Confidence Men Part 28

Later, in an interview, Summers was asked about his "home alone" riff, which was read back to him in full thus: "We're home alone. There's no adult in charge. Clinton would never have made these mistakes." In the interview, Summers at first shouted, "I never said it!" but then it was made clear to him that others had heard it and some-like Orszag-could even cite a specific instance, May 26, 2009, at the Bombay Club, when they'd discussed it. At that point Summers a.s.sumed owners.h.i.+p of the acerbic a.s.sessment and, after a few moments, offered this response about what he meant when he gave it: "What I'm happy to say is, the problems were immense, they came from a number of very different sources, they were all coming at once, and there were not very many of us, and people were pulled in many many different directions. And we couldn't make . . . That meant it wasn't possible to give-there were five issues at once, that were more important than any issue in a typical year of American economic management, and there certainly weren't five times as many of us. And that's what I must have been referring to."

In their final meeting, the two men had lunch. Obama handed Summers a new sterling-silver putter, saying it was to recognize him as not only a colleague, but a friend. Larry was grateful. Obama, gracious almost to a fault and offering more loyalty to those who'd served him than they often returned, had won over even the th.o.r.n.y Summers.

It wasn't until he left and got to the top of the stairs that Summers saw that the putter had been inscribed: Thank you, Larry-POTUS.

"Why doesn't business like me?" That question, pondered by the president privately, had come to a head by the fall of 2010. He was quick to point out that his administration had overseen the complete turnaround of the financial sector. Why, then, was the business community so frustrated with him?

Within the corridors of American business there was a different feeling. Obama was an academic-albeit very smart-who didn't understand, as the Calvin Coolidge quip so acutely summed up, that the "business of America is business."

Larry Fink had previously dismissed the Obama White House as being "all professors." But beyond the policies the Obama administration enacted, Fink felt fatigued at what was perceived to be Obama's Rooseveltian idealism. Any serious conversation about creating jobs needed to start not with federal programs or vouchers, but rather with a focus on how to get the economy growing again.

That point was driven home during a series of perspective-forming meetings through the late fall leading up to the midterms. Rahm Emanuel, before making his grand exit, orchestrated several private one-on-ones for the president and leading business magnates.

First up was Warren Buffett, whom Obama had consulted at various points during the campaign. Buffett was direct, telling Obama that there were gaps in the housing market. There was an imbalance, and it would take at least two years to restore equilibrium, no matter what plans the government proposed.

This leitmotif, the limitations of government, was difficult for Obama to reconcile. Having so eloquently defended liberalism, the humbling recession and the coming s.h.i.+ft in American politics meant that an embrace of austerity, and more limited aspirations, would define the next two years.

In a series of meeting with Larry Fink through the fall, Obama wondered aloud what he could do to better align himself with business.

But that wasn't the only reason Fink had been invited to meet with the president. It was an interview of sorts. Summers, with his adoration of Wall Street, had told Krueger that "Fink is the smartest man in the world." Greg Fleming, who had known Fink for years as a close friend and business colleague, would differ with Summers. Fink was smart, but Fleming had learned, he said, that "it's wrong to judge people's intelligence by how much money they have-there's not always a correlation." Nonetheless, when Emanuel asked Summers who he thought would be best to replace him, Summers mentioned Fink. That's all Emanuel needed to hear. He told Obama that Fink was his first choice to head the NEC.

Which is why just a few days before he himself left for Chicago, Rahm Emanuel ushered Fink into the Oval Office for his first meeting with the president.

Through September and October, Fink met with Obama and talked to him on the phone several times. He fretted about whether to take the job. Emanuel suggested that he could be NEC chief for a year, get seasoned in the ways of Was.h.i.+ngton, and then possibly be in line for Geithner's job.

But as October neared its end, BlackRock entered into negotiations to sell a major portion of its Bank of America shares, and had just raised $10 billion in equity. With those changes afoot, Fink told Obama it would be "immoral" for him to leave his post at BlackRock at this moment.

