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

by Ron Suskind

  “Some of this was also just compelled by circumstance,” Obama said of this particularly frustrating area of drift. “Part of the reason issues would get relitigated is that they were just very hard. B, it was because we didn’t have a clean story that we wanted to tell against which we would measure various actions. C, the reason that story wasn’t as coherent as a principle was because what was required to save the economy might not always match up with what would make for a good story. So, if I wasn’t in crisis, or if I had been elected six months later . . . then shaping a story for the American people might have been very different.”

  A central issue, he added, was the “first, do no harm” stance that Summers and Geithner stressed from the start and that the president, in most cases, affirmed. “We were thinking very practically about how do we get through this crisis without doing permanent damage and hurting taxpayers,” he said; if that can’t be done then what might be possible? “Precisely because you would never arrive at the perfect technical answer, what [then] are the clear philosophical underpinnings that guide us in sorting through these various decisions?”

  He stopped on a dime, at a conclusion: “And that led to relitigation.”

  This president, showing one of the qualities people find most admirable about him, didn’t blame his many experienced subordinates, or how they may have mismanaged or misled him. For any failures of his administration, he blamed himself.

  Those last few thoughts, accepting responsibility, was a broader summation of his first two years: a frustrating and often futile search for “the perfect technical answer” to each item on a very full plate of complexity—such as job creation or financial restructuring, or even health care, where the original goals of cost cutting were mostly abandoned by July of 2009, leaving a long scramble to push through health insurance reform. Not that there weren’t results to show, in health care and elsewhere. Plenty of his proposed policies became law. But there were fewer than there might have been, the president admitted, because of a lack of “clear philosophical underpinnings” to shape policy. There was no narrative, no story to tell, because there was no guiding vision. And that, not incidentally, diminished the creation of policies that could improve the lives of Americans.

  Barack Obama had originally wanted Pete Rouse to be chief of staff. When he proffered the idea at the “secret summit of chiefs of staff” in Reno, back in October 2007, Rouse demurred—not right for him, not now. Obama said, “Well, maybe later.”

  “Later” had finally arrived in the fall of 2010, with a vengeance. Rouse officially became interim chief of staff on October 1, after Emanuel’s departure. But since his first February memo, he’d been steadily shaping the president’s understanding of how the White House needed to be organized and managed.

  Now, following the midterms, the president seemed to be assembling the team he’d originally wanted. Austan Goolsbee, the early favorite, from the campaign days, to be chairman of the Council of Economic Advisers, now took that role. Jack Lew, whom Obama had once slated to be head of economic policy process as NEC chairman, was brought into the White House as head of OMB; he was confirmed and at his desk by mid-November.

  Though the dispute between Axelrod and Emanuel had seemed to drive troubles within the political and communications staff, Obama, with Rouse’s guidance, felt that this was also in need of an overhaul. Erskine Bowles’s warning, “leave your friends at home,” now became a call to action.

  Gibbs would soon be gone. Jim Messina, Emanuel’s deputy, would be leaving for Chicago to build the foundations for the next campaign. Axelrod would return to Chicago to do the same. He’d be replaced by the yin to his yang from the glory days, David Plouffe, who would step into Axelrod’s role as senior adviser.

  “Rahm and Larry especially, but others on senior staff as well, didn’t have a strong appreciation of what got [Obama] elected, the power of it and how to harness it. It wasn’t just any old election—it was the key to who Obama was and his connection to the American people,” one longtime adviser to the president said. “After the midterms, with Rahm gone, Larry due to leave, and many others from the first two years either out the door or soon to be, it was almost as though the president was hitting the Restart button.”

  The shift in atmosphere inside the White House was so dramatic that those who knew about the Reno meeting couldn’t help but wonder what might have transpired over the first two years if Rouse had accepted Obama’s original offer.

  The biggest change, several top advisers noted, was in the president himself. After a few days of slouching and soul-searching following the midterms—when he gave a sober and downbeat interview saying he’d received a “shellacking” and had “heard the American people, loud and clear”—he seemed to revive.

