Confidence Men: Wall Street, Washington, and the Education of a President

by Ron Suskind

  At the noon press briefing, ABC’s White House correspondent Jake Tapper, citing the job numbers and new fears by both Stiglitz and Krugman that “the economy is going to contract,” tried to get Gibbs to reveal some change in Obama’s view from a month ago.

  Gibbs would offer none: “He’s not an economic prognosticator,” he shot back testily. “The president is concerned about the economy, concerned about the stories of people hurting that he has heard for many, many years, and is working to do all that we can to create an environment for businesses, small and large, to hire more people.”

  Those listening from inside the White House couldn’t help but sigh. They were doing little about joblessness, and everybody knew it. Summers’s acknowledgment of Krueger’s data a month earlier had simply yielded a next subject for debate: how to structure an employer tax credit so it wouldn’t simply reward employers for something they were already going to do. The debates inside of the economic team continued to rage, with Summers standing in the way of almost any proposed stimulus. His underlying position, largely unchanged since the previous summer, was that nothing would be effective if there were not a rise in demand, something the government had little role in effecting, short of another major stimulus package, which Congress wouldn’t approve—and around it went.

  The president listened, engaged, but wouldn’t make a decision. He was still looking for consensus. None was forthcoming.

  On the jobs front alone, it had been going on for nearly three months, one “relitigation” after another. By mid-December, Anita Dunn had gone to Pete Rouse and Valerie Jarrett and said someone needed to take control of the economic team, saying that “it’s in crisis—it can’t go on like this.”

  By early January she had returned to her job running a political consulting/media firm. She was happy to leave the white building. Of course, she retained enormous affection for Obama, but was dispirited—as so many were—with the shattered, haphazard process of decision making and wildly uneven execution. It was chaos. The situation with the women, for one, hadn’t improved. The women’s group still met. They’d had their moment with the president and, all together, had made their appeal for action. Several of those at the meeting left feeling unrequited, that the president, with so much on his plate, would not do much more than express attentiveness to the problem. This, to be sure, was the sort of problem that chiefs of staff were generally left to handle. In this case, the chief of staff was at the center of the problem.

  But, of course, as the women had stressed at their dinner, the president was responsible. Each president is responsible, after all, for the White House he builds and leads. If there was, in fact, a single operational victory in this period, it involved secrecy: the strife inside the White House was largely kept from public view. Rather than the Cheney-driven secrecy models of the Bush days—where cell phones were White House–issue and where problematic phone numbers, such as those of major newspapers, were regularly searched through shadow directories—the Obama secrecy was born of old-fashioned loyalty. With a few exceptions, it didn’t need to be enforced. There was an enveloping adoration of him, still, in the White House, which, month by month, hardened into protectiveness, especially among senior aides who were privy to regular contact. He was indisputably bright and eager; his casual manner, walking through the building, ducking into offices, to get out of what he called his “gilded cage” of the Oval Office, made staffers feel like he never looked down on them. His easy smile and demonstrable charm, even if it came only in brief gusts before he’d settle into his Zen mode, to get down to business, was sometimes forced, but he got an A for effort. What happened on Pennsylvania Avenue stayed on Pennsylvania Avenue. The dozen or so people who’d attended each day’s key meeting, the morning economic briefing, would tell stories to anyone who’d listen, and there were plenty: about Obama’s brilliance, his strokes of stunning insight, conceptually stitching together cloud formations, or mapping a horizon line. But then, some would comment, there’d be a drift or loss of interest in how an idea would or wouldn’t “score” with CBO, or in how to execute it or push it through Congress, or in where an accepted initiative from weeks ago now stood. Meanwhile, within this privileged group, there were whispers and fears, and the kind of growing doubts that continued to undermine Obama’s authority.

  Of course, Orszag wasn’t the only one who heard Summers repeat his “home alone” riff. Others did, too. They’d roll their eyes and look away.

