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Bruised by Stimulus Battle, Obama Changed His Approach to Washington

By Scott Wilson
Washington Post Staff Writer
Wednesday, April 29, 2009

The night before the Senate vote on President Obama's $787 billion stimulus bill, one question echoed through the West Wing:

Where is Arlen Specter?

The Republican senator from Pennsylvania would not answer his phone. Not for White House Chief of Staff Rahm Emanuel, Pennsylvania Gov. Edward G. Rendell (D) or Harry M. Reid (D-Nev.), the Senate majority leader.

The president, a senator himself only a few months before, had spent weeks courting Specter. Obama had invited him to his Super Bowl party days earlier, gently teasing the prickly lawmaker about wearing a coat and tie to a relaxed social gathering. He had also brought Specter in for a 15-minute, one-on-one session in the Oval Office.

"This is the first president I've ever met alone," Specter would later say of the meeting. "I'm just searching for the right word -- it was unique."

With the vote only hours away, the job of finding the senator fell to Vice President Biden, who reached him by phone on the morning of the Feb. 13 vote. Soon after, Biden called Emanuel, who had been operating on virtually no sleep for several days, with the news: Specter would vote yes. In return for his support, Specter, who has Hodgkin's disease, won a large increase in cancer research funding for the National Institutes of Health.

"The dominoes," a senior adviser involved in the lobbying effort recalled, "began to fall into place."

Hours later, the Senate delivered the filibuster-proof 60 votes needed in favor of a measure that senior White House officials noted among themselves was more costly than the New Deal. For Specter, the vote represented a major step toward leaving the Republican Party, a defection he announced yesterday, putting Obama closer to being able to force his will in the Senate.

"While we passed the largest piece of domestic spending legislation in history, we went through 48 hours of not knowing if we were going to get anything at all," said a senior administration official involved in the stimulus campaign. "In the end, you saw what a thin, thin, thin margin it was."

During his first 100 days, Obama has moved quickly to strengthen the U.S. economy, refine the American strategy in two foreign wars and reverse Bush-era detention and interrogation policies that have drawn condemnation at home and abroad. But his first weeks in office have also showed a president who, rather than changing Washington, as he pledged during his historic campaign, was being changed by it.

The near-defeat of his stimulus plan has emerged as the seminal learning experience for Obama and his fledgling administration, which came to Washington with equally high measures of ambition and confidence in its ability to quickly begin remaking the country. Along the way, Obama and his advisers, who had campaigned against Washington's insular politics, made several missteps that undermined their message of reform and helped stoke the capital's partisan traditions.

At the core of the misjudgment were poll-driven assumptions made by the president's senior advisers, many of them schooled in politics on Capitol Hill. Several believed that a fair number of Republican lawmakers would rally behind the nation's first African American president at a time of crisis, an assessment that proved wrong when only three GOP senators supported the stimulus measure and not a single House Republican followed suit.

But Obama and his advisers corrected course quickly. Drawing conclusions from a post-mortem analysis that Emanuel conducted of the stimulus battle, senior White House advisers returned to the successful tactics of the presidential campaign, taking the president and his message beyond the Beltway and scaling back his appeals to congressional Republicans. The approach has defined the way he has governed since.

A month after he nearly lost his stimulus bill, Obama faced another critical test in Congress, this time a vote on his $3.5 trillion budget proposal. In preparation, he traveled outside Washington, appearing at town hall meetings, in prime-time news conferences and on late-night talk shows. One senior adviser said the president did not make a single call to a lawmaker seeking support for the budget blueprint, which is expected to gain final approval from Congress today.

"It's kind of like he decided 'I'm the boss,' " said Sen. Johnny Isakson (R-Ga.).

Even before taking office, Obama decided he would challenge Washington to confront all of the country's most pressing problems at the same time. He has used his first 100 days to begin marking out, through rhetoric and legislation, the way he believes Americans should receive health care, produce energy, spend and invest their money, and engage the world after a period of history during which he thinks the country veered far from its moral bearings.

His critics on the left say he has not gone far enough, whether in attempting to end the wars in Iraq and Afghanistan or on social policy.

From the right, Obama has been criticized for not scaling back his expensive domestic priorities despite a soaring national debt. His call-and-response diplomacy with Iran and Cuba, his appeal from a city square in Prague for a nuclear-free world and his prohibition of torture strike conservatives as a dangerously naive approach to a perilous world.

