Measured Response To Financial Crisis Sealed the Election

By Anne E. Kornblut
Washington Post Staff Writer
Wednesday, November 5, 2008

Sen. Barack Obama, so steady in public, did not hide his vexation when he summoned his top advisers to meet with him in Chicago on Sept. 14.

His general-election campaign had gone stale. For weeks, he had watched Sen. John McCain suction up the oxygen in the race, driving the news coverage after the boisterous Republican convention in St. Paul, Minn., and suddenly drawing huge crowds with his new running mate, Alaska Gov. Sarah Palin.

Convening the meeting that Sunday in the office of David Axelrod, his chief strategist, Obama was blunt: It was time to get serious.

"He said, 'You know, maybe we can just win it on the issues. But I don't think so,' " recalled senior adviser Anita Dunn. With the debates approaching and just seven weeks until the election, "his charge to everybody was 'Guys, we're back in combat mode,' " Dunn said.

And then, the next morning, a global earthquake hit: Lehman Brothers, the giant investment firm, filed for bankruptcy, triggering the biggest corporate collapse in U.S. history and an international financial meltdown, and transforming the presidential race.

It was a moment neither the senator from Illinois nor his advisers had anticipated, but one for which they were uniquely prepared. In the days that followed, the newly chastised Obama team became more aggressive, with a message they had refined over the summer. The candidate himself, criticized as too cool, too cerebral and too detached, suddenly had the opportunity to show those qualities to be reassuring and presidential.

For McCain, already struggling with the economic issue, the Wall Street meltdown became part of a much different narrative. By the time the senator from Arizona made the surprise announcement on Sept. 24 that he would suspend his campaign, a powerful image had been framed: of an "erratic," older Republican who could not be trusted to handle a crisis, economic or otherwise.

In a race that had been thought to be even, the polls showed Obama to be pulling ahead, a lead that he would not relinquish through three debates and the election's closing weeks.

"It was a pivotal two weeks of the election," Axelrod said yesterday. ". . . It changed the structure of the race, in that it just never went back. Once people had rendered that verdict, it just didn't change."

In the end, both the candidate and the campaign lived up to the challenge Obama outlined that Sunday in Chicago. They benefited from a dose of what his staff called "Obama luck." But to paraphrase the famous adage of Pasteur, it was the kind of luck that favored only a prepared candidate.

If Sen. Hillary Rodham Clinton (N.Y.) had been a formidable primary opponent, McCain seemed to present another challenge to Obama -- as one of the few Republicans who could potentially slip the damaging shackles of his party and run on his compelling biography as a former prisoner of war and as someone with a record of working with Democrats.

"John McCain had the potential to be the toughest Republican opponent we could have drawn," said Dan Pfeiffer, Obama's communications director. "Although his record told a different story, his national celebrity was based on his opposition to President Bush and his reform credentials. On paper, McCain was perfectly suited to run a very strong campaign that nullified some of our strengths and exploited some of our weaknesses."

In hindsight, however, the primaries tested Obama's political instincts and endurance more than the general election ever would. His long-shot triumph in the nominating process came after an intense focus on one state, Iowa, for most of 2007, followed by a grueling 55 contests, across multiple time zones, against a relentlessly energetic opponent, for months.

McCain turned out to be a less rigorous match, whose staff "worked hard, but there's a difference between going all out in ways you didn't even know you could do, and just working hard," said one Obama aide. Because of the nature of the electoral college map, McCain actually challenged Obama in fewer states than Clinton did; then he gave Obama the unexpected gift of pulling out of the expensive battleground of Michigan in early October.

"John McCain was nothing compared to Hillary Clinton," the Obama aide said.

New Slogan, New Strategies

But no one knew that in June, when Obama finally defeated Clinton after a bruising primary campaign. What Obama's aides did know was that they would need a message adjustment, away from "Change We Can Believe In," which had worked so well against the Clinton juggernaut by suggesting that her claim to be a change agent was insincere. By late summer, after researching and road-testing slogans, there was a new one, tailored for McCain: "The Change We Need."

At the campaign's headquarters in Chicago, an unprecedented ground game was under development. Regional directors, battle-hardened during the primaries, were retrained and dispatched the moment the general election launched, opening offices across an ambitious 18-state battleground.

Rather than work toward a traditional Democratic electoral map that hinged on trying to steal Ohio or Florida, Obama advisers aimed at using the candidate's unique profile -- and the vast public dissatisfaction with President Bush -- to peel off seemingly more difficult states such as Virginia and Colorado.

