Confidence Men Part 22

The ebullience he'd felt, hugging Romer and rus.h.i.+ng off to Allentown in early December to tell that hard-hit city the economy had "turned the corner," was being thoroughly mocked by a new set of numbers released this morning, January 8.

Joblessness rose by eighty-five thousand in December. November was an anomaly. Mark Zandi, Moody's sober economist-trusted by both left and right-said he expected unemployment to rise from its current 10 percent to nearly 11 percent in 2010. He pointed out that, adding in those who'd dropped out of the workforce or were underemployed, the current rate was 17.8 percent. Even Zandi, a deficit hawk, was recommending an additional $125 billion in stimulus.

At the noon press briefing, ABC's White House correspondent Jake Tapper, citing the job numbers and new fears by both Stiglitz and Krugman that "the economy is going to contract," tried to get Gibbs to reveal some change in Obama's view from a month ago.

Gibbs would offer none: "He's not an economic prognosticator," he shot back testily. "The president is concerned about the economy, concerned about the stories of people hurting that he has heard for many, many years, and is working to do all that we can to create an environment for businesses, small and large, to hire more people."

Those listening from inside the White House couldn't help but sigh. They were doing little about joblessness, and everybody knew it. Summers's acknowledgment of Krueger's data a month earlier had simply yielded a next subject for debate: how to structure an employer tax credit so it wouldn't simply reward employers for something they were already going to do. The debates inside of the economic team continued to rage, with Summers standing in the way of almost any proposed stimulus. His underlying position, largely unchanged since the previous summer, was that nothing would be effective if there were not a rise in demand, something the government had little role in effecting, short of another major stimulus package, which Congress wouldn't approve-and around it went.

The president listened, engaged, but wouldn't make a decision. He was still looking for consensus. None was forthcoming.

On the jobs front alone, it had been going on for nearly three months, one "relitigation" after another. By mid-December, Anita Dunn had gone to Pete Rouse and Valerie Jarrett and said someone needed to take control of the economic team, saying that "it's in crisis-it can't go on like this."

By early January she had returned to her job running a political consulting/media firm. She was happy to leave the white building. Of course, she retained enormous affection for Obama, but was dispirited-as so many were-with the shattered, haphazard process of decision making and wildly uneven execution. It was chaos. The situation with the women, for one, hadn't improved. The women's group still met. They'd had their moment with the president and, all together, had made their appeal for action. Several of those at the meeting left feeling unrequited, that the president, with so much on his plate, would not do much more than express attentiveness to the problem. This, to be sure, was the sort of problem that chiefs of staff were generally left to handle. In this case, the chief of staff was at the center of the problem.

But, of course, as the women had stressed at their dinner, the president was responsible. Each president is responsible, after all, for the White House he builds and leads. If there was, in fact, a single operational victory in this period, it involved secrecy: the strife inside the White House was largely kept from public view. Rather than the Cheney-driven secrecy models of the Bush days-where cell phones were White Houseissue and where problematic phone numbers, such as those of major newspapers, were regularly searched through shadow directories-the Obama secrecy was born of old-fas.h.i.+oned loyalty. With a few exceptions, it didn't need to be enforced. There was an enveloping adoration of him, still, in the White House, which, month by month, hardened into protectiveness, especially among senior aides who were privy to regular contact. He was indisputably bright and eager; his casual manner, walking through the building, ducking into offices, to get out of what he called his "gilded cage" of the Oval Office, made staffers feel like he never looked down on them. His easy smile and demonstrable charm, even if it came only in brief gusts before he'd settle into his Zen mode, to get down to business, was sometimes forced, but he got an A for effort. What happened on Pennsylvania Avenue stayed on Pennsylvania Avenue. The dozen or so people who'd attended each day's key meeting, the morning economic briefing, would tell stories to anyone who'd listen, and there were plenty: about Obama's brilliance, his strokes of stunning insight, conceptually st.i.tching together cloud formations, or mapping a horizon line. But then, some would comment, there'd be a drift or loss of interest in how an idea would or wouldn't "score" with CBO, or in how to execute it or push it through Congress, or in where an accepted initiative from weeks ago now stood. Meanwhile, within this privileged group, there were whispers and fears, and the kind of growing doubts that continued to undermine Obama's authority.

Of course, Orszag wasn't the only one who heard Summers repeat his "home alone" riff. Others did, too. They'd roll their eyes and look away.

