Pete Souza/White House

President Barack Obama greeting Speaker of the House John Boehner before delivering the State of the Union address, Washington, D.C., January 25, 2011

President Obama, more popular than he’s been in a long time, is nonetheless negotiating very tricky terrain. But so, too, are the supposedly triumphant Republicans, with their often obstreperous ideologically extremist Tea Party partners. Obama wants to preempt the Republicans on some legislative issues. This is already disappointing or even enraging his most ardent followers, but he’s also making a strenuous effort to win back for 2012 the independents who made his victory possible in 2008 but then voted Republican in 2010.

To accomplish that goal, Obama has ceded the Republicans considerable territory and is arguing on their terms. He has accepted the long-held Republican premises that the government is too big and unwieldy, that regulations can get in the way of jobs, that the huge deficit can be handled by spending reductions without tax increases, and that federal workers (a frequent target of “small government” advocates) must accept a wage freeze (already imposed).

He’s also agreed that spending on domestic programs is such a big part of the problem that it should be frozen for five years, which will mean actual reductions in some of those programs. (His budget was to be submitted February 14.) To make cuts in defense spending and ward off Republican charges that he’s “weak on defense,” he’s hiding behind Defense Secretary Robert Gates’s apron strings, saying in his State of the Union address they are Gates’s proposals. But a very big question is whether the economy is yet on strong enough footing to begin seriously cutting spending. When I ask officials they give the impression that they are going on a wing and a prayer that we won’t slide back into another recession.

In his address Obama wrapped additional federal initiatives—more money for education, infrastructure, and “innovation”—in the term “investments,” which didn’t fool the Republicans for a minute, and they made this clear to the public, the real audience for his speech. Though unemployment was hovering just above 9 percent in January (the unemployment number is considerably higher when one counts those who have given up looking or have had to take part-time jobs), he didn’t dare talk forthrightly about more spending. So he reached back to the oft-used and useful concept of “competitiveness,” to stir up optimism and appeal to that part of the American psyche that wants the US to be the best-educated, most innovative, and most creative nation in the world. And he played on the worry—the fact—that we’re falling behind.

This theme has been used against the Soviet Union, Japan, and now—though Obama didn’t name it—China. George W. Bush and Bill Clinton also talked of competitiveness in their State of the Union addresses and so, for that matter, did presidents going back at least as far as Dwight Eisenhower, who used it in response to the shock of the Soviets in 1957 being the first to send a satellite into orbit. That set off an effort to improve America’s adeptness at science, math, and education in the relatively conservative Eisenhower’s National Defense Education Act. Thus, though it didn’t quite fit the circumstances, Obama declared that “This is our generation’s Sputnik moment.”

Obama and his aides had spent months considering how to keep some form of economic stimulus going without using the word stimulus. They had to deck out these efforts in new attire, since the Republicans, with their expertise in repetitive negativism (“Obamacare”), had turned “stimulus” into a term of opprobrium. (They consistently refer to Obama’s “failed stimulus program”; actually, the data show that it boosted GDP by 2.5 to 3.5 percentage points.)

In his speech Obama attempted to avoid the proverbial “laundry list” of new programs—in light of spending restraints, of the expanded Republican ranks in Congress, and a desire to avoid two more years of nearly constant combat. Lacking the votes to win very much from the new Congress, he sought to avoid a big agenda and the Sturm und Drang of the past two years. Instead, he would try to get some things done through laws already on the books (the Republicans are on guard for this) and to fight only those fights he has to. Obama and his aides would like to do more, but have concluded that there are only so many things they must do. They have to extend the continuing resolution that has funded the government for the past several months (since Congress passed no appropriations bills last year, and that runs out on March 4); and the debt ceiling has to be raised sometime later in the spring.

