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Loose Change

Inside a shaken White House.

Of all the historical analogies urged on Obama following November’s drubbing—Truman in ’48, Reagan after ’82, Clinton after ’94—the one the White House has opted for is easily the most obscure. That would be Patrick in ’10—as in Deval Patrick, the recently re-elected governor of Massachusetts. Months after Patrick signed the state’s first sales-tax hike in 33 years, political chatterers gave him little chance of surviving to a second term. Not only did he face the same foul, anti-incumbent mood that elected Scott Brown, he’d drawn an attractive GOP candidate in businessman Charlie Baker.

Patrick’s handlers recommended that he distance himself from liberals in the state legislature—and, above all, downplay the tax increase. The governor overruled them. His first commercial highlighted the “combination of deep cuts and new revenue” he’d accepted to close the state’s budget shortfall. “He all but said, ‘I raised taxes.’ Jesus Christ,” recalls one still-traumatized adviser. “He thought the way to do it was to be true to what he ran on [in 2006]”—the belief that voters will support someone who levels with them, even if they don’t love every decision. In the end, Patrick and his “politics of conviction” won by a comfortable seven-point margin.

It’s not hard to see the appeal of this narrative in Obamaland, whose principal also fancies himself a teller of hard truths. The way the president’s inner circle sees it, the re-election of Patrick—a longtime Obama pal and former client of his message guru David Axelrod and campaign manager David Plouffe—affirms the president’s bias against desperate reinventions. “[Patrick] may be a model for Obama in 2012,” says one strategist close to the White House. “Let them write you off for dead, say how stupid you are”—while you remind voters why they fell for you in the first place. So far, at least, the pundits are living up to their end of the bargain. The question is whether the president can live up to his.

By any measure, the first few weeks after the midterms were hardly encouraging. The president gave a low-energy press conference, then jetted off to Asia for ten days; the advisers he left behind seemed rootless and out of sorts. Still, as November wore on, the White House settled on the contours of a plan: Obama would refocus on reforming government and transcending partisanship—something they felt voters craved. “It was back to the first principles he stood by in the campaign,” says the strategist. This was, among other things, the impetus behind embracing a ban on congressional earmarks and freezing federal pay.

Both initiatives raised hackles among congressional Democrats and liberals, and stirred suspicions that Obama was bent on Dick Morris–style triangulation. But the charge is unfair. Obama has a longstanding appetite for good-government initiatives, dating back to his work on ethics and welfare reform in the Illinois state Senate. As a U.S. senator, he teamed up with Oklahoma conservative Tom Coburn to create an online database for earmarks. “It’s not left-right, it’s inside-outside,” says one administration official. In 2008, Obama was the vehicle for a backlash against Washington dysfunction. In 2010, the Tea Party was. The challenge Obama has set for himself is to reclaim that role.

Of course, the last two years weren’t exactly an advertisement for the tactical benefits of bipartisanship—Republicans had a huge incentive to defect, sowing frustration that hurt the governing party. But the Obama people and even many on the Hill believe the elections have altered this dynamic. “The Republicans for the first time share some responsibility for cleaning up the mess,” says Chris Van Hollen, soon to be the ranking Democrat on the House Budget Committee. It’s one reason, adds the White House–friendly strategist, that “we’re probably in a better position now than if we’d barely held control of the House.”

Nowhere is the continuity motif more evident than the president’s midcourse personnel decisions. So far, the White House has replaced its budget director, national security adviser, and Council of Economic Advisers chair with internal candidates. Legislative Director Phil Schiliro is rumored to be in line for deputy chief of staff and senior aide Stephanie Cutter is likely to shoulder some of the outgoing Axelrod’s responsibilities. Other than Larry Summers’s replacement at the National Economic Council, where the administration has hinted at a fresh face, the only real possibility for a high-profile outsider is chief of staff. Veteran Obama aide Pete Rouse—a beloved figure at the White House—is serving on an interim basis while Valerie Jarrett conducts a formal search.

