Promised Land (9781524763183)

by Obama Barack

  IT’S IN THE NATURE OF politics, and certainly the presidency, to go through rough patches—times when, because of a boneheaded mistake, an unforeseen circumstance, a sound but unpopular decision, or a failure to communicate, the headlines turn sour and the public finds you wanting. Usually this lasts for a couple of weeks, maybe a month, before the press loses interest in smacking you around, either because you fixed the problem, or you expressed contrition, or you chalked up a win, or something deemed more important pushes you off the front page.

  If the rough patch lasts long enough, though, you may find yourself in a dreaded situation in which problems compound, then congeal into a broader narrative about you and your presidency. The negative stories don’t let up, which leads to a drop in your popularity. Your political adversaries, smelling blood in the water, go after you harder, and allies aren’t as quick to defend you. The press starts digging for additional problems inside your administration, to confirm the impression that you’re in political trouble. Until—like the daredevils and fools of old at Niagara Falls—you find yourself trapped in the proverbial barrel, tumbling through the crashing waters, bruised and disoriented, no longer sure which way is up, powerless to arrest your descent, waiting to hit bottom and hoping, without evidence, that you’ll survive the impact.

  For most of my second year in office, we were in the barrel.

  We’d seen it coming, of course, especially after the Tea Party summer and the ruckus surrounding the Affordable Care Act. My approval ratings, which had held fairly steady during my first six months in office, ticked down throughout the fall. Press coverage became more critical, on matters both significant (like my decision to send more troops into Afghanistan) and strange (like the case of the Salahis, a pair of Washington social climbers who found a way to crash a state dinner and have their photo taken with me).

  Nor had our troubles let up over the holidays. On Christmas Day, a young Nigerian named Umar Farouk Abdulmutallab had boarded a Northwest Airlines flight from Amsterdam to Detroit and tried to detonate explosive materials sewn into his underwear. Tragedy had been averted only because the contraption hadn’t worked; seeing smoke and flames coming from under the would-be terrorist’s blanket, a passenger restrained him and flight attendants extinguished the flames, allowing the plane to land safely. Having just arrived in Hawaii with Michelle and the girls for a much-needed ten-day break, I spent most of the next several days on the phone with my national security team and the FBI, trying to determine who exactly Abdulmutallab was, whom he’d been working with, and why both airport security and our terrorist watch list hadn’t kept him from boarding a U.S.-bound plane.

  What I failed to do in those first seventy-two hours, though, was follow my initial instincts, which were to get on television, explain to the American people what had happened, and assure them that it was safe to travel. My team had made a sensible argument for waiting: It was important, they said, for the president to have all the facts before making a statement to the public. And yet my job involved more than just managing the government or getting the facts right. The public also looked to the president to explain a difficult and often scary world. Rather than coming off as prudent, my absence from the airwaves made me seem unengaged, and soon we were taking incoming fire from across the political spectrum, with less charitable commentators suggesting that I cared more about my tropical vacation than I did about threats against the homeland. It didn’t help that my usually unflappable secretary of homeland security, Janet Napolitano, briefly stumbled in one of her TV interviews, responding to a question about where security had broken down by saying that “the system worked.”

  Our mishandling of the so-called Underwear Bomber played into Republican accusations that Democrats were soft on terrorism, weakening my hand on issues like closing the detention center at Guantánamo Bay. And like the other gaffes and unforced errors that occurred during my first year, this one no doubt contributed to my slide in the polls. But according to Axe, who spent his days poring over political data, cross-tabbed by political party, age, race, gender, geography, and Lord knows what else, my sinking political fortunes heading into 2010 could be traced to one overriding factor.

  The economy still stank.