"We decided at the get-go to have a very broad playing field and to run, in each of these states, the largest presidential campaign in history," said campaign manager David Plouffe.

Jon Carson, a brainy, 33-year-old field director, developed sophisticated databases to chart developments -- the number of hits the campaign's Florida Web page got in a single day, for example, or the number of people nationwide who had downloaded voter-registration forms. Such unprecedented technology would later give the campaign confidence that its strength in Republican-leaning states was not a mirage.

Fueling it all was an influx of money like none in history. In June, Obama decided to forgo public financing in the general election -- another potentially dangerous move, but one that the last Democratic presidential nominee, Sen. John F. Kerry (Mass.), adamantly urged. Obama raised as much as $750 million, a sum so staggering, so much greater than the $84 million McCain took in public financing and the $240 million more than the Republican Party raised, that it was a line of attack for McCain as he tried to argue that the decks were unfairly stacked.

For all these overwhelming advantages, Obama had a steady but stubbornly narrow lead at the beginning of the summer. But three potentially decisive moments were on the horizon: the selection of a running mate, the Democratic convention in August and the debates against McCain in the fall. Obama added a risky fourth -- a trip abroad in July.

Still recovering from the exhausting primaries, his campaign put its efforts into the foreign trip, believing Obama could not take on a war hero if he did not set foot in Iraq once more. He traveled for a week and a half, visiting Iraq and Afghanistan, then Europe.

The most publicized event of the journey was his speech in Berlin, which drew an audience of 200,000. The address, a bold, outsize move -- four years earlier, Kerry had fought mockery that he seemed too "French," and Obama was already edging toward being seen as elitist -- was in part a nod to independent voters weary of the negative U.S. image abroad.

The campaign knew it was a risk nonetheless. The idea was to "get it out of the way early," one adviser said, then switch from foreign policy, a perceived strength for McCain, back to health care and economic issues soon afterward.

Some Obama supporters thought the trip could produce a modest bounce in the polls. Instead the numbers remained static, and the travel gave the McCain campaign an opening to mock the Democratic nominee as a megastar abroad but an empty vessel at home. In a television advertisement released in late July, McCain compared Obama to Paris Hilton and Britney Spears.

"He's the biggest celebrity in the world. But is he ready to lead?" the ad's narrator taunted. McCain, unable to bring Obama back down to his own level, hoped to push him even higher up into the clouds, to make him seem completely inaccessible.

While Obama's advisers were confident about the fundamental dynamics of the race, they found this line of attack worrisome. They saw it as a page from the extremely effective Republican playbook of the previous two campaigns, portraying the Democrat as an elitist and an outsider who did not share American values. After Obama left for his family vacation in Hawaii, several of his senior strategists convened to present ideas about the way forward.

Almost universally, they concluded that he must shift the focus of the campaign to the economy.

Relying on a stockpile of data gathered over the spring and summer, the strategists agreed that economic instability, driven by the subprime mortgage crisis, was likely to evolve into the dominant theme of the race. It had not been Obama's strong suit in the primaries: He had seemed to float above economic hardship, discussing it in the abstract, while Clinton reached working-class voters on a visceral level. His team recognized, by late summer, that it was their urgent mission to fix that.

In one August memo, Axelrod warned that it was essential to redirect the growing attacks on Obama's persona back toward the concerns of average voters.

"They are following the Mark Penn blueprint, hoping to paint Barack as both culturally alien and inexperienced -- a silver-tongued empty suit, embraced by Washington but undeserving of the position or celebrity he commands. (Like Britney and Paris)," Axelrod wrote in a four-page memo, referring to the former chief Clinton strategist. "A far left liberal, whose views on taxes, crime and other issues are out of sync with the American people. And a dogmatic Democrat, willing to put interest group politics ahead of the country's interests. (Drilling.)"

Axelrod continued: "Candidly, I think the Republicans have had some success in the last few weeks in making this a referendum on Barack, or, more accurately, their caricature of him. In the coming weeks, we must change that dynamic by using our campaigning, spots and Convention to burst that caricature and draw a sharp contrast on fundamental economic issues and values."

Joel Benenson, Obama's lead pollster, separately concluded in August that the campaign would need to target a slice of undecided voters deeply motivated by economic concerns. In a PowerPoint presentation, Benenson identified about one-quarter of the electorate as being "up for grabs" in the 18 battleground states, with 67 percent of them citing the economy as a top issue, far more than the 51 percent who named Iraq.

