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Obama’s memos in the New Yorker: The highlights

at 11:30 AM ET, 01/23/2012

In this week’s New Yorker, Ryan Lizza delves into the decisions made by President Obama over the last three years, using previously-unreleased White House memos.

The piece shows Obama’s increasing willingness to listen to political advisers’ opinions on policy as his own popularity declined, and his attempts to compromise with Congress, business interests and members of his own administration in passing major legislation.

Here are some of the highlights:

* The Summers memo:

The piece quotes from a  57-page memo written by Larry Summers, the incoming director of the National Economic Council, to President-elect Obama in December of 2008.

In the memo Summers argued for a $600 billion or smaller stimulus, saying “an economic judgment that would need to be combined with political judgments about what is feasible” given the increasing deficit, and that a package big enough to truly deal with the hole in the economy would “spook markets” and become counterproductive.

Summers also argued that Obama would not have too much difficulty getting more stimulus money from Congress if he needed it — a prediction that proved false.

Other accounts report that in 2009, Summers pushed for more spending to bring down the unemployment rate, saying it was not the time to worry about the deficit.

* Obama wanted “moon shot”

In initial stimulus discussions, Obama pushed for a major inspiring initiative like the Hoover Dam — for example, a national electric “smart grid.” But advisers told him that a long-term project would not have enough immediate impact on the recession.

* Clinton rejects budget:

Secretary of State Hillary Clinton rejected the 2011 White House budget for her department, writing Obama that she was “deeply concerned” by the level of cuts in funding. The president fought for some additional money for the State Department.

* Compromise:

Obama agreed to cut $60 billion in highly stimulative spending from the stimulus to make room for a $70 billion tax provision (a fix to the alternative minimum tax) that was important to Democratic leaders in Congress but not actually useful in jumpstarting the economy.

* The president modified his plans to cut corporate loopholes, giving up $16 billion in revenue, to address concerns from multinational corporations.

* Obama attempted to find common ground with Rep. Paul Ryan (R-Wis.), inviting the House Republicans’ point-person on budget issues to a summit on fiscal issues and asking staffers to look into his ideas. Nothing came of it.

* Discussion of nationalizing the banks in the wake of the financial crisis was dropped for fear of a congressional backlash, along with concerns over legality and the effect on the banks themselves.

* Fear of right-wing press:

In January of 2010, Obama rejected a proposal from Office of Management and Budget Director Peter Orszag and health-care adviser Ezekiel Emanuel that would pay federal employees to participate in a patient treatment pilot program for fear of ridicule. “[Communications director] Pfeiffer ... thinks it could easily be caricatured by the right-wing press,” Obama’s staff secretary wrote, and the president agreed.

* Choosing deficit reduction:

A memo from Obama’s political team sent toward the end of 2009 helped convince the president to focus on reining in government spending and distance himself from Congress.

At this point, Obama gave up his commitment to “honest budgeting” and used tricks employed by previous administrations to make his budget appear smaller.

In May of 2010, Obama decided against either ambitious new stimulus or ambitious deficit-reduction, going with smaller, more symbolic government cuts going into the midterm elections. He ended up proposing a new jobs bill, however, in early 2011.

 
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