  More difficult was what each of them saw in the morning meetings. “Larry would say [to Obama], ‘I’ll make my argument first; you can go after me,’ ” Peter Orszag remembered, in a comment echoed by others. “I’m thinking, ‘I can’t believe he’s talking to the president that way.’ I don’t know why Obama didn’t say, ‘I made that decision a week ago. Just do what I say.’ ”

  But he didn’t. And, over time, some of Obama’s more admirable features, his joy of inquiry, his impulse to reach just a bit beyond his grasp, started to get planed down. He was making fewer decisions, and almost none where he couldn’t manage to tease some supporting consensus from his senior staff.

  At a meeting in January, during one of a dozen arguments over a somewhat confused proposal by Gene Sperling about a small business lending program, Obama, in a voice that was softly dispirited, said, “Well, if you guys can’t agree, I mean, we don’t have to do it.”

  Meanwhile, his administration was looking ever more confused and ineffectual. Neither the political nor the policy arm was working effectively, and the two clearly weren’t working in any meaningful concert.

  The major event scheduled for January 8—cited several times by Gibbs at the noon press briefing—was the granting of $2.3 billion in tax credits to companies involved in high-tech clean-energy manufacturing.

  At 3:00 p.m., flanked by Vice President Biden, Tim Geithner, and Steven Chu, the Nobel Prize–winning secretary of energy, the president stepped to the lectern in the East Room to say, portentously, that “building a robust clean energy sector is how we will create the jobs of the future.” He went on like that for a bit, as did other officials, talking about the makers of solar panels and wind turbines—143 firms in all—and how they’d form foundations of job growth for the twenty-first century. It was admirable and forward thinking, a bookend to an event in late October where he announced the competition for the grants at a solar panel farm in Arcadia, Florida.

  But building capacity for some far-off future was the last thing anyone wanted to hear about. During a brief press availability following his prepared remarks, Obama acknowledged the deflating jobs numbers. They “are a reminder that the road to recovery is never straight,” he said soberly. “We have to continue to explore every avenue to accelerate the return to hiring.”

  Geithner, in his statement, pointed out that the tax credits were expected to draw a match of $5.5 billion in private-sector investments, for a total of $7.7 billion, and eventually create more than seventeen thousand jobs. But the fine points of the program indicated that only a third of the credits were slated to create jobs by the end of the year, which would bring the total to just shy of six thousand jobs in 2010.

  Nearly two years before, Goolsbee had told Obama, then an underdog candidate, that hiring from a clean-energy initiative would be modest. But now the White House was offering official pronouncements and fanfare, presenting the president and his top officials, for six thousand jobs? The economy had lost seven million jobs in the last two years of recession; economists agreed that unless it added a hundred thousand a month, the unemployment rate wouldn’t budge. In the scheme of things, the clean-energy grants—which some inside the White House were already dubbing the “science fair”—were a rounding error. They fit into a broader category of programs that flowed from Obama’s famous line, during the campaign and since, that the hardest thing in Washington was “to solve tomorrow’s problems with today’s dollars.” Trenchant and true. But over the first year, it yielded an array of what were commonly r
eferred to in the White House as “S and S” programs, for “somehow, some way.”

  Which was the unintended point being made today in the East Room: the president was occupied with S and S programs, which would not bear fruit for years, while the economy listed forward, with the highest levels of unemployment since the Great Depression.

  The most sweeping of those “somehow, some way” programs was, of course, health care. In any version of reform now being contemplated, significant reforms wouldn’t take hold until 2014. Not that, after a year of presidential engagement, anyone could actually claim a specific, hard-edged proposal from the White House. Emanuel’s initial, and understandable, fear that an articulated health care plan from the White House would open up Obama to a flurry of slings and arrows, as Clinton’s thousand-page proposal had in 1993, never really evolved with changing circumstances. Now it was January—nearly a year after he had taken the oath—and Obama was still engaged in the act of earnest brokering between warring houses of Congress.

