David Axelrod Describes The No Good, Very Bad Minefield Of Obama's Early Presidency

David Axelrod's View Inside The Economic Storm Obama Inherited In 2009

WASHINGTON -- Barack Obama, transitioning from presidential campaign to the White House in the fall of 2008, was confronted with what could be described as a steaming pile of bad economic news. The stock market was collapsing, credit markets were frozen and hundreds of thousands of jobs were being lost every month.

“Well,” the soon-to-be president told his incoming economic advisers. “It’s too late to ask for a recount.”

The meeting foreshadowed what would be a multi-year crash between lofty goals of a hope-filled campaign and sharp realities -- economic, political and otherwise. For David Axelrod, Obama's top strategist since his run for Senate in 2004, the moment was perhaps more meaningful than it was for others.

Axelrod was chiefly responsible for crafting the aspirational message that catapulted a one-term senator into the White House. As he moved from campaign adviser to a senior aide in the White House, Axelrod's disposition and wordsmithing changed as well. Campaign rallies were replaced with conference calls. Town halls became endless nights at 1600 Pennsylvania Ave.; Debate strategy shifted to rescuing an economy.

Those first months of the Obama presidency are recounted in behind-the-scenes detail in Axelrod’s new book, Believer: My Forty Years in Politics, which goes on sale Tuesday. The 509-page account of Axelrod's career in news and politics also illuminates the frustrations, nuances and annoyances that presidents and members of their staffs face in office.

Obama's first problem upon winning the election, as Axelrod recounts, was putting together a staff. Whether out of false modesty, stubbornness or an aversion to a terribly stressful job, many of Obama’s cabinet picks initially turned him down.

“Fuck no,” said then-Rep. Rahm Emanuel upon being asked by Axelrod to consider being chief of staff. Hillary Clinton balked as well (though presumably in less salty language) when offered the post of secretary of state. And Tim Geithner tried to talk Obama out of nominating him for treasury secretary, which had the perverse affect of making Obama want him more.

“What I liked the most about him was that he spent the whole hour trying to persuade me why I shouldn’t hire him,” Obama said, according to Axelrod.

The one person that Axelrod describes as actively gunning for the treasury job was former Treasury Secretary Larry Summers. But when the title went to Geithner, Emanuel had to sweeten the pot to get Summers to accept a lesser post.

He assured Summers that “he would succeed Ben Bernanke as chair of the Federal Reserve when his term expired in 2010,” writes Axelrod, confirming a details reported in other books.

Summers would thereafter become the most dominant voice in the room, impressing everyone -- Obama included -- with his wizardry in discussing matters of politics and the economy. His proclamation that, absent aggressive action, there was “a one-in-three chance of a second Great Depression” was delivered with enough gravitas to spook the rest of the cabinet.

Staffed up and freaked out, the president’s team went to work on an economic stimulus package. But here, too, political considerations ran into philosophical ones. It was Emanuel, Axelrod writes, who said any stimulus bill that cost more than $1 trillion would be a non-starter on Capitol Hill. Instead, the chief of staff suggested something in the $750 billion to $850 billion range.

Making one-third of that package tax breaks was supposed to ensure some cross-party support. But Obama got his first taste of no-compromise GOP politics when he went to the Hill, only to learn that Republicans weren’t even waiting until he had made his presentation to oppose his plan.

“This shit’s not on the level, is it?” he told Axelrod, according to Axelrod.

Shit not being on the level was a frequent revelation to Obama and his chief adviser during those early months. And it wasn’t just the Republican Party shoveling it.

Axelrod was “livid” when he found out that Geithner and Summers “had quietly lobbied” against an amendment to the stimulus that would have restricted the payment of bonuses at firms that received bailout funds. Those bonuses had become a huge political sore point for the administration, but the finance guys argued that retroactive steps to claw back the money would have violated existing contracts.

“This would be the end of capitalism as we know it” Geithner told Axelrod, to which Axelrod says he responded: “I hate to break the news, Mr. Secretary, but capitalism isn’t trading very high right now.”

Other debates that seemed to involve this level of pique included whether to nationalize banks (Obama didn’t) and bail out the auto industry (he did). On Detroit, Axelrod reveals that Obama's team had actually secured an auto bailout before they took office. In private communication, they had successfully urged the Bush administration to provide “just enough loans from the TARP fund to keep GM and Chrysler alive for a few more months.”

All the heavy decision-making and political trading had its toll on Obama during those early days. At one point, he tells Axelrod that he could envision leaving the White House after one term, provided he got enough done -- a statement that Axelrod describes as more venting frustration than disillusionment.

Obama, of course, ran for re-election after getting his stimulus passed, bailing out Detroit, and seeing health care reform enacted. And along the way, he was forced to compromise more on promises, including those to his own team.

“Despite his yeoman service, and Obama’s deep respect, Larry [Summers] was twice passed over for the Fed chairmanship he had been promised when he agreed to serve in the White House,” writes Axelrod. “The first time, in the spring of 2009, Obama yielded to Geithner’s recommendation that he reappoint Bernanke in order to reassure the jittery markets. Four years later, when Bernanke retired, the president passed over Summers again, concerned that opposition from the Left, including Senator [Elizabeth] Warren, would make the nomination too heavy a lift, jeopardizing other priorities.”

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