Jan. 20 (Bloomberg) -- When Barack Obama held his first prime-time news conference as president, the financial crisis was at its peak and not a single Republican had voted for his economic stimulus bill. So he pleaded for their partnership.
“I am the eternal optimist,” he said Feb. 9, 2009 in the East Room of the White House, wearing a red tie. “I think that, over time, people respond to civility and -- and rational argument.”
Four years later, this time with an improving economy threatened by a showdown with Republicans over the debt ceiling, Obama arrived in the East Room for the final news conference of his first term, wearing his party’s color -- a blue tie -- and issuing an ultimatum.
“Republicans in Congress have two choices here: They can act responsibly, and pay America’s bills, or they can act irresponsibly, and put America through another economic crisis,” he said. “But they will not collect a ransom in exchange for not crashing the American economy.”
Obama, who took the oath of office from Chief Justice John Roberts today at a small ceremony in the White House, has shed the aura of a hopeful consensus builder determined to break partisan gridlock. Instead, the Democratic president has adopted a more confrontational stance, refusing to negotiate with Republicans over the debt ceiling and asserting executive authority on gun control.
“He’s much more battle hardened in terms of understanding that the opposition may not just be subject to sitting down and reasoning together,” said John Podesta, who was former President Bill Clinton’s chief of staff. “He’s shaping the battlefield now, with a much keener understanding of what the opposition looks like.”
That approach is easier for the incumbent president because he is now focused on governing without having one eye on his re-election.
Obama’s first term was largely consumed by repairing economic wreckage from the 2008 financial crisis and getting his health care law passed. His next four years -- and ultimately his legacy -- may be judged by how much he can accomplish in an era of domestic political dysfunction and persistent international challenges.
The U.S. economy, the world’s largest, will continue to color the debate. While it grew at a 3.1 percent rate in the third quarter, this year will bring growth of just 2 percent, according to the median estimate of economists surveyed by Bloomberg. Forecasters expect the unemployment rate to remain at or above 7 percent through 2014.
Still, U.S. stocks closed at a five-year high last week and Treasuries rose for the fifth time in six days on prospects of a short-term lift of the debt ceiling. The Standard & Poor’s 500 Index increased 0.3 percent to 1,485.83 at 4 p.m. in New York on Jan. 18 and the Dow Jones Industrial Average added 54 points to 13,649.54. Yields on 10-year Treasuries slid four basis points to 1.84 percent.
Many of Obama’s predecessors were brought low in their second terms by scandal, policy blunders, hubris, even crime. In recent weeks, Obama has been reading up on second terms, reviewing past inaugural addresses, and dining with presidential historians at the White House. He solicited advice while golfing with Clinton, a fellow Democrat who served two terms.
Obama’s been cautioned against the pitfalls of insularity for second-term presidents who, emboldened by re-election, risk losing touch with voters and political realities. Obama has always depended on a core group of advisers, several of whom have left the West Wing. Yet as he’s building his new team, Obama hasn’t so far put a premium on expanding his inner circle.
Senior advisers including Valerie Jarrett, Pete Rouse and Denis McDonough, a deputy national security adviser who Obama probably will elevate to chief of staff, have been with him since his days in the U.S. Senate. While there’s strength in loyalty, historians and White House veterans say a president needs to welcome divergent opinions.
“He needs to bring to in a diverse group of people, new blood, new thinking that will push this administration into higher gear,” said Podesta, who oversaw Obama’s transition into office four years ago. “He’ll be more or less successful based on whether he can make that transition.”
An energized, fresh core also can counteract the pattern of presidents losing the top talent who served in the first term, said H.W. Brands, a presidential historian at the University of Texas at Austin.
“When you get elected the first time, you get your first draft pick,” said Brands, who is part of the group of historians that periodically meets with Obama, most recently over dinner on Jan. 10. “When you get to the second term, you’re working on second string.”
Obama, 51, needs aides who can tell him he’s wrong and who he will listen to, according to David Axelrod, Obama’s campaign strategist.
“It’s always hard to tell the president stuff that he doesn’t want to hear,” said Axelrod, who insisted Obama has several aides who can perform that task. “It may be more imperative now than ever.”