More difficult was what each of them saw in the morning meetings. "Larry would say [to Obama], 'I'll make my argument first; you can go after me,' " Peter Orszag remembered, in a comment echoed by others. "I'm thinking, 'I can't believe he's talking to the president that way.' I don't know why Obama didn't say, 'I made that decision a week ago. Just do what I say.' "

But he didn't. And, over time, some of Obama's more admirable features, his joy of inquiry, his impulse to reach just a bit beyond his grasp, started to get planed down. He was making fewer decisions, and almost none where he couldn't manage to tease some supporting consensus from his senior staff.

At a meeting in January, during one of a dozen arguments over a somewhat confused proposal by Gene Sperling about a small business lending program, Obama, in a voice that was softly dispirited, said, "Well, if you guys can't agree, I mean, we don't have to do it."

Meanwhile, his administration was looking ever more confused and ineffectual. Neither the political nor the policy arm was working effectively, and the two clearly weren't working in any meaningful concert.

The major event scheduled for January 8-cited several times by Gibbs at the noon press briefing-was the granting of $2.3 billion in tax credits to companies involved in high-tech clean-energy manufacturing.

At 3:00 p.m., flanked by Vice President Biden, Tim Geithner, and Steven Chu, the n.o.bel Prizewinning secretary of energy, the president stepped to the lectern in the East Room to say, portentously, that "building a robust clean energy sector is how we will create the jobs of the future." He went on like that for a bit, as did other officials, talking about the makers of solar panels and wind turbines-143 firms in all-and how they'd form foundations of job growth for the twenty-first century. It was admirable and forward thinking, a bookend to an event in late October where he announced the compet.i.tion for the grants at a solar panel farm in Arcadia, Florida.

But building capacity for some far-off future was the last thing anyone wanted to hear about. During a brief press availability following his prepared remarks, Obama acknowledged the deflating jobs numbers. They "are a reminder that the road to recovery is never straight," he said soberly. "We have to continue to explore every avenue to accelerate the return to hiring."

Geithner, in his statement, pointed out that the tax credits were expected to draw a match of $5.5 billion in private-sector investments, for a total of $7.7 billion, and eventually create more than seventeen thousand jobs. But the fine points of the program indicated that only a third of the credits were slated to create jobs by the end of the year, which would bring the total to just shy of six thousand jobs in 2010.

Nearly two years before, Goolsbee had told Obama, then an underdog candidate, that hiring from a clean-energy initiative would be modest. But now the White House was offering official p.r.o.nouncements and fanfare, presenting the president and his top officials, for six thousand jobs? The economy had lost seven million jobs in the last two years of recession; economists agreed that unless it added a hundred thousand a month, the unemployment rate wouldn't budge. In the scheme of things, the clean-energy grants-which some inside the White House were already dubbing the "science fair"-were a rounding error. They fit into a broader category of programs that flowed from Obama's famous line, during the campaign and since, that the hardest thing in Was.h.i.+ngton was "to solve tomorrow's problems with today's dollars." Trenchant and true. But over the first year, it yielded an array of what were commonly referred to in the White House as "S and S" programs, for "somehow, some way."

Which was the unintended point being made today in the East Room: the president was occupied with S and S programs, which would not bear fruit for years, while the economy listed forward, with the highest levels of unemployment since the Great Depression.

The most sweeping of those "somehow, some way" programs was, of course, health care. In any version of reform now being contemplated, significant reforms wouldn't take hold until 2014. Not that, after a year of presidential engagement, anyone could actually claim a specific, hard-edged proposal from the White House. Emanuel's initial, and understandable, fear that an articulated health care plan from the White House would open up Obama to a flurry of slings and arrows, as Clinton's thousand-page proposal had in 1993, never really evolved with changing circ.u.mstances. Now it was January-nearly a year after he had taken the oath-and Obama was still engaged in the act of earnest brokering between warring houses of Congress.

Which is what would now thoroughly occupy the president's January schedule, even more than it had, month to month, over the past year. After the press conference on the future of clean energy, Obama picked up briefing materials for a quiet weekend in the White House. On Monday he would begin a bout of negotiations to try to reconcile the bills that the House and Senate had finally pa.s.sed on health care reform, the latter having pa.s.sed just before Christmas.

