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Bruised by Stimulus Battle, Obama Changed His Approach to Washington

First came a national security meeting, after which Obama remarked, according to a senior adviser present, "You know it's bad when Iraq isn't even the biggest worry out there."

Then, on Dec. 16, the staff assembled to hear Christina Romer, Lawrence H. Summers, Timothy F. Geithner and others describe an economy in a state of near-free fall.

Romer, an MIT-educated economist, took on the role of selling Obama on the need for a much larger fiscal stimulus package than had been proposed.

She had charts, graphs and a sheaf of ominous economic indicators -- "numbers we'd all been looking at our whole lives," another senior adviser said, "and had never seen anything like before."

Just three months earlier, as the global reach of the subprime mortgage crisis came into view, economists talked about the need for a fiscal stimulus of as much as $150 billion. In internal conversations, the Obama transition team had concluded that the amount would have to be much larger.

On this day, Romer, Summers and others outlined a package of public works spending, unemployment benefits expansion and tax cuts more than four times that size. The economy was contracting at an annual rate of 6.5 percent, the fastest since 1982.

During her presentation, Romer told Obama that Americans had yet to have their "holy [expletive]" moment over the economy, a phrase she had borrowed moments earlier from the more profane David Axelrod, Obama's senior political adviser.

Obama was taken aback, and not just by the numbers. "I'm still trying to get my arms around the fact you said [expletive]," he told the bookish economist.

"I walked up to him afterward and said, 'That has got to be about the worst meeting a president-elect has ever had,' " recalled Austan Goolsbee, a member of the White House Council of Economic Advisers, which Romer now heads. "He said, 'That's not even the worst meeting I've had this week.' "

Bumps in the Road

Obama, who was studying Roosevelt's first 100 days, taking particular interest in how the former president sought to both comfort and brace the country as he took office, understood that in terms of domestic policy he had become commander in chief already. He began talking directly to the country about the economy and how he intended to fix it.

He decided, his advisers say, that he would convey the idea that the nation's problems, from the retreating economy to falling student test scores, were intertwined as he pressed for action on a host of fronts simultaneously.

Mona Sutphen, the deputy chief of staff for policy, said the pre-inauguration period in Washington was used to "get intellectually ready" for such first steps as the signing of legislation on equal-pay and children's health insurance, an Iraq policy review, and executive orders closing the military prison at Guantanamo Bay, Cuba, and banning Bush-era interrogation tactics.

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