  On paper, our emergency measures—along with the Federal Reserve’s interventions—appeared to be working. The financial system was up and running, and banks were on the way to solvency. Housing prices, while still way down from their peak, had at least temporarily stabilized, and U.S. auto sales had started to climb. Thanks to the Recovery Act, consumer and business spending had rebounded slightly, and states and cities had slowed (though not stopped) their layoffs of teachers, cops, and other public workers. Across the country, major building projects were under way, picking up some of the slack that had resulted from the collapse of housing construction. Joe Biden and his chief of staff, my former debate coach Ron Klain, had done an excellent job of overseeing the flow of stimulus dollars, with Joe often devoting chunks of his day to picking up the phone and barking at state or local officials whose projects were behind schedule or who weren’t providing us with adequate documentation. An audit found that as a result of their efforts, just 0.2 percent of Recovery Act dollars had been improperly spent—a statistic that even the best-run private sector companies might envy, given the amounts of money and the number of projects involved.

  Still, to the millions of Americans dealing with the aftermath of the crisis, things felt worse, not better. They were still at risk of losing their homes to foreclosure. Their savings were depleted, if not entirely wiped out. Most troubling of all, they still couldn’t find work.

  Larry Summers had warned that unemployment was a “lagging indicator”: Companies typically didn’t start laying off employees until several months into a recession and didn’t resume hiring until well after a recession ended. Sure enough, while the pace of job loss gradually slowed over the course of 2009, the number of unemployed people continued to grow. The unemployment rate didn’t peak until October, hitting 10 percent—the highest since the early 1980s. The news was so consistently bad that I found myself developing a knot in my stomach on the first Thursday of every month, when the Labor Department sent the White House an advance copy of its monthly jobs report. Katie claimed that she could usually gauge the contents of the report by my economic team’s body language: If they averted their gaze, she told me, or spoke in hushed tones, or just dropped off a manila envelope for her to give me, rather than waiting around to hand it to me in person, she knew we were in for another rough month.

  If Americans were understandably frustrated with the recovery’s glacial pace, the bank bailout sent them over the edge. Man, did folks hate TARP! They didn’t care that the emergency program had worked better than expected, or that more than half of the money given to the banks had already been repaid with interest, or that the broader economy couldn’t have started healing until the capital markets were working again. Across the political spectrum, voters considered the bank bailouts a scam that had allowed the barons of finance to emerge from the crisis relatively unscathed.

  Tim Geithner liked to point out that this wasn’t strictly true. He would list all the ways Wall Street had paid for its sins: investment banks gone belly-up, bank CEOs ousted, shares diluted, billions of dollars in losses. Likewise, Attorney General Holder’s lawyers at the Justice Department would soon start racking up record settlements from financial institutions that were shown to have violated the law. Still, there was no getting around the fact that many of the people most culpable for the nation’s economic woes remained fabulously wealthy and had avoided prosecution mainly because the laws as written deemed epic recklessness and dishonesty in the boardroom or on the trading floor less blameworthy than the actions of a teenage shoplifter. Whatever the economic merits of TARP or the legal rationale behind the Justice Department’s decisions not to press criminal charges, the whole thing reeked of unfairness.

&
nbsp; “Where’s my bailout?” continued to be a popular refrain. My barber asked me why no bank executives had gone to jail; so did my mother-in-law. Housing advocates asked why banks had received hundreds of billions in TARP funds while only a fraction of that amount was going toward directly helping homeowners at risk of foreclosure pay down their mortgages. Our answer—that given the sheer size of the U.S. housing market, even a program as big as TARP would have only a nominal effect on the rate of foreclosures, and any additional money we got out of Congress was more effectively used to boost employment—sounded heartless and unpersuasive, especially when the programs we had set up to help homeowners refinance or modify their mortgages fell woefully short of expectations.

  Eager to get out ahead of the public outrage, or at least the line of fire, Congress set up multiple oversight committees, with Democrats and Republicans taking turns denouncing the banks, questioning regulators’ decisions, and casting as much blame as possible on the other party. In 2008 the Senate had appointed a special inspector general to monitor TARP, a former prosecutor named Neil Barofsky who knew little about finance but had a gift for generating sensational headlines and attacked our decision-making with zeal. The further the possibility of a financial meltdown receded from view, the more everyone questioned whether TARP had even been necessary in the first place. And because we were now in charge, it was often Tim and other members of my administration occupying the hot seat, defending the seemingly indefensible.

