Confidence Men Part 8

That night, he dined with Austan Goolsbee in Chicago, but his mind was elsewhere. The logistics of leaving CBO, a job he loved, for OMB weighed heavily on him. He thought about his life at home with his boys, a single dad. But the allure of opportunity ultimately drew him back in. "If I'm going to do this," he thought to himself again, "I need to know that health care is going to get done."

When he got to his meeting the next day, it took Orszag a few seconds to figure out why the shades in Obama's transition office were drawn on a cloudy mid-November day. Of course, a security measure-this was no ordinary job interview.

Obama was running five minutes late, so Orszag waited in a side office, feeling atypically nervous. OMB was a great opportunity, but he didn't really know the guy. Minutes later Obama wandered into the office with Reggie Love. The three made their way into his office.

"I want to be clear right off the bat," Obama began. "This is not a job interview."

It was a phrase he had fallen into the habit of using. It seemed intended to be both disarming and inviting, the kind of management guruspeak Obama might have culled from the Peter Drucker books he was known to favor. But considering the seriousness of today's interview, it couldn't help seeming contrived and more than a little precious. Obama, who appeared so at home with himself in front of large crowds, sometimes had trouble sounding as authoritative and confident in small settings. Admirers read this as humility; detractors saw it as awkwardness. As was so often the case, people saw in Obama largely what they wanted to see.

The pair moved now into the minutiae of policy specifics. While the budget would of course be Orszag's top priority, the conversation gravitated naturally to health care.

It took all of two seconds for Obama to say it: "I'm definitely committed to health care reform for my first year."

It was not just what he said that was convincing, Orszag recalled, but how he said it. His body shifted and settled with a kind of physical firmness. "He wanted health care reform to be his legacy," Orszag said later. Though he did not think much of it at the time, it was an odd ambition to have before even taking the oath of office; a touch early, perhaps, to be considering your legacy. But, if anything, a singular, anxious focus on history's arc had been evident in Obama since 1995, when he published his memoir at age thirty-three.

In any case, they both knew and agreed on the whys of health care reform. It was the hows that were trickiest and that now occupied their next half hour. The Dartmouth team had recently found that correcting for practice variation across the country could lead to as much as $700 billion per year in savings. The cost issue might very well be the key, both to expanding coverage and to selling the necessity of reform. Obama said he wanted Orszag to a.s.sume an expanded portfolio as...o...b..chief, serving as the administration's budget czar and also as the driving force behind health care reform.

The week after the election had been notably brutal for the flailing economy. The Dow dropped a stunning 411 points the morning of Orszag and Obama's meeting. Secretary Paulson had just made public a crucial decision regarding the recently enacted TARP: its $700 billion would no longer be put toward the purchase of the toxic "troubled" a.s.sets, as originally outlined, but be used instead to bail out the capital-short banking industry, with direct payments to troubled inst.i.tutions.

But for all this, the two never really discussed economic policy. Here was Obama at his most ideologically focused and his most aloof, chatting with one of his first appointments to the economic team about health care while the economy caved in. Well, maybe that was okay, Orszag considered. Ahead of him in the appointment line, he'd heard, was Jack Lew, widely believed to be a lock for National Economic Council chairman.

This gave Orszag comfort. The NEC, created under Clinton in 1993 and first chaired by Bob Rubin, was designed as an apparatus for advising the president on economic matters. It would be a hugely important body in the midst of an economic crisis, and it called for a chairman with the greatest skill and wisdom, someone who could shape and nourish competing ideas about what to do to arrest the sliding economy and reverse its course. The quiet and brilliant Lew was a consensus favorite for the job. He'd been in Washington for decades, first as Tip O'Neill's top policy adviser and then as special adviser to Clinton. After a bunch of key posts in the Clinton White House, where he negotiated the Balanced Budget Act of 1997, Lew served as...o...b..chief for the last two years of the president's term. He was the perfect fit, and Orszag felt good knowing he would have such a strong team around him.

As the meeting began wrapping up, Obama casually solicited Orszag's opinion on the two men he was looking at for Treasury secretary: Larry Summers and Tim Geithner. Orszag was complimentary of both men, thinking that as long as Lew was quarterbacking the policy process from NEC, either would make an adequate secretary. Summers at NEC, acting primarily as an honest broker, didn't make sense for an economist of his strong opinions.

