Confidence Men: Wall Street, Washington, and the Education of a President

by Ron Suskind

There are more answers of this sort going forward: clever—respectfully acknowledging opponents’ positions, even those with thin evidence behind them, that then get stitched together into some pragmatic conclusion—but hollow. With today’s Warren announcement also part of the broader counterattack on progressives’ criticisms, the president then unabashedly champions Warren, speaking as though he has named her head of the bureau. A light bit of chat about Paul McCartney and the Obama girls closes out the lengthy (hour-and-change) interview. Obama bids the visiting journalists adieu and leaves to confer with aides outside the office.

  Then suddenly he’s back, enlivened and ready to say something—as if the person the journalists had sat with for the last hour in the Oval Office was not the person he’d intended for them to meet.

  “One closing remark that I want to make: It is inexcusable for any Democrat or progressive right now to stand on the sidelines in this midterm election. There may be complaints about us not having certain things done, not fast enough, making certain legislative compromises. But right now, we’ve got a choice between a Republican Party that has moved to the right of George Bush and is looking to lock in the same policies that got us into these disasters in the first place, versus an administration that, with some admitted warts, has been the most successful administration in a generation in moving progressive agendas forward. The idea that we’ve got a lack of enthusiasm in the Democratic base, that people are sitting on their hands complaining, is just irresponsible.”

  He continues, passionate, punching the air, throwing some jabs at 527s and the Roberts Court, which had freed companies to spend at will, without disclosure, as political actors, leaving Democrats heavily outspent in the current midterm campaign. Then he brings it to a crescendo.

  “We have to get folks off the sidelines. People need to shake off this lethargy, people need to buck up. Bringing about change is hard—that’s what I said during the campaign. It has been hard, and we’ve got some lumps to show for it. But if people now want to take their ball and go home, that tells me folks weren’t serious in the first place.”

  The speech he’s referring to “during the campaign” was witnessed by only a few hundred people. It was the darkest moment of his run, in early October 2007, after an American Research Group poll put him 33 points behind Hillary Clinton, with only three months to go until the all-important Iowa Caucus. Obama gathered his National Finance Committee, the campaign’s top givers, in the auditorium of a Des Moines hotel for a do-or-die meeting. He explained to them that they were running a different kind of campaign, a genuine from-the-bottom-up, grassroots effort, that it had never been done before, not like this, and that it took time for those roots to take hold. The heavy hitters nodded: fine, they understood the concept. But it wasn’t working. The dispiriting national polls were one thing, but a recent Des Moines Register piece had Obama running third in Iowa.

  Obama listened to them air their doubts for an hour or so before responding. Then his gaze, filled with the flinty resolve of tough love, swept over the crowd.

  “Did you think I was kidding when I said this was the unlikely journey? I never said this was going to be simple or easy. You thought this would be simple? Change is never simple. Change is hard.” He dug deep, his voice dropping to a whisper. “Listen, I know you’re nervous. I understand. But if you’re nervous, I’ll hold your hand. We’re going to get through this together. I promise we will. And if we can win Iowa, we’ll win this country.” Many of those in the room, among them not a few Wall Street financiers, cheered, moisture creeping into their eyes. They opened their wallets, one last time, giving a campaign on life support a final transfusion. Of course, he did go on to win Iowa and “win this country.”

  Now Obama is in the depths again, but there’s no one’s hand to hold. No one, outside of a few people in this iconic building, understands what the past two years have held, or what they’ve revealed to this man and those gathered tightly around him.

  By being himself—an alluring and inspiring self, supremely confident yet expressing humility, speaking powerfully of grabbing history’s arc and bending it toward justice—Obama became the first black president. But more and more, walking the halls of this building, he doesn’t feel like himself—someone who could bring people together, who could map common ground and, upon it, build a future.

