Confidence Men Part 27

The health care debate seemed to co-opt everyone. The process had been so protracted and ugly and partisan that there was almost no one who could claim credibly not to have had a dog in the fight.

Up at Dartmouth, Jim Weinstein had watched the debate rage, while trying to summon impartiality. After all, it had been data from the Atlas Project that had fueled Obama early on in the debate. Going back years, Peter Orszag had been captivated by the data-driven allure of Atlas's findings: Reduce costs now, and you will be able to expand coverage with the savings from an improved health care system. Doing it in reverse involved a diametric opposition impossible to reconcile.

During the summer of 2009, when Atul Gawande published his influential New Yorker piece, it seemed that Dartmouth, with Weinstein at the helm, could be the research engine that drove pragmatic reform. And so Weinstein and Wennberg, two outspoken proponents of the need for reform, both ethically and economically, had championed the cause through its most trying hours.

The centrality of the Dartmouth data to the intent, at least, of health care reform is hard to overstate. Weinstein was considered for the inspector general's job during the Obama transition. The fact that he didn't take it made sense to everyone. As Nancy-Ann DeParle later said, "You're more important to have up at Dartmouth."

In the spring of 2010, Weinstein was called to the White House to help draft the final bill. In it was a section legally mandating that various comparative effectiveness and evidence-based a.n.a.lyses-albeit shrunk, at that point, to mostly pilot programs-rely on Dartmouth's data. It was blocked at the final moment by Ma.s.sachusetts senator John Kerry, under pressure from Harvard's noted medical centers, so aggrieved were they at how Dartmouth's effectiveness data had revealed flaws, inefficiencies, and unnecessary treatments even at the world's most noted hospitals. Though their data and methodology would prevail, Kerry managed to get the name "Dartmouth" out of the final bill.

Weinstein, who had recently matched his leadership of Dartmouth's Atlas with the lead job at Dartmouth-Hitchc.o.c.k Medical Center, was excited when the bill became law, as was his predecessor, Wennberg, now nearly eighty.

But in the ensuing months, as he dug into the new law, its features and consequences, he had dropped to ground level.

In early August he was sitting in a diner near Hanover reflecting with painstaking specificity about how bringing the first steps of a.n.a.lytical, outcomes-based rigor to America's bloated fee-for-service medical system was so important "that it should have been the first priority, even above the expansion of coverage."

To spend a "once-in-a-generation" effort on extending coverage to the uninsured-without any real teeth in using evidence about what was effective in reducing unnecessary procedures, and driving down costs-was a "stunning error."

"It's made things worse," he said solemnly.

And then he got frustrated. "I can't believe how wrong they got it. This was our one chance, and we completely blew it."

In the weeks following the pa.s.sage of financial reform, as editorials and online pet.i.tions pressed for Elizabeth Warren to be named head of the consumer bureau she'd conceived, the Harvard professor was booked for a round of meetings with the important players of Washington.

First, it was lunch with representatives from the financial services industry, Scott Talbott and Steve Bartlett, a meal for which she needed to write a check for $13, so as not to violate ethics standards.

Next stop, the White House, where she met with Pete Rouse, David Axelrod, and Valerie Jarrett.

Axelrod was a huge fan and was pushing for Warren to be nominated, even if it meant a fight with Congress. Jarrett, also a Warren supporter, was keeping her counsel. Rouse was gaming the issues in Congress, the mechanics of which he knew all too well. A long confirmation battle could keep Warren in limbo for a year, when she wouldn't be able to help shape the agency. He was working on the legislative math.

Then she moved to offices where there were doubts, starting with Christy Romer's, just a few days before Romer cleaned her office to return to Berkeley. Warren could tell that Romer had put real thought into her questions. The two of them sat alone in Romer's office.

"You are coming into something new, that hasn't been regulated," Romer started. "You could come in hard, which has some real benefits. But it has some disadvantages. You could break a lot of things and cause some damage. Or you could come in slow and soft. How are you going to handle that?"

