Obama’s frustration could set the tone for the remainder of his term. For all the trials of war and terrorism, the economy has come to define his presidency. During the first half of his term, he used the tools of government to shape the nation’s economy more aggressively than any president in 75 years. As the national debt rises and Republicans assume more power on Capitol Hill, it won’t be easy finding ways to juice the economy that are exciting, effective and politically viable. Every day, in briefings, in trips around the country, in letters from the public, Obama is reminded of the many people who are still hurting. And he surely knows that if he cannot figure out in the next two years how to create jobs, he may lose his own.Obama is fighting to keep Republicans, fresh from their fall electoral triumph, from reversing what he has started while prodding his own team to come up with something, anything, to put people back to work. “The president wanted to lower unemployment but didn’t see a way to get more money out of Congress,” one adviser who sat in on many such meetings told me. “He grew frustrated because the economic team didn’t have that magic combination.” Or as another adviser put it, “He was really frustrated that there weren’t solutions on the cheap.”
Obama has been casting about for ideas. He held two unpublicized meetings last month with outside economists, a group of liberals one day and a group of conservatives the next, soliciting suggestions while deflecting criticism. (He was “a bit defensive,” one participant told me.) He likewise met with labor leaders and convened a four-hour meeting with chief executives from Google, General Electric, Honeywell, Boeing and other corporations. Obama was so intent on the conversation that he canceled a lunch break and asked the executives to bring their chicken, fish and pasta back from a buffet so they could keep talking.Some of those who met with him repeated the common complaint that he has yet to articulate a coherent strategy. While the policies have been “quite good,” the “public relations and related politics have not been,” Alan Blinder, the Princeton University economist and former Federal Reserve vice chairman, told me. “One damaging result of that is the American public has little to no understanding why various things were done, why they made sense, what effect they were expected to have and did have, and instead they feel ripped off.”Douglas Holtz-Eakin, a former Congressional Budget Office director who advised John McCain during the 2008 campaign and attended another meeting with Obama last month, said the problem goes beyond public relations. “I honestly do not know where his policy rudder resides,” he told me. “I really can’t tell. What are the principles on which he operates? He’s very smart; he knows all the policy options. I just don’t know what are the criteria by which he’s picking between them.”
Obama would say his main criterion is finding what works. His approach to economic policy has been as much improvisational as ideological, a blend of Keynesian spending, business tax breaks, bank and auto bailouts, tax cuts for workers — really almost anything he thought could fix the problems. “For all the people who want to say he’s a starry-eyed radical, in fact he’s a moderate, middle-of-the-road guy,” Christina Romer, who recently left as chairwoman of the President’s Council of Economic Advisers, told me. “He worked to fix what we have, not throw it all out and start over. To the extent that he had to take emergency action, it was born of circumstances.”There is a compelling case that Obamanomics has produced results. An economy that was shrinking in size and bleeding more than 700,000 jobs a month is now growing at 2.6 percent and added 1.1 million jobs last year. The American Recovery and Reinvestment Act, known as the stimulus, produced or saved at least 1.9 million jobs and as many as 4.7 million last year, according to the Congressional Budget Office. The much-derided Troubled Asset Relief Program, or TARP, started by George W. Bush and continued by Obama, stabilized the financial sector, and the big banks have repaid the money with interest. According to a Treasury Department report sent to Congress this month, TARP will cost taxpayers $28 billion instead of the $700 billion originally set aside. The nearly $80 billion bailout of the auto industry may cost taxpayers only $15 billion, as the restructured General Motors and Chrysler come back to life with strong sales. The stock market has surged; corporate profits are setting records.All of which seems offset by one simple figure: 9.4 percent. Or perhaps two, if you add $1.3 trillion. The first, of course, is the unemployment rate, which has remained stubbornly above 9 percent for 20 straight months, the longest since the Great Depression. Counting those who are seeking full-time jobs while working part time and those who have stopped looking altogether, it’s closer to 17 percent. At the current rate, it could be 2017 before the country replaces the more than eight million jobs lost since December 2007. The second figure is this year’s federal budget deficit, which has touched off a prairie fire of public protest and emerged as the central issue of the newly installed Republican House. In a recent poll by The Times and CBS News, 82 percent of Americans rated the economy bad, and just 43 percent approved of the way Obama was handling it. “People look at the economy today, and they’re disappointed by what we’ve achieved,” Treasury Secretary Timothy Geithner told me last month. “But that just misses the fundamental reality — it could have been so much worse.” The program Obama managed to enact represented an “unbelievably heroic, implausible accomplishment,” Geithner argued, yet one that requires patience. “Even if we had a magic wand,” he said, “it was going to take a long time to dig out.”The path from crisis to anemic recovery was marked by turmoil inside the White House. The economic team fractured repeatedly over philosophy (should jobs or deficits take priority?) and personality (who got to attend which meetings?), resulting in feuds that ultimately helped break it apart. The process felt like a treadmill, as one former official put it, with proposals sometimes debated for months before decisions were reached. The word commonly used by those involved is “dysfunctional,” and in recent months, most of the initial team has left or made plans to leave, including Larry Summers, Christina Romer, Peter Orszag, Rahm Emanuel and Paul Volcker.
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