  By mid-November he appeared oddly liberated. It was back to the future . . . but all the way back, to his days in the Senate, when Rouse was his chief of staff and all-purpose guide to Washington.

  So many of the senior staff brought aboard after the 2008 election, in fact, were people that Obama—stunned, as everyone was, by the unfolding financial crisis and collapsing economy—felt he needed; the people, like it or not, he was “supposed” to have, seasoned veterans, such as Emanuel, Orszag, and Summers, to help navigate him through the coming storms. Obama, who’d never captained a ship, was naturally hesitant to have any of them spot him practicing his knots belowdecks. The pressure of not letting top advisers see a president’s doubt or confusion is something noted by many former presidents, especially concerning their first years in office.

  Now that equation was inverted. Rouse knew everything, from the messy start, when Obama stumbled into town like a tourist. There was nothing to hide. Meanwhile, Obama had gained hard-won experience, and insights into how difficult the job really was; how, loyalty and personal affection notwithstanding, his needs, in surrounding himself with a staff to help him govern most effectively, were all that mattered.

  Then there was the matter of Rouse himself. Outside of Valerie Jarrett and the Davids—Axelrod and Plouffe—there were few people whom the president felt as comfortable around; and none of them had Rouse’s combination of managerial skills and understanding of Washington.

  Rouse could sit with his old friend, now the president, and help him recover his balance and bearings. Years before, in the early months of 2008, he told Obama that he needed to “take ownership” of his campaign. Now he helped Obama take ownership of a reconstituted White House.

  In mid-November, Biden came to the Oval Office with a full dossier of issues he’d been handling with Congress. He’d been meeting since the midterm with his old colleagues in the Senate, John McCain and Mitch McConnell. Biden, of course, had had relationships with them in the Senate since Obama was in college, and this time, with Biden’s guidance, they’d baked a tall layer cake. In it was a wide array of swaps, from the Dream Act, which gave rights to illegal aliens; to the still unratified START II treaty on nuclear weapons reduction with the Russians; to ending “Don’t Ask, Don’t Tell” in the military in favor of acceptance of gays; to tax giveaways; to the closing of food safety programs that industry opposed.

  Obama sat with Biden, going over the package. He had great affection for Biden, who’d been an enormous, and generally unheralded, asset to him, largely because he could act, much like Rouse had, through his own designated channel to the president.

  But now Obama said, “No, I’m not going to make some of these trades.”

  Biden, who’d been waiting for his friend to step up and assert more control, gladly stepped back.

  A few weeks later, Obama was on the phone to McConnell. He could do this himself; presidents often do. Over the first weekend of December, he and McConnell cut a deal: exchange the two-year extension of the soon-to-expire Bush tax cuts for high-income Americans, a hot-button issue for the left, for a yearlong extension of unemployment benefits and a payroll tax cut.

  By Monday night, December 6, the deal was done. Now Obama—ha
ving decided this on his own, consulting no one except his innermost circle, namely Rouse and Biden—had to pull up the curtain and sell it.

  The hardest part, of course, would be the front end. The legacy of the Bush cuts, in 2001 and 2003, had become its own atmospheric zone. The cuts, especially the second batch, were opposed by then-Treasury secretary Paul O’Neill. He said to Bush and Cheney that tax cuts were not as stimulatory as Republican supply-side enthusiasts had long claimed—that they did not return anywhere near their lost tax revenue—and that it was “irresponsible” and unprecedented to cut taxes at a time of war. When O’Neill made this case most strongly in late 2002, the war in Afghanistan and one about to start in Iraq would clearly be costing hundreds of billions a year. Cheney famously shot O’Neill down, saying, “Reagan proved deficits don’t matter; we won the midterms—this is our due.” O’Neill turned out to be even more famously correct: the tax cuts blew a $2 trillion hole in the U.S. balance sheet, contributing mightily to the $1.1 trillion annual deficit that Obama inherited when he arrived in office.