And it was possible to fuse the two. "Don't forget that Iraq is an economic issue," Benenson wrote.

He went on to make the case for taking a harder line against McCain -- listing areas of vulnerability, such as being "out of touch," that made undecided voters sour on the Republican when they learned about them, according to the campaign's research. That laid the groundwork for the moment weeks later when McCain struggled to answer a question about how many homes he had: The Obama campaign, sometimes split on whether to attack its rival, did not hesitate to pounce.

The tension over how and when to hit McCain surfaced repeatedly during the course of the primaries and then the general election, and was often seen by the staff as a split between Axelrod, the idealist and master of grand strategy, and Plouffe, the calculating tactician.

In a campaign that thrived on discipline, the disagreements were almost never publicly aired, but they existed behind closed doors, aides said. Axelrod, a soulful father figure inside the campaign, was seen as the one channeling Obama, with both adviser and candidate urging restraint and a focus on the issues.

Later, Obama's competitive instincts would kick in and he would urge going after McCain more aggressively -- a development that was met with a mixture of amusement and relief by aides who had been itching to get tougher all along. But that was not where he was in late summer.

Dozens of advertisements were created that never ran. One health-care ad was stripped of a line accusing McCain of supporting the "biggest middle-class tax increase in history" because it was too much of an exaggeration. Obama ultimately rejected the line himself, advisers said, replacing it with a more modest statement about taxing health benefits -- a reflex aides came to expect from a certain wing of the campaign.

"Plouffe has pretty harsh instincts. Axe doesn't always," one aide said, referring to Axelrod by his nickname. "Axe is protecting the brand," the aide said -- meaning Obama's personal brand as an extraordinary, above-the-fray figure running a "different kind of campaign."

Unfazed by Palin 'Hysteria'

On the Friday morning after Obama delivered his soaring convention address to 84,000 supporters at Invesco Field, Democrats awoke in Denver to the stunning report that McCain was about to announce an absolute unknown, Palin, as his running mate. Excitement from Obama's speech quickly turned to disbelief, then outrage, then panic. McCain had chosen a female vice presidential nominee, the first Republican ever to do so, in an effort to peel away female voters -- reopening the wound over Clinton that Democrats thought they had healed over the previous few days.

Only Obama's advisers were giddy about the choice.

Since early July, the campaign's researchers had met daily to discuss the list of possible Republican vice presidential choices, based on news accounts and their best guess at how McCain's mind might work.

Palin had been on the Obama short list for a few weeks, and then had been taken off when stories about her efforts to get her brother-in-law fired from the Alaska state police broke.

Dunn, the senior Obama adviser, had the unique perspective of having run a campaign against Palin two years earlier, as an adviser to Alaskan gubernatorial candidate Tony Knowles. She considered Palin a formidable and charismatic politician; she also had a grasp of Palin's thin record and her history on the "bridge to nowhere," and had sat through numerous Palin-Knowles debates.

That Palin expertise, shared by few in the country, would steady the Obama campaign at a moment when national Democrats embarked on what one adviser described as "two weeks of total hysteria" over the Alaska governor.

Dunn had the research staff stop putting so much energy into Palin, convinced that she could not pass the vetting process. "How was I to know that they weren't going to vet her?" she said.

The morning McCain announced Palin as his vice presidential pick, as Democrats scrambled for the right way to react to a woman they had barely heard of, Obama spokesman Bill Burton gave the campaign's first official response.

"I think the American people are pretty surprised to see that John McCain would pick someone to be a heartbeat away from the presidency who has zero foreign policy experience," Burton told Andrea Mitchell on MSNBC. "Just a couple years ago she was the mayor of a small town in Alaska."

Shortly afterward, the Obama campaign issued a second statement praising Palin as an "admirable person" and suggesting that they would not attack her. Obama himself seemed to repudiate Burton, saying that "campaigns start getting these hair triggers" at times.

In fact, according to campaign sources, Burton's comments had been approved by all of the campaign's senior staff members. It was not the first time the spokesman had been dispatched to say something over the edge, only to pull it back later -- part of the delicate art of advancing negative ideas about the GOP ticket without being accused of doing so.

When they successfully hit McCain hard without suffering any consequences, Obama aides considered it a success. It was worth noting, one adviser said with evident pride, that what Burton said on television that day "was the line of attack that the left took for the next month."