Now on the point of parting, Orszag summoned the courage to ask the one other question still tickling the back of his mind. He wanted to know if this White House would be more family-friendly than Clinton's West Wing, where the hours were long, often stretching into late nights.

"I'm not worried about your work ethic," Obama said.

As Orszag was left to wonder what exactly his future boss meant, and what question exactly he was answering, Obama walked his new OMB chief out of the office. They exchanged parting formalities, and Orszag reiterated his excitement about joining the team. As they shook hands, Orszag realized he was looking forward to getting to know the man behind the curtain more intimately. The air of change that seemed to hover around the president-elect was heady-intoxicating, even. As the two separated, Obama tossed off one last cryptic joke, poking fun at Orszag's pinstriped suit.

"All you economists dress the same!"

Obama's offhand queries to Orszag about who should head Treasury were more than idle chitchat. In the weeks following the election, the president-elect had been seriously weighing the various pluses and minuses of three major contenders: Geithner, Summers, and the aging Volcker.

But while Treasury secretary was the marquee job, it really came down to a more fundamental question of Team A versus Team B. The former, Team A, which had shepherded Obama to triumph, comprised Volcker, Goolsbee, Wolf, Reich, O'Neill, and Donaldson, all of whom were understandably confident of getting key jobs or advisory roles.

The heft and credibility that Volcker lent Obama's candidacy was hard to overstate. He had been there from the fall of 2007 on, offering the most powerfully disinterested guidance available, as an earthquake began to shake the U.S. financial system. Volcker had also been there at the birth of the contemporary economy, managing it as Fed chair from 1979 to 1987, and he seemed to know it like a parent might a child-a child who now, in adulthood, had gone terribly astray. Across those decades of maturation, Volcker had stayed actively involved, the independent-minded director of various companies and a steward of patient capital in his own investment work. From these vantages he'd watched how the management of money and risk had changed over the years.

Besides all that, he was an old guy, plenty robust, but free from the standard set of public and private ambitions. He had little care for money and had lived happily, working with his longtime a.s.sistant, and soon-to-be wife, Anke Dening. His tenure as Fed chair, meanwhile, so long overshadowed by Alan Greenspan's, was being appreciated afresh by the summer of 2008. As his successor, Greenspan had presided over two decades of a Miracle-Gro economy, in large part the result of cheap credit policies. When these turned out to have played a fundamental role in the 2008 crisis, the intelligentsia had swung back to Volcker, dusting off a record that suddenly looked like a finely aged vintage. Volcker's invaluable a.s.set could be summed up in a single phrase: tough love.

The subtle and unsung value of the Volcker-led team was exactly the absence of what on Wall Street is called a "financial handle." Reich and Tyson were public intellectuals whose standing in the marketplace of ideas came from their scruples about accepting money from the broader marketplace. Wolf viewed his status, as Obama's buddy and top counselor with a job on Wall Street, as sacred. He would never even have thought to ask a favor of the guy, and as difficult as it might have been to place a UBS executive in a senior administration post, had the offer been made, Wolf told close friends, he would have left New York and done a "Nixon to China," turning against type to use his financial savvy to regulate the industry that had so long employed him. Donaldson laid claim to a similar sort of integrity, as a Republican free-market champion and longtime Wall Streeter who had undergone a tough-minded conversion.

But for all this, as the gravity of being elected president and the severity of the crisis bore down on him, Obama found himself leaning toward Team B. Sure, the other team brought to the table honesty and pa.s.sion, but those bold visions of the campaign season had meanwhile resolved into the serious, often risk-averse business of actually governing. In the midst of a battering economic storm, it no longer seemed like the right time to be making waves.