Having got much credit for working with the Republicans in the lame duck session, Obama proposed some issues on which he and his aides thought they might be able to reach agreement with them. The administration has for some time been working with some Republicans on revising the No Child Left Behind education act, widely accused of putting too much reliance on test scores. Another possible area of bipartisan agreement is trade, which Obama specified in his address, singling out for congressional approval the recently negotiated agreement with South Korea. (There’s also another pending with Colombia, but it’s politically more difficult and not expected to result in as much business for US companies.) The White House also figured that despite the Republicans’ attacks on the stimulus program, they show up at ribbon cuttings and might well go along with a proposal for more infrastructure projects. The day after the State of the Union speech, the Chamber of Commerce and the AFL-CIO put out a joint statement praising the President’s call for more infrastructure.


Obama’s request for a broad immigration reform, apparently appealing to Hispanics and some businesses, is expected to go nowhere now that the coalition behind it no longer includes John McCain, who had given it Republican cover. Obama’s proposal to invest in “clean energy,” such as wind farms and solar heating—giving up on more ambitious energy programs, such as cap-and-trade or a carbon tax, which he couldn’t get through the last Congress—might not go far either, but it’s a favorite of his friend John Kerry. Obama had to know that his demand that Congress not extend the tax cuts for the wealthiest 2 percent permanently was an empty gesture, given that he didn’t even have the votes to stop it in the last Congress; but it may have been a sop to the left, or a way to project a lower budget deficit.

In view of the economic realities, at some points during his speech Obama was almost too upbeat, at times almost euphoric. He had been studying how FDR and Ronald Reagan raised public optimism. The essentially thematic nature of his speech—the emphasis on “competitiveness” and “winning the future”—was intended to give the presidency something that several outside advisers had recently told him was needed: a “narrative” that would help people understand his overall purpose.

Following his “shellacking” in the 2010 election, the proud but realistic Obama was more ready than before to listen to outsiders and acknowledged that things were wrong with his White House and the way he’s been conducting his presidency. A group of his allies took the moment to make a collective effort to try to convince him to make important changes. These were people whom he trusted—among them John Kerry (who made a major effort), Dick Durbin, Tom Daschle, DNC Chairman and former Virginia governor Tim Kaine, and Harry Reid—and apparently he listened.

He heard the frequent and valid criticism that he and his White House staff were too “insular.” The list of those who complained—and who had every right to—that they couldn’t get through to anyone in a senior position—was long. He had to make an effort to “reach out” more to people he had neglected, the advisers told him. They criticized the decision-making process of the White House, and even who was and wasn’t invited to White House events. He was asked to pay more attention to business people. He was told point-blank that his presidency had no large meaning, nothing that the public could understand or grab hold of as its driving purpose.

Obama himself expressed frustration that he hadn’t been able to get across his positions, whether to his liberal base or to business. He concluded that he needed a new staff and a new press secretary. One person who talked to Obama during this period told me, “Eventually, through the collective efforts of a lot of folks. Despite all the intransigence, the word got through.”

Obama’s reshuffled staff is designed to bring more order and discipline to the White House. Before, there had been several high-flying figures who, whatever their talents, on occasion went their own way. Also, some observers thought from the start of his presidency that his White House lacked a “grown-up,” someone with solid experience, wisdom, and discipline. It wasn’t terribly helpful to have in Rahm Emanuel an energetic but brash chief of staff who used the f-word with members of Congress and who made much of his toughness.

The choice of William Daley as his new chief of staff had more to do with this obvious gap than with Daley’s background in business, of which much was made by Obama’s liberal supporters; his previous years of government service and politics (he’s a Daley, after all) were ignored. Besides, the President sets the policy. Daley brings to his new job an enormous range of contacts; his word is taken as good. Daley is the long- missing “grown-up” in the Obama White House.