The Senate bill was funded largely by a tax on the so-called Cadillac coverage insurance, which was just about the only life feature shared by high-income individuals and some of the more privileged industrial workers. In bitter labor negotiations across decades, the strong coverage was often a replacement for wage increases, and union leaders were flying to Was.h.i.+ngton to meet with the president on Monday to lodge protest as a start to the reconciliation efforts between the two bills.

But the White House's internal poll numbers from the previous fall showed something surprising: the drop in the president's approval ratings over the summer was not significantly due to the "death panel" attacks. It was primarily because he'd allowed the congressional wrangling over the shape of health care reform-and especially the widely covered "sausage making" deliberations under the auspices of Max Baucus-to limp forward through the summer and fall.

Of course, the bickering continued through the winter and had now officially migrated down Pennsylvania Avenue. In Was.h.i.+ngton it was seen as progress. There were, after all, now bills pa.s.sed by both the House and the Senate, even if there were wide gaps and distinctions between them. Reconciling the two was now the next step in the legislative process.

To the wider public, anxious about the sliding economy, it was just sound and fury with bills that were hard to comprehend and still had yielded no final legislation to be voted into law.

Even with its poll data about the public's distaste for such sausage making and the poor outcomes of the November governors' races in Virginia and New Jersey, there was no antic.i.p.ation of a political backlash.

Through the summer and fall and now the winter, it was always the same refrain from Rahm: once they finish health care, they'll take the acquired political capital from that victory and apply it to everything else. "But the clock had run out," said a senior White House official, "and, somehow, we didn't even realize it."

Certainly Republicans had spotted opportunity and were moving forcefully to seize it.

By December, it was clear the race to fill Ted Kennedy's open seat was turning into a close contest, with enormous national stakes: the Democrats' fragile, one-party control of Was.h.i.+ngton, arguably the greatest bequest of Obama's rise, was on the line.

Since Minnesota's Al Franken was sworn in the previous July, after many recounts and court battles by his Republican opponent, Norm Coleman, the Democrats had a filibuster-proof 60-vote lock on the Senate. But now its soft underbelly was exposed.

In early December, Tea Party activists, supported by Republican fund-raisers, were starting to trickle into Ma.s.sachusetts, which was holding a special election to fill the U.S. Senate seat that had been held by Ted Kennedy. Martha Coakley, the state attorney general, was treating the race as if it were hers for the taking. She was busy meeting with Bay State power brokers in labor, business, and politics to weave together a like-minded coalition that would help her to be effective as a senator after the special election on January 19.

Her opponent, a telegenic Republican state legislator named Scott Brown, was busy, meanwhile, driving the state in his aging pickup truck.

With populist anger bubbling through the electorate-especially against Wall Street and against backroom deals, of all kinds, cut in Was.h.i.+ngton-it was an ideal moment for an upset.

A mid-December poll by the Republican Senatorial Campaign Committee showed Brown only 3 points behind among likely voters. In a way, it wasn't a great surprise. Though the current governor, Deval Patrick, was a Democrat, for sixteen years before him Ma.s.sachusetts had been led by Republican governors, including popular social liberal William Weld and corporate centrist Mitt Romney. The state was more purple than deep Democratic blue.

With the core of its first-year agenda on the line, the White House did nothing. A brief reading of the Boston papers would have sounded an alarm. Coakley was clearly a lackl.u.s.ter candidate, dismissive of voters and smug. Brown, meanwhile, handled like a pro an early controversy over his posing for a Cosmopolitan magazine centerfold as a law student, and being paid $1,000. Dealing with issues like that is the sort of thing, campaign managers say, you can't teach. He said he'd needed the money, working his way through law school, and, "I wish I still looked that good." That was it, nice and neat; everyone laughed. They checked out the photo on the Internet. And, of course, Brown, at forty-six, still looked terrific and seemed like a guy you'd want to laugh with over beers. As Obama and his team knew so well, surviving controversies-and even turning them to your advantage-is what people look for in candidates. Coakley took off a week at Christmas, went on vacation. Brown worked twenty-hour days, dominating the airwaves.

"To not see this coming, and not start to act, even back in November, after we got slaughtered in the governors' races, wasn't an asleep-at-the-switch issue," said a close aide to Obama. "It was utter incompetence. This is what political aides get paid for. This is their job." In January-with two weeks, still, until the day of the special election-the White House called Coakley's campaign strategist, Dennis Newman, to see what help Was.h.i.+ngton could offer. He said they were fine. Nothing was done.

