Double Down: Game Change 2012 (5 page)

THE WEAKNESS MEME

T
HE FOURSOME HIT THE LINKS
at Andrews Air Force Base, outside Washington, on Saturday morning, June 18: Obama, Biden, and a pair of Republicans from Ohio, John Boehner and the state’s new governor, John Kasich—all four clad in polo shirts, Biden and Boehner wearing shorts.

Since the midterms, Obama had been encouraged by an assortment of establishment grandees to socialize with Boehner, get to know him, establish a human connection. Invite him up to Camp David, Obama was told, or to the White House to watch a movie. You and Boehner both smoke; bring him over, then break out the butts and a bottle of nice merlot, counseled one Beltway wise man.

Daley was a big proponent of this approach. It was Politics 101. But Obama and his people had come a long way practicing Politics 2.0. That winter, when the new chief of staff had floated the Camp David plan—a weekend getaway for the congressional leadership and their spouses—Michelle’s East Wing staff shot it down: who wanted to be cooped up on a cold day in the woods with Mitch McConnell? The smoking summit was a nonstarter, too, since Obama apparently had finally quit although Daley marveled at how much Nicorette his boss chomped through every day. (
It’s embarrassing,
Daley thought, restraining himself from chastising Obama.
Hey! Enough with the fucking gum!
)

The idea of a shared golf round was more promising. At first, Obama brushed off the idea, saying, “Nah, Boehner’s too good.” But now, with the deadline on lifting the debt limit looming, Republicans seeking $2 trillion in spending cuts for raising the ceiling, and Biden leading bipartisan negotiations with the Hill that were stuck in quicksand, Obama decided the time was ripe to hit the fairway. The famously competitive president wasn’t about to lose to the speaker, though. When the Ohioans arrived at Andrews, their expectations of teaming up against the Democrats were dashed by an executive switcheroo.

“Hey, Boehner,” Obama announced, “you and I, we’re gonna take these two on.”

Obama-Boehner edged Biden-Kasich on the final green. (Boehner described the narrow victory as a whipping, while Biden moaned about his swing and Kasich informed the VP that shorts were not a good look for him.) When the group repaired to the nineteenth hole, the conversation turned to the debt ceiling. Boehner pointed out that, despite the difficulties of the Biden talks, all sides—the White House, the Republicans, and Obama’s Simpson-Bowles deficit commission—agreed in principle on the $4 trillion deficit-reduction goal. And Boehner said he still believed such a “big deal” was possible. Obama concurred and proposed that the two of them chat in more detail, one on one.

Four days later, Boehner arrived at the White House and huddled with Obama on the Truman Balcony. Achieving a big deal, the speaker said, would require entitlement reform, meaning significant cuts to Medicare and Social Security, programs that Democrats were loath to touch.

I’m open to that, Obama said. But Republicans would have to accept new tax revenues, which they’d been adamantly opposing.

We’re not raising rates, Boehner countered, but we can do broad tax reform. “If we lower all the rates, clean out the garbage in the code, you know, there could be some revenues,” he said.

Obama and Boehner circled each other warily, but with a dawning sense that they might be able to do business—that the big deal, a “grand bargain,”
was worth pursuing. They agreed to keep talking and have their staffs start consultations, all in strictest confidence.

After the meeting, Obama briefed his senior advisers. On a personal level, he liked Boehner, saw him as an old-fashioned Republican—a Kiwanis Club guy, a Rotarian. A conservative, sure, but not a nuthouse conservative, and certainly no Tea Partier. And therein lay the problem. Unlike Gingrich, who led the insurgency that seized the House in 1994, Boehner had played little part in fomenting the latest GOP revolution. Now he was coping with a caucus filled with raucous freshmen, over whom his sway was modest.

Like his boss, Plouffe was skeptical about whether Boehner could deliver. But from his place at the president’s side, with one eye trained on governing and the other on reelection, the potential benefits of a big deal were simply too great not to chase. It would be another, far more powerful, demonstration of the president’s ability to forge bipartisan consensus, as he had in the lame-duck session. And, in particular, it would help remediate the president’s weakness with independent voters, who saw him as an insuppressible spender. Just as bin Laden’s killing would make it hard for Republicans to attack Obama on national security, a grand bargain would neutralize them on the deficit. Heading into 2012, he would be clothed in a doubly dense suit of chain mail.