Though the White House staff has been extensively reshuffled, in the end, Obama, who greatly prefers to have around him people he feels comfortable with, has not brought in many fresh faces. In that vein, the widespread idea that Obama has “turned to the center” has been much overstated, a concept encouraged by the White House and aimed at independents: Obama has made some symbolic gestures, such as some of his new appointments, and is being nicer to business, but he was no flaming liberal in his first two years in office. He is the same as before, essentially a somewhat left-of-center pragmatist, and a man who has avoided fixed positions for most of his life. Even his health care proposal—denounced by the right as a “government takeover” and “socialism”—was essentially moderate or centrist. When he cut a deal on the tax bill, announced on December 7, he pragmatically concluded that he did not have the votes to end the Bush tax cuts for the wealthiest, and in exchange for giving in on that he got significant concessions from the Republicans, such as a fairly lengthy extension of unemployment insurance and the cut in payroll taxes. Making this deal also left him time to achieve other things—ratification of the START treaty, the repeal of don’t ask, don’t tell—before the new and more right-wing Congress came thundering to town.


Charles Dharapak/AP Images

Austan Goolsbee, chairman of President Obama’s Council of Economic Advisers, with Press Secretary Robert Gibbs and National Economic Council Director Gene Sperling in the White House briefing room, February 4, 2011

It’s actually quite possible that the 2010 election itself has been misread. And liberal discontent apparently had a significant effect on the outcome. Alex Horowitz, of Hart Research Associates, which provides half of the highly regarded polling team for Wall Street Journal/NBC polls, says that the voters who showed up in 2010 were fairly different from the country as a whole, whether in age, race, or ideology, whereas the electorates of 2006 and 2008 were more representative of the general population.

The 2010 turnout resulted from the Republicans’ far higher level of interest, which they had shown throughout the year. In both 2006 and 2008, self-identified conservatives made up an average of 33 percent of the electorate, but in 2010, in a significant change, conservatives made up 42 percent of the electorate. Conservatives were more motivated to vote: 62 percent said they were “extremely interested,” compared to just 49 percent of liberals. But in 2010, largely because of the state of the economy, and also the effectiveness of Republican charges that Obama was “too liberal,” a “big spender,” even a “socialist,” the Democrats lost badly among independents, who make up about 40 percent of the electorate and who had given Obama his margin of victory in 2008. Though his name wasn’t on the ballot, Obama was the main focus of this particularly nationalized midterm election—dominated more by national than local issues.

But the election may not have been as definitive as the Republicans are claiming. The numbers show the dangers for both parties as they approach 2012. A Wall Street Journal/NBC poll released on December 15 (before the lame duck session, before the tax deal) also suggested that the complaints of liberal activists in Washington might not count for so much in the future. The survey said:

In all, 63 percent of Democrats polled said they wanted to see Democratic leaders in Washington make compromises to gain consensus on legislation, about the same percentage of independents who expressed that view. Just 29 percent of Democrats said they would rather see their elected leaders stick to their positions, even if that meant not reaching any consensus.

The Republicans are thus running the great risk of misreading their mandate and, under the strong influence of—if not in the grip of—the Tea Party, running their party off the road. Their problem is not just the elected Tea Party members exercising their influence in Washington (and driving the congressional leadership crazy), but also the grassroots members, who could mount challenges in the primaries for the next election. The losses of some prominent members, such as Bob Bennett, a strong conservative from Utah, and Mike Castle of Delaware, shocked other Republicans, many of whom live in fear that they might meet the same fate. In the House, about eighty members are either affiliated with the Tea Party or owe their seats to Tea Party support, but in the Senate just four showed up for a meeting of Tea Party members in late January. Some of those elected with Tea Party backing are now uneasy about being identified with the movement, in part because of some of its more prominent leaders—such as the wacky and self-appointed Michele Bachmann of Minnesota, who seems to want to displace Sarah Palin as the leader on the right and who, like Palin, gets a lot of attention in the press, on television, and online, by saying wild things. Bachmann first gained national prominence by claiming on Chris Matthews’s Hardball last year that Obama “may have anti-American views.” (It mattered little that she later took this back.)