Warren was caught off guard by Romer's intensity, and her thoughtfulness.

When Warren explained her approach-like everything about the CFPB, she could answer the question in intricate detail-Romer immediately pushed back with a counterquestion. Question after question, the two engaged in an intellectual thrust-and-parry, until finally, after Warren forcefully reiterated her desire to be a potent regulator, Romer finally broke her stride.

"Why is it always the women?" Romer said. "Why are we the only ones with b.a.l.l.s around here?"

That night Warren got a call from Valerie Jarrett. "Wow, you really turned Christy Romer around."

Warren demurred, secretly surprised that Romer had initially opposed her.

"Christy was totally with Larry and Tim," Jarrett continued. "They've been saying we can't bring you in. After you met with her, she walked into a meeting with the president and said, 'Mr. President, I've been pretty strongly opposed, and I was wrong.' "

Summers, shocked by her reversal, was fuming.

This didn't surprise Warren. Her meeting with Summers had been just the opposite. He arrived late, looking disheveled. After asking a couple of simple questions, he told her in a huff that he needed to take a call, and abruptly departed.

The next day, August 13, Warren finally got her meeting with the president. It was her first time in the Oval Office, and she told herself to try to focus and remember every detail.

But she noticed little about the iconic room, as Obama ushered her in and kissed her on the cheek. The president opened the meeting with his familiar line: "This is not a job interview."

Warren took a seat on the couch as Jarrett sat quietly across the room, taking notes.

"So, Elizabeth, do you think the bill is good?"

"Yes, Mr. President, it has the right tools."

Obama thought for a moment-and then got authentic.

"It just kills me that the car lenders are not included," Obama opened up, referencing the Brownback amendment, which exempted dealers from regulation by the protection bureau using an arcane parliamentary trick.

The president then launched into a more personal story. "Mich.e.l.le and I, when we were younger, decided we were going to lease a car. I went out and shopped around and got a car. When I returned the car four years later, like I was supposed to, it was the first time I realized how expensive that car was," he confided, trying to show Elizabeth his empathy for her cause. "How could anyone understand that? I really tried!"

Warren flashed back to her meeting in Cedar Rapids several years before. Obama had used the same personal touch to relate to her. Had it really been three years?

The meeting went on for half an hour, then forty-five minutes. The president offered a long explanation of the complex logistics whereby Warren would stand up the agency and become a special adviser to him. That way she wouldn't spend months, or maybe longer, on ice, as a nominee going through confirmation. He said this would be a new period in his presidency. And then he stopped, as if something had just dawned on him. He said simply, "I want you to help me."

As the president was expressing need, and maybe yearning, to Elizabeth Warren, the carpeted hallways outside the Oval Office had become a battleground.

After months of growing recriminations, Axelrod and Emanuel-friends for thirty years-had descended to a state of open warfare.

The tensions had been building, slowly but steadily, since the first few months of the Obama presidency, as Emanuel, Geithner, Summers, and Orszag established their domain over policy, and Axelrod's hopes for a "movement presidency" steadily evaporated. Now, as the White House's policy operations began to dim their lights, and Obama was facing a slaughter in the midterms, an opening era of promise-maybe promise unfulfilled-was coming to a close.

Today's specific issue of conflict was a strict collision of principle and pragmatism: the heated dispute over a pet.i.tion by a New York City Islamic organization to place a mosque beside the World Trade Center memorial.

The debate had been boiling in New York for weeks. Obama felt strongly about the issue. Rahm was unyielding: Mr. President, don't get involved!

Axelrod disagreed and, more importantly, so did the president. Obama felt it was an opportunity to state sacred principles.

But, as was often the case in the first two years, Emanuel barred the door. He was saving the president from himself.

It was clear that the dynamic inside the White House had become intolerable. Obama tried to ease the tension-these were two of his top advisers, his friends.

In an interview a few months later, Axelrod said darkly that the president would never again need a chief of staff as powerful as Rahm.