Fink's perception of the president had evolved dramatically since an interview he gave the previous November, when he ranted: "I'm frustrated with these academic economists. Goolsbee, Krugman, I haven't spent a moment with the president . . . Not that I've sought it . . . But they don't want to hear it. He's a college professor, he'd reach out to John s.e.xton [the NYU president] before he reached out to a CEO. We have 3 trillion in a.s.sets-they don't care what we think!" After his arrival at the Oval Office, though, he was impressed by the president's grasp of financial arcana, as when he rattled off obscure housing statistics or spoke with Fink about industry jargon such as the "filtering process," a housing term for the pa.s.sage of houses through the marketplace. As for Obama's policies, Fink said, "The president is much more of a centrist . . . in some ways he might even be called right of what used to be called center."

Grasping policy options had never been difficult for Obama. It was about leaders.h.i.+p-and how he could wrangle the mighty universe of American business. Fink and Buffett knew more than anyone about that. But Fink also knew that government and Wall Street were different beasts, and he could be just as critical of his own capital as he was of Was.h.i.+ngton.

"Wall Street's confidence is buying back your shares; that does not add a job. Wall Street's confidence is doing a merger; that destroys jobs."

On Tuesday, November 2, the American electorate showed a lack of confidence in Barack Obama and his Democratic Party. Voters came out in droves for Republicans. They picked up sixty-three seats in the House, the largest swing since 1948. The Republican Party took control of the House, having relinquished it to Nancy Pelosi and the Democrats for only four short years.

A half dozen Senate seats also fell to Republicans, a feat, considering that only a third of the members were up for election.

The counterpoint to Obama's reform period featured a wide swath of characters. Many of the Republicans were business-owning "American Dream" candidates, especially in the congressional races, with the cash to finance juggernaut campaigns. Less prevalent, but still influential, were the Tea Party candidacies, many of whom fell short in the Republican primaries but pushed the nominee further right in the election.

Perhaps most interesting was the strain of Libertarian and Const.i.tutionalist candidates who percolated to prominence in senatorial and gubernatorial elections. Rand Paul of Kentucky and Marco Rubio of Florida, both Senate victors, appeared to be the ones most suited to rise quickly. Young and charismatic, they harnessed support, deep-seated in the conservative psyche, for dramatically limited government. The 2006 midterms had been a referendum on Bush. Republicans were hoping these midterms were a referendum on liberalism.

Of course, this view was myopic. If the election had proven anything, it was that American politics were still a realm of striking volatility. Obama had fallen from historic highs to crus.h.i.+ng defeat in just two short years. But it was also a reminder that, from now on, anything could happen.

Speaking at a press conference the day after the election, Obama expressed the unfamiliar emotions of a president coping with defeat.

"I do think that, you know, this is a growth process and-and an evolution. And the relations.h.i.+p that I have had with the American people is one that was built slowly, peaked at this incredible high, and then during the course of the last two years, as we've together gone through some very difficult times, has gotten rockier and tougher.

"And, you know, it's going to, I'm sure, have some more ups and downs during the course of me being in this office."

20.

The Man They Elected.

Reflecting on the two years leading up to the midterm sh.e.l.lacking, President Obama focused most acutely on the portentous early days.

"In the first six months, we were in uncharted territory. When we met every day with our economic team, and the markets are gyrating by hundreds of points every day, and n.o.body was sure how bad the banking crisis might get, I'm the first one to admit that at that stage, we were constantly working with probabilities. Every day having to make decisions . . . will the stress tests work? What would nationalization look like? n.o.body has been through this since the 1930s."

That first six months, from the inauguration through the summer, was, of course, the seminal period in the Obama presidency, when the historic forces that converged on the newly elected president provided both challenges and opportunities. Decisions made, or not made, during that period on the largest issues-financial restructuring, the related issue of jobs, economic recovery, and health care-would, in essence, be the hand he'd have to play right up until the harsh electoral judgment.

"I think at the time we had a spectrum of options," he said about the enveloping crisis of a collapsed financial system. "n.o.body wanted to do pure nationalization of the banks. Not only because philosophically that would have been a radical s.h.i.+ft for America, but also because if you do it to one bank there would be capital flight, essentially. On the other hand you could end up like j.a.pan. Zombie banks. That's a cla.s.sic example of where I made a decision based on having heard from everybody and gotten as much factual information as we could have, and then basically having 70 percent probability of this working, and understanding that there was a 30 percent chance it wouldn't work, in which case we would have to go back in and try something new."