  Republicans weren’t shy about taking advantage, suggesting that TARP had always been a Democratic idea. On a daily basis, they launched broadsides at the Recovery Act and the rest of our economic policies, insisting that “stimulus” was just another name for out-of-control, liberal pork-barrel spending and more bailouts for special interests. They blamed the Recovery Act for the exploding federal deficit we’d inherited from the Bush administration, and—to the extent that they even bothered to offer alternative policies—argued that the best way to fix the economy was for the government to slash its budget and get its fiscal house in order, the same way hard-pressed families across the country were “tightening their belts.”

  Add it all up, and by early 2010, polls showed that significantly more Americans disapproved of my economic stewardship than approved—a flashing red light that helped explain not only the loss of Ted Kennedy’s seat in Massachusetts but also Democratic losses in off-year gubernatorial races in New Jersey and Virginia, states I’d won handily just twelve months earlier. According to Axe, voters in focus groups couldn’t distinguish between TARP, which I’d inherited, and the stimulus; they just knew that the well-connected were getting theirs while they were getting screwed. They also thought that Republican calls for budget cuts in response to the crisis—“austerity,” as economists liked to call it—made more intuitive sense than our Keynesian push for increased government spending. Congressional Democrats from swing districts, already nervous about their reelection prospects, began distancing themselves from the Recovery Act and shunning the word “stimulus” altogether. Those further to the left, freshly angered by the lack of a public option in the healthcare bill, renewed their complaints that the stimulus hadn’t been big enough and that Tim and Larry were too cozy with Wall Street. Even Nancy Pelosi and Harry Reid started questioning our White House communications strategy—especially our penchant for denouncing “excessive partisanship” and “special interests” in Washington rather than going harder at the Republicans.

  “Mr. President,” Nancy said to me on one call, “I tell my members that what you’ve managed to do in such a short time is historic. I’m just so very proud, really. But right now, the public doesn’t know what you’ve accomplished. They don’t know how awful the Republicans are behaving, just trying to block you on everything. And voters aren’t going to know if you aren’t willing to tell them.”

  Axe, who oversaw our communications shop, was exasperated when I mentioned my conversation with the Speaker. “Maybe Nancy can tell us how to spin ten percent unemployment,” he harrumphed. He reminded me that I’d run on the promise to change Washington, not to engage in the usual partisan food fight. “We can bash Republicans all we want,” he said, “but at the end of the day, we’re going to keep taking on water so long as the best we can tell voters is ‘Sure, things are terrible—but it could’ve been worse.’ ”

  He had a point; given the state of the economy, there were limits to what any messaging strategy could accomplish. We had known from the start that the politics of the recession were going to be rough. But Nancy was also right to be critical. I was the one, after all, who’d taken such great pride in not letting short-term politics intrude on our response to the economic crisis, as if the rules of political gravity didn’t apply to me. When Tim had expressed concern that overly harsh rhetoric directed at Wall Street might dissuade private investors from recapitalizing the banks and therefore prolong the financial crisis, I’d agreed to tone it down, despite objections from Axe and Gibbs. Now a sizable part of the country thought I cared more about the banks than I cared about them. When Larry had suggested that we pay out the Recovery Act’s middle-class tax cuts in biweekly increments rather than in one lump sum because research showed that people were more likely to spend the money that way, giving the economy a quicker boost, I’d said great, let’s do it—even though Rahm had warned that it meant no one would notice the slight bump in each paycheck. Now surveys showed that the majority of Americans believed that I’d raised rather than lowered their taxes—all to pay for bank bailouts, the stimulus package, and healthcare.

  FDR would never have made such mistakes, I thought. He had understood that digging America out of the Depression was less a matter of getting every New Deal policy exactly right than of projecting confidence in the overall endeavor, impressing upon the public that the government had a handle on the situation. Just as he’d known that in a crisis people needed a story that made sense of their hardships and spoke to their emotions—a morality tale with clear good guys and bad guys and a plot they could easily follow.