What Volcker understood, which made him extremely dangerous in the eyes of the banks, was that in order to stabilize America's credit system, Wall Street's great debt machine would have to be dismantled. If the industry was going to center its business on consumer debt products such as credit cards and mortgages, or a vast matrix of complex business-to-business lending, it would have to be treated more like regular old commercial banks and savings and loans. Boom-bust cycles in equities markets were one thing. A lot of wealth was lost during the stock market crashes of 1987 and 2000. But these two crises had proven far more manageable than the present one. People felt poorer, but a lot of their losses were paper profits. When busts occurred in debt markets, however, the results were dire. Debt is a legal contract, and its interest payments don't budge. When payments can no longer be met, people lose their collateral-which is serious enough. But when the collateral itself loses value, creditors tend to realize losses they never guarded against. The collateral, after all, was the backstop. In the collapse of a big enough market-the housing market, say-the whole credit system can come crashing down with it.

Volcker also saw that the recent profitability of Wall Street was directly tied to the riskiness of its behavior: the banks and investment houses had been making money hand over fist by investing in the boom-bust cycle for debt. On the consumer end, debt was temporarily underpriced to make it more attractive, so people had a.s.sumed more than they could afford. On the far other end, with the sale of debt securities to major inst.i.tutional investors and the like, the riskiness of underlying debts was masked and ma.s.saged through financial innovation until these ticking time bombs could be sold as rock-solid, high-yield securities.

Now that a lot of the bombs had gone off, it was time systematically to set off the rest, Volcker felt. How else could we feel safe moving forward? This meant accurately pricing the "toxic" mortgage-backed securities on which the credit system was resting. Even if prices were severely depressed, at least they would hit a floor. The result would be painful, no doubt, but moral hazard would be averted. And if executives who had sold the explosive debt products wound up in the streets, having to hire their own lawyers to fight off waves of legal suits, well, so much the better for discouraging such behavior the next time around.

The competing team in this drama could hardly have disagreed more strongly. Heavy on former Clinton officials, many of whom swore allegiance to the former Treasury secretary and Citigroup chairman Bob Rubin, Team B believed the crisis called for delicate actions in support of a fragile banking system. Who knew what would happen if you started pricing mortgage securities correctly-which banks might find themselves on the verge of insolvency, or in its grasp? Team B had been moving forward with tactical clarity since September: the Volcker-led group must be stopped. Several people had complained, directly to Obama or within earshot, about how Volcker mumbled, how he had lost a step over the years and might not be able to handle the heavy demands of the secretary job. Goolsbee was unknown to the public and did not inspire surety or have much gravitas. As for Reich, Tyson, and Donaldson, their strong, fiery words might disrupt the shaky market. The first priority, Team B stressed, was to stand up a facsimile of the old system, to get Wall Street up and running and to restore faith in iconic American inst.i.tutions. Credit needed to start flowing again. After that-and it might take a year or two-everyone could talk about sweeping reforms.

Secretary Paulson had adopted Team B's approach, infusing banks with capital and giving Wall Street what amounted to an early victory. But the game had hardly begun. If the new president chose to surround himself with Volcker's A-Team, then a throw-them-out-on-the-street, rip-the-bandage-off scenario would be in the offing. The hopes of Rubin's B-Team-many of whom had turned high-ranking posts under Clinton into Wall Street riches-came to rest on the two men challenging Volcker for the Treasury secretary job: Summers and Geithner.

By the morning of November 11, when the president-elect had asked Orszag what he thought of the two candidates, they were in deep, side-by-side discussions with Obama. Several possible arrangements were taking shape, offering an early glimpse of Obama's managerial style and inclinations.

One possibility would be to put Volcker in the top job of Treasury secretary and make Geithner his deputy. Once the markets had stabilized and the big structural reforms-conceptualized and shepherded by Volcker-were under way, Geithner could move up into the secretary job. He was better on the implementation side of things anyway.

Obama liked Geithner personally. He brought youth and energy to the table and undisputed expertise on the particulars of the current crisis. Though his roots with the Clintonite B-Team were deep-he had served as an undersecretary of the Treasury under both Rubin and Summers-his arrival on the national stage, as a member of the new administration, would make him Obama's man. When they met in October they chatted amiably for forty-five minutes, two charming but sometimes hard-to-read young men, both of whom had spent many youthful years overseas. After a few minutes, they figured out that Geithner's father, a State Department official, had briefly worked with Obama's mother, a coincidence that brought a warm glow to Obama. Geithner just needed a little seasoning.