But even with those uncertainties, Obama did make a decision, one of the most important of his young presidency, in the seminal meeting on March 15, 2009. The decision was to continue with the stress tests while pulling together a plan to restructure many of the large, troubled banks starting with Citigroup. That directive, he discovered nearly a month later, had been ignored by the Treasury.

When asked about how agitated he was at his Treasury secretary when he found this out, Obama said, "I'll be honest, I don't recall the exact conversations."

Then, recalling the matter-something never publicly disclosed-he said, "Agitated may be too strong a word. But I will say this," he continued. "During this period, what we are increasingly recognizing is that there are no ideal options. And so, on something like a Citibank plan and doing a 'good bank, bad bank' structure, the technical constraints around how to execute are enormous. And typically, in these situations you might have one inst.i.tution that you are dealing with. Here you had potentially fifty! And if you didn't get it right, it could have made everything else worse."

This is precisely the fear that the president's plan to close and then reopen Citibank was, in fact, meant to address. By handling Citibank effectively, Congress and the American people would see that "government could do this right," as the president a.s.serted that afternoon nearly two years before, killing off fear that if another financial inst.i.tution failed, it would spark a financial crisis similar to what happened after Lehman. Then the White House could go back to Congress to restructure the banking system properly.

But the Citibank incident, and others like it, reflected a more pernicious and personal dilemma emerging from inside the administration: that the young president's authority was being systematically undermined or hedged by his seasoned advisers. On this issue, a matter perilously close to insubordination, the president was careful in his selection of each word: "What's true is that I was often pus.h.i.+ng, 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."

In poll after poll, across two years, Americans agreed, without regard to political party, about their most pressing concern: jobs.

This was an area where the dysfunctions of an often leaderless White House were most p.r.o.nounced. In the period from the fall of 2009 to the spring of 2010-when unemployment was just above or just below 10 percent, the highest level in nearly thirty years-the president and his economic team, led by Larry Summers, were locked in paralysis and constant "relitigation," as the president often groused, over what to do. The policies that emerged from those endless hours were negligible. This was a central result of all the management woes. It wasn't a matter of his policies not succeeding in Congress. Few policies of any real heft were even proposed.

"Some of this was also just compelled by circ.u.mstance," Obama said of this particularly frustrating area of drift. "Part of the reason issues would get relitigated is that they were just very hard. B, it was because we didn't have a clean story that we wanted to tell against which we would measure various actions. C, the reason that story wasn't as coherent as a principle was because what was required to save the economy might not always match up with what would make for a good story. So, if I wasn't in crisis, or if I had been elected six months later . . . then shaping a story for the American people might have been very different."

A central issue, he added, was the "first, do no harm" stance that Summers and Geithner stressed from the start and that the president, in most cases, affirmed. "We were thinking very practically about how do we get through this crisis without doing permanent damage and hurting taxpayers," he said; if that can't be done then what might be possible? "Precisely because you would never arrive at the perfect technical answer, what [then] are the clear philosophical underpinnings that guide us in sorting through these various decisions?"

He stopped on a dime, at a conclusion: "And that led to relitigation."

This president, showing one of the qualities people find most admirable about him, didn't blame his many experienced subordinates, or how they may have mismanaged or misled him. For any failures of his administration, he blamed himself.

Those last few thoughts, accepting responsibility, was a broader summation of his first two years: a frustrating and often futile search for "the perfect technical answer" to each item on a very full plate of complexity-such as job creation or financial restructuring, or even health care, where the original goals of cost cutting were mostly abandoned by July of 2009, leaving a long scramble to push through health insurance reform. Not that there weren't results to show, in health care and elsewhere. Plenty of his proposed policies became law. But there were fewer than there might have been, the president admitted, because of a lack of "clear philosophical underpinnings" to shape policy. There was no narrative, no story to tell, because there was no guiding vision. And that, not incidentally, diminished the creation of policies that could improve the lives of Americans.

