by Brian Abrams
JACK LEW
One day, during one of the debt-limit battles, I walked into the Capitol and ran into Newt Gingrich. “Mr. Speaker, we lived through this together. Why do we have to go through it again? We know how it ends.” He said, “That one is easy: because a lot of people in this building haven’t lived through it.” Now, he probably was right. They had to experience it, not just know the history of ’95–’96. But if you repeat a play that was so potentially dangerous over and over again, and in an environment that becomes less and less attentive to history and, unfortunately, less and less attentive to fact, the chance of doing something really dangerous grows.
GENE SPERLING
To actually be at that moment where the Treasury Secretary was telling the president of the United States in the Oval Office the steps we would take in default, and knowing the risk to the economy and the incredible potential of hardship for average Americans, was a stomach-turning event.
JASON FURMAN
A decent amount of contingency planning was done for what would happen if we breached the debt limit. All of the options were terrible, and our main focus, of course, was making sure we never hit it. But, certainly the morning after, the Treasury would have been prepared to do the best that they possibly could.
JACK LEW
In 2011, we weren’t even sure that it was physically possible to pick and choose to pay interest on the debt or not. So when the question was asked, “Would you prioritize debt payments,” the system was designed to pay. Not to not pay. It took some work to figure out if there was even a mechanical pathway to pay the debt. Then, as a policy question, if you paid the debt, you’re paying bondholders, whether they’re mom-and-pop investors or sovereign governments owning US securities. So you’re going to pay all those bills but you’re not going to pay the veterans’ hospitals? You’re not going to pay, potentially, for Social Security?
GENE SPERLING
And then the potential threats of loss of confidence in the US financial system—it would have put a degree of risk to the economy and to ordinary people that was unthinkable, even when you had a couple of months to try to figure out how to do it in the most rational way.
JACK LEW
It’s not as if our systems were set up to say, “Well, we’ll pay for the lights, but we won’t pay for the rent.” The plumbing doesn’t work to do that. The full faith and credit of the United States meant we pay all of our bills. We didn’t pick and choose. And Congress had ultimately always agreed with that.
GENE SPERLING
When he actually saw them using the threat of defaulting the country as an actual budget tactic, he said to us, “We can’t do this anymore.” We were in the Oval when he said this to us. It was right before one of our discussions in the Cabinet Room with the Republican and the Democratic leadership. He literally looked at me, he looked at Jack, he looked at [Treasury Secretary] Tim [Geithner], he looked at Valerie, and he said, “And you better show that in your body language, because that’s how I feel.” He never backed down after that.
JACK LEW
The president made the right decision that we couldn’t negotiate any longer over the debt limit, because it had gone from a kind of give-and-take with marginal leverage to an existential threat. And even if we could navigate in our window of time, if you let that continue, at some point this calculation or overreach would lead to default. And we just had to stop it. And obviously we did. It succeeded. We ended up extending the debt limit.
MICHAEL STEEL
The White House’s number-one top priority was avoiding another debt-limit vote before his reelect. They wanted a number that would get them through the 2012 election. So we had enough cuts with the Biden-Cantor stuff and discretionary caps that we could get about halfway there . . . and then the Joint Select Committee on Deficit Reduction would have to come up with the other half, and originally, if they didn’t, well, we would run out of debt-limit authority. But that would have put another debt-limit fight some time in 2012 if the supercommittee failed, and the White House found that unacceptable, so they came up with the idea for across-the-board spending cuts, called sequestration.106
GENE SPERLING
There was no high-fiving. There was relief.
DAVID PLOUFFE
Then we went on a bus tour of the Midwest. He would do town halls, and no one was happy with him. Republicans, Democrats, independents—it was an ugly period. And so in that case, it wasn’t just like the chattering class in Washington. We were in Iowa, and he came back on the bus after the event and was like “No one’s happy.” And they weren’t! It was a really poor reflection on our country.