On the other hand, Summers could just as easily lead the charge at Treasury, then move over to the Fed when Bernanke's term was up at the end of 2009. Summers told Obama he would be very interested in the Fed job, a unique and prestigious position on the world stage. Summers had watched his old friend Greenspan turn the chairmanship into a seat of extraordinary, dynastic power. In twenty years on the job, Greenspan could lay claim to having been the most powerful public official of his era. At only fifty-three years old, Summers saw in the Fed post the long final chapter to a storied career. When Summers moved over, Geithner would move up.

But then it all started to become complex math. The financial crisis was altering the country's professional landscape. Citigroup, made a home for so many former Clintonites by Rubin and others, suddenly went from esteemed financial behemoth to b.u.mbling charity case. The financial meltdown revealed a host of sins and perfidies, and Citi seemed to have plenty of every variety. It had loaded up on toxic mortgage a.s.sets rather late in the game, received the initial $25 billion in bailout money, and then another $25 billion to keep it afloat. It had seen fit, along the way, to dole out stunning compensation, including the $126 million to Rubin over a period of eight years. The melange of greed, incompetence, and bailout funds was toxic. As late as early September, Rubin was actually talking to Obama about a taking a job in the administration: a "dollar-a-year" position as a presidential adviser, with an office in the West Wing. Now he was persona non grata, at least in public. The same was increasingly the case for Jack Lew, who had been well compensated in the past few years at Citi. If congressional Republicans dug into some of the activities occurring in departments beneath Lew-even if he didn't know about them-it could get ugly. In mid-November, Lew reluctantly withdrew himself from consideration for the job he'd all but been offered: NEC chairman.

There was one other twist. The prospect of selecting Hillary Clinton as secretary of state-speculated publicly, and much discussed internally by the Obama team, with high hopes-was increasingly seen as a strike against Summers. If he were put at Treasury, the president's top two appointments would both be central actors of the Clinton era.

Obama began to reconsider the mix, with an eye on the close bond between Summers and Geithner, something neither had with Volcker. This friendship might turn into an a.s.set, encouraging close coordination between the White House and Treasury, as they worked together through the crisis. Obama was initially worried that Geithner might a.s.sume an overly subordinate manner with Summers, who had once been his boss. But the remark, from someone who knew the pair well, that Geithner could stand up to Summers and tell him he was "full of s.h.i.t" allayed Obama's worries. Both longtime tennis players, Summers and Geithner had played together for years, cementing a bond in athletic battle that Obama respected. He became enamored, as he thought about it, of the idea that Summers could spearhead economic debate within the White House while using his deep rapport with Geithner to keep the administration closely coordinated with Treasury's emergency activities.

When Obama suggested this arrangement, however, Summers demurred. Having once been Treasury secretary, he considered the NEC job a step down. He hinted that he might be less than ideal for the position, pointing out that his strong suit was not in evenhandedly distilling rival ideas into distinct, unbiased choices. This was what the NEC job demanded. Then, for good measure, Summers added conditions: he would manage all information regarding economic matters that pa.s.sed to Obama, and he would be first among equals to replace Bernanke.

Obama accepted his conditions.

Many people with Obama's ear advised the president-elect against Summers, among them several members of Team A. They said he was too divisive, too combative, and, to their knowledge, never a consensus builder-that his brilliance was rhetorical rather than substantive, that he had abandoned original research two decades ago, and that his track record over the years in major decisions had been disastrous.

But for every voice testifying against Summers, there was one who said, simply, that he was brilliant and that the rest was irrelevant. Many of those voices came from Rubin's B-Team and from Wall Street, which should have set off an alarm. But their message and the timbre of their voices, full of confidence and loyalty, were in the end more comforting than those of the ragtag A-Team, whose love seemed suddenly too tough.

For Christina Romer it was love at first sight.

She had seen the convention speech in 2004, and watched in awe the declaration of candidacy from the Illinois snows and his victory speech in Iowa.

But her teenage son was a Hillary supporter. She was dumbstruck.

"Yes, Hillary's fine. But have you seen the speeches?"