Not everyone in the White House was convinced that Obama would need such thick armor. In the afterglow of the OBL triumph, some had lost sight of just how dicey his reelection prospects were. Plouffe had not. In mid-June, Daley had arranged a senior staff retreat at Fort McNair, a leafy Washington Army base on the peninsula at the confluence of the Potomac and Anacostia rivers, but it was Plouffe who dominated the proceedings. In a detailed presentation, he ran through several swing states, showing how dips of only a few percentage points from 2008—in Obama’s support among independents, in turnout among young voters or African Americans—could spell defeat in 2012.

“Guys, we have no margin for error here,” Plouffe told his colleagues. What he was thinking was more pointed:
I need to scare the shit out of these people.

Obama wasn’t especially scared or even mindful of the electoral details that kept Plouffe awake at night. His focus was on the macro picture, not
the micro-politics. His main objective was to avoid a default on America’s debt, which would wreak financial havoc—and, for all its perils, a grand bargain that spread the pain around equally might actually be easier to pull off than a smaller one. It would boost business confidence, bolstering the economy. And it would put America’s fiscal house in order for a decade or more.

But while the country’s finances were his top priority, he wasn’t ignoring his campaign’s, or the epic clash of cash that the race ahead would bring. In the wake of the Supreme Court’s landmark 2010 decision in the
Citizens United
case, which allowed unlimited spending by outside groups, a raft of conservative tycoons were lining up to shell out hundreds of millions of dollars to smite him down. Obama hoped that a grand bargain might reduce their ardor, along with that of their amen corner in the broader business world. Watching the Republican presidential field take shape, he and his people saw Mitt Romney as the likeliest nominee. They took him seriously as a candidate, yet he did not make them sweat. The money, however, was another story—in more ways than one.

•   •   •

T
WENTY-SIX HOURS AFTER
Obama hosted Boehner on the Truman Balcony, the president’s motorcade deposited him at a venue that was a mite less exclusive but nearly as ornate: the restaurant Daniel, on East Sixty-fifth Street in Manhattan. Unlike the House speaker, the people in the dining room were supporters of Obama’s, the kind willing to part with $35,800—the maximum annual contribution to a presidential candidate and his party—to share his company for an hour. Yet Obama brought a certain trepidation to the fund-raiser, for the crowd mostly hailed from Wall Street, a community with whom his relationship was, to put it gently, suboptimal.

At Obama’s side was Jim Messina, his campaign manager. Messina was forty-one years old, pale-skinned, rapid-talking, and profane. As Plouffe’s deputy on the 2008 campaign, Emanuel’s in the White House, and chief of staff to Montana senator Max Baucus before those gigs, he had earned a reputation as a genially ruthless fixer—a very nice guy who would merrily club you with a truncheon if you crossed him. In 2002, while running Baucus’s reelection effort, Messina okayed a notorious ad insinuating that his
boss’s opponent was gay; in 2010, he served as Obama’s point man on the repeal of “don’t ask, don’t tell.” Messina saw no conflict between these episodes. He was all about winning.

Dispatched to Chicago in February, Messina was busy building Obama’s reelection operation into a colossus, as innovative as Google and as juggernautish as Exxon Mobil. For its headquarters he rented the sixth floor of One Prudential Plaza, a towering high-rise overlooking Lake Michigan, filling it with 160 staffers by late June. To reenlist Obama’s grassroots army from 2008, he had already opened sixty field offices in thirty-nine states and was upgrading the campaign’s high-tech tools and infrastructure for the age of Twitter, Tumblr, and Pinterest.

What Messina was doing most urgently was meeting with donors—all the time, all over the place. North of $750 million would be required to repel the coming Republican onslaught, he told anyone who would listen, although in truth his goal was more like $1 billion. (After all, Obama had rustled up $748 million the last time around.) To hit that target, Obama would need to work the circuit tirelessly for eighteen months. He would need to tap Hollywood, Silicon Valley, trial lawyers, and labor. But most of all, he would need to milk Wall Street for millions—because, to borrow from Willie Sutton, the Street was where the money was.

In 2008, Obama had done precisely that. Though the importance of the Web and small donors to the money machine that the Obamans built was often and rightly noted, the role of Gotham’s financial elite was impossible to overstate. By Election Day, three of the top seven institutions bundling donations to him were New York megabanks: Goldman Sachs, Citigroup, and JPMorgan Chase, with UBS AG and Morgan Stanley further down in the top twenty.