Two weeks was once enough for the Obama campaign to blanket a state, with an artful mix of media buys, troops on the ground, and targeted events by the candidate. Now, with so much at stake, they sat idle. A public poll on Sat.u.r.day, January 9-a day after the bleak jobs report and Obama's energy policy event in the East Room-showed Brown with a 1-point lead.

The dilemma, at that juncture, had two edges. Do anything necessary, at any cost, to win Ma.s.sachusetts; and use the threat of a loss, and the loss of the filibuster-proof majority in the Senate, to get an emergency reconciliation, in a matter of days, of the two competing health care bills.

The White House did neither. Obama met with the union leaders on Monday. He was reasonable, as usual, working through disputes and competing positions. Pelosi and Reid were dug in, and the union leaders bounced between them. People worked hard and earnestly, but it was just a bit of an uptick, not a moment of urgency.

The question-"What would Lyndon have done?"-had been bubbling up around town for months, as health care started running off the rails the previous summer. Several senators pa.s.sed volumes of Robert Caro's signature three-part biography hand to hand. Barney Frank was reading Caro's second volume, Master of the Senate, in the fall, as he wrestled with obstinate conservative Democrats opposed to financial regulation. The way Lyndon Johnson, as senator, had pushed the foundations of civil rights legislation through a resistant Republican Senate in the late 1950s held tactical clues. Now, inside the White House, aides pined for what one called "a Lyndon moment."

"A few of us joked that we should just get Robert Caro's book on Lyndon Johnson, highlight a few pages, and leave it on the president's desk," the aide said. "Sometimes a president just needs to knock heads. It's kind of what the combatants secretly want. [Johnson] twisted their arm, they had no choice-he was going defund them, ruin 'em, support their opponent, whatever the f.u.c.k-and the deal was cut. It lets them off the hook. They had no choice. I mean, for f.u.c.k's sake, he's the G.o.dd.a.m.n president."

On Thursday, January 14, Axelrod called Ma.s.sachusetts and it was decided that Obama would make a last-minute visit on Sunday.

Meanwhile, negotiations between the House and Senate, many of them conducted into late nights at the White House, brought the two sides closer, but key divisions remained.

Obama asked the House and Senate teams to each suggest $70 billion in cuts. The senators ordered pizzas in Max Baucus's office and, with each senator giving up something, created a list.

Back at the White House, later that night, the teams gathered in the Cabinet Room. The House had cut nothing. It felt it had already made all the concessions it could and still have a bill that could pa.s.s. The teams separated again, to rooms in the White House, and then returned.

They were still $20 billion apart.

It was closing in on midnight. Even if they had come to some agreement, the logistics of getting the blended bill through Congress would have been daunting, maybe even futile.

Obama's method, now clear to all partic.i.p.ants, was to sketch overarching principles, wait until others had painted in those outlines with hard proposals, and then, at day's end, step down from his above-the-fray perch to close the deal. Of course, the distance between overarching principle and concrete policy can be so vast that the former becomes invisible. As for the latter, others were left to b.l.o.o.d.y themselves with the hard negotiating over actual policy.

The result: everyone was exhausted. Obama offered his own suggestions, interesting but mostly fliers, to bridge the last $20 billion.

Henry Waxman, chairman of the House Energy and Commerce Committee, feeling an urge to affirm the president's effort, said, "I don't speak for the House, but you, Mr. President, have put forward a serious set of numbers."

Pelosi just shook her head. "Mr. President, I agree with Henry on two points," she said acidly, turning to Waxman. "The president put out a set of numbers, and you, Henry, don't speak for the House of Representatives."

Now she glared at Obama, and laced into him over the whole mess: an already stripped-down pair of bills, with Republican proposals, such as the health care exchanges, and competing, maybe irreconcilable models for how to pay for the widened coverage, much less actually control costs. It was another strong woman lecturing Obama.

"Well, what do you suggest, Nancy?" Obama replied, br.i.m.m.i.n.g with frustration.

Pelosi shook her head. She felt she'd been making suggestions for a year. She'd pushed a proposal through the House nearly six months before and then watched the Senate dither. She'd been waiting for the White House-and, more specifically, the president-to take the lead. He never had.

