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The Miseducation of the President

Ron Suskind describes a leader pulled off course by his staff. But we still don't know where Obama wants to take us.
 
 
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This story was originally published atSalon. 

 President Obama has a feisty new tone this week, offering up a deficit plan with taxes on the rich and no increase in the Medicare eligibility age (a reported feature of his failed "grand bargain" with the GOP last month). And when Republicans (and silly Dems) called his proposals "class warfare," he shot back: "This is not class warfare. It’s math."

Maybe Obama read Ron Suskind's controversial book over the weekend, and decided it was time to take control of his presidency and put it on the side of struggling Americans, rather than on the side of super-wealthy Wall Street titans who destroyed the economy, where it's been since Inauguration Day.

It's unlikely the president is finding lessons in "Confidence Men: Wall Street, Washington and the Education of a President"; the White House is pushing back, hard, on Suskind's revelations. The coverage has mostly hyped "shocking" anecdotes about an inexperienced president poorly served by scheming aides and Cabinet members who fought among themselves and frequently ignored the president's own wishes. But the question at the heart of Suskind's book is much more interesting: Who is Barack Obama, and what exactly did he want to do with his presidency?

Was he a bold visionary with big plans, who was hampered by disloyal aides and his own lack of leadership experience? Or did the many examples of underlings "slow-walking" or "relitigating" or simply ignoring the president's alleged decisions, without paying any penalty for their insubordination, reflect Obama's own lack of clarity about and commitment to his priorities and choices?

At the end of the book, the reader has to make a leap of faith -- of confidence, in fact -- about the answer to those questions. Suskind provides evidence for both views.

Bold visionary Obama periodically sides with staffers pushing big moves to break up what Suskind memorably describes as "the debt machine": the financial sector contraption that seized the American economy, almost destroyed it in 2008 and yet, tragically, still runs it in 2011. The book's good guys -- former Fed chair Paul Volcker, consumer protection visionary Elizabeth Warren, Commodity Futures Trading head Gary Gensler, Council of Economic Advisors chair Christina Romer, adviser Austan Goolsbee and the FDIC's Sheila Bair -- turn up regularly with good progressive ideas to beat back financial sector treachery that catch Obama's attention and win his backing ... for a while.

But in the end, whether it's "Volcker's Rule" keeping banks out of speculative, proprietary trading; Gensler's effort to force the trading of poorly understood derivatives on "exchanges" where their shady contents could be better examined; or Bair's push for a contingency plan to force the toxic behemoth Citibank into bankruptcy; the tough reforms never materialized. They were watered down to insignificance, or as in the case of the Citi breakup, abandoned completely.

The book's most controversial revelation, strenuously denied by the White House, is that Treasury Secretary Timothy Geithner either "slow-walked" or absolutely ignored the president's directive to come up with a plan to break up the spectacularly failing Citibank. It's become a big story, because it serves a couple of narratives: It provides Obama admirers with evidence that the president had progressive priorities and values, but his underlings thwarted them. It provides his critics (on left and right) with more fodder for the view that the president is in over his head, unready for the job we gave him.

The fact is, the material Suskind presents is inconclusive. By the president's own admission, the "instructions" to draw up a contingency plan to dismantle Citi were vague enough that his different advisors could legitimately disagree about his real intent.

When Suskind asks Obama if he was "agitated" by Geithner's failure to develop a plan for Citi, his answer is classic no-drama Obama, Zen Man:

"Agitated may be too strong a word. During this period what we are increasingly recognizing is that there are no good options."

He goes on:

"What's true is that I was often pushing hard, and the speed with which the bureaucracy could exercise my decision was slower than I wanted. But I don't think, it's not clear to me -- and I'll have to reflect on this at some point -- it's not clear to me that that was necessarily because of a management problem, as it was that this is really hard stuff."

Frankly, given Obama's answer, I'll give that one to Geithner. There's no hard evidence he ignored a firm directive from his boss -- and if he did, it obviously wasn't a big deal, because Geithner is one of the few people from the president's original economic team still employed at the White House. If the president wanted a tougher approach with Citibank, or with any other malefactor of great wealth, he'd have forced his subordinates to develop one, and fired them if they didn't.

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Whatever happened with Citibank, it's clear that at every turn, Obama made choices that protected the Wall Street status quo, and Geithner was behind every single decision. Although during the campaign Obama seemed to be closer to a group of economists Suskind labels Team A -- voices for strong action like Volcker, former Clinton Labor Secretary Robert Reich, and Clinton advisor Laura Tyson -- when it came time to staff his economic shop, he chose from Team B, most of whom had clustered around the infamous Robert Rubin, who moved from the Clinton White House to Citibank. He picked Geithner and Larry Summers precisely for their caution when it came to dramatic action regarding the banks. Obama seemed reassured by Geithner's tiresome reliance on the Hippocratic Oath, "First, do no harm."