Obama’s performance in the first debate of the 2012 campaign, which his own advisers regarded as poor, highlighted his insular tendencies. He relied on a small group to prepare him. During rehearsals, he exhibited symptoms of what one aide diagnosed as the Presidency Disease, a flat-footedness that results from being rarely challenged.
He has also bucked advice to reach outside the White House to develop relationships with other Democrats as well as Republicans.
“He needs to have a reservoir of good will, and fundamental to that is building trusting relationships on Capitol Hill,” said Ken Duberstein, a chief of staff to former President Ronald Reagan.
In his last news conference, Obama brushed aside a question about whether he needed to socialize more. He said Republicans have turned down his invitations.
“I think there are a lot of Republicans at this point that feel that, given how much energy has been devoted in some of the media that’s preferred by Republican constituencies to demonize me, that it doesn’t look real good socializing with me,” Obama said.
One guide for Obama may be his own foreign policy approach.
He’s assembled an infrastructure of independent and bipartisan advisers, such as Secretary of State Hillary Clinton, and empowered them to execute the administration’s policies. He took risks by ordering the raid that killed al-Qaeda leader Osama bin Laden and escalating a secret drone war to root out terrorists. He’s forged relationships with foreign leaders that helped stem the contagion from Europe’s debt crisis.
“He needs to draw on that experience and apply it in the domestic sphere,” said Podesta. “How do you get the most out of a really talented group of people? How do you engage in a way where everything isn’t a zero sum game with partisan opponents?”
His advisers say the president has learned the value of bypassing Congress, pursuing goals through executive actions instead of legislation, and marshaling public opinion. His inaugural address on tomorrow and the State of the Union speech on Feb. 12 will set the tone as he pushes for immigration, gun control and raising the debt ceiling.
“The powers of the presidency are largely rhetorical,” said Axelrod. “Power is limited in many ways by politics. What the president does have is the bully pulpit.”
Unveiling his administration’s proposals to curb gun violence last week, Obama announced a host of legislative proposals, including an assault-weapons ban that even his aides concede may not pass in Congress. He appealed for public support, saying the country’s gun culture won’t change “unless the American people demand it.”
On the debt ceiling fight, aides said Obama has stood his ground against Republicans even at the risk of a default on the nation’s credit because it’s important for both future negotiations and to preserve the institution of the presidency.
There are signs his hardball strategy is being taken seriously on Capitol Hill. Republicans last week announced they would vote to extend the debt ceiling for three months, backing away from their insistence that any increase in the nation’s borrowing limit be accompanied by equal spending cuts.
“He’s a constitutional lawyer who really is trained on the legislative process that interests him. But the dynamics of our time, the tea leaves, have forced him to be much more of an executive power president,” said Douglas Brinkley, a presidential historian at Rice University in Houston, who also dined with Obama earlier this month.
Shortly after his re-election, Obama held a meeting in the Roosevelt Room of the White House to map a strategy for his year-end confrontation with congressional Republicans over taxes and spending.
“He’ll often say, ‘I get how we’ll win the positioning here. But tell me how we’re actually going to accomplish it,’” said senior adviser David Plouffe.
In his second term, Obama has said he wants to accomplish a rewriting of immigration laws and the tax code and to continue boosting economic growth. He also wants his health care law implemented successfully, so that it’s regarded in the same positive light as Medicare and Social Security, helping solidify his legacy, aides said.
Just as Ronald Reagan’s vision of smaller government shifted the political debate in the U.S. for 30 years, Obama seeks to leave a lasting shift back to the positive role that it can play.
Like Reagan, Obama has offered soaring oratory to reach his goals. His challenge for the next four years is tapping his “eternal optimist” while keeping a sharp edge for adversaries.
Reagan and John F. Kennedy are among the few former presidents from the last 50 years who have a special place in public memory because of the hope they stirred, according to presidential historian Robert Dallek, who participated in this month’s dinner with Obama.
“They still inspire a degree of optimism, hope, positive feeling,” said Dallek. “It’s very difficult to sustain that, especially when you’re in office and reality is nipping at your heels.”
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