Full transcript of Obama’s speech on the economy in Cleveland, Ohio

Washington Post reprint

Thursday, June 14, 12:28 PM

Full transcript of President Obama’s June 14 speech on the economy at Cuyahoga Community College in Cleveland, Ohio:

OBAMA: Thank you. Thank you. Thank you, everybody. Thank you very much. Thank you so much.

Well, good afternoon, everybody. It is great to be back in Cleveland. (APPLAUSE)

It is great to be back here at Cuyahoga Community College.

(APPLAUSE)

I -- I want to first of all thank Angela (ph) for her introduction and sharing her story. I know her daughter is very proud of her. I know her daughter’s here today. So give her a big round of applause.

I want to thank your president, Dr. Jerry Sue Thornton.

(APPLAUSE)

And I want to thank some members of Congress who made the trip today, Representatives Marcia Fudge...

(APPLAUSE)

... Representative Betty Sutton...

(APPLAUSE)

... and Representative Marcy Kaptur.

(APPLAUSE)

Now, those of you who have a seat, feel free to sit down.

(LAUGHTER)

So...

AUDIENCE MEMBER: We love you, Obama!

OBAMA: Thank you.

AUDIENCE: Four more years! Four more years!

OBAMA: Thank you.

So, Ohio, over the next five months, this election will take many twists and many turns, polls will go up and polls will go down, there will be no shortage of gaffes and controversies that keep both campaigns busy and give the press something to write about.

You may have heard I recently made my own unique contribution to that process.

(LAUGHTER)

It wasn’t the first time. It won’t be the last.

(LAUGHTER)

And in the coming weeks, Governor Romney and I will spend time debating our records and our experience, as we should. But though we will have many differences over the course of this campaign, there is one place where I stand in complete agreement with my opponent: This election is about our economic future.

(APPLAUSE)

Yes, foreign policy matters, social issues matter. But more than anything else, this election presents a choice between two fundamentally different visions of how to create strong, sustained growth; how to pay down our long-term debt; and most of all, how to generate good, middle-class jobs so people can have confidence that if they work hard, they can get ahead.

(APPLAUSE)

Now, this isn’t some abstract debate. This is not another trivial Washington argument. I have said that this is the defining issue of our time and I mean it. I said that this is a make-or-break moment for America’s middle class, and I believe it.

OBAMA: The decisions we make in the next few years, on everything from debt to taxes to energy and education, will have an enormous impact on this country, and on the country we pass on to our children.

Now, these challenges are not new. We’ve been wrestling with these issues for a long time. The problems we’re facing right now have been more than a decade in the making.

And what is holding us back is not a lack of big ideas. It isn’t a matter of finding the right technical solution. Both parties have laid out their policies on the table for all to see.

What’s holding us back is a stalemate in Washington between two fundamentally different views of which direction America should take. And this election is your chance to break that stalemate.

(APPLAUSE)

At stake is not simply a choice between two candidates or two political parties, but between two paths for our country. And while there are many things to discuss in this campaign, nothing is more important than an honest debate about where these two paths would lead us.

Now, that debate has an understanding of where we are and how we got here.

Long before the economic crisis of 2008 the basic bargain at the heart of this country has begun to erode.

For more than a decade, it had become harder to find a job that paid the bills, harder to save, harder to retire, harder to keep up with rising costs of gas and health care and college tuitions.

You know that. You lived it.

(APPLAUSE)

OBAMA: During that decade there was a specific theory in Washington about how to meet this challenge.

We were told that huge tax cuts, especially for the wealthiest Americans, would lead to faster job growth. We were told that fewer regulations, especially for big financial institutions and corporations, would bring about widespread prosperity. We were told that it was OK to put two wars on the nation’s credit card; that tax cuts would create a enough growth to pay for themselves.

That’s what we were told.

So how did this economic theory work out?

(CROSSTALK)

OBAMA: For the wealthiest Americans it worked out pretty well.

Over the last few decades the income of the top 1 percent grew by more than 275 percent, to an average of $1.3 million a year. Big financial institutions, corporations saw their profits soar.

But prosperity never trickled down to the middle class. From 2001 to 2008 we had the slowest job growth in half a century. The typical family saw their incomes halt.

The failure to pay for the tax cuts and the wars took us from record surpluses under President Bill Clinton to record deficits. And it left us unprepared to deal with the retirement of an aging population that’s placing a greater strain on programs like Medicare and Social Security.

OBAMA: Without strong enough regulations, families were enticed and sometimes tricked into buying homes they couldn’t afford. Banks and investors were allowed to package and sell risky mortgages. Huge reckless bets were made with other people’s money on the line. And too many, from Wall Street to Washington, simply looked the other way.