More fundamentally, the Palin selection removed a worry that Obama advisers had about their candidate's lack of seasoning: In a flash, they felt, McCain had thrown away his central rationale for being president, his experience. It would take several more weeks -- and Palin's devastating interview with CBS News anchor Katie Couric -- before Obama's internal data would show that McCain's running mate was dragging the Republican ticket down.

Yet it was the damage done to McCain by the financial disaster and then his response to it that had the most consequences. While Obama bore down on financial issues on the campaign trail, his rival cast about for a message -- initially saying the fundamentals of the economy were strong, then announcing plans to suspend his campaign, then dropping those plans. Obama's speechwriters combed the dictionary to come up with terms that would get at McCain's unsteadiness without directly calling him old or angry, aides said. They settled on "erratic."

"The American people were watching very closely," Axelrod said. "They saw two candidates deal with a crisis in real time, and McCain appeared halting and inconsistent, and Obama seemed very focused and secure."

Amid the sudden explosion of bad economic news, it seemed that the very thing that made Obama's candidacy historic -- the fact that he would be the nation's first black president -- remained unspoken. His candidacy was all about race in one sense: As the first African American nominee of a major party, he ran as the embodiment of American possibilities, with his personal story at the core of that message. But with the exception of one major speech, a few stray comments and answers to questions in interviews, Obama did not dwell on race. How he embraced the historic nature of his bid without seeming to hold a national referendum on race will be part of the campaign's legacy.

His strategists, most of them white, seemed allergic to the subject, dismissing questions about the "Bradley effect" -- the theory that white voters overstate their support for black candidates in polls -- and insisting race would be a nonstory in the end.

Under the radar, advisers kept an eye on potential trouble spots. One aide noted that the campaign had "kept Al Sharpton quiet," avoiding any potentially provocative comments from the reverend by having Valerie Jarrett, a close friend of Obama's, stay in close contact with him.

When a flap erupted last month over Rep. John Lewis's remarks comparing McCain to the 1960s segregationist George Wallace, the official response from the Obama campaign was to play down the comments. But behind the scenes, staff members hit the phones, first calling the Georgia Democrat to get his remarks revised, then calling members of the Congressional Black Caucus to make sure the situation did not escalate. "Our political team called every member of the CBC and said, 'Don't do that,' " an Obama official said.

Obama spoke to his campaign staff after another controversy in July, this one triggered by remarks he made at an event in Missouri. He had warned voters: "What they're going to try to do is make you scared of me: You know, he's not patriotic enough; he's got a funny name. You know, he doesn't look like all those other presidents on the dollar bills." When McCain advisers responded angrily that the Democrat was playing the race card, aides to Obama insisted, at first, that he had not been referring to race.

The candidate then rebuked his staff, telling them it was unacceptable "to pretend that it wasn't an issue," one senior adviser said. "No, you just confront it directly, you're honest, and you talk to people, and you move on," Obama told the staff, the adviser said.

A Winning Formula

McCain emerged from the debate season badly bruised, his campaign in disarray. Obama came out emboldened, back on the comfortable terrain of an issue -- the economy -- on which he had grown increasingly confident, both substantively and in terms of campaign politics.

He had reacted to the Wall Street implosion with the earnestness of a student (talking with Treasury Secretary Henry M. Paulson Jr. nearly every day) and his characteristic calm. His campaign had laid the groundwork for his economic embrace since summer, in part by taking the step, unusual for a Democrat, of a message blitz on taxes, preemptively arguing that Obama would lower most.

And they had put Obama in smaller settings, with his sleeves rolled up, talking to voters at picnics and barbecues, to convey the sense that he was "among people, and not above them," in Axelrod's words.

He had embraced the legendary Clinton message, "it's the economy, stupid," without fully embracing either Clinton. He had seamlessly woven it into a narrative all his own, making the economy the cornerstone of his argument that the country was on the wrong track and desperately needed change.

Six days before the election, Obama delivered his $3 million, 30-minute advertisement on seven television channels during prime time. "Earlier this year, we already knew our country was in trouble. . . . But then, a little over a month ago, the bottom fell out," he said, looking directly at the camera and speaking to an estimated 33 million viewers.

It was his closing argument, and it had evolved a long way from his initial rationale for getting into the race -- ending the war in Iraq and bringing about generational change. Lost on no one was how heavily the message borrowed from his greatest rivals, the Clintons, who had defined the economy as their bedrock issue, and the Democratic Party's, 16 years earlier. But it was Obama's now. And yesterday, after one of the longest and most captivating campaign seasons in history, it worked.

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