Jan. 3 (Bloomberg) -- As Barack Obama prepares to confront a strengthened Republican opposition to his tax, spending and immigration priorities when Congress convenes this week, his advisers are comparing him to another president who faced similar circumstances: Ronald Reagan.
Like Reagan and Bill Clinton, Obama must spend the next two years of his presidency navigating a new balance of power after midterm election losses. Before leaving for a year-end vacation, Obama sought advice from Reagan chief of staff Ken Duberstein and David Gergen, an image adviser to both Reagan and Clinton, said an Obama aide. On his Hawaii trip, Obama brought along journalist Lou Cannon’s Reagan biography, “The Role of a Lifetime,” a selection his press secretary announced over Twitter.
Obama “has the bully pulpit and he’s demonstrated in the clutch that he knows how to use it,” said Patrick Griffin, who was Clinton’s legislative affairs director from 1994 to 1996. “He is going to be a formidable player in defining who did the right thing for the American people, whether the result is legislation or stalemate.”
Obama, 49, has maintained his personal popularity even when his job approval dropped, as did Reagan. While independent voters disapprove of how Obama is handling his job as president by 50 percent to 44 percent, they rate him favorably by 51 percent to 44 percent, according to a Bloomberg National Poll Dec. 4-7.
“Both Obama and Reagan have retained a strong likability,” said M.B. Oglesby, a congressional liaison and later deputy chief of staff for Reagan. “You have a president who people kind of want to see succeed, and that can help him with Congress,” said Oglesby, now chairman emeritus of Prime Policy Group, a Washington lobbying firm owned by Dublin-based WPP Plc.
One way Reagan capitalized on that popularity was by focusing on moving public opinion, said Duberstein, who declined to comment on his advice to Obama in their Dec. 10 Oval Office meeting.
“The job of the president is fundamentally to build a consensus in the country in order to build the votes in Washington,” said Duberstein, Reagan’s chief of staff from 1988-89 and now chairman and chief executive officer of the Washington lobbying firm The Duberstein Group.
Shift Outside Washington
Obama senior adviser Valerie Jarrett suggested in a Dec. 26 appearance on NBC’s “Meet The Press” that Obama’s approach to governing would shift in that direction, putting more emphasis on communicating with the public. Jarrett said Obama underscored the point just before leaving for his Christmas vacation, telling her, “When I get back, I really want to figure out a way where I can spend more time outside of Washington, listening and learning and engaging with the American people.”
During his 2008 Democratic primary campaign, Obama praised Reagan in an interview with a Nevada newspaper as a president who “changed the trajectory of America in a way that Richard Nixon did not and in a way that Bill Clinton did not.”
Reagan began his term as the country was roiled by double-digit inflation and long-term interest rates. Obama entered office amid the worst financial crisis since the Great Depression. Both presidents’ parties retained control of the Senate in the midterm elections while the opposition expanded in the House, in Reagan’s case weakening a working coalition between minority Republicans and fiscal conservatives among the majority Democrats. Obama’s Democrats lost control of the House.
Reagan forged an alliance with Democratic leaders to pass legislation in 1983 to shore up Social Security by raising taxes and increasing the retirement age. In 1986, also with control of Congress divided, Reagan got help from Democratic allies to win passage of tax legislation reducing rates and limiting deductions.
Obama’s agenda will include items that appeal across party lines, such as an education overhaul that expands teacher merit pay and encourages more charter schools, a rewrite of the tax code, and steps to reduce the long-term budget deficit, according to an aide who spoke on condition of anonymity. Obama has yet to offer a plan or say whether he’ll take up the Dec. 3 recommendations by members of his bipartisan deficit commission to reduce the cost of programs such as Social Security and Medicare.
Obama, in an interview with NPR and a statement before meeting with corporate chief executives, said he would like to pursue a tax overhaul that, like Reagan’s tax code revision, would reduce rates and simplify the system.
Jeff Sessions of Alabama, who will become the Senate Budget Committee’s top-ranking Republican, said Obama could gain broad backing across party lines, including “a lot of support from Republicans,” for a plan that reduces the corporate tax burden.
“If he could come across with a compromise on simplifying and reducing tax rates in general, including the corporate side, that would be in the national interest,” Sessions said.