Others who got to Washington with Tea Party support now want wider backing, or are daunted by the realities of enacting the deep budget cuts they had promised during the campaign. The $100 billion that the Tea Party candidates promised to cut in this year’s spending on domestic programs has shrunk to $32 billion, as it dawned on them that the fiscal year was half over when they got to town. And even a cut of this size could make deep slashes into funds for education, transportation, and housing.

A conservative House group, the Republican Study Committee, which includes a majority of the House Republicans, has demanded, without being specific, cuts of 42 percent in domestic programs over ten years—which would eviscerate numerous federal agencies, such as the Park Service and the FBI. Since such cuts existed only on paper and in the minds of people who apparently haven’t done a lot of thinking, they likely won’t happen.

Shortly before Obama gave the State of the Union address (and less than two months after the election), an ABC/Washington Post poll found that by 46 percent to 41 percent, those surveyed trusted Obama to do a better job than the Republicans on handling the economy. In mid-January a Wall Street Journal/NBC poll showed a startling jump in Obama’s approval rating to 53 percent from 45 percent in December—eight points in about a month. That same poll showed that 40 percent—the highest figure recorded since the spring of 2010—expected the economy to get better. Many observers attributed Obama’s “bounce” to his eloquent speech in Tucson, and perhaps to his effectiveness in working with Republicans in the lame duck session; but it appears that some deeper stirrings were also taking place.

Based on signs of optimism about the economy, and on indications that the back of the recession had been broken, the administration believed it could—and had to—move on to a redefinition of its goals. An all-out depression, a free fall, had been averted—some of it because of government actions begun late in the George W. Bush presidency and continued by Obama. Private-sector jobs had been added for twelve consecutive months, for a total of 1.3 million in 2010, a year that also had the fastest rate of growth since 2005. So there was a rationale for emphasizing further growth of the economy and calling for innovation. Austan Goolsbee, the chairman of the Council of Economic Advisers, told me recently, “Over the summer, we started to see conditions change; there was no exact moment, but it continued building through the last several months of the year.”

Among the administration’s goals now, Goolsbee said, are facilitating the expansion of businesses (thus the proposal to cut corporate tax rates, to be offset by eliminating some special tax provisions); making the United States a more attractive place for foreign-based businesses to invest; and getting US businesses to start investing the $2.2 trillion that, panicked by the recession and loath to invest, they are sitting on. Some of these actions, and Obama’s splashy introduction of Jeffrey Immelt, chairman of GE (which earns most of its profits and has most of its jobs overseas), to head the new President’s Commission on Jobs and Competitiveness, were aimed at getting business leaders to stop complaining that they weren’t appreciated, or that there was too much “uncertainty”—after a year in which, overall, business profits grew by 60 percent.

The feelings of business leaders were supposedly hurt when the President chided those who had benefited from government bailouts for taking huge bonuses, or by instances when Rahm Emanuel talked to them the same way that he talked to almost everyone. Obama has a worrisome tendency to seem eager to appease those who bring sustained open pressure on him, as the military brass did before he decided to send more troops to Afghanistan. Moreover, in the last election, Wall Street’s and other business donations had shifted notably from the Democrats to the Republicans. Speaking of the administration’s frantic overtures to business, a prominent Republican lobbyist says, “This is about raw politics. The Democrats saw the business community shift its donations dramatically to the Republicans.”