  Disputes among his top advisers have become so acute, so fierce, that the president has had to step in and mediate many of them himself. He’s not getting what he needs to manage this daunting job, and some advisers have become convinced that his lack of experience, especially managerial experience, may be his undoing; that, at a time of peril, the president may simply not be up to the demands of this moment. But his gratitude for those who’ve ushered him to power, and have walked with him through battle, gets in the way of tough love, at least with those closest to him. There are top aides he’s wanted to remove for months or even longer, but can’t seem to. He knows he should, that no organization can run without accountability.

  But today, as he runs between events and interviews—struggling to square the circle between pitiless reality and high ideals that, on Election Day, allowed him to claim kinship with FDR—President Obama is feeling oddly buoyant.

  In the past few days, he’s caught a break. The mayor of Chicago decided not to run for reelection. That means his chief of staff, Rahm Emanuel, will be seeking “other opportunities” and the president won’t have to worry about firing him.

  All taken care of. Emanuel will be out by month’s end to resume his political career. Many other top advisers are now planning their exits.

  After that, maybe Obama can at least attempt a fresh start, a next chapter. There’s no perch, anywhere, like the presidency, with the daily burdens of office, the weight of history—and all in a fishbowl, with the world, some of it malevolent, watching every move. Which is why a president who doesn’t feel quite like himself often portends a crisis of leadership. But change presents opportunity—always—and the ground is now shifting beneath Obama’s feet. And soon enough, the president of the United States may get a chance to resume his conversation with the men whose busts stare from the cabinet behind his favorite wing chair, looking, with icy grandeur, over his narrow shoulders.

  2

  The Warning

  Senator Barack Obama slipped out of the swelter of an unbearable Washington day—August 1, 2007, with the temperature nosing up toward a hundred degrees—and into the nondescript, six-story building a few blocks from the U.S. Capitol. This office, his campaign headquarters, abuts Armand’s Original Chicago Pizzeria, and with windows open to catch a faint breeze, the air inside smelled of baked dough and marinara.

  And a pinch of doubt. Running for president was turning out to be harder than Obama had figured, which was not to say he’d expected it to be easy. He said all the time that “change is hard” for anyone, and he included himself. But the nature of the challenges seemed to surprise him, demanding that he narrow the scope of his personality and exhibit more discipline than even he, a disciplined man, was accustomed to.

  What had become clear to those at campaign headquarters and beyond was that the senator had lost his early rhythm, his perfect pitch. This sort of thing happened; Babe Ruth led the league in strikeouts the same year he hit sixty homers. But everything had been going so well. Obama’s ascent was already one of the most astonishing in modern political history: from lowly state senator to presidential candidate in just three years.

  He had become a sensation on the power and perfect cinema of a few brilliant speeches. First, the show-stealing turn at the 2004 Democratic National Convention: “I stand here knowing that my story is part of the larger American story . . . and that, in no other country on earth is my story even possible.” Then his declaration of candidacy on a freezing February day in Lincoln’s own Springfield, Illinois: “If you sense, as I sense, that the time is now to shake off our slumber, and slough off our fear, and make good on the debt we owe past
and future generations, then I’m ready to take up the cause, and march with you, and work with you. Together, starting today, let us finish the work that needs to be done, and usher in a new birth of freedom on this earth.” Heady and stirring, with the artful finish that yoked together two of Lincoln’s most famous lines.

  But it was hard to know how even Lincoln’s rhetorical genius would have met the awesome challenge of modern politics: to explain hugely complex problems and offer first-step solutions in all of sixty seconds. Hillary Clinton could do it just like Lincoln split wood: steady and true, swing by swing, as the clock ticked—fifty-four seconds . . . fifty-five . . . fifty-six—her final summarizing sentence would hit its period and leave her three seconds to step back and consider what she had said, as though it had all just dawned on her. Obama watched her, on stage after stage, suppressing his amazement. He found the demands confounding and unreasonable, and he responded with a professorial mien, oddly uncertain, offering what felt like introductions to dissertations never to be completed.