On the Volcker team, "harming" the debt machine that destroyed the economy was precisely the point. Suskind does a magnificent job explaining the way an economy centered on debt has decimated the middle class and made the top 1 percent of Americans impossibly wealthy. The entire machinery of government, under Democrats and Republicans, has been rigged to privilege the financial sector over any other business sector for the last 30 years. Household debt, which had run between 30 and 50 percent of GDP for decades, doubled in the 2000s, to almost 100 percent of GDP. Family savings rates became "negative," meaning people used credit to spend more than they earned. Essentially, the economy now runs on the financial sector's genius in finding ways to profit by lending Americans the money they haven't received from their employers in wage increases since the 1970s.

A Wall Street lobbyist says as much to Suskind during the debate over financial regulatory reform: "Maybe we did this to ourselves, sure, but we're just responding to the way things are. We've gone 'long' on developing markets around the world, and gone 'short' on America, where the whole game is using debt to give people what they haven't been able to earn, and may never earn."

Geithner worked hard to protect the debt machine and its masters. He opposed limits on executive compensation at firms receiving TARP funds, insisted on paying AIG's debts at 100 percent (instead of a smaller sum like creditors would have had to accept in a bankruptcy proceeding), squashed a tax based on bank size (to discourage "too big to fail" titans). One prominent banker tells Suskind his colleagues expected much harsher treatment from the Obama administration in the administration of TARP and other decisions. "For Washington to not demand anything when it saved us, even stuff that we know is for our long-term good, was one of the stupidest moves in modern times ... I feel like I should go over and hug Tim. It's a shame we can't pay him, 'cause that's a guy who really earned a big-time bonus."

Suskind also spends time on the stimulus debate, where proponents of big moves likewise lost. Romer argued forcefully the stimulus should be at least $1.2 trillion, but Peter Orszag told Suskind they couldn't do anything over a trillion, out of "a concern we would look wacko lefty." Better to let the economy decline than look "wacko lefty," I guess. Larry Summers didn't even present Romer's $1.2 trillion suggestion to Obama, but she pushed for it herself in a meeting, and Obama chose to go with the pragmatists.

Some of the book's most unsettling revelations have to do with White House sexism, or maybe it's best described as "guyism," as in Obama just misses the way his guy culture leaves out women, however inadvertently. Most of the juicy stories have already been dissected -- and denied, not convincingly, by some of the women involved: Anita Dunn saying the White House would "fit all of the classic legal requirements for a genuinely hostile workplace to women”; Christina Romer complaining she was overlooked and undermined so often by Larry Summers she "felt like a piece of meat"; a "women's dinner" convened by Valerie Jarrett to allow the president to hear the complaints of his top female staff directly. (It's a little awkward to learn that Obama greeted Christina Romer, the first time they met, by declaring that monetary policy had "shot its wad.")

Most of this stuff has been known since the New York Times' Mark Leibovich revealed that the president's fondness for bonding on the basketball court and golf course was leaving female staffers on the sidelines. But Suskind offers one telling anecdote about Obama's approach to gender that's been overlooked in coverage to date. Early in the book, during a campaign strategy session on candidate Obama's economic program, he and his advisors discuss the continuing erosion of jobs and wages for low to moderately skilled male workers. The big job opportunities, one researcher explains, will be in the exploding realm of healthcare -- positions for nurses, hospital orderlies and in-home assistants to frail seniors will boom.

Obama jumps in: "Look, these are guys," he says. "A lot of them see health care, being nurse's aides, as women's work. They need to do something that fits with how they define themselves as men." Quickly the conversation turned to infrastructure: fixing the nation's crumbling roads, bridges, schools and public buildings. Men like to build, the group concludes, and infrastructure offers a campaign promise that promotes employment, improves our public roads and buildings, and makes working-class men feel better about themselves. It's a threefer, the kind of big idea Obama likes. He leaves the meeting energized. "Good meeting," he tells the guys. "Real good.

Of course, there was no big infrastructure campaign, although Obama has made a pitch for an infrastructure bank in the last year, when he'd already lost control of the economic and political narrative. I could shrug off Obama's "guyism" in that conversation about "women's work," if only he'd had the courage to follow through and push a program that would create jobs, fix what needs fixing and shore up male employment. Instead, we have unconscionably high unemployment, plus a window into the president's retro view of "men's" and "women's work."

That meeting is important for another reason. Princeton economist Alan Krueger gave a seminar on all the trends taking down the economy. He presented a graphic slide: "Growing Together (1947-1973) vs. Growing Apart (1973-2005)." I've seen the slide: It starkly depicts the American dream years, when real family income grew 3 percent a year and the big increases went to those at the bottom. After 1973, we move into the American bust years. Growth for most people slowed or declined -- except for the top 5 percent. Candidate Obama professed to understand and want to tackle that crisis head-on, with tax hikes for the wealthy, tough new reforms for Wall Street, an infrastructure crusade for unemployed and underemployed men (and, I trust, women), but he didn't do any of that. He didn't even push for it very hard.