At the same time, congressional Democrats and the White House have been plotting a more coherent “messaging” strategy than existed in the past two years, when one hardly existed at all. The idea is that the President will remain somewhat above the fray, be seen as the reasonable man “reaching out” to the Republicans to effect compromises (hence, he won’t be attacking the Republican Party as a whole). Some House and Senate Democrats, such as New York’s Chuck Schumer, will take on the more extreme proposals of the Republican right. This is no “Give ’em Hell, Harry” approach, but perhaps one more suited to the times and to Obama’s temperament. But the President and the Democrats are to be seen as the ones fighting for the middle class, offering more reasonable approaches, while the Republicans will be shown as pushing ideological, extremist proposals, and unwilling to compromise. Representative Chris van Hollen, a senior House Democrat, told me,

We’ll continue to say that we’re willing to work with our Republican colleagues to try to solve the country’s problems. But pretty soon, because of the pull of the Tea Party wing of their caucus, it will become apparent that they’re not interested in that. This will cut across several issues. You’ll be hearing it a lot.

The opening weeks of the new Congress, in particular the newly elected Republican House, had a somewhat comic aspect. Having little of real substance to do, it carried out a series of Tea Party–inspired acts, such as changing the name of the Committee on Education and Labor to the Committee on Education and the Workforce. The Republican leaders showed their reverence for the Constitution by having it read aloud on the House floor by both Democrats and Republicans alike.

This piety about the Constitution was to provide the Tea Party and other conservative members a high-minded rationale for eliminating or blocking various government activities. The fact that the Constitution is subject to varying interpretations was either lost on them or rejected as a nuisance. In January, Michele Bachmann invited Justice Antonin Scalia, the leading advocate of the “originalist” theory, to address the Tea Party group; showing questionable judgment, Scalia accepted. But the difficulty with the “originalist” view that the Constitution should be applied as the Founders would have applied it (though in 1787 there were no airplanes or Internet) is that it can’t work. Carried to its logical—or illogical—conclusion, there would be no clean air and water regulations or even some civil rights laws—which even Scalia has deemed acceptable. He is not a purist on “originalism.”

The Republican House took five hours (with no hearings) to try to repeal the most important social advance in decades—the President’s new health care law. The Republicans used bogus statistics (some of them created by the small business lobby) and if their numbers differed from those of the impartial Congressional Budget Office, they set about trying to discredit this highly relied-upon institution. And they were probably going against public opinion. An ABC/Washington Post poll taken in January found that 45 percent of the respondents supported the new health care law and 50 percent opposed it, but 25 percent of that 50 percent opposed it because they felt it didn’t go far enough.

A week later, the Senate voted against repealing the health care law—as the House Republican leaders knew that it would—on a straight party-line vote, with even Democrats who had opposed it last year now voting to keep it. That fact, plus that only three Democrats voted against it in the House (whereas thirty-nine had voted against it in 2009), also suggested that opinion on the health care law was shifting. Cleverly, the administration had already put into effect some of the law’s more popular features, such as permitting offspring to be covered by their parents’ insurance until they are twenty-six, thus allowing Democrats to ask if Republicans really wanted to repeal these things. Though Republicans had tried to moderate their call for “repeal” by then saying “repeal and replace,” they had no replacement, and Speaker John Boehner said he’d set no “arbitrary deadlines” for House committees to come up with one.

Senate Majority Leader Mitch McConnell had maneuvered to get the Senate to vote because he thought it good politics to make Democrats up for reelection (twenty-three of them) in 2012 go on record against repeal. Republicans have sworn to keep trying to undo the law—perhaps by taking away the funds to implement it—for two years. But this just might not be good politics, either; it may also all be moot if the law is struck down in the courts.* So the House vote to repeal was a charade. It may have appeased the Tea Party, but even the insurance companies don’t at all mind the additional business that the new law gives them (over 30 million new customers) and had already instructed their lobbyists to watch out for the regulations and see to it that their profits weren’t too squeezed by new requirements. The House Republicans proceeded to repeal public financing for the presidential elections, and then moved to further restrict abortions by setting rules that would even affect private insurance policies.