Romer loved the Cooper Union speech, but she was unsettled-as Hillary made her final push in Ohio and Pennsylvania, playing to union workers-to see Obama step back from his earlier statements in favor of NAFTA. She called up Austan Goolsbee, whom she knew from academic circles.

"Don't let him sink to that," she told Goolsbee, a fellow free trade enthusiast. "Have him broaden the discussion about displaced workers and what government can do to help them."

Soon enough she was sending Goolsbee a steady stream of materials, adding to the Obama campaign's economic potpourri her own notes and various handpicked academic reports. By June, however, Jason Furman had replaced Goolsbee as the campaign's top economic adviser. He was calling the shots now, and Romer found herself out of the loop.

That is, until a mysterious e-mail popped up in her account on November 16. She was sitting at her home in Berkeley with her husband, David, also an economics professor, when a note arrived from Michael Froman, with a strange tag: @NTT.org. She thought it might be someone looking for a job.

"If it's a job with Obama they want, I certainly can't help them," she thought.

On a whim, David decided to Google the name Froman. "I think you might want to respond to this one," he told her. "NTT stands for National Transition Team. Michael Froman is the head of hiring for the Obama transition team."

Curious just what in the world Froman might want, Romer made the call.

"What kind of a job would you be interested in?" Froman asked, sending a thrill of excitement through Romer. She played her cards close.

"Well, there are a few Fed governorships opening up," she noted.

"We had something else in mind," Froman said. It was the chairmanship of the Council of Economic Advisers.

Five days later Romer found herself on a plane to Chicago, like Orszag before her, on her way to meet the object of her political infatuation. But her excitement crowded out the obvious question: Why her? Obama had already surrounded himself with a healthy cast of top economic minds from the highest reaches of the private sector and academia. She had been an ardent supporter, sure, but hardly an instrumental adviser.

The answer would only begin to dawn on her later in her West Wing tenure. Obama had a woman problem: too few of them in key jobs. There was Valerie Jarrett, but she'd been a friend of Mich.e.l.le's first. Speculation that Hillary would get the secretary of state job had begun circulating, but she wouldn't really garner the administration any diversity points. She was "Hillary," a single-name ent.i.ty across the globe, and bringing her into the fold would be more about power than equal opportunity.

It was on a Friday, November 21, that Romer first entered Obama's curtain-sealed office in Chicago. Unlike Orszag, she was nervous about meeting Obama and she hadn't even come with any ultimatum or conditions about taking the Council of Economic Advisers job. She was just elated to get to know the guy.

But their first meeting would open on an odd note. Before exchanging h.e.l.los or even shaking hands, the president-elect delivered what seemed intended as a zinger.

"It's clear monetary policy has shot its wad."

It was a strange break from decorum for a man who had done so outstandingly well with women voters. The two had never met before, and this made the salty, s.e.xual language hard to read. Later it would seem a foreshadowing of something that came to irk many of the West Wing's women: the president didn't have particularly strong "women skills." The guy's-guy persona, which the message team would use to show Obama's down-to-earth side, failed to account for at least one thing: What if you didn't play basketball or golf? Still, for the moment, the comment didn't faze Romer. She was curious to hear what he thought.

"What do you mean?" she asked.

Obama extended his hand, now ready to greet her.

"I guess we need to focus on fiscal policy," he said.

"No, you're wrong," Romer corrected him. "There's quite a bit we can still do monetarily, even with the historically low interest rates."

She described how, even with rates near zero, an expectation of coming inflation, and a rise in rates, prompts the use of cheap debt in more robust, and stimulatory, ways.

The conversation soon turned to more familiar ground: Roosevelt. Romer, a scholar of the Depression, listened to Obama invoke FDR's example as a model of crisis management. He praised the way Roosevelt took charge of the situation and let everyone know that "I'll fight this thing with everything in my being. We'll put the people first." That, Obama added, "was how Roosevelt restored confidence."

Romer was impressed. With Rooseveltian fantasies dancing in her head, she said she would be honored to accept the job as chair of the Council of Economic Advisers. The president-elect had Rooseveltian fantasies of his own, and Romer later recalled that he seemed to understand that economic policies could often "have an impact beyond what was immediately quantifiable," that "for a president to forcefully take a stand could really affect confidence."