Now it was too late. She had nothing to give.

Obama stormed out of the room, telling aides to clean up the mess.

On Sunday he flew to Boston and appealed to the crowds to recapture the enthusiasm of the campaign. It was a campaign speech . . . for an office he already occupied. It had little to do with Coakley, who stepped up to the lectern as any enthusiasm rushed from the room. The polls were clear. In two days, Scott Brown would be elected to the U.S. Senate.

The next morning, Monday, Obama called his senior staff together.

"What is my narrative?" he all but shouted. "I don't have a narrative."

Of course, he was right. The extraordinary story of Barack Obama-a boy, so truly African American, who was blown between countries and households before finding his solid stance in the United States and then racing upward through its meritocracy-no longer seemed pertinent to almost anything he was doing. It was, no doubt, always a narrative of "up ahead," a dream of what would be: of how he would bind the country into an enlarged ideal of shared purpose, integrating its dissonant chords into a melody as elegant and surely struck as he, himself, appeared to be.

Instead, he had vanished into a cloud of endless policy debates and irreconcilable factions, of bold words-still hoping to summon the magic-so often divorced from measurable deeds.

Bit by bit, month by month, that first narrative had faded, even if plenty of people still felt its presence, like the ghost of a lost limb.

"He was right," one of the partic.i.p.ants that morning recalled. "He had no narrative. No story. For someone like Obama, that's like saying I don't know who I am. That I've lost my way."

Nature abhors a vacuum, and now the narrative was being written for him.

The specific issues in Ma.s.sachusetts were much more than the Tea Party's involvement, despite what the movement's cheerleaders on Fox News were crowing. Exit polls showed a desire by independent voters in Ma.s.sachusetts to stop Obama's push to bring about health care reform. And this from a state that had a health system that included features from both House and Senate bills: a universal-coverage program that generally received strong reviews from the Ma.s.sachusetts residents. It was a loss of faith in the president.

Internally, Joe Biden wisely counseled the senior staff to "take a deep breath"; that once everyone got their bearings, opportunities would present themselves.

None seemed to. In the days after the election, health care stalled. All sides just stopped, and sat down, trying to figure out where they stood and what, if anything, to do next.

Almost like a bad joke, what many felt should have been the president's first priority-financial reform, related as it was to the broader issues of the economic crisis-filled the new hole.

No news of progress on that score. Financial reform had been stalled in Congress since the late fall, when Barney Frank, charging forward in the weeks after Volcker's appearance, got a package of reforms through his committee that was then approved by the House and went beyond what the White House had recommended. Now Frank, and everyone else, was waiting on the Senate, which had been left to its own slow-footed devices for six months, without interference from the White House or Treasury. With the filibuster-proof majority gone, financial lobbyists around town were rejoicing. Delay and obstruction had worked, and now it would be that much harder to pa.s.s any meaningful financial reform.

The news cycles, meanwhile, were occupied, as they had so often been, with a hard, over-the-shoulder gaze back at the still-smoking disaster of September 2008. Throughout January there'd been a steady ticktock of disclosures about e-mailed memos written the previous fall by lawyers at the New York Fed. The reason that the release of the memos, which were subpoenaed in October by the Republican's investigative bulldog, Representative Darrell Issa, was delayed for three months was clear as soon as they were delivered: one of them showed Fed lawyers telling attorneys at AIG to block disclosure of the insurer's controversial 100 cents on the dollar counterparty payments to Goldman and others-made, of course, with the $182 billion in bailout money. Who was requesting that information? The SEC. Evidence of the Fed telling AIG to hide some of the era's most controversial financial disclosures from the SEC-in the wake of a financial catastrophe enabled by obfuscations from the very financial firms now being bailed out-was more than even Barney Frank, a friend of the White House, could take. Geithner had to make account.

Which is what he did, after some resistance, on January 27, before the House Oversight Committee, in a pile-on that, again, proved to be a brief, s.h.i.+ning moment of bipartisans.h.i.+p. Geithner, denying knowledge of anything in the e-mails or many of the particulars of the counterparty payments, was met with open derision: "It stretches credulity for us to believe that you had no role in this and didn't know anything about it when your attorneys were sending e-mails around everywhere," said Representative Dan Burton (R-Ind.).