That the Republicans chose Representative Paul Ryan of Wisconsin to give the Republican response to the President’s State of the Union address was unsurprising (though New Jersey Governor Chris Christie was reportedly wise enough to turn down what can be a particularly thankless task). Ryan, forty-one, is the House Republicans’ new star. With his thick shock of dark hair, his ability to talk earnestly in clear sentences, and his seeming mastery of budget matters, the Republicans trot him out and also vest him with enormous power. A friend of mine comments that, especially in Washington, articulateness is often mistaken for brilliance; and judgment isn’t taken into account. In a most unusual arrangement, Ryan, chairman of the House Budget Committee, has been given the authority to decide, on his own, the House Republicans’ budget figures.

But the problem with the plausible-looking Ryan, with his thick studies and reports, is that his basic views are too radical for even most of the Republicans. His “roadmap” for the economy, brought out last year, would essentially privatize Social Security (a failed effort by George W. Bush); replace Medicare with vouchers that people would use in the private insurance market but that would likely not increase in value as the cost of care went up; and revise the tax code so that the middle class would end up paying higher taxes than the wealthy. Low-income people would be especially hard hit by Ryan’s plan. His roadmap gained about fifteen supporters and wasn’t even adopted by the House Republican caucus. (“It won’t be adopted by the Senate,” an aide to Mitch McConnell told me.) But Ryan himself would remain a powerful force.

Ryan’s response to the State of the Union was overseen by McConnell and Boehner, and his roadmap was abandoned. Ryan spoke in apocalyptic terms about the dire fiscal situation the country is facing. Predictably, he perpetuated the Republican myth—widely accepted—that Obama’s policies had bloated the deficit. In fact, the deficit was already headed toward very high levels (it was projected to be more than $1 trillion when Obama took office), the result of policy decisions by the Bush administration. These include two unfunded wars, two unpaid-for tax-cut bills, an unpaid-for prescription drug program, plus the effects of the economic downturn and the cost of efforts to arrest it (including TARP and the auto company bailouts, which began under Bush).

These expenditures account for a very large proportion of the current deficit, far more than any policy changes that Obama has made. His health care plan has very little effect on the current deficit (and is projected to save money over time). He was unable to lower the deficit by ending the tax breaks for the wealthiest. So the increased deficit is not the result of wholesale spending increases by Obama. Most of it comes from temporary policy changes needed to deal with the economic downturn. Still, no sensible person denies that the country is in a fiscal pickle, and that hard decisions and great care will be needed to work our way out of it—while new forces in our politics will be pushing against reasoned solutions.

But despite all the confrontational rhetoric between the two parties about budget priorities, the White House and Republican congressional leaders, in private talks, have agreed on the need to try to reach a bipartisan “grand bargain” over the budget—a sweeping deal that could include entitlements and tax reforms as well as budget reduction. A Senate Republican leadership aide confirmed this, saying, “In fact, for anything to happen, it will require such a White House/congressional leadership bargain.” The preferred idea is that, just as they did late last year on the tax bill, they would reach an agreement and then unveil it to the public.

At the same time, a bipartisan group of leading senators have met in an effort to cut the deficit—which could become a part of the debt-reduction puzzle. The thinking is that the Tea Party allies might be brought along in the end, because their primary goal is to reduce the deficit. The details will be difficult, but a surprising sort of deficit-cutting fever has broken out on Capitol Hill, fueled in part by a fear that at some point the bond markets and foreign lenders will call in their loans, setting off a disastrous financial crisis. Right now, there’s a game of chicken going on over who will offer their proposals first, but this should be resolvable.

Another reason this is happening is that despite their occasional deference to Tea party demands, the Republican congressional leaders, Mitch McConnell, John Boehner, and Eric Cantor, are also realists. They may try to drive a hard bargain on the budget but they know that the issue must be resolved. Despite the baying of some Tea Party allies that the government should be shut down if the administration doesn’t offer enough concessions, these leaders understand that that would be a disastrous course for the Republicans—as it was when Newt Gingrich tried it in 1995.

Meanwhile, the President will be greatly tested, and we shall learn how steady is his rudder.

—February 8, 2011