But few would argue that his decisions -- to withdraw combat forces in Iraq by the end of August 2010, help cash-poor mortgage holders stay in their homes and confront the legacy of harsh detainee policies -- have not changed the course of government. For the first time in five years, according to polls conducted this month, more Americans say the country is heading in the right direction than in the wrong one.

Late one evening, after a long day, one senior adviser said he joked with Obama about another president who inherited a country in dire economic straits, Franklin D. Roosevelt.

"I told him I had to give Roosevelt credit," the adviser recalled. "He waited eight years before he had his war."

This account of Obama's first 100 days draws on interviews with more than a dozen senior administration officials, Cabinet members and congressional leaders who have participated directly in the most important policy debates of this stage-setting period.

Economy in Crisis

Over several days of meetings in mid-December, the president-elect and his advisers began to fathom the depth of the troubles ahead.

In Chicago, the administration-in-waiting gathered in a conference room at the federal building, where the transition from campaign to government was underway.

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.

"As Rahm said, 'In Washington, you're either pitching balls or receiving balls. And we need to be pitching,' " Sutphen said. "We just didn't buy the notion that these things could wait."

In the days after the Jan. 20 inauguration, when Obama challenged the nation to "choose our better history," the administration confronted the challenge of new surroundings.

There were the new cellphone numbers no one else knew. E-mail accounts that had yet to function. Virtually no support staff.

An initial goal of having Congress move the stimulus bill to his desk by Inauguration Day had faded, and Obama set Feb. 16 -- Presidents' Day -- as the new deadline. As he would note in a prime-time news conference five weeks later, "Obviously, at the inauguration, I think that there was justifiable pride on the part of the country that we had taken a step to move us beyond some of the searing legacies of racial discrimination in this country.

"But," he added, "that lasted about a day."

The work began on the fly. One of several of Obama's senior advisers who served in the Clinton administration noted that amid a far milder recession, President Bill Clinton pitched a $25 billion spending bill, then cut it to $16 billion in the face of opposition to its size. "We still lost," the adviser said.

Having arrived in Washington on a promise to promote bipartisanship, Obama began holding Wednesday night cocktail parties at the White House with lawmakers, events directed informally toward winning support for his stimulus bill.

He traveled to Capitol Hill to meet with the House and Senate Republican caucuses, as well as with conservative Democrats who worried about the size of the measure.

"There was a huge outreach to congressional Republicans," said Ray LaHood, a former GOP House member from Illinois who is now Obama's transportation secretary.

Emanuel, who had chaired the Democratic Congressional Campaign Committee only months earlier, designed the legislative strategy. Phil Schiliro, a longtime Hill staff member picked to run Obama's Office of Legislative Affairs, executed it.

"This is going to be the biggest vote in a whole bunch of members' lives," Goolsbee recalled Schiliro telling the senior staff. "Some are going to be new members, and they won't have hired staff. So this is going to have a very high degree of difficulty."

Republican House leaders recall a meeting in the West Wing's Roosevelt Room days after the inauguration that, for them, set the tone for the rest of the debate.

The bill then emerging in the House, where Speaker Nancy Pelosi (D-Calif.) watched over it, had grown to $825 billion. House Minority Leader John A. Boehner (R-Ohio) and Minority Whip Eric Cantor (R-Va.) urged the president to pare it back.

Obama said he would think over their proposals, according to Republican lawmakers in the room. When Cantor pressed him to lower business-investment tax rates and reconsider the tax breaks for low-income families, Obama responded: "I won. So I think on that one, I trump you."

"There was plenty of opportunity to incorporate some of our ideas, all of our ideas," Boehner said later. Shortly after the House approved the bill along party lines, he said, "it became clear to us that they didn't want to work with us."

At the same time, one of Obama' s most important Cabinet nominees, former Senate majority leader Thomas A. Daschle (D-S.D.), nominated to run the Department of Health and Human Services and coordinate health-care reform, had run into trouble over the $128,000 in back taxes he paid days before his confirmation hearings. The president, who a day after taking office had signed an executive order to ensure a more transparent government, stuck by Daschle for five days until he withdrew his nomination under pressure on Feb. 3.

"We internally overrode our best instincts on how something would play and how people would perceive it," Axelrod said.

By then, the stimulus package had grown to nearly $900 billion. Conservative cable-news hosts carried the message daily that the bill had become the creation of the Hill's liberal Democratic leadership.

Axelrod, who is most responsible for designing the way the administration talks publicly about its agenda, said the debate had become muddled by claims of broken pledges of bipartisanship and the measure's growing cost.