Barack Obama had originally wanted Pete Rouse to be chief of staff. When he proffered the idea at the "secret summit of chiefs of staff" in Reno, back in October 2007, Rouse demurred-not right for him, not now. Obama said, "Well, maybe later."

"Later" had finally arrived in the fall of 2010, with a vengeance. Rouse officially became interim chief of staff on October 1, after Emanuel's departure. But since his first February memo, he'd been steadily shaping the president's understanding of how the White House needed to be organized and managed.

Now, following the midterms, the president seemed to be a.s.sembling the team he'd originally wanted. Austan Goolsbee, the early favorite, from the campaign days, to be chairman of the Council of Economic Advisers, now took that role. Jack Lew, whom Obama had once slated to be head of economic policy process as NEC chairman, was brought into the White House as head of OMB; he was confirmed and at his desk by mid-November.

Though the dispute between Axelrod and Emanuel had seemed to drive troubles within the political and communications staff, Obama, with Rouse's guidance, felt that this was also in need of an overhaul. Erskine Bowles's warning, "leave your friends at home," now became a call to action.

Gibbs would soon be gone. Jim Messina, Emanuel's deputy, would be leaving for Chicago to build the foundations for the next campaign. Axelrod would return to Chicago to do the same. He'd be replaced by the yin to his yang from the glory days, David Plouffe, who would step into Axelrod's role as senior adviser.

"Rahm and Larry especially, but others on senior staff as well, didn't have a strong appreciation of what got [Obama] elected, the power of it and how to harness it. It wasn't just any old election-it was the key to who Obama was and his connection to the American people," one longtime adviser to the president said. "After the midterms, with Rahm gone, Larry due to leave, and many others from the first two years either out the door or soon to be, it was almost as though the president was. .h.i.tting the Restart b.u.t.ton."

The s.h.i.+ft in atmosphere inside the White House was so dramatic that those who knew about the Reno meeting couldn't help but wonder what might have transpired over the first two years if Rouse had accepted Obama's original offer.

The biggest change, several top advisers noted, was in the president himself. After a few days of slouching and soul-searching following the midterms-when he gave a sober and downbeat interview saying he'd received a "sh.e.l.lacking" and had "heard the American people, loud and clear"-he seemed to revive.

By mid-November he appeared oddly liberated. It was back to the future . . . but all the way back, to his days in the Senate, when Rouse was his chief of staff and all-purpose guide to Was.h.i.+ngton.

So many of the senior staff brought aboard after the 2008 election, in fact, were people that Obama-stunned, as everyone was, by the unfolding financial crisis and collapsing economy-felt he needed; the people, like it or not, he was "supposed" to have, seasoned veterans, such as Emanuel, Orszag, and Summers, to help navigate him through the coming storms. Obama, who'd never captained a s.h.i.+p, was naturally hesitant to have any of them spot him practicing his knots belowdecks. The pressure of not letting top advisers see a president's doubt or confusion is something noted by many former presidents, especially concerning their first years in office.

Now that equation was inverted. Rouse knew everything, from the messy start, when Obama stumbled into town like a tourist. There was nothing to hide. Meanwhile, Obama had gained hard-won experience, and insights into how difficult the job really was; how, loyalty and personal affection notwithstanding, his needs, in surrounding himself with a staff to help him govern most effectively, were all that mattered.

Then there was the matter of Rouse himself. Outside of Valerie Jarrett and the Davids-Axelrod and Plouffe-there were few people whom the president felt as comfortable around; and none of them had Rouse's combination of managerial skills and understanding of Was.h.i.+ngton.

Rouse could sit with his old friend, now the president, and help him recover his balance and bearings. Years before, in the early months of 2008, he told Obama that he needed to "take owners.h.i.+p" of his campaign. Now he helped Obama take owners.h.i.+p of a reconst.i.tuted White House.

In mid-November, Biden came to the Oval Office with a full dossier of issues he'd been handling with Congress. He'd been meeting since the midterm with his old colleagues in the Senate, John McCain and Mitch McConnell. Biden, of course, had had relations.h.i.+ps with them in the Senate since Obama was in college, and this time, with Biden's guidance, they'd baked a tall layer cake. In it was a wide array of swaps, from the Dream Act, which gave rights to illegal aliens; to the still unratified START II treaty on nuclear weapons reduction with the Russians; to ending "Don't Ask, Don't Tell" in the military in favor of acceptance of gays; to tax giveaways; to the closing of food safety programs that industry opposed.

