What Obama should do now

Unless you’re sworn to spin, it’s hard to deny that Barack Obama needs a more compelling message. There’s a Politico story—in which I’m quoted—that parades Democrats “from across the party’s ideological spectrum” criticizing the President for his “results-oriented 'pragmatism.’”

To attribute the perils now threatening his party and perhaps even his presidency to his pragmatism is a misreading of history and of present events.

FDR, the greatest of progressive presidents, described his leadership this way: “Take a method and try it. If it fails, admit it frankly and try another.” In that spirit, he calculated that he had to sacrifice health coverage to salvage the passage of Social Security—and so he did. In the teeth of isolationism, he maneuvered adroitly to arm Britain and then the Soviet Union against Nazi Germany before the U.S. entered World War II. He sold Lend Lease, a fateful step toward war, as a way to keep us out of war.

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In a contest over the Bush tax cuts, Obama holds the high cards.

Similarly, Ronald Reagan, arguably the greatest conservative president, in 1982 signed into law what was then the largest tax increase in American history, partially undoing his signature tax cut from the year before. In 1983, he advocated a Social Security tax increase and in 1984 he agreed to another tax rise to reduce the deficit. He was responding to what was real in the economy even when it didn’t accord with his version of the ideal. Then, in his second term, this proud Cold Warrior moved toward a definitive peace with the Soviets. After he negotiated a far-reaching arms reduction with Mikhail Gorbachev, Reagan’s friend William F. Buckley, Jr. called the treaty “a suicide pact”; another friend, the columnist George Will, wrote that the President was “wildly wrong.” Reagan had chosen to be right rather than far right.

Principled and consequential presidents are inevitably pragmatic presidents. Barack Obama comprehends that. That’s how he passed the health reform that FDR had to leave behind, along with fundamental reforms in student loans, and then a new regulatory regime to protect consumers and rein in reckless financial speculation.

Each time, he compromised; each bill fell short of what progressives had hoped for. Yet those on the other side have recognized the full measure of Obama’s success and reacted with fury: Obama, like Roosevelt before him, has been cursed as a “socialist”—and far worse. Maybe you judge the sweep and significance of a president’s achievements by the enemies made—and the enmity aroused.

This may not be a comforting metric for Obama, who yearns to transcend partisanship even as he transforms the nation. And it’s certainly not comforting to Democrats, facing a tough and bitter midterm election in a still dismal economy, that the President had to compromise too far to secure the $800 billion stimulus package. Commentators like Paul Krugman were right that the package was insufficient to create sufficient new jobs. The truth, the plain pragmatic truth, was that a bigger bill couldn’t pass. But government intervention, according to a recent report, did prevent the loss of eight million more jobs and “averted what could have been called Great Depression 2.0.”

The problem, however, is that people don’t vote for what was averted; if their job was saved, they never know it was nearly gone. At the same time, Republicans relentlessly decry the stimulus for what their own opposition made sure it couldn’t fully accomplish. “Where are the jobs, Mr. President?” asks House GOP Leader John Boehner with sun-tinged cynicism.

In 2012, the President will have the advantage of a Republican field so weak that the inch-deep Romney is the favorite, the frenetic Gingrich is plausible, and the utterly unqualified Palin is remotely possible. But in the end, Obama will be judged by the reality and the perception of the economy. One advantage he apparently won’t have is an economic trajectory even as moderately hopeful as Reagan’s was after the 1982 recession.

The Reagan recovery wasn’t as robust as its mythic status in conservative memory. Unemployment, which peaked at 10.8 percent, did drop as the presidential race entered the final lap—to 7.5 percent, about where it was when Reagan took office in 1981 with a pledge to cure “an economic affliction of great proportions.”

No such luck appears in store for Obama. The predictions now are for a slow slog forward, with unemployment near 9 percent or higher into 2012 and perhaps all the way to Election Day. (Of course, the predictions may be wrong; recent events suggest that most economists are best at forecasting the past.)

So the President and Democrats must decide what to do next. And in this case, being principled will prove to be the truest pragmatism.

First, Obama and Democrats have to redraw the battle lines for the midterms. Don’t cast the campaign merely—and too cautiously—as a choice between the Bush collapse and an Obama turnaround that a majority of Americans don’t yet believe in. They are already rid of Bush; their anger at the status quo drives them toward the GOP—a reversal of the dynamic that swept in Democrats in 2006 and propelled the improbable Obama in 2008.

What’s called for is a starker choice rooted in progressive conviction. September is the time and tax cuts are the cause—if the President and his party are bold enough to break with the conventional wisdom that this issue invariably favors Republicans, and wage the battle not in the arcane interstices of the legislative process, but in the glare of the national spotlight.

So demand that the tax cuts be made permanent for most Americans, but not for the top two percent. And don’t keep that money, for now, for the federal Treasury; fight to reallocate it to two years of additional tax relief for the hard-pressed middle class. That’s a choice to fight an election on—between more help for the many or another windfall for the few.

In a contest over the Bush tax cuts, the President holds the high cards: They expire automatically unless he signs an extension. Standing on principle—on the difference between serving the people or the privileged—can moderate Democratic congressional losses and may thwart the ascent of a GOP House or Senate festooned with subpoenas and intent on combining stalemate with ceaseless investigation.

There’s also room for a little political jujitsu here. To shore up fragile markets, the President could propose a permanent 15 percent rate for capital gains and investment. This wouldn’t be an ideologically pure exercise in economic justice. But it’s a pragmatic measure that could boost markets, sending a powerful, positive signal to voters. More than that, it will generate more investment and jobs—not in the distant future, but in the next two years. So there’s something in this policy for Main Street, not just Wall Street.

Second, the President will confront a more Republican Congress next year even if it is still nominally Democratic. His Deficit Reduction Commission will have reported its recommendations, almost certainly including cuts in Social Security or Medicare—and/or raising the retirement age. (Isn’t it wonderful how well-heeled “experts” sitting in air-conditioned offices conclude that people with tough, tedious, often back-breaking jobs should shoulder on to 70 or 75?) This will be a moment of maximum peril for Obama. How can he manage to spur growth and jobs facing a Congress infatuated with deficit reduction?

Of course, the infatuation stems from hypocrisy, especially among Republicans whose only economic idea is tax cuts that redistribute income in the wrong direction. But this offers an opening, similar to the one President Kennedy took when he saw that he couldn’t get Congress to go along with more spending to stimulate the economy. He pushed for tax cuts, which are less efficient to that purpose, but efficient enough. So in the name of jobs, Obama ought to focus on another round of temporary tax cuts for middle and lower income families who will actually spend the money—which will increase demand and employment.

Let Republicans oppose this and propose their own tax policy that gives the most to those who already have the most. The President should welcome that confrontation while conspicuously vetoing every special interest giveaway.

To take this path, Obama will have to accept that one of his cherished goals is unattainable. There can be no bipartisanship when the Republican definition of it is surrender.

The President’s message today comes nowhere near the mountaintop of his achievements. But someone elected on a promise of change can’t become a triangulator or a custodial president, especially in a time of economic upheaval. Bill Clinton is a great political storyteller, but he left office without a great and enduring legacy.

Obama must be faithful to his promise of change. Fighting for what’s right may be the only way to win. This President’s achievements matter, but he urgently needs the storytelling gifts that he brilliantly deployed in 2008.

We know what Barack Obama has done. We will soon learn far more about who he really is.