"There was a sense this thing was beginning to cut against him," he said. "None of which was true. I mean, I'm looking at polling, like, all the time. There was very consistent support for him out there. But that wasn't the story here."

Beyond the Beltway

Senate Republicans and Democrats began trimming the package, which had grown to $930 billion, even as a new report showed that the economy had shed nearly 600,000 jobs in the month of Obama's inauguration.

"Everybody [in Congress] was very concerned about the optics," Axelrod recalled. "So the thing had to be under $800 billion. It did fall in the guidelines the president originally set, but it was members who insisted on a rigid number."

A few hours after the grim report was released, Obama flew to Camp David, seeking a breather from the frenzied lobbying and a first look at the presidential retreat.

On his return, Obama, after weeks of bipartisan outreach, jumped on Air Force One for town hall-style meetings in ailing Indiana and Florida. The campaign, in essence, began again.

"It was like we were living in an alternate universe in Washington," Sutphen said. "That's when we realized we had to lift this up, reconnect it to the urgency felt by everyone who didn't read Roll Call."

The calls of support began to come into congressional offices, not only from constituents but also from manufacturing groups, union members and Republican governors.

The American Recovery and Reinvestment Act won the 60 votes it needed in the Senate. Not one more.

"So you have one of the greatest legislative victories in history turned somehow into a semi-defeat," a senior administration official said. "The lesson is that we can't measure our success by how many Republican votes we get. Our approach to the budget showed that. You just don't mess around."

Changing Tone

The administration was determined not to make the same mistakes on Obama's budget proposal, a far-reaching statement of where he intends to take the country. Informed by the stimulus experience, Obama embarked from the start on an approach that largely ignored Washington.

But the administration, which had evolved from a campaign team that relied on an army of volunteers, had yet to establish a way to bring the sentiment "out there" into the halls of Congress.

"We clearly didn't have the politics right about how to deal with the outside game," said a senior administration official who previously worked on the Hill. "I think there was an assumption based on a huge electoral landslide . . . that Republicans would at least find some good politics in working with the president."

As it took office, the administration had planned to give Obama's formidable grass-roots political network what one senior adviser called "a few months off" after the grueling campaign season. David Plouffe, Obama's campaign manager and an informal White House adviser, had informed the president's senior advisers that "we had really run our people into the ground," according to one of them.

"It became very clear we couldn't do that," the senior official said of the planned rest for their troops in the field, adding that the administration began spending "way more time trying to figure the outside of it out to give us some cover" as the budget debate began.

As his administration began selling the budget, a distraction arose. The Washington Post reported on March 16 that American International Group, the insurance giant that had received $170 billion in government funding to avoid collapse, would pay out $165 million in executive bonuses.

According to a senior adviser who was in the meeting when Obama was told about the bonuses -- days before they became public -- the president responded, "You've got to be kidding."

Obama and his aides explored what could be done to block the bonus payments. But there was a difference of opinion between Obama's more politically minded advisers, who anticipated how explosive the matter could become, and his economic advisers, who believed that the administration should honor the contracts and move on.

One senior administration official said Geithner did not initially believe that the issue was serious enough for him to bring it up directly with the president.

"There's always been this sort of weird conversation back and forth between the finance guys, who come from that world," said one senior adviser involved in the first meetings. "Their thing is, 'We get all that [anger], but the fact is this is the way the system works on Wall Street.' "

In a March 18 town hall forum in Orange County, Calif., the president told an audience of unemployed teachers, labor officials, students and others that "these bonuses, as outrageous as they are, are a symptom of a much larger problem."

"And that's the system and culture that made them possible -- a culture where people made enormous sums of money, taking irresponsible risks that have now put the entire economy at risk," he said.

The West Coast trip was one of several designed for Obama to pitch his budget plan, which includes long-term funding for such top domestic priorities as expanding health-care coverage, creating a clean-energy industry and improving public education. The trip included two town hall meetings and an appearance on "The Tonight Show with Jay Leno," a venue never used before by a sitting president.

This time, Obama paid little attention to how many Republican lawmakers signed on to his budget plan, and it passed by a far larger margin than the White House anticipated.

"He changed his tone on the budget," said Isakson, the Republican senator from Georgia. "He went from being more suggestive in his tone of what he might want to do, to declaratory in terms of saying, 'This is what we are going to do, and this is why.' "

Team Obama

Another story has played out over these 100 days. An African American couple has moved two young daughters from Chicago and begun transforming a historic residence into their home.

