax bills for middle-class workers. The imperatives of governing, he knew too well, don’t always line up with those of politics.
And this dilemma was nothing new. “In the first two years of the administration,” a former senior Obama White House official later said, “there was a split between those who believed in fighting for things even if you know you’re going to lose and those who said get the best thing possible passed. As for the president, he really is a stone-cold progressive. But he believes you have to get stuff done.”
The president was aware of the rap on him. He realized that if he cut a deal, he would be accused of capitulating to political terrorists, of being too enamored with consensus building, of rewarding the bad behavior of the Republicans who had been trying to derail his presidency from the first moments of his administration. He would be called a sellout.
Polls showed that most Americans supported ending the Bush tax-cut bonus for the most fortunate. But Obama was operating within a conservative and hostile political environment that would soon be more conservative and more hostile to him and his policies. His approval ratings were not strong, and the recent elections had created a sense of political momentum for the opposition.
In previous meetings, Obama had told his aides: if you can outline a path for me in which a bare-knuckles political fight yields a better outcome for the Americans we most care about, I’ll choose that course. No one spoke up. They all realized that in a few weeks’ time, the Republicans would be running the House. Winning a legislative battle over taxes—or anything else—at that point would be nearly impossible for the White House.
The president was at the intersection of crosscutting currents. He had an obligation to govern and do right by most Americans. He had a campaign promise to keep—one based on a principle he held dear. And he had his own political future to consider, while meeting his obligation to lead the besieged Democratic Party into what appeared to be an uphill 2012 battle.
Progressives could howl about yielding ground to the Republicans on Bush’s tax cuts. But the biggest setback for liberals would be a Republican in the White House in 2013. Forging a compromise with obdurate GOPers might well prevent the economy from worsening—a necessary condition for Obama’s reelection—and improve the president’s standing among the crucial block of independent voters, many of whom had become skeptical of the president and his policies.
Obama remained caught between the two halves of his political base: independents looking for a nonpartisan leader who could stay above the fray and force Washington to do its business and progressives yearning for an ideological champion who would charge into that fray, dispatch his Republican foes, and triumph. Obama could not satisfy both groups at once—especially while dealing with opponents he publicly likened to hostage takers.
The president—at this juncture—was leaning toward cutting a deal. But he had an idea: if the Republicans were holding middle-class tax cuts hostage, he would hijack the entire tax-cut fight and exploit it to advance progressive policies that assist middle-class families and juice up the economy. While the rest of the world would be watching a scuffle over the Bush tax cuts, Obama would be maneuvering on a different field—a field, for better or worse, not widely recognized. He was aiming not for a zero-sum political victory—denying the Republicans their cherished tax breaks for the well-heeled. His goal was a victory he couldn’t otherwise achieve: more federal support for financially stressed-out Americans and hundreds of billions of dollars in another shot of stimulus for the economy. But, he would tell aides, don’t use the s-word. It was as if he had a secret.
THAT SATURDAY MORNING, BIDEN PLACED BEFORE OBAMA AN offer from Senator Mitch McConnell, the top Republican in the upper chamber, for a tax-cut deal that included preserving the high-end breaks, and Obama had to make a call: whether or not to pursue a compromise that would require him to concede on a matter of principle in order to gain on grounds of policy.
In the Oval Office, Obama was surrounded by reminders of Martin Luther King Jr. He had placed a bust of the inspiring civil rights leader on a table across the room from his desk. On the wall was a gift from a friend: a framed program from King’s famous 1963 March on Washington, where he had proclaimed, “I have a dream.” On the floor was a rug that included a saying King often cited: “The arc of the moral universe is long, but it bends toward justice.” These were not totems of political compromise. Yet as the president and his closest advisers in this room evaluated the McConnell offer, they were contemplating yielding to Republican intransigence—albeit to achieve a higher goal.