  The prepared speech, meticulously crafted and delivered, was his forte. So that very August morning, he led with his strength—a finely wrought policy address to highlight his one major difference with Clinton and most of the Democratic field: early opposition to the Iraq War. The contours of the current foreign policy debate turned out to have been mapped back in October 2002, when members of Congress, among them Clinton, authorized the invasion of Iraq. The then-unknown Illinois state senator spoke out against the decision at the Federal Plaza in Chicago. Little noted at the time, Obama’s speech was cited exhaustively through the first seven months of his presidential campaign, particularly its Lincolnesque finish: “We ought not, we will not, travel down that hellish path blindly. Nor should we allow those who would march off and pay the ultimate sacrifice, who would prove the full measure of devotion with their blood, to make such an awful sacrifice in vain.” To summon the dreadnought term “in vain,” even as the country marched to war back in 2002, was indeed audacious. Hoping to make the leap from debating highway bonds in Springfield to debating the country’s future at the heart of the national fray, Obama astutely noted that the deaths in wars of necessity were materially different from those in wars of choice, and that the latter carried a distinct and dangerous moral liability.

  While the country had moved in Obama’s direction, granting him precious political capital, to be president he would have to go beyond a simple antiwar stance to paint his own compelling picture of “America in the world.” Hence the morning’s address, given at Washington’s Woodrow Wilson Center, covering everything from “getting out of Iraq and onto the right battlefield in Afghanistan and Pakistan” to “restoring our values and securing a more resilient homeland.” The speech was tough, hawkish even, and doubled down on his offhand comment from a month back—criticized by Clinton as naïve—that he would reverse Bush’s policy of refusing to negotiate with rogue states, including Iran. “Presidents,” he said, “can’t only meet with people who will tell them what they want to hear. President Kennedy said it best: ‘Let us never negotiate out of fear, but let us never fear to negotiate.’ ”

  An audience of former national security officials and veteran reporters, definers of the conventional wisdom, responded that he was no Jack Kennedy. They swiftly connected his speech’s opening statement of support for a Wilson Center scholar imprisoned by the Iranians with its summation that “Iran presents the broadest strategic challenge to the United States in the Middle East in a generation.” By early afternoon, online and cable news pundits were saying that Obama was now openly threatening the Iranians.

  “Did I say I was going to bomb Iran? Did you hear me say that?” Obama groused into the speakerphone, as he settled into the second-floor conference room at campaign headquarters.

  “No, Barack,” said the crackling voice of Dan Tarullo, a top Treasury official under President Clinton, now advising Obama on the economy. “I definitely didn’t hear you say that—or anything like it.”

  Obama exhaled in frustration, drawing sympathetic nods from a group of economists gathered around the conference room table. It was two o’clock and they had booked the room for the next two hours, an eternity in the minute-by-minute scheduling of a campaign. Even before the lukewarm response to that morning’s speech, the reason for today’s meeting was clear: attention-grabbing domestic policies looked like the only way his campaign was going to generate forward motion. Obama needed some—and fast. An NBC News/Wall Street Journal poll released the day before showed Hillary Clinton with a 21-point lead.

  Obama grabbed a water bottle, nodded to his economic team leader, Austan Goolsbee, and settled into that mindful, Zen hyper-focus that had, since his law school days, impressed just about everyone who saw it.

  Goolsbee opened the meeting by running through a few top items—relations with China, capital gains taxes—then guided the discussion over to free trade. There was no real sense of urgency to any of this, however, and for seemingly good reason. GDP growth was still strong, unemployment was at 4.7 percent, and inflation was low. With the Fed keeping interest rates low, credit continued to flow so cheaply that few could refuse borrowing. Goolsbee took advantage of a small lull in the conversation to introduce a newcomer to the group.