"We clashed a lot because he viewed me as kind of the manifestation of aspects of Obama that frustrated him," of the president's being "excessively idealistic and not pragmatic," Axelrod reflected in another interview. "He's not going to confront the president about that . . . so he and I would have surrogate battles over those things and there's no doubt that there were tensions in many instances."

The frustrations flowed in both directions. The mosque issue brought matters nearly to blows, as Axelrod yelled at Emanuel: "You may think you can keep him from speaking to this, but you're not going to!"

In the estimation of Axelrod and many others who had risen with Obama through the campaign, this is precisely where they felt Emanuel and other powerful advisers had triumphed: in keeping Obama from doing what he really wanted to do.

But not in this case. A few hours after Elizabeth Warren's meeting, Obama stepped to the podium in the East Room after emerging from a dinner celebrating the start of Ramadan.

"As a citizen, and as president, I believe that Muslims have the same right to practice their religion as anyone else in this country," he said. "I understand the emotions that this issue engenders. Ground zero is, indeed, hallowed ground." But, he continued, "This is America, and our commitment to religious freedom must be unshakable. The principle that people of all faiths are welcome in this country, and will not be treated differently by their government, is essential to who we are."

He was bitterly attacked from across the political spectrum, but within a few days the onslaught was already starting to fade, leaving-to Obama's satisfaction-a statement of principle.

Five days later, Robert Wolf, now UBS's CEO, stepped onto a dock on Martha's Vineyard. He was on the island for a reason: the president wanted him there. Obama was on his summer vacation, and Wolf was scheduled for two rounds of golf. He and his sons, both athletes like their dad, also played basketball with Obama in the gymnasium of a local high school.

The two men had stayed close. Obama talked to Wolf on and off and had Wolf, as a member of the PERAB, often give the perspective of Wall Street in briefings with the group.

Part of the key to their relationship, Wolf felt, was that he treated the president just like "one of the guys-which is what he doesn't otherwise get to be." They talked trash, and family and sports.

But Wolf, seeing his friend in distress, wanted to expand the conversation. The president was being roundly criticized for being antibusiness, a charge that Wolf believed to be false, a trumped-up attack to get particular results. Wall Street wanted even more from Obama, and this was the way to get it. Start with an audacious stance, and see if Obama bent toward you, searching for a middle ground. All this made Wolf feel protective. He wanted to ask Obama if he could help, if he could "be the son-of-a-b.i.t.c.h that a guy like Obama needs." Wolf wanted to sit across the table from the guys on Wall Street and the wider realm of corporate America and say, as he put it, "Don't f.u.c.k with my man. If you want to cut a deal, let's talk-about some ways we might help you, but, more importantly, let's talk about what you're going to do for us. Otherwise get outta my face."

Then, from the dock, he saw the nose of a ship rounding a point on the Vineyard.

It was Le Reve. His buddy, Sal Naro, had managed to hold on to it, all 110 feet.

Sal had landed upright. He now ran a company that was sort of like a Moody's for derivatives. It had been an amazing year for Wall Street. Best ever.

Robert Wolf considered his schedule. Maybe tomorrow, when they played golf, he'd have that talk with Obama, man to man.

But now Sal Naro was waiting. Robert Wolf walked purposefully to the end of the dock and stepped aboard The Dream.

On Tuesday, September 7, Mayor Richard Daley stunned Chicago with the announcement that he would not be running for reelection when his term expired in early 2011.

"Simply put, it's time," he said at an afternoon news conference at City Hall. "Time for me. And time for Chicago to move on."

For most of the past fifty-six years, the Daleys had run Chicago, starting with Mayor Richard J. Daley, one of America's signature political bosses, who led Chicago's from 1955 to 1976 and died in office, soon to be followed by the equally long tenure of his son. Richard M. Daley, elected in 1989, was slated to become the city longest-serving mayor the day after Christmas.

A few hours after the announcement, Rahm Emanuel released a statement: "While Mayor Daley surprised me today with his decision to not run for reelection, I have never been surprised by his leadership, dedication, and tireless work on behalf of the city and the people of Chicago."