JIM MESSINA
After the debt-limit stuff, one time David Plouffe called me and said, “Messina, I just need someone I trust. Do you think we can still win?” And it was the great advantage of being in Chicago and not in DC, because I started laughing at him. I was like, “Are you fucking kidding me? Of course we can still win.” But it didn’t seem like that for a while. It was tough times.
DAVID PLOUFFE
I don’t recall that, but if I did it, it would have been because you’re in the middle of the bubble, it’s really dark, and the president’s leadership had been called into question. It was not a good moment for the Obama enterprise.
* * *
94 January 12, 2011, at the McKale Center, University of Arizona.
95 “Here was a young girl who was just becoming aware of our democracy; just beginning to understand the obligations of citizenship; just starting to glimpse the fact that some day she, too, might play a part in shaping her nation’s future. She had been elected to her student council. She saw public service as something exciting and hopeful. She was off to meet her congresswoman, someone she was sure was good and important and might be a role model. She saw all this through the eyes of a child, undimmed by the cynicism or vitriol that we adults all too often just take for granted. I want to live up to her expectations. I want our democracy to be as good as Christina imagined it. I want America to be as good as she imagined it. All of us, we should do everything we can do to make sure this country lives up to our children’s expectations.” —President Barack Obama, University of Arizona, Tucson, Arizona, January 12, 2011.
96 The Tea Party–backed wing of the Republican House had not officially dubbed itself the Freedom Caucus until 2015, when Representative Jim Jordan of Ohio assumed chairmanship over a group of some thirty-six lawmakers, but their obstructionist practices and organization began in a less centralized manner at the outset of the 112th Congress.
97 Budget negotiations ended in early April between House Republicans and Senate Democrats and the White House, with an agreement that would slash $38 billion in federal spending and fund the government through fiscal year 2011 (end of September).
98 Three days after the attacks on September 11, 2001, a nearly unanimous 98 senators and 420 members of the House of Representatives sent Senate Joint Resolution 23, a.k.a. Authorization for Use of Military Force (AUMF), to President Bush’s desk for his signature. The legislation granted the administration unprecedented war powers “under the Constitution to take action to deter and prevent acts of international terrorism.” Two senators and ten House members abstained from the vote. Only Congresswoman Lee voted nay.
99 On December 21, 1988, Pan Am Flight 103 was flying over Lockerbie, Scotland, when a bomb exploded on board, killing all 243 passengers, 16 crew members, and 11 people on the ground. In 2003, the nation of Libya formally claimed responsibility for the bombing in a letter to the United Nations Security Council, and offered $2.7 billion to settle claims filed by victims’ families. During the Libyan Civil War of 2011, Mustafa Abdul Jalil, former justice secretary of Libya, claimed Gaddafi had personally ordered the attack.
100 The most notorious smear against Obama began in March 2008 and spread widely a month later, when supporters of Hillary Clinton’s primary campaign pushed a baseless claim via email that “Obama’s mother was living in Kenya w
ith his Arab-African father late in her pregnancy. She was not allowed to travel by plane then, so Barack Obama was born there and his mother then took him to Hawaii to register his birth.”
101 April 27, 2011.
102 President’s Daily Briefing.
103 Months after the attacks on September 11, US forces intercepted radio communications of Osama bin Laden and pinpointed his location to the Tora Bora cave complex in a mountainous region of eastern Afghanistan. Along with allied forces, the US engaged Taliban fighters there between December 6, 2001, and December 17, 2001. However, requests to deploy eight hundred US Army Rangers as reinforcements were denied by General Tommy Franks, commander of US forces in Afghanistan. As a result, bin Laden, along with hundreds of al-Qaeda and Taliban fighters, was believed to have escaped into Pakistan during the campaign.
104 The maximum amount of funds that the Treasury can borrow to pay for government appropriations (including interest payments on the nation’s outstanding debt) had routinely been granted authorization with little to no dispute from Congress—until 1995, when the authorization was first held hostage by Speaker Gingrich and his “Republican Revolution” as a bargaining chip for budget negotiations. Insurgent Republicans resurfaced with the same tactic in 2011 after recapturing the House majority under Speaker Boehner.