With a kind of giddiness, Romer recounted the meeting highlights to her husband. "He's even better than I expected," she announced.

But David Romer was more blown away by her brazenness than anything. "The first thing out of your mouth was 'No, you're wrong'?!"

On Monday, November 24, Obama unveiled his newly minted economic team. The headline names were Summers, Geithner, and Romer. It was a markedly different group, compositionally and ideologically, from the A-Team Obama had showcased throughout his campaign. Summers would take the NEC chair, Geithner the top job at Treasury, and Romer the head role at CEA. As for the members of Team A, they would find themselves exiled to the hastily crafted President's Economic Recovery Advisory Board.

For all the infighting and acrimony that would plague the administration after the inauguration, the atmosphere of the transition was one of surprising camaraderie. As one high-ranking official put it, "We were actually working as a team in December."

Never was this feeling so palpable as on November 30, when Larry Summers turned fifty-four years old. Spirits were high as they gathered to celebrate in the Chicago transition office; Geithner even brought cupcakes for the career curmudgeon. Following a hearty rendition of the Happy Birthday song, Summers, without missing a beat, launched into his own solo verse: "For he's an unpleasant fellow!"

Everyone laughed. Looking back, Orszag would later say, "It was one of those moments where we felt like whatever happened before, it was okay. It was one of those moments in one of those windowless conference rooms." There was something poignant about the self-awareness of the verse, something in the humility of self-deprecation that evoked a sense of new beginnings. The team had begun to gel, with good humor, around the quirkiness of its members.

The moment would not last.

Christina Romer was soon struggling to understand exactly what her role as head of the CEA entailed, and she was having serious reservations. The position, impressive as it had seemed, looked more and more insubstantial, a big t.i.tle without much effective heft. In the coming months she would feel increasingly isolated in her job, excluded from the broader discussion by Summers, whose Kissingerian role at NEC had basically annexed her position in the sweep of its bureaucratic imperium. Later on she would go straight to Rahm Emanuel about the issue, although she had reservations about the president's chief of staff, too. For the time being, however, she worked with Larry as best she could.

She even had a degree of sympathy for the newly "mellowed" Summers. "He's just not very good at politics," she thought. "If he were the CEA chair, he would be saying the exact same things I am." The issue of the moment, as the inauguration inched closer day by day, was the stimulus package. It was the seminal debate of the transition. The figure being thrown around early in December was $300400 billion, but Romer didn't have to crunch the numbers to know that wouldn't be enough.

"I think it should be bigger," she told Summers, as the two set to drafting the memo they would pa.s.s on to Emanuel.

"How much bigger?" Summers asked.

"Eight hundred, at least."

"I agree," Summers said, surprising Romer. Both of them knew that if the stimulus was going to have any real impact, it was going to need to be a politically unpopular number. They drafted the memo to include two options below $1 trillion. Romer pushed for a larger stimulus, at around $1.2 trillion.

"All of these stimulus options are set up to achieve eight percent unemployment," she exclaimed. "Since when is eight percent unemployment acceptable? We've spent the last few years at four percent!"

Romer, in preparing a report for Obama, included the perspectives of several big-name economists who supported a larger stimulus: Stiglitz and Tyson, along with Ken Rogoff, a highly respected Harvard professor. But $1.2 trillion was going to be a political nonstarter, and in a sign of his increasingly dominant role, Summers chose not to include it in the materials for the president-elect.

The fledgling transition team's first major stimulus meeting took place on December 16, in snowy Chicago. For all the fierce internal debate, there wasn't much the president-elect could do until January 20. Though his strong desire was to tackle health care in year one, Obama knew his first piece of legislation would have to address the financial crisis. Much of what ended up as the American Recovery and Reinvestment Act of 2009-the stimulus-was decided at this meeting.

All eyes were on Romer, who had spent much of her career studying the effects of government spending under FDR. She opened the meeting, taking to heart David Axelrod's message that the gravity of the situation could not be overstated.

"Mr. President, this is your 'holy s.h.i.t' moment," she said in surprisingly strong language.

She was right. The crisis was that big. She clicked and brought up a PowerPoint slide-something Summers disliked ("Don't show what you are already saying anyway!")-describing the difference between a severe recession and a depression. Only through major intervention, she explained, firmness and earned certainty in her voice, could they hope to prevent the latter.