In a 2004 interview, Obama, then running for the US Senate, had explained his days as a state senator bent on concocting strong compromises: “You can’t always come up with the optimal solution, but you can usually come up with a better solution. A good compromise, a good piece of legislation is like a good sentence. Or a good piece of music. Everybody can recognize it. They say, ‘Huh. It works. It makes sense.’ That doesn’t happen too often, of course, but it happens.”
Obama was now trying to write a symphony. He was aiming for a compromise—to help those millions of Americans, to do what he could to bolster the economy, to score points with independents, and to demonstrate that he still had the power and savvy to govern and make things happen. In the year ahead, the opportunities to do all that would be severely limited. That’s why this compromise had to be right.
“Let’s make this work,” he told his aides. His presidency could depend on it.
AFTER THE MIDTERM ELECTIONS, OBAMA NEEDED TO REBOOT. The coming year would be a continuous confrontation with the newly empowered Republicans of Capitol Hill. Obama would have to figure out how to govern within narrow and less hospitable confines, how to produce results from a divided government, and how to win the brewing political battle over fundamental notions, such as the role of government. In this period, he would be setting up the grand choice of 2012, when the nation would experience a presidential election covering a stark political divide, with government-is-the-problem Republicans fighting a cage match against Obama, who still believed government ought to be used to nudge the nation in a better direction and guide the country’s difficult transition toward a vibrant twenty-first-century economy. Each side would be wrestling for the political soul of the United States.
Though at this point Obama appeared to have his back against the wall, much had gone right during his first two years. He had accomplished a great deal. In his first days, he banned the use of torture, what the Bush-Cheney crowd had called “enhanced interrogation techniques.” (He also ordered the shutdown of the controversial Guantánamo prison—which would be difficult to achieve.) Weeks into office, Obama enacted the American Recovery and Reinvestment Act, the stimulus bill that shot $787 billion into the economy. The bill—though much derided by Republicans as a symbol of excessive government spending—would lift employment by up to three million jobs (by creating and saving jobs), according to the nonpartisan Congressional Budget Office.
The next year, he passed historic health care legislation that would provide medical insurance coverage to tens of millions of Americans and prohibit abusive practices of insurance companies, while compelling these businesses to spend 80 to 85 percent of their premiums on medical care, as opposed to administrative costs and executive bonuses. (Obama’s top advisers had repeatedly counseled him to drop or downsize his ambitious health care effort, and Obama had refused. As Bill Burton, the former deputy press secretary, put it, “There was a point when the president was the only person in the White House who thought that health care would happen.”)
Obama had enacted Wall Street reform and created the Consumer Financial Protection Bureau, which would police banks, credit card companies, mortgage lenders, and other financial firms that tried to hoodwink consumers. He presided over the second half of the TARP bailout of the financial sector and a government rescue of the US auto industry—policies that were widely criticized (justifiably so on certain particulars) but that essentially succeeded in preventing these major economic players from collapsing.
He dramatically increased the diversity of judicial nominees and appointed two women, including the first Latina, to the Supreme Court. He removed the ban on federal funding for family planning groups that promote abortion rights and work overseas. He also increased Pell grants, expanded health care coverage to benefit four million more children, provided states aid to save about 150,000 teacher jobs, reformed the student loan program, forced new consumer protections on credit card companies, granted the Food and Drug Administration the authority to regulate tobacco products, created incentives for clean energy jobs, and enacted legislation that would allow women workers to challenge instances of pay discrimination. Obama kept his vow to reduce US troops in Iraq.
This was a period of tremendous and historic productivity. Yet left-of-center critics had consistently registered complaints about the former candidate of hope: The stimulus was not nearly large enough, and Obama had not subsequently pressed for bold and extensive jobs initiatives. His appointments were too centrist. The health care reform bill was a hard-to-understand and poorly sold mishmash and lacked the so-called public option. Obama’s new Wall Street rules were not tough enough, and he showed little taste for blasting Big Finance and holding it fully accountable for the economic crash caused by its rapacious practices. His programs to address the mortgage crisis—which was at the center of the nation’s economic malaise—were not sufficient or fully effective.