Last summer, John Podesta, the Clinton ex-chief of staff who runs the influential Center for American Progress, became alarmed at the lack of pushback against the Bush tax cuts. To goad the administration into action, he organized a debate between Treasury Secretary Timothy Geithner and Douglas Holtz-Eakin, a former adviser to John McCain. Podesta’s gambit was only a partial success. Geithner, who’d previously weighed in on the issue, joined the campaign to bury the upper-income cuts when they expire in January. But, except for one forceful speech in September, the president stayed mostly on the sidelines.

The missteps that led to the likely two-year renewal of the Bush tax cuts highlight the danger in the White House’s aversion to course corrections. Obama did extract more concessions (pending congressional approval) than recently thought possible, like a one-year payroll-tax cut and a 13-month extension of unemployment benefits. These will boost the economy and help him politically. But the cost, a hundred-billion-dollar-plus gift to the rich, is tough to accept at a time when the deficit cries out for shearing and when the money would be far better spent on further stimulus.

Within the administration, the split over whether to mount a tax-cut offensive broke down largely along wonk-operative lines. The wonks spent the last year mystified that the White House was ducking the fight when the substantive merits were so one-sided. The operatives brooded that the politics could abruptly turn against them, despite polling showing little public appetite for the upper-income cuts. “They view it through the class warfare stuff—Kerry in 2004, Gore in 2000,” says one administration official. “They worry that they’ll get painted as lefties, tax-raisers.”

At key moments, including one internal discussion this spring, the political team declined to make a concerted push before Election Day. “The political people were like, ‘It’s a mess, let’s not deal with it now,’ ” says another official involved. (In fairness, the wonks were divided on policy details even as they all favored a quick resolution. A White House spokesperson says the congressional math made the discussion academic: “The Senate didn’t have the votes.”) This created the post-election predicament, in which the GOP could filibuster any less-than-complete extension, betting that the public would blame Obama if the rates reset in January. Such was the frustration among the wonks that, when asked to explain their tax-cut strategy, they’d morbidly joke that there was no strategy, just an “approach.”

The operatives were rightly put off by the cowardice of Senate Democrats. What they didn’t grasp was the structural advantage of a White House in framing a debate. The West Wing’s reluctance to exploit this advantage was a bitter irony given that polls showed Obama to be highly effective on the tax question as a candidate. “Obama thinks there are campaigns and there’s governing, and never the twain shall meet,” laments one Democratic consultant. Indeed, in his statement on the compromise, Obama seemed to relish a return to the issue in 2012.

Team Obama may also be insufficiently attentive to the left, which has erupted over the tax-cut deal. The Friday after the midterms, a senior administration official convened a meeting with representatives of several dozen prominent progressive organizations. When the meeting began at 9 a.m., the official announced the discussion would have to be quick as the White House needed the room by ten o’clock. “The White House is having a meeting with all its important allies, and the initial message is, ‘We couldn’t get a room for more than an hour,’ ” says one participant. “You’ve got to be shitting me.”

Left uncorrected, these failings could unravel Obama’s re-election chances. To be sure, his approval rating is respectable given the economic climate, while the Republican primary will eventually serve up a handy conservative foil. Still, it’s not hard to imagine a scenario in which the president staggers into 2012. The various corporate front groups—like Karl Rove’s Crossroads GPS—spent nearly $100 million on ads in the homestretch of the midterm elections. Campaign finance laws require these groups to devote at least half their money to a “primary purpose” that’s not overtly political. Which means that, by the end of their accounting year—presumably next September—they’ll have to spend an equivalent amount. What will they do with it? “If I were Karl Rove and I had $100 million at my disposal, I’d go up in twenty media markets for an entire year,” says the consultant. “Nothing that mentions Obama. Just pisses on the economy. ... Even if unemployment does get better by a point, point and a half, no one believes it.”

Unfortunately, there’s no similar effort anywhere in sight on the Democratic side. And the people tasked with running the next Obama campaign—Axelrod and deputy chief of staff Jim Messina—have their hands full with John Boehner and Mitch McConnell. If there’s something in the Deval Patrick playbook that offers guidance on this dilemma, now would be a great time to use it.

Noam Scheiber is a senior editor of The New Republic and a Schwartz Fellow at The New America Foundation.

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