The Center Holds: Obama and His Enemies Page 4

  But this left a lot of innocent homeowners in the lurch. Obama’s new programs to address the issue, the Home Affordable Modification Program and the Home Affordable Refinance Program (HAMP and HARP), helped only about a million homeowners, less than one-tenth of the total who were in trouble. Without the stick wielded by bankruptcy judges—a stick withheld when the Senate rejected so-called cramdown measures in 2009—the banks simply dragged their feet on renegotiating mortgages, neglecting or even abusing thousands of homeowners with good credit histories. Obama called many White House meetings on housing and posed barbed questions. “What does it take to actually get a loan modified?” he’d ask with great frustration in his voice. He immersed himself in the details, pushing for steeper discounts in HARP loans and adjustments in the incentives offered loan servicers. But every action entailed a complex trade-off. The president had to settle for merely nicking the problem.

  The Santelli outburst and general fatigue with bailouts would have major downstream consequences. Had Obama borrowed more from Roosevelt and fashioned a successful housing program in 2009 or 2010, the economy would likely have revived faster. That, in turn, might have forestalled the Republican takeover of the House and all that followed.

  THE TEA PARTY was a grassroots organization, but it wouldn’t have amounted to much without lots of money behind it. While Democrats kept pace for most of the 2010 midterms, they were outspent down the stretch thanks to an explosion of new contributions from outside the campaigns themselves. Much of this new spending was the product of the Supreme Court’s decision in the case of Citizens United v. Federal Election Commission, announced on January 21, 2010. Citizens United promised to be one of those rare cases, like Dred Scott (1857), Plessy v. Ferguson (1896), and Roe v. Wade (1973), that left a legacy of bitterness. In upholding the right of a nonprofit group called Citizens United to air a film critical of Hillary Clinton during the 2008 election, the Court invalidated much of the 2002 campaign finance reform bill known as McCain-Feingold. This opened the door to unlimited corporate and union money in campaigns.

  As it happened, such contributions from corporations and unions didn’t grow much after the decision. Publicly traded corporations were worried about a backlash from customers if they grew too partisan, and unions had long figured out how to use their diminishing muscle in politics. It was the so-called IE—independent expenditure—efforts, which were allowed long before Citizens United, that grew hugely in 2010, especially on the Republican side. The publicity from the case, generated largely by liberals, had the ironic effect of energizing already legal super PACs that included not just the Kochs’ Americans for Prosperity and FreedomWorks (which underwrote Glenn Beck rallies in addition to Tea Party events) but Restore our Future (Mitt Romney’s super PAC), the Club for Growth, the Faith and Freedom Coalition (the successor to the Christian Coalition), the Chamber of Commerce (which pu rape and incest. vmped $75 million into congressional races), and the National Rifle Association, among others.

  Republican-affiliated organizations kicked in around a half-billion dollars to the 2010 campaign on behalf of Republicans, more than twice what Democratic unions and other progressive groups spent. In off-year elections, to which few people pay much attention, this money made the difference in race after race, especially as young people, blacks, Latinos, and others who voted in 2008 stayed home. Super PAC ads charging Obamacare with taking “$500 billion from Medicare” were especially effective, even if they weren’t, strictly speaking, true. (Obamacare cut nothing from Medicare benefits, only from bloated reimbursements to providers.)

  A shadowy group called 60 Plus, which billed itself as a conservative rival to the American Association of Retired Persons, suddenly became a potent force. After AARP supported Obamacare, 60 Plus, whose donors are largely unidentified, shouted betrayal and poured tens of millions into ads in 2010 featuring the retired singer Pat Boone, who claimed that Obamacare cut Medicare. The subtext of Boone’s message to seniors wasn’t hard to figure out: Obama planned to take away their medical coverage and peace of mind and give the payroll tax money they had paid into the system during their working lives to poor uninsured blacks.