The effectiveness of stimulus spending was still considered the realm of unproven economics, but its detractors, in failing to take the "multiplier effect" into account, appeared to underestimate its value. Whatever dollar amount of stimulus pa.s.sed through Congress would be only a fraction of the money actually added to the economy. Because Americans tended to spend more and save less than people in other countries, stimulus spending could be expected to go a long way, generating more actual value than it cost, as beneficiaries spent and the stimulus money pa.s.sed from hand to hand.

Inside Team Obama there was almost no discussion of whether to undertake a stimulus, just of how large it ought to be. The number had grown quickly. Clinton had attempted to pa.s.s $16 billion in stimulus after taking office in what, at the time, was considered a huge piece of legislation. Before this election, $100 billion had seemed to be the number. But now, with the economy speeding off a cliff, Congress was working with numbers closer to half a trillion. The key would be to fill the output gap, estimated to be around $2 trillion. Romer stressed that because of the multiplier effect, the stimulus didn't need to be quite that large.

For his part, Obama was surprisingly aloof in the conversation. Like McCain during the September meeting with Paulson, the president-elect now seemed disconnected and less than in control of the process. As the economic team hashed out the minutiae of a plan and tried to settle on a number, Obama's contributions were rare.

"There needs to be more inspiration here!" he said at one point.

The team was sympathetic to Obama's position, which demanded that he somehow deliver on the high rhetoric of his campaign, but it was taken aback all the same by how out of place the comment seemed in the middle of a discussion of quantifiable outcomes.

The debate would ultimately hinge on whether the stimulus should exceed $1 trillion. As the resident expert, Romer had convincingly argued that $1.2 trillion would suffice. The forces pushing for a number in the billions, however, were strong. For one thing, there was the near-term issue of being able even to get such a monumental package through Congress. In the long run there was the worry of coming across as a tax-and-spend administration. As Peter Orszag said, "There was the concern that we would look wacko lefty."

Obama seemed persuaded that the stimulus did not need to exceed a trillion dollars. For him it was more about the symbolic content of the stimulus.

"What about smart grids?" he asked at one meeting.

The conversation then turned to an extended discussion with Carol Browner, Obama's top adviser on energy and the environment, about the limitations of eminent domain. A smart grid would need to be implemented district by district, which, as part of the stimulus, was entirely unfeasible.

Obama, frustrated, refused to let the topic go. "We need more moon shot," he said.

Members of the team were perplexed. How could the guy who had wowed them with his ability to synthesize ideas and move discussions forward get so hung up on something that everyone agreed was impossible? Yes, it was important for legislation to inspire, but couldn't they hash out a basic plan first? For the first time in the transition, people started to wonder just how prepared the man at the helm really was.

It was too cold to camp out, but people still tried, and some managed it. They had come to watch history unfold before their eyes, to be a part of its unfolding. Toughing out the brutally cold night seemed to bind them more closely to the historic moment, as hero partic.i.p.ants. By midmorning, a.s.sembling in the sunless cold was a crowd many times the size of Grant Park's. Later estimates would put it at nearly two million, making it the largest gathering ever in the nation's capital.

The emotions of Election Night had widened and deepened, becoming, in light of the crisis, more urgent still. Everyone knew the economy had collapsed, losing three and a half million jobs over the past six months, a slide that showed no sign of slowing. But no one needed to see those numbers to know the country was in trouble. You could feel it. Things were out of control.

So people controlled what they could. For most of the two million, that meant finding a way to Washington, a place to stay, clothes warm enough for long exposure, and a path to the Mall through the teeming throngs. They had come to be inspired. That was what they needed and couldn't manage on their own. That's what presidents are for.

A year before, almost to the day, Obama had given an interview to the Reno Gazette-Journal that prompted a line of ongoing a.n.a.lysis and controversy. On the issue of which recent presidents had been "transformational," the senator had said that "Ronald Reagan changed the trajectory of America in a way that, you know, Richard Nixon did not and in a way that Bill Clinton did not. He put us on a fundamentally different path because the country was ready for it."