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The Unencumbered Man’

After Barack Obama’s victory in the presidential election last November, the question arose whether the result should be seen as a realignment—a fundamental shift in party dominance that would continue for a good many years. That the era of conservative supremacy was over seemed clear. Beyond that, observers were divided. My view, expressed in these pages, was that such talk was premature and that any notion of Democratic dominance “would depend on what President Obama and the congressional Democrats did with their power.”1

Now, seven months later, this picture is starting to come into focus. On the plus side we’ve seen the passage of a $787 billion stimulus package; an agreement on higher emissions standards for US-made automobiles that a chastened industry accepted (the President and his auto czar, Steven Rattner, are practically co-CEOs of General Motors and Chrysler, and thus could have their way); and a major credit-card reform bill.

Other moves have been less cheering, including a desultory and, say many liberal critics, deeply regressive scheme regarding the banks, with billions of taxpayer dollars going to some of the institutions responsible for the economic crisis, credit flowing only a little more freely than it had been, and no big, Glass-Steagall-style reform proposed as of yet (although new regulations of derivatives have been put forth). In addition, Obama’s policies on detainees were seen by many civil libertarians as scarcely distinguishable from those during the last year of the Bush administration. He made a costly misstep by not preparing a timely, detailed plan for dealing with Guantánamo detainees, following his announcement in January that he would close the prison within one year.

More generally, there has been a sense among some liberal interest groups that their concerns are decidedly second-tier. Labor groups worry that “card-check” legislation that would make it easier for workers to form unions has stalled; and the lesbian and gay lobby suspects that repeal of the “don’t ask, don’t tell” policy in the military has been postponed.

Whatever the criticisms, though, the central fact is that, so far, Obama’s coalition is holding together. This is true in the country at large, where his approval ratings, though down several points from the very early days, are still more than high enough to provide him political capital. And it’s true among Democrats of all stripes in Washington. I recently conducted eighteen interviews (most of them off the record or “on background,” alas) with administration officials, members of Congress and staff, operatives, and insiders—this in addition to casual conversations with other such people that come naturally in my line of work. I heard quibbles, and sometimes more than quibbles, especially about the bank bailout, which was often described as a transfer of wealth from the middle class to Wall Street.

By and large, though, I was struck by the sense of good feeling and optimism among these people. There was a broad understanding of the importance of the historical moment. In stark contrast to 1993 (Bill Clinton’s first year as president), the factions within the Democratic Party are keeping their disagreements pretty quiet for now. People grasp that in this moment of high political capital, when they are up against a GOP that is becoming increasingly forceful in opposition, Democrats must prove this year that they can pass legislation that will fix the country’s problems. And there was a confidence in their ability to do so that surprised me.

Health care reform and climate-change legislation are the two largest domestic items that will be coming along this summer and fall. Each is a huge undertaking—the former having eluded presidents going back a century, the latter entailing an enormous shift in federal policy. On January 20, when Obama was sworn in, I never would have been so rash as to venture that both would become law this year. Now this appears to be possible or even likely, although the question of whether the administration has gone too far in accepting Congress’s terms is in both cases a valid one.

To the extent that internecine warfare is being sublimated in the pursuit of concrete gains, much of the credit for this goes to Obama himself, for two reasons. First, and this is very important to understand, he comes from no faction within the Democratic Party. He has managed to stand apart from all of them. Liberals assume that he’s mostly one of their own, which he almost surely is at the level of personal values (strict civil libertarians are probably an exception here). Centrists see a leader who has placed moderates such as Timothy Geithner and Robert Gates in key posts, and who sends them ample signals that he will bring the liberals in line when he feels he has to—as with the refusal to release more photographs of detainee abuse.

Alone among the party’s three leading candidates last year, Obama showed the ability to walk this tightrope. And while he does not always please liberals and centrists, he still has the basic trust of both. Will Marshall, of the centrist Democratic Leadership Council, calls Obama “the unencumbered man” and says: “He’s the least experienced president we’ve had in some time, but he’s turned that into an asset. He comes in with no great mortgages held by any of the party factions.”

The second reason for the common resolve has to do with the strategy being deployed by Obama, his chief of staff Rahm Emanuel, and his other lieutenants. Recall Emanuel’s words to The Wall Street Journal last November, after Obama named him to his post: “You never want a serious crisis to go to waste.” The Obama White House has lived by these words more aggressively than most observers would have guessed—offering the legislation mentioned above, a far-reaching crackdown on offshore tax havens, a scheme to overhaul the regulation of banks, and a proposal during his April trip to Europe for drastic reductions in nuclear weapons, among other initiatives.