105 From the Senate: Cochair Patty Murray (D-Washington), Max Baucus (D-Montana), John Kerry (D-Massachusetts), John Kyl (R-Arizona), Rob Portman (R-Ohio), Pat Toomey (R-Pennsylvania). From the House: Cochair Jeb Hensarling (R-Texas, Fifth District), Xavier Becerra (D-California, Thirty-First District), James Clyburn (D-South Carolina, Sixth District), Chris Van Hollen (D-Maryland, Eighth District), Dave Camp (R-Michigan, Fourth District), Fred Upton (R-Michigan, Sixth District).
106 Debt-ceiling negotiations ended on August 2, 2011, when Obama signed the Budget Control Act, granting the president authorization to request, in increments, extensions on the debt ceiling, expected to last until the beginning of 2013. In exchange, the legislation cut $917 billion in discretionary spending for fiscal years 2012 through 2021, and tasked the Joint Select Committee on Deficit Reduction with seeking an additional minimum $1.5 trillion in savings over ten years. As a backup plan, the committee’s failure to find such savings would automatically trigger a series of deep spending cuts—a.k.a. “sequestration”—across multiple government agencies.
2011–2012
The proverbial clown car of Republican hopefuls puttered its way across the heartland. Minnesota congresswoman Michele Bachmann boasted in a TV interview about having God as a campaign surrogate, from whom she received “that calling” that prompted her to enter the primaries. Texas governor Rick Perry caved to pressure from evangelicals to reverse his position on a vaccine mandate, which he had previously supported in his state. Rick Santorum, an adamant opponent of LGBT equality, fell victim to the Daily Show’s lampooning his “Google problem,” referring to the top search-engine result that associated the former senator’s last name with the residual aftermath of anal sex. Mitt Romney battled protesters at the Iowa State Fair, where he famously defended beneficiaries of tax-code loopholes: “Corporations are people, my friend!”
Regardless of whether these rifts lost or gained support from the Republican base, the candidates succeeded in consuming network airtime, and may have incidentally permitted the incumbent’s campaign to deal with its concerns relatively quietly.
For PACs such as the Obama Victory Fund, Michelle Obama was the saving grace, a donor-luncheon powerhouse who bagged $10 million in the first fundraising quarter, far more than her husband’s efforts during that period. Operatives found themselves occupied with the more typical internal dysfunctions of a campaign, ranging from cracking down on press leaks to personnel shake-ups back in DC—including the departures of Axelrod and Press Secretary Robert Gibbs. A Gallup poll in August gave President Obama a devastating 26 percent approval rating regarding his handling of the economy. With an electorate still hobbling and corporate profits eating up larger proportions of the national income, the question loomed whether Americans would prefer a new president, one with a CEO background, rather than a constitutional-law professor.
The worries caused the campaign’s nucleus to consider factors beyond the normal means. Everything ought to be on the table was a prevailing-enough sentiment, according to one senior official, that it prompted brief discussion about Secretary of State Hillary Clinton replacing Joe Biden on the ticket. A focus group was convened in the latter half of 2011 with the purpose of seeing if, somehow, a change in the roster might boost the numbers.
“It was never seriously considered,” David Plouffe said. “It was really more of a way to measure a kind of energy.” The result of the focus group was inconclusive, and the campaign moved on.
AUSTAN GOOLSBEE
It was extremely stressful to live through the financial crisis and then the economic crisis, and then kind of the political crisis. In a way, that was a pressing breakpoint, the end of the debt-ceiling fights. The government found itself in a new gridlock, not a lot of policy development . . . I didn’t realize that, two hours after I left the government, that the government would be downgraded by the rating agencies.
