Sept. 23 (Bloomberg) -- Flash-forward to late January 2011: A humbled President Barack Obama, putting the final touches on his State of the Union address, ponders offering an olive branch to the new House Speaker, John Boehner.
Should he work across party lines on a budget-balancing deal, or maybe a free-trade accord, or just make sure his veto pen has plenty of ink?
To triangulate or not -- that’s the dilemma Obama will confront if, as almost every poll now suggests, the Democrats lose control of the House in November and hold the Senate by a nose or two.
Past presidents have sought to avoid gridlock by recalibrating their agendas and governing style and shaking up their teams. While Obama may follow suit, some say his odds of success are slim, Bloomberg Businessweek reports in its Sept. 27 issue.
“Nobody should be under the illusion that there is an easy path to compromise,” says Vin Weber, a Republican strategist and former House member from Minnesota. One reason is that the new Congress likely will be even more polarized than the current one, dominated by conservative Republicans who challenged party regulars in primaries and won.
The Democratic caucus will be more liberal because it will be mostly swing-state centrists who will lose in November, Weber says.
The recent master of triangulation -- adopting the other party’s ideas while trying not to alienate loyalists -- was President Bill Clinton. He claimed the political center in 1996 with his “frenemies” approach, famously declaring, “the era of big government is over.”
He went on to score landmark legislation that overhauled the welfare system and balanced the budget.
Obama is already remaking his team. On Sept. 21 the White House said Lawrence Summers, the director of the National Economic Council and architect of Obama’s recovery plan, will return to Harvard University at yearend.
His is the third economic team departure, along with budget director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers. Romer’s replacement, Austan Goolsbee, clashed with Summers over automaker bailouts, which Goolsbee in part opposed, according to “Overhaul,” the new book by Steven Rattner, who managed the automaker rescue for the administration.
Chief of Staff Rahm Emanuel is also likely to depart, possibly in early October, to run for mayor of Chicago.
The vacancies will let Obama reshape his agenda and address a criticism that the White House, lacking a top West Wing aide with corporate experience, doesn’t understand business.
People familiar with Obama’s thinking say he’s considering adding a corporate ambassador to his economic team. Among those being discussed: Anne Mulcahy, the former Xerox Corp. chief executive, and Richard Parsons, the Citigroup chairman and former Time Warner head.
“I think they are looking for someone who businesses can feel they can talk to,” says Martin Baily, CEA chairman under Clinton.
It may be easier for Obama to decide on an agenda than a new staff. He would like to rewrite the immigration laws and cap carbon emissions, two pieces of unfinished business.
That won’t be possible. The focus will have to be more mundane -- making sure the health care and financial system overhauls are implemented. Republicans, infused with Tea Party passions for limited government, will do their utmost to stymie him.
Today, House Republicans are set to unveil their agenda, which will call for a three-day waiting period for citizen review of legislation before a vote. It will also advocate a certification process to make sure the Constitution authorizes bills, and congressional approval of new regulations.
Some Republicans already have staked out their ground. Representative Pete Sessions of Texas will try to freeze government hiring to block Obama from bolstering the agencies that will put in place the health-care and financial-system changes.
Senator Richard Shelby of Alabama wants to defang the Consumer Financial Protection Bureau, a centerpiece of the financial revamp.
Still, there could be room for deal-making. Obama’s debt commission, expected to report Dec. 1, could propose a combination of spending cuts, tax increases, and entitlement changes attractive to both parties’ deficit hawks.
“If we’re going to confront the fiscal issues of the country,” Goolsbee says, “it has to be done in a bipartisan way.”
If the commission proposes tax changes that include a consumption tax, Obama would certainly consider it, an administration official says.
The enormity of the national debt may spur Republicans to put aside their differences with Obama, says former House Ways and Means Chairman Bill Archer, a Texas Republican.
“People are definitely scared,” he says.
Free-trade pacts could also open Republican doors. Obama has said he wants to reach a deal on the U.S.-Korea Free Trade Agreement during a November trip to Seoul. And while he is unlikely to seek legislation to create a market for trading carbon credits, he may try to pass energy legislation piecemeal.
Republicans may also get behind Obama’s recent proposals to expand tax incentives to encourage business investment and to extend permanently a research-and-experimentation tax credit.
Some congressional curve balls could come from Representative Darrell Issa, a California Republican in line for the chairmanship of the Oversight and Government Reform Committee if Republicans take the House.
Issa plans to wield his subpoena authority aggressively, judging by a report he released Sept. 21 that says he would investigate the $814 billion stimulus bill and administration claims to have created or saved millions of jobs, among other areas.
The presence of lawmakers aligned with the Tea Party could be a new and unpredictable force. Obama may run into even more resistance than Clinton faced from former Speaker Newt Gingrich.
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