  Seniors were the only age cohort to favor McCain in 2008, and they usually turned out heavily, especially in midterms. Many had grown so accustomed to government programs that they didn’t recognize them as such. The cognitive dissonance imperiling Democrats was neatly summarized by a South Carolina man at a town meeting during the 2009 health care debate. “Keep the government’s hands off my Medicare!” he told his congressman. When they weren’t slamming Obama for his failures on the economy, Republican IE ads in 2010 were largely devoted to exploiting that confusion.

  The most powerful of the IEs was a newcomer in 2010, American Crossroads, which was founded by Karl Rove, known for the past decade as “Bush’s brain”; Ed Gillespie, a savvy lobbyist and former chair of the Republican National Committee; and Steven Law, a former top aide to Mitch McConnell. Impressed by the success in the 2006 cycle of a liberal consortium called Americans Coming Together, MoveOn.org, and of course the 2008 Obama campaign, they aimed to convince donors they would spend money wisely. The Virginia offices were stripped down, with no art or even plants. Rove, who earned his income from fat lecture fees and TV gigs, insisted he was “a volunteer” who didn’t see a dime from his political activity, which may have been strictly true but didn’t account for the large travel, scheduling, and research expenses that Crossroads picked up. All told, Crossroads spent more than $70 million in 2010, an amount that would look like a pittance when compared to 2012.

  Crossroads boasted both a super PAC that gave directly to campaigns, and a C-4—short for section 501(c)4 of the tax code—called Crossroads GPS that didn’t expressly advocate for candidates but told the government in filings that it was simply engaged in “social advocacy.” This offered a legal fig leaf that allowed donors to remain anonymous, though of course the ads made by Crossroads GPS and other “dark money” C-4s in both parties weren’t subtle; in 2010 they were usually the most vicious of an already virulent strain of ads, launched under the cover of darkness. To the problem of unlimited contributions—a lava of cash cascading into the process—dark money added a new threat to democracy: a complete lack of transparency and accountability.

  deficit reduction and, The power of super PACs extended down to the state level. When Gillespie wasn’t busy at American Crossroads, he chaired a little-known organization called the Republican State Leadership Committee. Backed by Walmart and the tobacco companies, among other corporate interests, Gillespie’s super PAC pumped more than $40 million into key state legislative races in 2010 with the intention of bolstering Republicans who could gerrymander new GOP congressional districts. That was enough for an extra $50,000 or even $100,000 per state legislative campaign, which went a long way in most districts. Gillespie told donors that investing $5 million in 2010 was the equivalent of $25 million in 2012 in terms of electing Republicans and changing the country’s electoral map.

  IF THE TEA PARTY’S emergence had coincided with a strong recovery, it would have remained a mere historical footnote, no matter how well-funded. But the nostalgic conservative appeals fell on the soil of economic discontent. Americans wanted jobs, and they told pollsters they would demand a president who shared that single-minded focus.

  The origins of the president’s political problems lay in his failure to show voters that he was relentlessly focused on the same things they were. Such relentlessness had not been as necessary back in 2009, when the Recovery Act was new and the government was waiting for it to kick in. In that sense, the “opportunity costs” (economist-talk for consequences) of obsessing over health care for a year were negligible because there was no appetite for another stimulus so soon. It wasn’t as if Congress was distracted from jobs while arguing about things like health insurance regulation and preexisting conditions.

  But 2010 was a different story. When the Affordable Care Act became law in Ma
rch 2010, the president failed to pivot immediately to a jobs agenda. Had the infrastructure proposals he included in the American Jobs Act in September 2011—when Republicans controlled the House—been rushed through the Democratic Congress in 2010, the president would have laid a more solid foundation for recovery. Instead he waited nearly eighteen months from the signing of health care reform to the introduction of his jobs package. This made him seem detached from what Americans considered Job One.