Other progressive gripes piled up. Obama failed to push the world toward an enforceable climate change treaty at the 2009 Copenhagen summit (and instead patched together a voluntary accord among the world’s leading emitters of climate change gases). He had not nominated enough progressive judges to counterbalance President Bush’s stuffing of the judiciary with conservative jurists. His troop withdrawal in Iraq was slow. He dispatched more troops to Afghanistan before committing to a gradual drawdown. Gitmo wasn’t closed. He continued controversial national security policies from the Bush-Cheney years (in some instances modifying them). He opposed efforts to investigate the Bush-Cheney administration.
His fellow Democrats on the Hill complained that the president and his crew, in the face of an unrelenting fusillade from the Right, had failed to sell their joint accomplishments to the public, losing the message wars over the stimulus, health care reform, the new Wall Street rules, and other initiatives.
Obama and his advisers, following the midterms debacle, readily acknowledged they had flopped as marketers. They claimed to have a good excuse: in the face of multiple crises, they were intently focused on devising policies and guiding them through Congress. While so occupied, Obama and his aides had a difficult time convincing independent voters (and others) that they had changed Washington for the better.
Obama’s legislative wins looked messy and highly partisan. That was largely due to Republican wrench throwing, but Obama had not established a context in which Republicans would pay a political price for their unrelenting obstructionism. The president had made Washington more productive, but he had not altered its ugly ways or toxic atmosphere.
“Emergencies got in the way of coherent messaging,” David Axelrod said. “And we were operating in a political environment when every day is an election day and covered as such.” But politics is selling—and Obama and his strategists were repeatedly bested by the Republicans in the struggle to control the political narrative of the moment.
How could Obama and his top aides—intelligent people who had done so well promoting a message in 2008—have failed so miserably at such a basic task once they hit the White House?
Asked this question, one Obama confidante said that there was no good answer.
OBAMA’S ALLIES HAD ANOTHER COMPLAINT. THE REPUBLICANS constantly tried to block Obama’s programs (often relying on overheated rhetoric or falsehoods) and allied themselves with conservatives who accused Obama of being a foreign-born secret socialist Muslim hell-bent on weakening the United States of America and diminishing the wealth and freedom of its citizens—or something like that; the conspiracies varied. Yet Obama insisted on treating his Republican opposition respectfully and finding avenues for cooperation.
He rarely punched back as hard as he could, and this puzzled some supporters, who feared that say-anything Republicans were too often getting the better of Obama in the nation’s endless political squabbles. They questioned his negotiating skills and his fortitude. After the midterm elections, well-known Democratic strategist James Carville, speaking at a breakfast with reporters, cracked, “If Hillary gave up one of her balls, and gave it to Obama, he’d have two.”
“It frustrates people that Obama is unwilling to go for the cheap political point,” Axelrod remarked. “He cares more about the larger result and that’s antithetical to the gestalt of Washington. We take a lot of hits for that.”
Obama the candidate had denounced the partisan bickering of Washington. He promised to remake the nation’s capital so that its denizens did the people’s business, rather than engage in continuous, cable TV–enabled mud wrestling. That was a heavy-duty and hard-to-fulfill promise, but it had been a large part of his appeal to moderate and independent voters (and some Republicans).
This vow also reflected a dominant part of his own nature: Obama is a consensus seeker, even when confronted with ferocious political and ideological opponents. “At his core is a search for common ground,” remarked a former senior Obama administration official who worked on his 2008 campaign. “I read his book The Audacity of Hope and kept saying to myself—no matter what issue he was addressing—that’s his answer. He is always trying to get consensus—but consensus that advances a principle he cares about.”