  Alan Krueger—at that point a top economic adviser to Hillary Clinton—was doing a bit of candidate shopping today. The value of the Princeton professor, to any candidate, was not only his contacts but his ecumenical appeal at having managed to retain the respect of both warring kingdoms of economics: the rationalists, with their abiding faith in the profitable mathematics of market efficiency, upon which much of the financial and political realms still relied; and the behaviorists, led by Krueger’s Princeton friend Daniel Kahneman, who’d teased out the subtle biases that impel seemingly sensible actors to act against their best long-term interests. The latter group was clearly on the rise.

  Krueger broke out a set of packets from his briefcase that showed why. The country, relying ever more singly across three decades on unregulated markets and the “wisdom of crowds”—of each rational economic actor, from steelworker to housewife to CEO, acting in his or her own best interest—was displaying dangerous imbalances. Certain groups were racing forward, increasing their lead. Many others, falling farther and farther behind. There were countless debates about whether the economy was in a postindustrial transition that revealed the lights of Joseph Schumpeter’s “creative destruction,” soon to yield more robust and widely distributed prosperity, or of simply destruction that increasingly profited those who were already ahead, as in a marathon where only the leaders got to grab cups at the water table.

  Krueger passed around copies—eighteen slides, each a chart of blazing, graphed insight. Taken together, the charts dug beneath the standard confidence-affirming economic indicators to reveal underlying fragility in the U.S. economy.

  The first chart, “Growing Together (1947–1973) vs. Growing Apart (1973–2005),” might have been called “A Crisis of the American Dream.” It showed the glory days, those first twenty-five years after World War II, when real income for all families grew at nearly 3 percent a year and the highest increases flowed to those at the bottom, in greatest need. Since 1973, the chart showed, income growth had been negligible, less than 1 percent annually, for four-fifths of all families. The top 5 percent of the country had done very well, with family income rising about 2 percent a year, but real hourly wages had fallen for almost everyone else, failing even to keep pace with inflation.

  Other charts looked at the fortunes of specific demographic groups, showing their earnings increasingly driven by educational attainment, a strengthening area for women. Men, on the other hand, had seen a dramatic downdraft in almost every measurement since 1983, including a startling decline in job stability for all age groups.

  Krueger put it to Obama bluntly. The American workforce was on an unsustainable course: overworked, heavily stressed, inadequately insured against rising
health costs, and moving more deeply into debt each year. Other economists at the table jumped in to say that household debt, commonly between 30 and 50 percent of GDP, had more than doubled since 2000, to almost 100 percent of GDP. Savings rates, usually around 10 percent of income, were now negative. Like a car with rusted axles, the group agreed, the American worker needed to hit just one deep pothole—a big medical bill, a broken furnace, a salary cut, a lost job—and the wheels would come off.

  “And the weakest link in this chain is the country’s male workforce,” Krueger added, explaining that men had been steadily dropping out of the labor market since the early 1990s. The losses had been stanched and obscured in part by the housing boom, which had brought with it plenty of construction jobs.

  Obama turned to Goolsbee.

  “But aren’t we already seeing excess capacity in housing?” he asked. “Aren’t values starting to plateau?”

  Then everyone at the table had something to say. Talk about housing values will do that. The presumption still existed that real estate prices were special, defying basic laws of economic gravity, but this view had begun to erode. Federal Reserve chairman Ben Bernanke had claimed a few weeks before that losses resulting from the subprime mortgage mess would not exceed $100 billion, about one-third the size of the 1990s savings-and-loan crisis, and spoke of how the Fed’s two-decade, liquidity-above-all policy would keep credit flowing and continue to buoy residential and commercial building, at least for now.

  Obama took a swig from his water bottle and sat up, ramrod straight. “Okay, in year two of my administration, when the housing bubble finally bursts, I come to you guys as my economic advisers and say, ‘What do we do!’ Well, what do we do?”

  Feeling suddenly like advisers to the president, the group burst into a debate about where ten million low- to moderately skilled male workers might go. Obama mentioned his energy policy, the current core of his domestic platform.