  Which is what would now thoroughly occupy the president’s January schedule, even more than it had, month to month, over the past year. After the press conference on the future of clean energy, Obama picked up briefing materials for a quiet weekend in the White House. On Monday he would begin a bout of negotiations to try to reconcile the bills that the House and Senate had finally passed on health care reform, the latter having passed just before Christmas.

  The Senate bill was funded largely by a tax on the so-called Cadillac coverage insurance, which was just about the only life feature shared by high-income individuals and some of the more privileged industrial workers. In bitter labor negotiations across decades, the strong coverage was often a replacement for wage increases, and union leaders were flying to Washington to meet with the president on Monday to lodge protest as a start to the reconciliation efforts between the two bills.

  But the White House’s internal poll numbers from the previous fall showed something surprising: the drop in the president’s approval ratings over the summer was not significantly due to the “death panel” attacks. It was primarily because he’d allowed the congressional wrangling over the shape of health care reform—and especially the widely covered “sausage making” deliberations under the auspices of Max Baucus—to limp forward through the summer and fall.

  Of course, the bickering continued through the winter and had now officially migrated down Pennsylvania Avenue. In Washington it was seen as progress. There were, after all, now bills passed by both the House and the Senate, even if there were wide gaps and distinctions between them. Reconciling the two was now the next step in the legislative process.

  To the wider public, anxious about the sliding economy, it was just sound and fury with bills that were hard to comprehend and still had yielded no final legislation to be voted into law.

  Even with its poll data about the public’s distaste for such sausage making and the poor outcomes of the November governors’ races in Virginia and New Jersey, there was no anticipation of a political backlash.

  Through the summer and fall and now the winter, it was always the same refrain from Rahm: once they finish health care, they’ll take the acquired political capital from that victory and apply it to everything else. “But the clock had run out,” said a senior White House official, “and, somehow, we didn’t even realize it.”

  Certainly Republicans had spotted opportunity and were moving forcefully to seize it.

  By December, it was clear the race to fill Ted Kennedy’s open seat was turning into a close contest, with enormous national stakes: the Democrats’ fragile, one-party control of Washington, arguably the greatest bequest of Obama’s rise, was on the line.

  Since Minnesota’s Al Franken was sworn in the previous July, after many recounts and court battles by his Republican opponent, Norm Coleman, the Democrats had a filibuster-proof 60-vote lock on the Senate. But now its soft underbelly was exposed.

  In early December, Tea Party activists, supported by Republican fund-raisers, were starting to trickle into Massachusetts, which was holding a special election to fill the U.S. Senate seat that had been held by Ted Kennedy. Martha Coakley, the state attorney general, was treating the race as if it were hers for the taking. She was busy meeting with Bay State power brokers in labor, business, and politics to weave together a like-minded coalition that would help her to be effective as a senator after the special election on January 19.

  Her opponent, a telegenic Republican state legislator named Scott Brown, was busy, meanwhile, driving the state in his aging pickup truck.

  With populist anger bubbling through the electorate—especially against Wall Street and against backroom deals, of all kinds, cut in Washington—it was an ideal moment for an upset.

  A mid-December poll by the Republican Senatorial Campaign Committee showed Brown only 3 points behind among likely voters. In a way, it wasn’t a great surprise. Though the current governor, Deval Patrick, was a Democrat, for sixteen years before him Massachusetts had been led by Republican governors, including popular social liberal William Weld and corporate centrist Mitt Romney. The state was more purple than deep Democratic blue.