Maybe more vexing, candidate Obama had smart early advisors who saw what was coming on Wall Street and warned him: about the derivatives disasters; the "repo books" where companies borrowed and loaned one another cash without examining the shoddy collateral put up to secure loans, which increasingly companies couldn't pay back; about the extent to which big firms like Goldman Sachs made money betting against their clients and the entire economy. You can argue that Obama became president because he spoke knowledgeably and reassuringly about the Lehman Brothers bankruptcy apocalypse in September 2008, while John McCain was still insisting "the fundamentals of our economy are strong." With his head start, Obama should have been wiser about how to get on top of the Wall Street disaster, and his early speeches were. It's also possible the intimacy that led his Wall Street friends to give him a heads up on the coming crisis also prevented him from breaking up their racket.

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Suskind frequently stops mid-narrative to grapple with the central question of his book: Was the problem mainly with Obama's staff, which can be corrected by a staff shakeup, and with the president's early inexperienced leadership, which can be ameliorated by experience? Or is there something missing in Obama himself, in his vision and values, that led to the lack of bold action to solve the nation's biggest problems? He points to a defining moment in Obama's candidacy, when he's making his final decision about whether to run for president with his closest advisors, and Michelle says:

"You need to ask yourself why you want to do this. What are you hoping to uniquely accomplish, Barack?"

Obama answers:

"The world will see us differently. Millions of kids across this country will see themselves differently."

Clearly, that was a worthy goal; electing our first black president would change -- did change -- America. But his answer didn't reveal what he would accomplish after he was elected president. Obama's appeal and his motivation were wrapped up in his story; but his story isn't a platform, an ideology or a set of policy prescriptions.

If we take Obama's answer a step beyond where Suskind leaves it, if we examine Obama's story, and look at the "American exceptionalism" that made his presidency possible, I think it also explains his worldview, and his priorities: Obama believes he is the creation of a fundamentally sound American meritocracy, which is often but not always distorted by race; where a kid whose father came from Kenya and whose mother came from Kansas, mostly raised by his grandparents in Hawaii, could get the opportunity, despite his race and his funny name, to rise and just keep rising -- Punahou Prep, Columbia University, Harvard Law School. Is this a great country, or what? It helps explain how an administration made up of Ivy League standouts, "the best and the brightest," to use David Halberstam's chilling phrase about JFK's team, updated for the 21st century, could wind up in an economic quagmire to rival the one Kennedy's men created in Vietnam.

On the question of whether the problem is with Obama's political values and priorities, or just his lack of leadership experience, Suskind doesn't seem sure himself. He closes the book with a picture of a president who's been "educated" on the ways of the White House, a picture that reassures Suskind a little. Obama cleans house after the midterm debacle, getting rid of most of his top staff, and he executes a big deal with Mitch McConnell and John Boehner to extend the Bush tax cuts, in exchange for extending unemployment insurance and a payroll tax cut, which would provide a stimulus of almost $500 billion over the next year. Suskind questions the content of the deal, but there's no doubt he sees a glimmer of hope for the young president in his bold deal-making: Finally, he wasn't paralyzed by the indecision of his staff or the carping of congressional Democrats. Indeed, Obama's approval ratings rise, briefly.

Obama explains his rationale to Suskind this way:

"What I think I was able to recognize was that, at this juncture, the country will feel better about itself and that will have important ramifications. If they see Democrats and Republicans agreeing on anything ... Because right now they are just exhausted with the partisan wars that are taking place."

Of course, that's the kind of values-neutral, content-free maneuver the president specializes in, and it doesn't offer a vision for how the country can and must change, to get out from under the debt machine and to begin to create an economy that works for everyone. It's the very attitude that led to the worst paralysis of his presidency, the debt-ceiling debacle, when Republicans held the economy hostage and Obama indulged them, for a while, hoping to reach a grand bargain that would again, he sadly believed, make the country "feel better about itself," because Washington worked, and Republicans and Democrats agreed. Even if they agreed on moves that would damage the country.

But it's possible, since the book was completed, that Obama himself learned from that disaster: The country won't feel better about itself if the president surrenders and makes bad deals; it will feel better when conditions are better, and that's going to require Obama to stand up and fight. He may finally have learned, as he's watched his approval rating decline in the nine grim months since the tax-cut deal, that the country wants results. It wants its leader to lead. That's the Obama we've had a glimpse of in the last week, as Suskind's book laid out his early mistakes. Let's hope this guy sticks around. 

Joan Walsh is Salon's editor at large. Read more of her work at Salon.
 
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