But Democrats seemed to carry the strongest ire. Pointing out that while the Treasury Department "scalped the folks at Bear Stearns, 2 cents on the dollar, Goldman got 100 cents!" Stephen Lynch, a Ma.s.sachusetts Democrat, said it "stinks to high heaven what happened here" and "it makes me doubt your commitment to the American people." Geithner countered that his choice was between paying in full or having the contracts slip into legal default, which would have caused AIG's overall collapse, imperiling the entire financial system and millions of insurance policyholders across the globe. Lynch wasn't buying the legal argument. "You were creating new facilities every week. We were changing the rules day by day. We had leverage, and we chose not to do it!"

What wasn't disclosed that day, or at any time since, is that UBS offered to take a haircut-saying it was customary, and only right and what the banks were expecting-but Treasury and the New York Fed literally turned them away.

The Treasury Department, to sh.o.r.e up their leader's "knows nothing and never did" position, was busy saying publicly that Geithner had signed a recusal agreement once he was nominated for the Treasury job in November 2008-to screen himself from the messy workings of his lawyers at the Fed. Marcy Kaptur, another Democrat-she, from Ohio-got Geithner to admit he had signed no such agreement. Well, did he or didn't he? No, he didn't. So did the secretary instruct his deputies to lie? No response.

A White House official who was watching the televised hearings-and also attended the seminal March 15, 2009, meeting, when the president said he wanted to "show accountability flows in every direction" by restructuring the banks that caused the meltdown-said, "Watching it, I couldn't help but think about that big meeting, and Rahm yelling, 'We have no f.u.c.king credibility!' Seeing Democrats and Republicans going at the same unresolved issues, side by side, highlighted that this might have been the only area of actual bipartisans.h.i.+p-the kind of bipartisans.h.i.+p the president was searching endlessly for. But here was our guy getting pilloried."

That guy's boss, meanwhile, was busy considering, and reconsidering, many of the decisions he'd made, attempting to reset his course by trying out various public statements, just to see, it seemed, how they sounded.

In the days after the Ma.s.sachusetts vote, he found himself saying he understood, affirming-and somehow even elevating-the disaster by noting that "Scott is just like me," as though he'd just glimpsed his successor. On health care, in the first days of February, he seemed to say one thing and then another about the future of health care.

Several key House Democrats, including Barney Frank, declared the prospects of pa.s.sing health care reform completely DOA.

Obama's approval ratings continued to slide.

The question: Who was to blame? The first shot across the bow came on February 3, with a piece by Edward Luce, Was.h.i.+ngton correspondent with the Financial Times. The story-filled with pointed, though mostly unattributed, comments-was the first to begin digging into dysfunction at the White House. The piece said that Obama was captive of the "Fearsome Foursome"-Emanuel, Axelrod, Jarrett, and Gibbs, and more or less in that order-supporting a thesis that "the Obama White House is geared for campaigning rather than governing."

A few days later, the New America Foundation's Steve Clemons, on his influential Was.h.i.+ngton Note-one of the town's most read blogs-wrote about the backroom flurry the Luce story had prompted, as the mainstream media mostly ignored it, for fear of losing White House access, even as they were forced to recognize that "this once mesmerizing Camelot-ish operation" may soon be seen, to paraphrase Churchill, as a case in which "never have so many talented people managed to achieve so little with so much."

Pete Rouse read all the articles from inside the West Wing. He had been in Was.h.i.+ngton long enough, nearly thirty years, to have read enough stories of palace intrigue to easily paper his tiny office.

Rouse had always been the quiet man with a clear sense that it was important for the elected official to receive the attention, hopefully of a favorable cast, and not the adviser-a basic precept often overlooked by ambitious Was.h.i.+ngton counselors.

Sticking to this old-school principle in an era when presidential advisers increasingly trafficked in celebrity-with television appearances, speeches, and eventually book contracts-often created gaps between appearance and reality. Rouse, who was generally seen as among the inner circle but not driving events in the West Wing, liked it that way. He could move freely, at the president's behest, and get done what was needed. His nickname in the White House was Mr. Wolfe, after Winston Wolfe, the character played by Harvey Keitel in the iconic movie Pulp Fiction, whose motto was "I solve problems."