The Obamas moved from the Hyde Park neighborhood to Washington the first week of January, earlier than most first families arrive. There was a new school for the girls to prepare for. On Jan. 5, Sasha, her hair in pigtails, and Malia, her hair in twists, said goodbye to Dad and headed from the Hay-Adams Hotel to Sidwell Friends School.

In settling in, they picked a playground set and a puppy named Bo, who two weeks ago attended a meeting of the president's senior economic advisers. Family dinners have often provided Obama an evening respite before he crosses from the East Wing to the West Wing, a border between family and work that first lady Michelle Obama is trying hard to enforce.

The Obamas have searched for a church, traveled to elementary school basketball games by motorcade and attended parent-teacher conferences for their daughters. Michelle Obama also plays a part in the West Wing -- as senior adviser for encouragement and solace. On days she identifies as particularly difficult for her husband, she will make an unannounced visit to the Oval Office.

The president also began to carve out his own routine.

An avid basketball player, Obama brought in a personal trainer from Chicago, with whom aides say he works out four times a week. He has also sought to end the eat-at-your-desk Washington culture embraced by his senior aides -- targeting their waistlines and cholesterol counts.

Obama offers the trainer to his senior advisers, too, needling Axelrod and Pete Rouse in particular to get on the treadmill. The first lady pushes the same health and nutrition ethos in the East Wing that the president does in the West.

"The president has mentioned to all of us that he knows we're under stress. He knows that we don't eat well," said Robert Gibbs, his press secretary. "If we want to use a trainer, he's got a good one."

On the morning of April 17, during the president's trip to Mexico City, Gibbs surprised the president by appearing in the gym of the InterContinental Hotel. Obama had rarely, if ever, seen his press secretary in workout gear.

"He just looked at me and said, 'This is a good thing, Gibbs,' " he recalled.

At the same time, the team in the White House has been transforming itself.

During the stimulus campaign, Obama's senior staff began to assume distinct roles in West Wing, with Emanuel, in the words of one adviser, serving as the "field general."

The spiritual center of the senior staff is the crew of campaign veterans from Chicago, namely Valerie Jarrett and Axelrod. One senior adviser, who is among a group of former Clinton administration officials, said the Chicago team "claims some ownership of the president and tries its best to keep the campaign spirit alive" in the White House.

Next to Emanuel, Axelrod has assumed the broadest portfolio, participating in the most important national security meetings, largely as an observer, and in such pivotal economic meetings as the March 26 gathering in which Obama decided to fire G. Richard Wagoner Jr., the chief executive of General Motors. "He sees his role here as implementing Obama-ism, not trying to mitigate it or moderate it for political expedience," said another senior adviser. "He believes that if the president can fulfill what he ran on, he'll be just fine politically."

Jarrett, a longtime family friend and Obama's liaison to the business world, is, in the words of another senior adviser, the president's "institutional memory." While Axelrod knows how Obama will want to talk about an issue, this adviser said, "Valerie knows how he feels about it."

Obama, a former law professor, encourages debate among his advisers, asking them to stake out opposing positions and often pushing rivals to argue their points further as he listens. He listens to everyone in the room before presenting his own view and decision.

"Then," the adviser said, "the meeting is over."

From the vantage of his inner circle, the new president has stepped into the role by projecting a sense of calm and confidence. The "no-drama Obama" campaign mantra has been adopted by Obama the president, sometimes through glimmers of humor during serious times.

While visiting Prague this month, Obama was awakened with news that North Korea had fired a long-range missile, and he joined Axelrod and Mark Lippert, the National Security Council chief of staff, in a secure room in their hotel to discuss the development. Looking at Axelrod, his hair suffering from an acute case of bedhead, and Lippert, who had thrown on a pair of shorts, Obama quipped: "I don't know which is more frightening -- your hair, Lippert's legs or this launch. I've got to think about this."

At home and abroad, Obama has used his first 100 days to signal a change from his predecessors, and he is drawing on his strength outside Washington to turn his plans into policy. But Washington, where for years parochial interests have shaped the agenda and incremental steps have marked the pace, is also working on him as he turns to the next phase of what he intends to be a transformational presidency.

"President Clinton bought into the idea very early in his administration that 'the system' could only handle one thing at a time," said a senior adviser who also worked in the last Democratic administration. "President Obama decided very early on to lay out as much as possible and move ahead. The jury is still out on whether that is going to be successful."

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