Meanwhile, and more quietly, legislators are being summoned to the White House—for example, a working group on climate change—to be told by the President that “this is important to me.” In addition, even if Obama has produced no positive results internationally, he has been visibly active, whether in trying to apply pressures in “Af-Pak,” proposing talks on Iran and the Middle East, taking an unusually firm tone with Israel on the settlement question, or showing an unusual degree of interest in Lebanon, which both Hillary Clinton and Joe Biden visited in advance of its important June 7 parliamentary elections. Three days before that vote, Obama was to deliver a major speech on democracy and human rights in Cairo.

The working theory of the White House seems to be to press as hard as possible on as many fronts as possible. A knowledgeable administration insider put it to me well: “I think one thing both Obama and Rahm get is that if the column just keeps rolling, the opposition can’t really form.”

That quote should ring true to any reasonably close observer of the last five months. But now we enter a new phase. Passing trillion-dollar legislation on, for example, health care reform, in which, by law, revenues have to equal outlays, is considerably harder than passing a stimulus bill on which no such demands were made (and even passing that legislation, as we saw, wasn’t easy). Big legislation makes walking the tightrope far more difficult, because “in legislation,” as one person told me, “there are winners and losers.” So now opposition will come not only from Republicans, but also from some Democrats. The next six months—especially with regard to health care, climate change, and the disposition of the Guantánamo issue—may go a long way toward determining the President’s fate.

The main legislative battle will be over health care. It’s first worth noting that the bill now taking shape in Congress will not look very much like the health care reform Obama proposed during his campaign in at least two key respects, the first reflecting a difference he had with Hillary Clinton during the primary season, and the second reflecting a disagreement with John McCain during the run-up to the general election.

It was Clinton whose proposal included a so-called “individual mandate,” requiring people who are uninsured to purchase health coverage as they do car insurance, in order to achieve universality (along the lines of the reform that has taken effect, with mixed results, in Massachusetts). Obama opposed this and criticized Clinton quite strongly at points—saying, for example, in an Austin, Texas, debate in February 2008 that “in order for you to force people to get health insurance, you’ve got to have a very harsh, stiff penalty.” But now, any legislation presented to Obama is likely to include some form of a mandate, and he will sign it. It will not provide universal coverage—policy analysts estimate that it will insure about 30 million of America’s 47 million uninsured and that it will likely take a number of years to reach that level. The administration, seeing that Congress preferred this approach, has warmed to it over the spring.

The second way in which a bill would depart from Obama’s campaign script has even greater political and policy implications. For American workers, employer-based coverage is currently an untaxed fringe benefit.2 John McCain’s health care proposal called for eliminating that benefit, which would require employees who receive coverage through their employers to start paying taxes on the portion of their premiums that is deducted from their paychecks. On the trail, Obama criticized McCain’s proposal as a tax increase on middle-income Americans. But now it’s likely to be part of a final bill.

There are two reasons for these changes. The first is that Congress appears to want them, and it’s Congress, not the administration, that’s writing the legislation. Obama has named an interagency working group to sketch out health care reform legislation. It is led by Nancy-Ann DeParle, the White House health czar, and it includes Kathleen Sebelius, the secretary of health and human services; high-ranking HHS officials such as Jeanne Lambrew, a former academic and a coauthor of Tom Daschle’s recent book on health care reform, Critical, and Neera Tanden, the highest-profile Hillary Clinton staffer to join Obama after the primary season; and administration economists such as Gene Sperling, who under Bill Clinton held the post that Lawrence Summers now occupies and is currently in the Treasury Department, and Jason Furman, a campaign adviser to Obama last fall who has become a top deputy to Summers.

This group will follow the lead of figures in Congress such as Senator Max Baucus of Montana, whose Senate Finance Committee has in recent weeks released a series of “options papers” on issues such as ways to expand coverage and generate revenue. Other legislators will be important here, either because they have partial jurisdiction or simply because of history: in the House, Californians Henry Waxman and George Miller, along with New York’s Charles Rangel; and in the Senate, Ted Kennedy, whose Health, Education, and Labor Committee—it shares Senate jurisdiction with Baucus—is drafting legislation right now. The hope of the White House group is to have the legislators take responsibility for the bill and negotiate the details.

  1. 1

    See “How Historic a Victory?,” The New York Review, December 18, 2008.

  2. 2

    The entire employer-sponsored system is a hangover from the World War II era, when the government placed wage controls on domestic employment. Those controls were on wages only, not benefits, so employers began offering untaxed benefits to lure workers. It was intended to be temporary, but both employees and large corporations, which deduct their health plan costs from taxes, liked it, and nothing ever changed.

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