And that's what he did through the first year: quietly solve problems, while attending all the key meetings, starting with the 7:30 a.m. gathering of Obama's highest-ranking deputies: Emanuel, Axelrod, Gibbs, Jarrett, Biden, Rouse, Schiliro, and, since August, as part of his demands for not getting the Bernanke job, Summers. Rouse didn't generally say very much, in any meeting. He'd save it for his private sit-downs with Obama. That's where the two old friends could confide in one another and Rouse could do whatever the president needed to get done.

On their agenda was the "annual review." This was something Rouse had done, under different rubrics, from his first days with Obama in 2004. He was suited by disposition, education, and experience to be a powerful memo writer. With graduate degrees from the London School of Economics and Harvard's John F. Kennedy School of Government, the self-effacing Rouse also shared what were frequently cited as Obama's cool-eyed, Zen sensibilities; his grandparents came from j.a.pan and spent time in an internment camp during World War II. His ability to step back and a.s.sess complexity nourished two particular memos-"the Strategic Plan" written in 2005, which had astutely guided the new senator through the halls of Congress, and 2008's "Campaign Plan," which had helped shape Obama's electoral rise-that were sure someday to have their own gla.s.s cases in the Obama Presidential Library.

Now Rouse was facing his weightiest and most delicate task: turning the annual review into a treatise that looked back, a.s.sessing the past year, in order to look forward. The problem: the White House. The solution: reshape it into one that his friend, formerly Senator Obama, needed to run the country most effectively.

Rouse decided to do it in parts over the coming weeks and months. It could be kept largely between him and the president, though Emanuel, at least, would have to get "read in." They'd have to work carefully, and of course he'd be able to discuss privately his findings and recommendations with the beleaguered president.

He knew Obama wasn't made of stone or ice, and that he wasn't some incarnation of King or Gandhi, as his fan club, including Axelrod, would often suggest. He was, in fact, a man wrestling with enormous burdens-a weight he felt getting up each morning, a pressure not to show doubt, or uncertainty, or lack of appropriate knowledge, even to his senior-most staff. What Rouse knew was something presidents often learn slowly-in some cases, against their will: good process creates good outcomes. When a staff of thousands is designated to express the will of a single man, bad process can spell disaster, no matter the clarity of best intentions.

As Anita Dunn said, "The President is such a capable guy, he thought he could master these organizational issues. I don't think he understood how important they were."

He was understanding now.

Beginning a memo dated February 11, Rouse laid out his plan to save the Obama presidency.

This memo addresses management/personnel and structural issues that affect White House operations. The purpose is to stimulate discussion of organizational refinements that may be advisable as we enter the second year of the Obama administration. The observations and ideas outlined are in no way meant to suggest criticism of the work ethic or commitment of individual staff but rather are aimed at improving the efficacy of the collective operation.

This organizational exercise can be broken into two categories, process challenges and structural response. The objectives of our process review are to tighten the policy development process across disciplines inside and outside the white house. Two: To redefine the relations.h.i.+p between the White House strategic planning process and day-to-day tactical execution including definition of what we want to convey to the American people. Three: To improve the communication of decisions among the senior staff. Four: To enforce accountability of the implementation of the policy and message decisions. Process adjustments will impact White House personnel and structure, they will require changes in operating procedures that will likely cause some discomfort within senior staff, thus the various potential ramifications of specific adjustments should be thoroughly thought through and the views of effected [sic] senior staff should be solicited before organizational changes are finalized.

All four items struck directly at responsibilities-coordinating policy development, creating a strategic plan to guide and shape day-to-day tactics, communications between top advisers, and the crucial task "to enforce accountability of the implementation of the policy and message decisions"-that amount to a job description for the chief of staff.

Though many actors had contributed to the current state of affairs, including the president, each area had fallen into disarray under Rahm Emanuel's watch.

Rouse's second memo, on February 17, lowered the boom on Emanuel's partner in shaping both policy and politics, Larry Summers, as well as the other key player in the economic realm, Tim Geithner.

Domestic policy far overwhelmed foreign policy in the first year-in terms of both the president's time and the nation's priorities-and virtually all domestic policy was, in some way, related to the economy. The memo, designed "to lay out and enforce clearer operating procedures for the economic team," cited how "tension within the economic team and philosophical differences within the White House have often frustrated our policy process."

Rouse had been taking notes, un.o.btrusively, in meeting after meeting for more than a year. In four sentences, he laid out his findings: First there is deep dissatisfaction within the economic team with what is perceived to be Larry's imperious and heavy-handed direction of the economic policy process.