  But the attacks from the left, that tax cuts were a giveaway to the wealthy, were true only in part. The total ten-year tab on the cuts was $2.5 billion in so-called middle-class tax cuts, which went to most taxpayers, and $700 billion for those at the top making over $250,000 a year. During the campaign, Obama had guaranteed that he wouldn’t raise taxes on the middle class. Deep down, his deficit hawk’s assessment, as he now looked at yawning deficits, was clear: that the whole package, the entire $3.2 trillion, over ten years, would have to go.

  On the other hand, the unemployment insurance extension and payroll tax holiday, both opposed by Republicans, amounted to an annual stimulus of nearly $500 billion for the coming year, a time of need, when the economy was still sluggish and uneven.

  When the deal was unveiled, House Democrats, wounded and outraged in their last few months of control, were unhinged. They were used to joining Obama in often endless meetings to deliberate and discuss, as though he were a still a congressional colleague. Now they crowded into the Roosevelt Room as Obama calmly, with his usual patience and courtliness, defended his position to one delegation after the next. But a subtle calculus had shifted. Obama’s presence, and his openness in searching for shared interest, still created some “space where solutions can happen.” It was still him; he was still the president. Over the past two years, of course, he’d been reluctant to fill that space. There were many reasons: his lack of surety in making decisions, in arriving at what he felt was an appropriate, defendable stance; the way he’d waited, and watched, as others, both in Congress and among the wide community of “stakeholders,” filled that space and then claimed squatters’ rights. And then there was the troubling matter of how he’d ceded authority in managing that space to senior staffers, who seemed all too anxious to fill it.

  This dysfunction is precisely what had undermined action on the Bush tax cuts across more than two years. During internal debates dating all the way back to the transition, the issue’s symbolic power, in terms of the passage of one president to the next, was clear. High-end tax cuts, where the added income often went into investments or savings, were not particularly stimulatory; killing this tax cut’s extension could have been readily passed through a Democratic-controlled Congress, even if a 50-vote reconciliation move was needed in the Senate. Fears in 2009 that any withdrawal of stimulus, even this unstimulatory tax cut, prompted the first round of decision delays. Once the economy was limping, though upright, in 2010, that reasoning was moot. At a final White House meeting on the matter in August 2010, it was already clear that the midterms could be the debacle that was, indeed, on the way, where the Democrats could lose the House. Some, such as Orszag, pleaded that now, while the Democrats could still unilaterally decide to kill the extension, was the last chance for the White House at least to swap the tax cuts for something significant. The meeting ended, like so many, with no decision.

  Now, less than four months later, Obama had simply taken control of the matter. He was sitting in the space his presidency had created. He owned it. This decision, like so many presidential decisions, was imperfect and filled with unknowns. The economy could move in many directions in the coming two years. The termination of the Bush tax cuts would ultimately rest with the matter of who won the next election. If Obama lost in 2012, the cuts would almost surely be made permanent, and would force deeper cuts across the government that Republicans—suffused with postelection, Tea Party–spiced fervor—said they were eager to make.

  But that was another fight for another day. Or so Obama had decided. The country needed stimulus; this was the best way to get it. He’d made his decision. He was the president. After a firestorm from the progressive press, and countless meetings in the Roosevelt Room, the deal easily passed in the House. In mid-December, the Senate voted for it with an overwhelming majority, one not seen on anything of any significance for years: 82 to 18.

  History may decide that this was a disastrous compromise for Obama, that what he got in return was not worth what he paid, that he abandoned a core principle. Or not.

  The mood in Washington—and surprisingly across much of the country, based on late December poll numbers showing a boost for both Obama and Congress—was different: a subtle boost in confidence.

  The future was unknowable. But at least this month, as Christmas neared, there seemed to be a president in the White House.