In an appearance on Charlie Rose's show in April, Emanuel said that being mayor of Chicago had "always been an aspiration of mine, even when I was in the House of Representatives."

Emanuel had long planned to remain the White House chief of staff until June 2011. The idea was that he would take Obama through the midterms, handle the aftermath of whatever occurred, and remain with the president until Obama had firmly pa.s.sed his second anniversary in office and was five months along and properly launched into the final two years of his first term. Everything rested on that target date. Emanuel's house in Chicago was rented until June 2011. By then his kids would have finished their school year in Washington.

The president was aware of Rahm's plans, as were other members of the senior staff.

But with Rouse having completed his long review, and having just finished meetings with Obama on his final August memo, the president was working through the logistics of a clean sweep.

Daley's announcement, just a day after Labor Day, "was like manna from heaven" and an "elegant thing for everybody involved," said Axelrod, especially considering the coming decimation (already expected by the White House) of a Democratic majority in the House that Rahm helped build in 2006. "The tension of that for him would have been unbearable, and it would have had very negative manifestations for the whole operation."

Another adviser was blunter: "It was total luck. He would have been fired."

Emanuel a.s.serted later that the president wanted him to stay-"I know what the president felt"-but his swift announcement that he'd leave in a few weeks to run for mayor left Obama joyous.

The president then completed his housecleaning, starting with David Axelrod. Obama's senior adviser was, like Emanuel, planning to stay in Washington until the next summer, using roughly the same calculus as his old friend turned adversary.

Obama had other ideas. He felt Axelrod was burned out from his difficult tenure in Washington, which had grown contentious, especially in his battles with Emanuel over the past six months.

Obama said he wanted Axelrod to get out of the building and get out of Washington after the midterms, to be his "eyes and ears" out in the wider country. Most importantly, he wanted his old friend to rest and recharge his batteries until the following summer, when he'd need to be fresh and ready to start on the next campaign.

Obama needed a change. Axelrod's tenure in Washington was over.

It was the same for Robert Gibbs, who'd been at Obama's side on most days, around the clock, since he was hired on to the Senate staff in 2005.

Obama, drawing from his seven months of management review and discussions with Rouse, felt Gibbs's relationship with the press was too contentious, too much like a combative press spokesman in a heated campaign. After the midterms, Obama decided he wanted to try some new public strategies with new faces.

But, as with Axelrod, Gibbs wasn't just an employee, serving "at the pleasure" of his boss, the president. He was a friend who'd been at Obama's side since the very old days, when they were more like Don Quixote and Sancho Panza than King Arthur and his trusty Galahad.

Just as with Axelrod, Obama thought about himself. But he also thought about what was best for his press secretary.

"He said that this would turn out to be a good move," said a senior adviser familiar with the housecleaning. Gibbs, who'd been in loyal service for eight years, could now be a political media consultant. "It'll be good for Robert to finally go out and make some money."

On the first week of October, Alan Krueger was sitting with people who understood confidence: Jim Clifton, the CEO of Gallup, and Gallup's editor in chief, Frank Newport.

They were fans of Krueger's work on the behavior of workers and recent studies of how people defined well-being. They had all decided to meet for dinner at the Four Seasons in Georgetown.

But Krueger had an interest as well, in a poll Gallup had just released. It was just four weeks until the midterm election, and the poll dissected the defining issue of confidence. Specifically, whether people felt confidence in Barack Obama.

Newport said they didn't. The numbers were dismal. People liked the president, but only 32 percent felt real confidence in him as a leader.

"Confidence is a kind of catchall for a wide array of emotions and responses," Newport said. "It's what you do, it's how you do it, and it's also how people feel afterward."

Krueger asked a few questions, trying to press Newport and Clifton to dig deeper.

"A big issue we find with confidence," Clifton added, "is the question of whether people take ownership of what they say. Look, we all say all sorts of things for all sorts of reasons. But the key is whether, for better or for worse, you take ownership of your words. If you do-or, as a leader, if you make sure your people do-then you usually have a pretty high confidence reading, even if you make mistakes. It's kind of the straight-shooter thing. People like that."