Obama sat with Biden, going over the package. He had great affection for Biden, who'd been an enormous, and generally unheralded, a.s.set to him, largely because he could act, much like Rouse had, through his own designated channel to the president.

But now Obama said, "No, I'm not going to make some of these trades."

Biden, who'd been waiting for his friend to step up and a.s.sert more control, gladly stepped back.

A few weeks later, Obama was on the phone to McConnell. He could do this himself; presidents often do. Over the first weekend of December, he and McConnell cut a deal: exchange the two-year extension of the soon-to-expire Bush tax cuts for high-income Americans, a hot-b.u.t.ton issue for the left, for a yearlong extension of unemployment benefits and a payroll tax cut.

By Monday night, December 6, the deal was done. Now Obama-having decided this on his own, consulting no one except his innermost circle, namely Rouse and Biden-had to pull up the curtain and sell it.

The hardest part, of course, would be the front end. The legacy of the Bush cuts, in 2001 and 2003, had become its own atmospheric zone. The cuts, especially the second batch, were opposed by then-Treasury secretary Paul O'Neill. He said to Bush and Cheney that tax cuts were not as stimulatory as Republican supply-side enthusiasts had long claimed-that they did not return anywhere near their lost tax revenue-and that it was "irresponsible" and unprecedented to cut taxes at a time of war. When O'Neill made this case most strongly in late 2002, the war in Afghanistan and one about to start in Iraq would clearly be costing hundreds of billions a year. Cheney famously shot O'Neill down, saying, "Reagan proved deficits don't matter; we won the midterms-this is our due." O'Neill turned out to be even more famously correct: the tax cuts blew a $2 trillion hole in the U.S. balance sheet, contributing mightily to the $1.1 trillion annual deficit that Obama inherited when he arrived in office.

But the attacks from the left, that tax cuts were a giveaway to the wealthy, were true only in part. The total ten-year tab on the cuts was $2.5 billion in so-called middle-cla.s.s tax cuts, which went to most taxpayers, and $700 billion for those at the top making over $250,000 a year. During the campaign, Obama had guaranteed that he wouldn't raise taxes on the middle cla.s.s. Deep down, his deficit hawk's a.s.sessment, as he now looked at yawning deficits, was clear: that the whole package, the entire $3.2 trillion, over ten years, would have to go.

On the other hand, the unemployment insurance extension and payroll tax holiday, both opposed by Republicans, amounted to an annual stimulus of nearly $500 billion for the coming year, a time of need, when the economy was still sluggish and uneven.

When the deal was unveiled, House Democrats, wounded and outraged in their last few months of control, were unhinged. They were used to joining Obama in often endless meetings to deliberate and discuss, as though he were a still a congressional colleague. Now they crowded into the Roosevelt Room as Obama calmly, with his usual patience and courtliness, defended his position to one delegation after the next. But a subtle calculus had s.h.i.+fted. Obama's presence, and his openness in searching for shared interest, still created some "s.p.a.ce where solutions can happen." It was still him; he was still the president. Over the past two years, of course, he'd been reluctant to fill that s.p.a.ce. There were many reasons: his lack of surety in making decisions, in arriving at what he felt was an appropriate, defendable stance; the way he'd waited, and watched, as others, both in Congress and among the wide community of "stakeholders," filled that s.p.a.ce and then claimed squatters' rights. And then there was the troubling matter of how he'd ceded authority in managing that s.p.a.ce to senior staffers, who seemed all too anxious to fill it.