  The White House offered plenty of excuses for failing to execute this pivot, some more convincing than others. From April 20, 2010, when BP’s Deepwater Horizon drilling rig exploded in the Gulf of Mexico, to July 15, when the well was finally capped, the president and his team worked endless hours confronting a crisis that would soon be forgotten. Every time they tried to talk about anything else, critics, including Democrats like Louisianan James Carville, hammered them publicly. So it wasn’t until midsummer that Obama could even talk about jobs, much less go out campaigning for Democrats.

  White House officials said later that polls showed the public already had a bellyful of government programs. It wasn’t just bank bailouts that stuck in the craw. The bailouts of Chrysler and General Motors were unpopular even in Michigan and Ohio, mostly because they hadn’t worked yet. The Democratic Congress had no appetite for more stimulus, and the White House policy shop wasn’t producing ideas for job creation. It didn’t help that their hopes for economic improvement over the summer were short-circuited by the Japanese tsunami and the collapse of the Greek economy, both of which af him across the finish lineMPafected global markets more seriously than many realized at the time.

  The president was torn over what tone to strike. While he campaigned hard against Republicans through the latter part of 2010, he continued to cling to a notion of bipartisanship that made him look out of touch. He stuck with it under the old Chicago political tradition “You dance with the one who brung ya.” Since his 2004 Democratic National Convention speech, which made him a national figure, he had preached a politics that moved beyond red and blue, and he felt it would have betrayed his entire political identity to give up on that message. At a minimum, he had to be seen by the public as at least trying to be bipartisan. Or so they thought in the White House.

  Bill Clinton felt strongly that Democrats should develop a national campaign in 2010 to combat the Tea Party. It wasn’t enough for every member of Congress to run his or her own campaign without being in harness to a national message. He called Joe Biden, who agreed, and they worked on a one-page Democratic agenda, loosely based on the “Contract with America” that Gingrich’s Republicans had used so successfully to take control of Congress in 1994. But after a couple of good conversations with Biden, Clinton heard nothing from the president, who had apparently decided that he didn’t need Clinton’s advice. In early August 2010 he assembled his political team for the first big meeting on politics since just after Obamacare became law in March. He started the meeting by saying, according to contemporaneous notes, “For the last 20 months I have not been political, not played politics. I’ve got three months before the election. What do I have to do? What’s the best use of my time?” This was late in the game to be starting from scratch.

  His advisers talked about how to motivate the base for the midterms, especially middle-age suburban voters, whose support for Obama was slipping in their internal polls. They disagreed on basic strategy, in part because the policy team was split over whether to let the Bush tax cuts expire. The research showed that voters were sophisticated enough to know that no one man could fix all the problems. But voters complained of a power grab from Washington and linked their economic condition to the deficit; rightly or wrongly, they thought it was an obstacle to creating jobs. How to deal with that? No consensus emerged.

  It was likely too late anyway. Three months wasn’t enough time to construct a strategy to overcome what they already knew was a strong Republican tide, though Clinton’s ideas for nationalizing the midterms would likely have helped.

  TEA PARTY ACTIVISTS did more than grab the attention of the media and generate volunteers for rejuvenating the GOP. They disrupted Obama’s strategy for the early part of his presidency. The president and his people were operating under the long-standing assumption that success built on success, that health care would create momentum for a new clean energy policy, which would enhance the prospects of financial reform, which in turn would make immigration reform easier. When Rahm Emanuel was named chief of staff just after the 2008 election, he told the president it would work that way on the Hill. He was wrong. Each issue had its unique complexities unrelated to what came before. And each was vulnerable to a right-wing attack given extra juice by the Tea Party.

  But none of this explains why the president went into the 2010 midterms without a bold and clear jobs Attorney General Eric Holders small agenda to help minimize the expected losses. In retrospect, Democrats should have used their strong control of the House and sixty-vote filibuster-proof Senate to take out insurance on the stimulus—to pass a bill saying that if unemployment didn’t come down by a certain amount, more stimulus (in the form of spending on infrastructure and other spending on jobs) would automatically take effect. Larry Summers kept pointing out that future Congresses could not be bound by these actions, but they were worth trying anyway.