After dinner Krueger made his way back from Georgetown toward the building where he'd been renting an apartment. After a lengthy run working at Treasury, he was finally ready to leave.

It was a warm evening in early October, a good night for walking, especially when life changes were afoot. In a few weeks he would return to Princeton, and he'd been trying to think about the last two years in Washington, and about the Barack Obama he first met in 2007.

He felt there was a clarity of thought and purpose to that earlier version that was increasingly difficult to find in the years he saw the president in his White House environs. He wasn't sure why there had been a change, if in fact there had been, and he was not blaming Obama. But somehow the president had lost ownership of his words and, eventually, his deeds.

After a few blocks of quiet strolling, he thought of all the experiments over the years which had resulted in academic disputes, including a few he'd had with other prominent professors on how questions were asked in surveys, or whether the selection of those being questioned skewed results toward certain responses.

In a particular dispute years back, Krueger eventually found something wrong in the methodology, that the data were being corrupted by the respondents' subtle urge to show the questioner that they were motivated and resourceful, when they actually were often dispirited and without energy.

"What we found was that in the early data, we were relying on seemingly strong responses from those surveyed that were meaningless. We were being misled by thorough but meaningless data. The statisticians call it 'noise.' We were living off the noise."

And that brought him back to present tense, and his past two years in Washington. As he walked, he tried to count the number of times that days or weeks rose up and down, relief to despair, on vast and wildly imperfect data. GDP or unemployment rates-imperfect measurements to start with-are often quietly changed several months after their news cycle-driving "release" has already had a profound effect on politics, public statements, quickly fashioned policies, and, by a.s.sociation, public confidence.

Then, he smiled, a researcher to the last.

"I think that happens to a lot of good people, in these times, when they come to this town. Our president may just be the most recent example. They think they're seeing things clearly. But they're living off the noise."

Larry Summers's exit from the White House, scheduled for shortly after the midterms-though it ended up not taking place until early 2011-provided a certain catharsis. The departure brought finality to the first phase of the Obama presidency.

The degree to which Summers's exit was organic is debatable. The restructuring plan concocted by Rouse starting at the beginning of the year suggested that Summers would need either to leave or accept a modified position, with his far-reaching post at NEC becoming administratively untenable. Summers contended that the exit was beyond amicable and that, in fact, the president pleaded with him to continue in his capacity.

What is not debated is the esteem that Obama continued to hold for Summers. When the announcement of Summers's departure was made public, Obama issued a lengthy statement in admiration of his service: "I will always be grateful that at a time of great peril for our country, a man of Larry's brilliance, experience and judgment was willing to answer the call and lead our economic team. Over the past two years, he has helped guide us from the depths of the worst recession since the 1930s to renewed growth. And while we have much work ahead to repair the damage done by the recession, we are on a better path thanks in no small measure to Larry's wise counsel. We will miss him here at the White House, but I look forward to soliciting his continued advice and his counsel on an informal basis, and appreciate that he has agreed to serve as a member of the President's Economic Advisory Board."

That public encomium was reflected privately, where Obama showed a begrudging fondness for Summers. Valerie Jarrett, when talking about the conflicts within the economic team, was quick to note, "The president considers Larry to be a friend." Shortly before the midterms, Obama had inadvertently channeled George Bush praising FEMA director Michael Brown following the Katrina disaster, when, in an appearance on The Daily Show, he told Jon Stewart that Summers had done "a heckuva job." When the audience scoffed aloud at the connection, Obama quickly, but unconvincingly, recovered, with a forceful "Pun intended!"

Obama's private admiration and public defense of the controversial Summers was made all the more poignant by the not-so-subtle slight Summers had shared with Orszag and others. Every time he riffed about being "home alone" with no one in charge, and declared that "Clinton would never have made these mistakes," he impugned the president's intellect and management skills. These, of course, were the very qualities Obama was publicly praising in Summers.