This dysfunction is precisely what had undermined action on the Bush tax cuts across more than two years. During internal debates dating all the way back to the transition, the issue's symbolic power, in terms of the pa.s.sage of one president to the next, was clear. High-end tax cuts, where the added income often went into investments or savings, were not particularly stimulatory; killing this tax cut's extension could have been readily pa.s.sed through a Democratic-controlled Congress, even if a 50-vote reconciliation move was needed in the Senate. Fears in 2009 that any withdrawal of stimulus, even this unstimulatory tax cut, prompted the first round of decision delays. Once the economy was limping, though upright, in 2010, that reasoning was moot. At a final White House meeting on the matter in August 2010, it was already clear that the midterms could be the debacle that was, indeed, on the way, where the Democrats could lose the House. Some, such as Orszag, pleaded that now, while the Democrats could still unilaterally decide to kill the extension, was the last chance for the White House at least to swap the tax cuts for something significant. The meeting ended, like so many, with no decision.

Now, less than four months later, Obama had simply taken control of the matter. He was sitting in the s.p.a.ce his presidency had created. He owned it. This decision, like so many presidential decisions, was imperfect and filled with unknowns. The economy could move in many directions in the coming two years. The termination of the Bush tax cuts would ultimately rest with the matter of who won the next election. If Obama lost in 2012, the cuts would almost surely be made permanent, and would force deeper cuts across the government that Republicans-suffused with postelection, Tea Partyspiced fervor-said they were eager to make.

But that was another fight for another day. Or so Obama had decided. The country needed stimulus; this was the best way to get it. He'd made his decision. He was the president. After a firestorm from the progressive press, and countless meetings in the Roosevelt Room, the deal easily pa.s.sed in the House. In mid-December, the Senate voted for it with an overwhelming majority, one not seen on anything of any significance for years: 82 to 18.

History may decide that this was a disastrous compromise for Obama, that what he got in return was not worth what he paid, that he abandoned a core principle. Or not.

The mood in Was.h.i.+ngton-and surprisingly across much of the country, based on late December poll numbers showing a boost for both Obama and Congress-was different: a subtle boost in confidence.

The future was unknowable. But at least this month, as Christmas neared, there seemed to be a president in the White House.

Pete Rouse still didn't want the job, even after the surprising post-midterm progress he'd helped guide. No dice. He was sixty-one. He was dating a new woman. He could serve the president in many other ways.

On the afternoon of January 6 the entire White House staff, several hundred people, along with a.s.sorted notables from around Was.h.i.+ngton, gathered in the East Room.

President Obama, dapper and looking rested in a crisp white s.h.i.+rt and gray-and-white-striped tie, stepped up to the lectern. To his left was a bald, solidly built man with a steady gaze and feet firmly planted. It was William Daley, the son of the former boss and mayor of Chicago, Richard Daley, and brother of its soon-to-be-departing mayor. Daley, who had also served as a deputy chief of staff under Clinton and as commerce secretary, had been working for the past five years as a top executive at JPMorgan, based in Chicago. He had strong organizational skills, he knew how to delegate, he knew Was.h.i.+ngton, he knew labor-having worked with them for years in their home base of Chicago-and he knew business. The reviews, just a few days after it was leaked that he'd be named chief of staff, were positive on Wall Street and across party lines.

Of course, Daley had been at the meeting in Reno, too.

On Obama's other side stood Pete Rouse, still looking ruffled, even in his best suit.

Before the president introduced Daley, he said he wanted to say a few words about the media-shy man to his right.

He talked about how Rouse had stepped up in mid-October, after Emanuel left, to take over the White House, as ever reluctantly. Obama said, "When I asked him, Pete said, in the gruff voice we all know, 'Well, Mr. President, my strong inclination is to leave government.' " Obama said this out of the side of his mouth, imitating Rouse, and the crowd reacted with laughter and applause.

It was as if warm air had filled a cold chamber. Obama smiled, and spoke from the heart. He said everyone had heard Rouse say this, heard him speak about his "strong inclinations" when he was asked to do anything over the past six years. "But each time, he saddled up," Obama said, including this last time, when Rouse oversaw the resurgent months since the midterms-a time "people thought would be one of retrenchment that turned out to be one of great progress"-while he "was working to develop a structure and plan for the next two years that will serve us going forward."

Obama reached for summation: "I wouldn't be where I am today without his expert counsel."