  Peter Orszag, the president’s first budget director, was a deficit hawk, and Jared Bernstein, the vice president’s top economic adviser, was a progressive. Despite their philosophical differences, they agreed that not buying such insurance against a downturn was the major mistake of Obama’s first two years. Had he thought it through more deeply, Obama could have told the country that full recovery would take five years and then introduced a multistage stimulus linked to the unemployment rate and matched by long-term deficit reduction, effective after the crisis passed. With the markets reassured by deficit-reduction commitments (as they had been, to great effect, in the Clinton era), the recovery would likely have been stronger.

  But instead of buying such insurance, Obama bought into Summers’s bet that the economy would come back fairly quickly. This led to rationalizations and “punting on housing,” as Orszag put it, under the assumption that the economy would bounce back faster than it did. In fact housing cratered.

  The internal debates in 2009 featured a sharp clash between V-shape economists and L-shape economists. The V guys thought the economy would plummet, then shoot back up; the L guys thought the line on the graph would drop sharply, then flatten out without rising much for years. The White House, Federal Reserve, and Congressional Budget Office economists were Vs, while the Nobelists Joseph Stiglitz and Paul Krugman were Ls, with an important assist from Kenneth Rogoff and Carmen Reinhart, whose 2009 book, This Time Is Different: Eight Centuries of Financial Folly, demonstrated conclusively that recessions originating in the financial sector always take several years to recover from.

  “V” was for Victory for Barack Obama in 2012, an economic result that could lead to a landslide reelection like Reagan’s in 1984. “L” meant a long, lethargic lapse into a Lost Decade like that of Japan and certain defeat at the polls. As it turned out, the recovery over the next three years was somewhere between the two, an unreliable “U,” with all that implied for the president’s political fortunes.

  3

  Obama Derangement Syndrome

  On November 22, 1963, President John F. Kennedy’s motorcade in Dallas was headed for the Trade Mart, where the president was scheduled to give a luncheon address. Kennedy didn’t live to deliver the speech, but the text suggests that he had become preoccupied with the rise of right-wing conservatism. He planned to assail “voices preaching doctrines wholly unrelated to reality, wholly unsuited to the Sixties, doctrines which apparently assume that . . . vituperation is as good as victory.”

  The forces arrayed against Barack Obama a half-century later were interested in vituperation and victory. Their aim was not just to fling invective but to block
everything the president stood for and eventually drive him from office. These goals were shared by all of the GOP, but the fringe elements within the party, the ones often described even by some other Republicans as “wing nuts” or “crazies,” had more power in 2011 and 2012 than ever before. Their outlandish views were once articulated mostly by crackpot writers and perennial also-rans and relegated to pamphlets full of exclamation points published in Kennedy’s day by the extremist members of the John Birch Society, a far-right organization that was denounced by mainstream Republicans like William F. Buckley. Now the John Birch Society, though much reduced in influence, was a cosponsor of the 2011 Conservative Political Action Convention (CPAC), a mini–GOP convention attended by all of the Republican presidential candidates. And the smears were often part of that mainstream, regurgitated by members of Congress and titans of industry and always welcome at the top-rated cable news network.

  During the Bush administration, left-wing critics were sometimes described as suffering from Bush Derangement Syndrome. A few demented individuals, described as “truthers,” even convinced themselves that Bush had known in advance about the attacks of 9/11. But the number of blogs, tweets, and books devoted to “birthers”—those who believed Obama wasn’t born in the United States—far exceeded anything on the left. And the left-wing conspiracy theories around 9/11 never went anywhere in Congress or the media or among major constituencies of the Democratic Party. Birtherism, by contrast, was a staple of talk radio, cable TV, and even the once-august Sunday shows. The depiction of the president as a dangerous interloper could be heard almost anywhere Republicans gathered.