  In other words, FDR understood that to be effective, governance couldn’t be so antiseptic that it set aside the basic stuff of politics: You had to sell your program, reward supporters, punch back against opponents, and amplify the facts that helped your cause while fudging the details that didn’t. I found myself wondering whether we’d somehow turned a virtue into a vice; whether, trapped in my own high-mindedness, I’d failed to tell the American people a story they could believe in; and whether, having ceded the political narrative to my critics, I was going to be able to wrest it back.

  * * *

  —

  AFTER MORE THAN a year of unrelentingly bad economic numbers, we finally received a glimmer of hope: The March 2010 jobs report showed the economy gaining 162,000 new jobs—the first month of solid growth since 2007. When Larry and Christy Romer came into the Oval to deliver the news, I gave them both fist bumps and declared them “Employees of the Month.”

  “Do we each get a plaque for that, Mr. President?” Christy asked.

  “We can’t afford plaques,” I said. “But you get to lord it over the rest of the team.”

  The April and May reports were positive as well, offering the tantalizing possibility that the recovery might finally be picking up steam. None of us inside the White House thought a jobless rate over 9 percent called for a victory lap. We agreed, though, that it made both economic and political sense to start more emphatically projecting a sense of forward momentum in my speeches. We even began planning for a nationwide tour in the early summer, where I’d highlight communities on the rebound and companies that were hiring again. “Recovery Summer,” we would call it.

  Except Greece imploded.

  Although the financial crisis had originated on Wall Street, its impact across Europe had been just as severe. Months after we’d gotten the U.S. economy growing again, the European Union remained mir
ed in recession, with its banks fragile, its major industries yet to recover from the huge drop in global trade, and unemployment in some countries running as high as 20 percent. The Europeans didn’t have to contend with the sudden collapse of their housing industry the way we did, and their more generous safety nets helped cushion the recession’s impact on vulnerable populations. On the other hand, the combination of greater demands on public services, reduced tax revenues, and ongoing bank bailouts had placed severe pressure on government budgets. And unlike the United States—which could cheaply finance rising deficits even in a crisis, as risk-averse investors rushed to buy our Treasury bills—countries like Ireland, Portugal, Greece, Italy, and Spain found it increasingly difficult to borrow. Their efforts to placate financial markets by cutting government spending only lowered already weak aggregate demand and deepened their recessions. This, in turn, produced even bigger budget shortfalls, necessitated additional borrowing at ever higher interest rates, and rattled financial markets even more.

  We couldn’t afford to be passive observers to all this. Problems in Europe acted as a significant drag on the U.S. recovery: The European Union was our largest trading partner, after all, and U.S. and European financial markets were practically joined at the hip. Through much of 2009, Tim and I had urged European leaders to take more decisive action to mend their economies. We advised them to clear up the issues with their banks once and for all (the “stress test” E.U. regulators had applied to their financial institutions was so slipshod that a pair of Irish banks needed government rescues just a few months after regulators had certified them as sound). We pushed any E.U. countries with stronger balance sheets to initiate stimulus policies comparable to our own, in order to jump-start business investment and increase consumer demand across the continent.

  We got exactly nowhere. Although liberal by American standards, Europe’s biggest economies were almost all led by center-right governments, elected on the promise of balanced budgets and free-market reforms rather than more government spending. Germany, in particular—the European Union’s one true economic powerhouse and its most influential member—continued to see fiscal rectitude as the answer to all economic woes. The more I’d gotten to know Angela Merkel, the more I’d come to like her; I found her steady, honest, intellectually rigorous, and instinctually kind. But she was also conservative by temperament, not to mention a savvy politician who knew her constituency, and whenever I suggested to her that Germany needed to set an example by spending more on infrastructure or tax cuts, she politely but firmly pushed back. “Ya, Barack, I think maybe that’s not the best approach for us,” she would say, her face pulling into a slight frown, as if I’d suggested something a little tawdry.