Of course, they were there to introduce Daley, as the new boss, which Obama said he'd now do, and let Bill say a few words. But before he did, he wanted to mention one other thing, that he had "prevailed once again on Pete's sense of duty, or guilt-I'm not sure which-and he's agreed to one more tour of duty as my counselor for the next two years."

That last word was barely out when the room-led by Biden, leaping up first in the first row-stood and applauded raucously, cheered, and hooted. After waiting a minute, Obama seemed to cue them with a nod and a shuffling of papers. He needed to introduce Daley, standing, somewhat stunned, by his side. But they wouldn't stop.

After years of wrestling with so many famous and consequential advisers, ambitious men with ambitious plans of their own, Obama looked over at Rouse and smiled, the last hoots finally dying down.

"I cannot imagine life here without him," he said softly. "And I told him so."

Afterward, in the foyer near the East Room, Obama clasped Rouse's shoulder. "Jesus, Pete," said the president, whose capacity for managing his emotions is renowned. "You almost made me pull a Boehner there."

Two days later, Arizona representative Gabrielle "Gabby" Giffords strolled to the first of her "Congress on the Corner" gatherings in front of a Safeway just north of Tucson. It was a sunny Sat.u.r.day morning in suburban Arizona and about thirty residents had gathered to meet Giffords, a so-called blue dog Democrat who'd been elected in 2006. A Jewish onetime Republican, she'd been targeted by the national Republican Party in her wins in 2008 and '10, because her district was affluent, conservative, and had virtually always elected Republican men. She ran counter to that, and was only the third woman elected to the U.S. Congress in Arizona's history. Only forty, Giffords had already made a strong impression politically-as a swing vote on key issues, ranging from supporting health care reform to backing immigration reform, that made her a favorite subject of derision as a "traitor" on conservative blogs and cable.

Maybe for these reasons, maybe not, she was also an object of obsessive interest for Jared Lee Loughner, who witnesses claimed rushed toward the crowd firing an automatic weapon. Six people died, among them a conservative federal judge who had previously received death threats, and another thirteen were injured, including Giffords, who had a bullet tear through her skull. Moments later, Giffords, with her dimpled, girl-next-door smile and long blond hair, became the face of a country that had lost its bearings. Cable channels set up a round-the-clock vigil at the hospital where the congresswoman, the wife of s.p.a.ce Shuttle astronaut Mark Kelly and mother of two young daughters, struggled to stay alive.

On all sides of the human drama emerged petulant debates about what had set off Loughner, who was a regular consumer of political vitriol from the far right. Soon a Sarah Palin citation-in which Palin targeted districts, including Giffords's, on her Take Back America Web site with the insignia of a gun sight-was igniting partisan battles. No one doubted that there was a high quotient of anger across the American landscape. Death threats against Obama that were considered credible by law enforcement were running at nearly four times what they had been against Bush or, for that matter, Bill Clinton. Palin responded that she'd never suggested anyone shoot down the congresswoman on a street corner, but then she attacked those who criticized her tactics as being engaged in a "blood libel," an oddly chosen term, linked exclusively to anti-Semitic charges the n.a.z.is used to justify the Holocaust. A few days later it was clear that Loughner was deeply psychotic, at the very fringe of being able to calculate any premeditation. But everyone, from left to right, was bruised, still shocked and grieving, as regular reports of Gabby's condition, how parts of her skull were removed to relieve pressure from a swollen brain-and guesses on how much of her ebullient personality would be left-dominated the national consciousness.

On the twelfth, Obama boarded Air Force One bound for Tucson. This was, of course, what he'd always thought he'd do as president: help bring the country together. It was, in fact, central to his appeal at the end of the divisive Bush era. Though arriving into the field day of fear that marked the economic decline and financial collapse, he had seemed to step back and opt instead for stability at all costs-bending, in a way, toward Bayard Rustin's old concerns, rather than King's forceful jeremiads and the actions that might have flowed from them. Pus.h.i.+ng policies with a focus on technocratic pragmatism was a formula, the president painfully discovered, for division.

But now, trying to restart the presidency as he'd long imagined it, Obama saw a type of crisis he knew how to handle, and he set foot in the Southwest like a thirsty man ready to drink deep from healing waters. He met with the families of the victims, visited Gabby Giffords at the hospital, as she opened her eyes for the first time, and then went to meet ten thousand people gathered at the University of Arizona for a memorial service.