In the course of collecting the bankers’ checks, Obama began consulting several of them as informal advisers, notably JPMorgan CEO Jamie Dimon and UBS Americas CEO Robert Wolf. He nursed a network of hedge-fund and private-equity admirers, such as Boston Provident’s Orin Kramer, Avenue Capital’s Marc Lasry, and Third Point’s Daniel Loeb. When the lords of finance gazed at Obama, they saw a version of themselves: a product of the meritocratic elite, a self-made Ivy Leaguer, a hyper-rational sophisticate transcending the hoary dogmas and histrionics of conventional party
politics. Dimon was so smitten that he spent three days in Washington with his family during the inauguration. It all smacked of puppy love.

But once Obama took office, the romance went south fast. Like many other businessfolk, the Wall Streeters disparaged Obama’s team for lacking anyone with a meaningful background in the private sector. When Jarrett would huff, “Well, I have one,” they rolled their eyes; they considered her a political hack, ineffectual and entitled. Axelrod they saw as a combination of Trotsky and Rasputin, spouting class warfare on TV. Larry Summers and Tim Geithner they derided as gormless eggheads. “They’re smart,” remarked one hedge-fund hotshot, “but you’d never, like, let them run a business for you.”

Even more than they disdained Obama’s people, the Wall Streeters hated his policies. And not so much the Dodd-Frank reregulation as his proposals to raise taxes on “carried interest” (the main source of income for private-equity pooh-bahs) and on the sale of hedge funds. But above all, they despised what they perceived as Obama’s hostile tone: his attacks on the financiers who resisted the terms of the administration’s plan to rescue Chrysler as a “small group of speculators . . . who held out when everybody else is making sacrifices,” his inveighing on
60 Minutes
against “fat-cat bankers,” his lecturing them piously that he was “the only thing between you and the pitchforks.”

By the middle of 2010, many of Obama’s Wall Street friends were heaping scorn on him behind his back and to his face. In a letter to his investors that August, Loeb, who had raised $200,000 for Obama in 2008, accused the administration of attempting to “fracture the populace by pulling capital and power from the hands of some and putting it in the hands of others.” (A few months later, around the holidays, Loeb sent an e-mail to several other Obama bundlers that started “Dear Friends/battered wives” and suggested that the book
He’s Just Not That Into You
would make an apt stocking stuffer.) At a private White House lunch, Dimon pulled a prepared speech from his pocket and admonished Obama for undermining business confidence. Goldman Sachs CEO Lloyd Blankfein was even starchier, telling friends, “These people are like the Chicago mob.”

The Wall Streeters still loyal to Obama were concerned that all the bellowing would affect his ability to raise money among their peers. One night
in New York, after listening to Blankfein and some other bankers trashing the president, Orin Kramer ran into Obama’s lead pollster, Joel Benenson. Kramer was a storied bundler, having raised millions for Bill Clinton, Al Gore, John Kerry, and Obama. He knew the score.

“I was just with some people who have been supportive, financial types, and they sound kinda negative,” Kramer said. “Should I care?”

“No,” Benenson replied. “Money is never going to be a problem for Obama.”

Obama’s own attitude toward fund-raising struck his Wall Street supporters as equally blithe. When he wasn’t bashing them in the nose, he was giving them the back of his hand. The stories of his aloofness and inattentiveness to his donors were legion. Of the first White House Christmas party, in 2009, when Obama declined to take photos with them and their families. (“Big deal,” he said to Rouse. “They’ve all got pictures with me before.”) Of the $30,000-a-plate dinner at the Four Seasons in 2010, at which Obama, after devoting a brisk seven minutes to each table, retreated to a private room to sup with Jarrett and his body man, Reggie Love—a tale that traveled so widely it became a sort of urban legend.

What made Obama’s behavior come across all the shabbier was the unavoidable comparison with Bill Clinton, who intuitively grasped the neediness of the deep-pocketed—and fed it, massaged it, manipulated it. He listened (or pretended to). He made them feel esteemed. Anyone hosting a fund-raiser for 42 would get a personal thank-you call, a handwritten letter, a signed picture. For the eight years of Clinton, Wall Street Democrats had been solicited, served, and serviced by the master of donor maintenance. For the first two years of Obama’s reign, they got . . . squat.