Obama set the stage for compromise during the December lame-duck session of the departing Congress, cutting a deal with Republican leaders to extend Bush-era income tax cuts, reduce Social Security taxes and extend unemployment benefits in return for a two-year continuation of tax cuts for the wealthy. He gained bipartisan support to overcome Republican opposition to ratification of a nuclear arms treaty with Russia and repeal of the ban against gays serving openly in the military.
Relations With CEOs
Obama also moved to reset his relationship with corporate leaders after the midterms, during which the U.S. Chamber of Commerce committed more than $75 million to ads mainly directed against Democrats.
After business-friendly decisions including the tax-cut extensions and a free-trade accord with South Korea, he met Dec. 15 at Blair House with 20 corporate leaders, including General Electric Co. Chief Executive Officer Jeffrey Immelt, UBS AG Chairman for the Americas Robert Wolf and Honeywell International Inc. Chairman David Cote.
Verizon Communications Inc. CEO Ivan Seidenberg, who complained in June that Obama was creating “an increasingly hostile environment for investment and job creation,” praised him on Dec. 8 for “a willingness to learn.”
John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said he anticipates that passage of the South Korea Free Trade Agreement as well as trade deals under negotiation with Panama and Colombia would lead to “some significant economic progress.”
While many House Democrats criticized the tax deal, the legislative accomplishments restored Obama’s political momentum, said Griffin, now associate director of the Center for Congressional and Presidential Studies at American University in Washington.
“It’s been one of the fastest cycles of political recoveries I’ve ever witnessed,” Griffin said. “It now gives him the chance to set the rhetorical table going into the new Congress.”
In April 1995, by contrast, more than six months after Clinton’s midterm losses the center of debate had so shifted to the Republican congressional majority that he felt the need to tell a news conference, “The president is still relevant here.”
Clinton went on to win re-election, and in the aftermath of the 2010 midterms, Obama met with Clinton, as well as Clinton’s former chiefs of staff, Leon Panetta and John Podesta.
Obama confronts stiffer economic challenges than Clinton or Reagan did. The recovery was already well-established for Clinton in 1994 and unemployment had been falling for more than two years. About the same time as Reagan’s midterm losses, the Federal Reserve began easing monetary policy and the economy was growing at more than 7 percent by the 1984 election.
When Obama faces re-election in 2012, the economy is projected to grow at 3.2 percent, and unemployment -- 9.8 percent in November -- is projected to be 8.7 percent, according to the median forecast of economists surveyed by Bloomberg News in December. The average jobless rate during their re-election years was 7.5 percent for Reagan in 1984 and 5.4 percent for Clinton in 1996.
“I can’t see the president or Congress will have a lot of interest in getting spending or the deficit under control in the next year or two,” said Wells Fargo’s Silvia. “I think they’ll put it off until after the 2012 election.”
House Republicans, campaigning last year amid voter distress over the economy, criticized Obama for the level of government spending, including the $814 billion stimulus package, and many vowed to seek a repeal of Obama’s health-care law, which requires most Americans to buy insurance.
Even so, House Republican leaders say repealing Obama’s signature legislation isn’t likely in the next two years and will be a rallying cry in 2012.
House Republicans will be “appealing to the American public” to support repeal of the health-care law by holding hearings to spotlight “what will work and what isn’t working,” said California Representative Wally Herger, who will lead the House Ways and Means Committee’s health subcommittee.
Still, “we know it’s going to be tough sledding to go through the Senate and it’s certainly not going to be easy to get something signed by the president,” he said.
Republicans have promised to seek cuts to reduce a budget deficit that the White House in July projected will reach $1.4 trillion in the current federal fiscal year. Obama already was laying down lines against spending cuts during his Dec. 22 year-end press conference before departing for Hawaii.
“It’s vital for us to make investments in education and research and development, all those things that create an innovative economy, while at the same time cutting those programs that just aren’t working,” Obama said.
Obama promised to renew his efforts to pass legislation to provide a path to citizenship for children brought to the U.S. at a young age by undocumented immigrant parents. Congress’s failure to pass the so-called DREAM Act was “maybe my biggest disappointment,” he told reporters.
And in praising bipartisan support for the Russia nuclear arms treaty, Obama evoked Reagan: “We will be able to trust, but verify.”
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