"I have come here tonight as an American who, like all Americans, kneels to pray with you today, and will stand by you tomorrow," the president opened. "There is nothing I can say that will fill the sudden hole torn in your hearts. But know this: the hopes of a nation are here tonight. We mourn with you for the fallen. We join you in your grief. And we add our faith to yours that Representative Gabrielle Giffords and the other living victims of this tragedy pull through."

He quoted scripture, and then-just "as an American," not due any special status-Obama listed the six who'd been slain, saying they "represented what is best in America." He offered affectionate, well-researched renderings of each of their lives, from the conservative judge John Roll, appointed by McCain and the "hardest working judge in the Ninth Circuit"; to George Morris, a former Marine on a cross-country RV journey with his wife of fifty years, who dove to save her but could not, and took a bullet himself; to Gabe Zimmerman, Giffords's young aide, who was struck down just months before he was to be married.

The citation of some individual and his circ.u.mstances, often in a story of triumph or resilience, had been a rhetorical standard since Ronald Reagan effectively tried it at his first State of the Union speech in 1981. Obama took it beyond prop, speaking like a dear friend of each of the victims, and many of those injured, to make his transcendent point about how, in all the essential ways, we remain identical to one another, that it is only our inability to see this that holds us back. And then he went a level deeper, as he arrived at the final victim, nine-year-old Christina Taylor Green, who was born on 9/11. As he spoke about her-a dancer, gymnast, an A student, the only girl on a Little League team, who "wanted to be the first woman to play in the majors"-he was talking, his eyes growing moist, about his own girls, and about the man their father hoped to become.

This speech, which he wrote himself, was finally a conversation with the marble busts behind his wing chair back in Was.h.i.+ngton. He finished it with a reach for the high plane where both King and Lincoln actually lived their headlong, crisis-filled days: "What we can't do is use this tragedy as one more occasion to turn on one another," Obama said. "Rather than pointing fingers or a.s.signing blame, let us use this occasion to expand our moral imaginations, to listen to each other more carefully, to sharpen our instincts for empathy, and remind ourselves of all the ways our hopes and dreams are bound together. After all, that's what most of us do when we lose someone in our family-especially if the loss is unexpected. We're shaken from our routines, and forced to look inward. We reflect on the past. Did we spend enough time with an aging parent? we wonder. Did we express our grat.i.tude for all the sacrifices they made for us? Did we tell a spouse just how desperately we loved them, not just once in a while but every single day? Perhaps we ask ourselves if we've shown enough kindness and generosity and compa.s.sion to the people in our lives. Perhaps we question whether we are doing right by our children, or our community, and whether our priorities are in order. We recognize our own mortality, and are reminded that in the fleeting time we have on this earth, what matters is not wealth, or status, or power, or fame-but rather, how well we have loved, and what small part we have played in bettering the lives of others."

The crowd in the field house stood and wept and clapped its hands red, seeing, as did countless viewers at home and for weeks on YouTube. It was an Obama who had been elusive-invisible, even-since the campaign. Not that there hadn't been strong speeches since then-the State of the Unions, the health care speech-but they were without a clear framing, based on principles beyond pragmatism: of how America had drifted from its moorings and how it might find a way back. There had been no moral handle for him to hold and lift. Axelrod's hope, in the days after the Cairo speech, that Obama might tap and direct a similar "moral energy" to reshape the day's pernicious and defining domestic battles-such as health care, financial reform, and jobs-had never been realized. In fact, it was barely attempted.

The day after Obama's speech, on January 13, a warrant was filed under seal in U.S. District Court in Manhattan for the arrest of Vincent McCrudden, the manager of a small investment fund who had threatened Gary Gensler, several dozen other employees of the CFTC, and various regulatory officials in a series of mid-December e-mails and postings-including an "execution list"-on his Web site. McCrudden, a commodities trader and hedge fund manager on Wall Street for twenty years, was facing several CFTC civil enforcement actions lawsuits. He posted threats on his Web site with a $100,000 reward for personal information on Gensler and others.