  Pete Rouse still didn’t want the job, even after the surprising post-midterm progress he’d helped guide. No dice. He was sixty-one. He was dating a new woman. He could serve the president in many other ways.

  On the afternoon of January 6 the entire White House staff, several hundred people, along with assorted notables from around Washington, gathered in the East Room.

  President Obama, dapper and looking rested in a crisp white shirt and gray-and-white-striped tie, stepped up to the lectern. To his left was a bald, solidly built man with a steady gaze and feet firmly planted. It was William Daley, the son of the former boss and mayor of Chicago, Richard Daley, and brother of its soon-to-be-departing mayor. Daley, who had also served as a deputy chief of staff under Clinton and as commerce secretary, had been working for the past five years as a top executive at JPMorgan, based in Chicago. He had strong organizational skills, he knew how to delegate, he knew Washington, he knew labor—having worked with them for years in their home base of Chicago—and he knew business. The reviews, just a few days after it was leaked that he’d be named chief of staff, were positive on Wall Street and across party lines.

  Of course, Daley had been at the meeting in Reno, too.

  On Obama’s other side stood Pete Rouse, still looking ruffled, even in his best suit.

  Before the president introduced Daley, he said he wanted to say a few words about the media-shy man to his right.

  He talked about how Rouse had stepped up in mid-October, after Emanuel left, to take over the White House, as ever reluctantly. Obama said, “When I asked him, Pete said, in the gruff voice we all know, ‘Well, Mr. President, my strong inclination is to leave government.’ ” Obama said this out of the side of his mouth, imitating Rouse, and the crowd reacted with laughter and applause.

  It was as if warm air had filled a cold chamber. Obama smiled, and spoke from the heart. He said everyone had heard Rouse say this, heard him speak about his “strong inclinations” when he was asked to do anything over the past six years. “But each time, he saddled up,” Obama said, including this last time, when Rouse oversaw the resurgent months since the midterms—a time “people thought would be one of retrenchment that turned out to be one of great progress”—while he “was working to develop a structure and plan for the next two years that will serve us going forward.”

  Obama reached for summation: “I wouldn’t be where I am today without his expert counsel.”

  Of course, they were there to introduce Daley, as the new boss, which Obama said he’d now do, and let Bill say a few words. Bu
t before he did, he wanted to mention one other thing, that he had “prevailed once again on Pete’s sense of duty, or guilt—I’m not sure which—and he’s agreed to one more tour of duty as my counselor for the next two years.”

  That last word was barely out when the room—led by Biden, leaping up first in the first row—stood and applauded raucously, cheered, and hooted. After waiting a minute, Obama seemed to cue them with a nod and a shuffling of papers. He needed to introduce Daley, standing, somewhat stunned, by his side. But they wouldn’t stop.

  After years of wrestling with so many famous and consequential advisers, ambitious men with ambitious plans of their own, Obama looked over at Rouse and smiled, the last hoots finally dying down.

  “I cannot imagine life here without him,” he said softly. “And I told him so.”

  Afterward, in the foyer near the East Room, Obama clasped Rouse’s shoulder. “Jesus, Pete,” said the president, whose capacity for managing his emotions is renowned. “You almost made me pull a Boehner there.”

  Two days later, Arizona representative Gabrielle “Gabby” Giffords strolled to the first of her “Congress on the Corner” gatherings in front of a Safeway just north of Tucson. It was a sunny Saturday morning in suburban Arizona and about thirty residents had gathered to meet Giffords, a so-called blue dog Democrat who’d been elected in 2006. A Jewish onetime Republican, she’d been targeted by the national Republican Party in her wins in 2008 and ’10, because her district was affluent, conservative, and had virtually always elected Republican men. She ran counter to that, and was only the third woman elected to the U.S. Congress in Arizona’s history. Only forty, Giffords had already made a strong impression politically—as a swing vote on key issues, ranging from supporting health care reform to backing immigration reform, that made her a favorite subject of derision as a “traitor” on conservative blogs and cable.