Another former Obama White House aide put it this way: “Bill Clinton every day of his life got up thinking, ‘What is the best argument I can make today to defeat the Republicans?’ Obama doesn’t think that way. He’s not a superpartisan person. He’s not in it for the fight. He doesn’t wake up every day thinking how to defeat [Republican leader John] Boehner. It’s, ‘How can I get Boehner to agree? How can I have a reasonable conversation with Boehner? How can I make Boehner see it’s in both of our interests to do this or that?’ ”
Obama the president had turned out to be far more pragmatic than Obama the idealistic candidate of change. “Obama is an idealist in terms of what he wants to get done,” said a former aide who worked on the campaign and in the White House. “He’s a pragmatist in terms of how he gets it done.” The politics of hope had become the politics of the possible.
Critics on the left and within the so-called netroots also griped that the White House had opted for conventionality, leaving millions of supporters at the side of the road. Obama had not channeled the popular engagement of the 2008 campaign into a force he could use to pressure Washington. He mostly eschewed movement-based politics and largely conducted his presidency in a traditional manner, when necessary brokering deals in private.
White House aides were sensitive about this criticism, but they had a counterargument. “You do not have the capacity to involve the public in the same way when governing as you do on a campaign, when there are opportunities to stuff envelopes, knock on doors,” one senior administration official maintained.
A top Obama adviser noted, “A presidential campaign is self-contained. It’s about the relationship between the candidate and the people. You don’t have to get anything done. Governing requires doing things and the involvement of more people within the government. In a campaign, you can wake up one day and say let’s do X, and then do it. As a president, you wake up, and you depend on agencies, Congress, and others. In governing it’s much more of a challenge to bring people along with you. You get to the White House, and it’s all top-down. It’s not surprising that supporters were not buying this was still a people-powered operation.”
Obama especially hated being hit from the Left on health care. “Nothing frustrated the president more than progressives saying health care was a piece of shit,” a former top adviser said. “We got all these people covered.” Obama saw the Right bash him for a supposed government overreach that threatened individual freedom, and the Left whine about the bill not going far enough. This cacophony, he fretted, was drowning out this major accomplishment.
Obama’s political problems extended beyond his relationship with disenchanted liberal activists or disheartened congressional Democrats. All that could always be patched up. At this point in his presidency, Obama had to think about how to handle the emboldened obstructionists of the GOP. He would have to gain control once again of the nation’s political tale. He had commanded it during the 2008 campaign. Now he would have to wrest it back from Tea Party Republicans who were sweeping into Washington waving the banner of small government and spending cuts. They had a simple story to tell: the economic woes of the nation were due to excessive spending of the government. That was inaccurate and ahistorical. But this explanation served their agenda of cut, cut, cut—and the agenda of the conservative donors, groups, and foundations that had rushed to underwrite and organize the Tea Party into an anti-Obama electoral force.
Obama had to provide counterprogramming. Calculating how to govern responsibly and engage in effective political warfare during a time of economic crisis—which Obama was currently doing with the tax-cut issue—would only become more challenging very soon.
AT THIS CROSSROADS, OBAMA WAS DOING A FAIR SHARE OF PONDERING. He believed that much of the criticism he drew was from commentators and politicos overly fixated on the short term. He derided the constant cable television chatter and told friends and colleagues he didn’t heed the instant verdicts rendered by pundits on a daily—or hourly—basis. But at times he would cite columns that had ticked him off.
Obama knew people wanted change and results quickly—especially when unemployment remained high and economic growth was slow. This was particularly true for independent voters whose loyalties, by definition, were fickle. But, he told himself, keep an eye on the horizon.
Obama wanted to guide the country into its next phase. But events had conspired against him. He would routinely note that he had been handed “a real shitty deal” when he entered the White House. He had made difficult, unpopular decisions to continue the TARP bailout of the financial firms and then to rescue the failing auto companies. Though these moves prevented the loss of millions of jobs, there was little political reward for having prevented the economic implosion from becoming worse.