DAVID PLOUFFE
We always knew a reelect was going to be hard. Everybody—Jim, the president, myself, David Axelrod—knew that, with the economy the way it was, we were gonna be up against it. And so, obviously the economy strengthened throughout ’12, but right after the debt-ceiling crisis, the August jobs report came out and there were zero jobs. Zero.
JEREMY BIRD
I don’t think I’ll ever wake up with as much anticipation [as] on the first Friday of every month. To get the job numbers and see where we were, it would dictate a lot of what we were doing that month.
GENE SPERLING
Thursday evening was somewhat awkward because the [National Economic Council] director and the chairman of the [Council of] Economic Advisers knew this number and normally told it to the president, but then were not allowed to tell any of their peers. On this particular day, as we walked into the Oval, he said something like, “I don’t think I like the look on your face.” And I said, “It’s zero. The job number was zero.” He said, “What do you mean ‘zero’?” I said, “It’s zero.” And he said, “You mean, exactly zero?” I said, “Yes.” And he said, “You mean if I grab that piece of paper from your hand, I’m going to see a zero?” And I said, “Yes, sir.” And he said, “Has this ever happened before?” I said, “Not to my knowledge.”
AUSTAN GOOLSBEE
Just from a strictly statistical point of view, for the average-job-growth number the standard margin of error was plus or minus 100,000 or 150,000. There’s a lot of fluctuation. You never wanted to take one month’s number as meaning anything, so the fact that we had one month with zero didn’t have to be a sign of a trend.
GENE SPERLING
President Obama was known for taking bad news pretty well, but we all knew that it was worse than being negative 20,000. That there was something political about “zero,” and, sure enough, hours later on the House floor, they were handing out pins that said “President Zero.” Of course the irony was that when [the Bureau of Labor Statistics] did the revisions, it turned out that over 100,000 jobs were created that month.
AUSTAN GOOLSBEE
It’s not wrong to view the immediate aftermath as a result of the dysfunction in that debt-ceiling debate. It’s not wrong to say that had a negative impact on the economy. Ultimately the kids really do not like to see Mom and Dad fighting. The S&P downgrade of the government that happened right in the aftermath of the debt ceiling was based on political uncertainty.107
GENE SPERLING
A major retailer who had been in business for decades told us that it had hurt sales worse than any time since Pearl Harbor.
KAREEM DALE
No administration goes without criticism even from its own party, right? You certainly had progressives sometimes complaining that m
aybe the administration wasn’t doing anything, from a progressive standpoint. I think we heard those things, but we always felt like we were headed in the right direction. I certainly think the American Jobs Act was a positive boost.
JARED BERNSTEIN
The American Jobs Act? I was just leaving when that was sort of getting under way. It looked like Congress really wasn’t going to nibble.
GENE SPERLING
The president called me into the Oval Office. “We need to put forward our economic vision from our heart.” And he said, “I want to know what we think is the best economic plan,” and we could all edit together, but “for now,” he said, “no editing—I want to know what you think is the best thing for us to do.” We went through a monthlong period, working at a fast pace, and the president was deeply engaged in the details. And so the American Jobs Act had things that actually got passed—extension of the payroll tax cut, some small-business issues, veterans’ tax credits, later the long-term-unemployment tax credits. But many of the things closest to his heart—the infrastructure investment, the investment in [reducing] blight in inner cities, funding for teachers and cops at state levels—didn’t end up passing, but they staked out his vision.
BRAD JENKINS
Everyone was on board, from AFL unions to progressive groups like MoveOn and Greenpeace, and they were pushing each piece of that bill as a document, and hammering home to Republicans, Vote on this. Vote for the payroll tax cuts. Vote for rebuilding public schools. That was an opportunity to get everyone on the same page again.
GENE SPERLING
It was also him, as president, going from outside the negotiating table to the bully pulpit. It was critical for people to see a guide for things that he wanted to do, and even as he was a president who was still dealing with a tough economy and had to make some of the most unpopular but necessary decisions.