  With the core of its first-year agenda on the line, the White House did nothing. A brief reading of the Boston papers would have sounded an alarm. Coakley was clearly a lackluster candidate, dismissive of voters and smug. Brown, meanwhile, handled like a pro an early controversy over his posing for a Cosmopolitan magazine centerfold as a law student, and being paid $1,000. Dealing with issues like that is the sort of thing, campaign managers say, you can’t teach. He said he’d needed the money, working his way through law school, and, “I wish I still looked that good.” That was it, nice and neat; everyone laughed. They checked out the photo on the Internet. And, of course, Brown, at forty-six, still looked terrific and seemed like a guy you’d want to laugh with over beers. As Obama and his team knew so well, surviving controversies—and even turning them to your advantage—is what people look for in candidates. Coakley took off a week at Christmas, went on vacation. Brown worked twenty-hour days, dominating the airwaves.

  “To not see this coming, and not start to act, even back in November, after we got slaughtered in the governors’ races, wasn’t an asleep-at-the-switch issue,” said a close aide to Obama. “It was utter incompetence. This is what political aides get paid for. This is their job.” In January—with two weeks, still, until the day of the special election—the White House called Coakley’s campaign strategist, Dennis Newman, to see what help Washington could offer. He said they were fine. Nothing was done.

  Two weeks was once enough for the Obama campaign to blanket a state, with an artful mix of media buys, troops on the ground, and targeted events by the candidate. Now, with so much at stake, they sat idle. A public poll on Saturday, January 9—a day after the bleak jobs report and Obama’s energy policy event in the East Room—showed Brown with a 1-point lead.

  The dilemma, at that juncture, had two edges. Do anything necessary, at any cost, to win Massachusetts; and use the threat of a loss, and the loss of the filibuster-proof majority in the Senate, to get an emergency reconciliation, in a matter of days, of the two competing health care bills.

  The White House did neither. Obama met with the union leaders on Monday. He was reasonable, as usual, working through disputes and competing positions. Pelosi and Reid were dug in, and the union leaders bounced between them. People worked hard and earnestly, but it was just a bit of an uptick, not a moment of urgency.

  The question—“What would Lyndon have done?”—had been bubbling up around town for months, as health care started running off the rails the previous summer. Several senators passed volumes of Robert Caro’s signature three-part biography hand to hand. Barney Frank was reading Caro’s second volume, Master of the Senate, in the fall, as he wrestled with obstinate conservative Democrats opposed to financial regulation. The way Lyndon Johnson, as senator, had pushed the foundations of civil rights legislation through a
resistant Republican Senate in the late 1950s held tactical clues. Now, inside the White House, aides pined for what one called “a Lyndon moment.”

  “A few of us joked that we should just get Robert Caro’s book on Lyndon Johnson, highlight a few pages, and leave it on the president’s desk,” the aide said. “Sometimes a president just needs to knock heads. It’s kind of what the combatants secretly want. [Johnson] twisted their arm, they had no choice—he was going defund them, ruin ’em, support their opponent, whatever the fuck—and the deal was cut. It lets them off the hook. They had no choice. I mean, for fuck’s sake, he’s the goddamn president.”

  On Thursday, January 14, Axelrod called Massachusetts and it was decided that Obama would make a last-minute visit on Sunday.

  Meanwhile, negotiations between the House and Senate, many of them conducted into late nights at the White House, brought the two sides closer, but key divisions remained.

  Obama asked the House and Senate teams to each suggest $70 billion in cuts. The senators ordered pizzas in Max Baucus’s office and, with each senator giving up something, created a list.

  Back at the White House, later that night, the teams gathered in the Cabinet Room. The House had cut nothing. It felt it had already made all the concessions it could and still have a bill that could pass. The teams separated again, to rooms in the White House, and then returned.

  They were still $20 billion apart.

  It was closing in on midnight. Even if they had come to some agreement, the logistics of getting the blended bill through Congress would have been daunting, maybe even futile.

  Obama’s method, now clear to all participants, was to sketch overarching principles, wait until others had painted in those outlines with hard proposals, and then, at day’s end, step down from his above-the-fray perch to close the deal. Of course, the distance between overarching principle and concrete policy can be so vast that the former becomes invisible. As for the latter, others were left to bloody themselves with the hard negotiating over actual policy.