The president was keenly attuned to what he considered a crucial fact: the country was sharply divided. Though his victory in 2008 had seemed decisive, he had not forgotten that it was a 53 to 46 percent win in the popular vote—and that was with the much-mocked Sarah Palin on the opposing ticket. As far as he saw it, his own triumph did not signify a basic shift in the nation’s political culture. Changing the fundamental mind-set of the country regarding government, taxes, foreign policy, education, the environment—this was a thirty-year mission. Roosevelt’s New Deal sensibility had defined politics for four decades, until Ronald Reagan reshaped the political culture in the 1980s and bolstered an antigovernment backlash. Obama was hoping to lead a new transition. He had concluded this could only be done gradually, in a manner that drew popular support from an American public that was often so at odds with itself politically, ideologically, and culturally.
At the same time, Obama would have to overcome obstacles set up by a Republican Party that was willing to be irresponsible. Many of its new House members would consider blocking unemployment benefits a victory, or shutting down the government an achievement to brag about. As a president who cared about what he could accomplish for low-income and middle-class families, he realized, he would be at a disadvantage in negotiations with Tea Party–driven Republicans. He was thinking about how to strike the right balance of compromise and confrontation.
Obama was indeed burdened with a rotten economy not of his making, as he regularly mentioned. But he also knew he had slipped up. In conversations with advisers, he acknowledged that the broader narrative had been lost. It was his job to tell his own story. He had done that so well during the campaign. But not as a president.
In failing to do this, he had allowed a meaner, darker vision to gain traction. His antagonists, using Obama’s own accomplishments, contended that government was the problem, that the economy was troubled because of wild spending in Washington and not due to Big Finance shenanigans and malfeasance; his foes took aim at the notions of communal action and collective responses. On Obama’s watch, these larger progressive themes seemed to lose ground.
Politics is not a meritocracy, and Obama realized no president was guaranteed credit or lucky bounces. But at times he couldn’t help feeling, as he told one associate, a kinship with the protagonist in Ernest Hemingway’s The Old Man and the Sea. He had, against tremendous odds, caught a big fish, but on the long voyage back to shore, his prized catch had been picked to pieces by sharks.
Moreover, the president was aware that sometimes it looked—and it certainly felt—as if he and his aides were just grinding it out. He had concluded that he needed to inject some poetry into the coming year, for people don’t live on prose alone. He assumed that the next two years would not be about legislating, but about storytelling. About the nature of America—and what’s best for the country in the long run. This was what he expected to be at the heart of his reelection campaign.
He figured he possessed a fighting chance—in part because the Republicans, though ascendant at the moment, were in a jam of their own devising. They were calling for reducing deficits and the national debt, yet they were eager to hand tax breaks to the wealthy. That central contradiction made them vulnerable. Plus, the Tea Partiers in their ranks would be calling for extreme actions, such as the elimination of Medicare or Social Security, and driving the party to the far right. The Republicans would overreach. They would offer Obama and his party room to recover. But the president and his strategists realized that many voters would not be willing to listen to anything he had to say if they were not experiencing an improving economic reality. Without better economic conditions, Obama’s next round of hope and change would be a tough sell.
The tax-cut deal would be the start to an arduous year. It might also be Obama’s last chance to enact major policies that could have a positive impact on the frail economy. In the previous two years, Obama had often won legislative battles while losing the corresponding political fights. In the coming year, there likely would be no major legislative successes, and he’d have to flip the script and become better—much better—at defining the public debate, and winning it.
Obama viewed this lame-duck session and the subsequent stretch as an opportunity to shape the terrain for the colossal clash of 2012. He had a basic plan: resolve the unavoidable budgetary issues with the Republicans, clear those matters off the table, and then compete with the GOP over fundamental messages.
It was his hope that the year ahead would be a time of debate over opposing values. He could not know what obstacles would arise. But every twist and turn—and there would be many—would hold much at stake for him, and anyone who yearned for the Obama presidency to succeed.