For a while credit cards and home equity loans papered over the reality of this new economy. People borrowed money to keep up.

But the growth that took place during this time period turned out to be a house of cards. And in the fall of 2008 it all came tumbling down with a financial crisis that plunged the world into the worst economic crisis since the Great Depression.

Here in America families’ wealth declined at a rate nearly seven times faster than when the market crashed in 1929. Millions of homes were foreclosed, our deficit soared, and 9 million of our citizens lost their jobs; 9 million hardworking Americans who had met their responsibilities but were forced to pay for the irresponsibility of others.

In other words, this was not your normal recession.

Throughout history it has typically taken countries up to 10 years to recover from financial crises of this magnitude. Today the economies of many European countries still aren’t growing and their unemployment rate averages around 11 percent.

But here in the United States, Americans showed their grit and showed their determination.

OBAMA: We acted fast. Our economy started growing again six months after I took office and it has continued to grow for the last three years.

(APPLAUSE)

Our businesses have gone back to basics and created over 4 million jobs in the last 27 months; more private sector jobs than were created during the entire seven years before this crisis, in a little over two years.

(APPLAUSE)

Manufacturers have started investing in America again, including right here in Ohio.

(APPLAUSE)

And across America, we’ve seen them create almost 500,000 jobs in the last 27 months, the strongest period of manufacturing job growth since 1995.

(APPLAUSE)

And when my opponents and others were arguing that we should let Detroit go bankrupt, we made a bet on American workers and the ingenuity of American companies and today our auto industry is back on top of the world.

(APPLAUSE)

OBAMA: But let’s be clear: Not only are we digging out of a hole that is 9 million jobs deep, we’re digging out from an entire decade where 6 million manufacturing jobs left our shores; where costs rose but incomes and wages didn’t; and where the middle class fell further and further behind.

So recovering from the crisis of 2008 has always been the first and most urgent order of business, but it’s not enough. Our economy won’t be truly healthy until we reverse that much longer and profound erosion of middle-class jobs and middle-class incomes.

So the debate in this election is not about whether we need to grow faster, or whether we need to create more jobs, or whether we need to pay down our debt.

Of course the economy isn’t where it needs to be. Of course we have a lot more work to do. Everybody knows that.

The debate in this election is about how we grow faster, and how we create more jobs, and how we pay down our debt. That’s the question facing the American voter.

(APPLAUSE)

And in this election, you have two very different visions to choose from.

AUDIENCE MEMBER: No we don’t!

(LAUGHTER)

OBAMA: Now, Governor Romney and his allies in Congress believe deeply in the theory we tried during the last decade, the theory that the best way to grow the economy is from the top down.

OBAMA: So they maintain that if we eliminate most regulations, we cut taxes by trillions of dollars, if we strip down government to national security and few other basic functions, then the power of businesses to create jobs and prosperity will be unleashed and that will automatically benefit us all.

That’s what they believe. This -- this is their economic plan. It has been placed before Congress. Governor Romney has given speeches about it, and it’s on his website.

So if they win the election their agenda will be simple and straightforward; they have spelled it out. They promise to roll back regulations on banks and polluters, on insurance companies and oil companies. They’ll roll back regulations designed to protect consumers and workers.

They promise to not only keep all of the Bush tax cuts in place, but add another $5 trillion in tax cuts on top of that.

Now, an independent study said that about 70 percent of this new $5 trillion tax cut would go to folks making over $200,000 a year. And folks making over a million dollars a year would get an average tax cut of about 25 percent.

Now, this is not my opinion. This is not political spin. This is precisely what they have proposed.

Now, your next question may be: How do you spend $5 trillion on a tax cut and still bring down the deficit?

Well, they tell us they’ll start by cutting nearly a trillion dollars from the part of our budget that includes everything from education and job training, to medical research and clean energy.

(BOOING)

OBAMA: Now, I -- I want to be very fair here. I want to be clear.

They haven’t specified exactly where the knife would fall, but here’s some of what would happen if that cut that they proposed was spread evenly across the budget.

10 million college students would lose an average of a thousand dollars each on financial aid. 200,000 children would lose the chance to get an early education in the Head Start program. There would be 1,600 fewer medical research grants for things like Alzheimer’s and cancer and AIDS; 4,000 fewer scientific research grants, eliminating support for 48,000 researchers, students and teachers.

Now, again, they have not specified which of these cuts they choose from, but if they want to make smaller cuts to areas like science or medical research, then they’d have to cut things like financial aid or education even further.

But either way, the cuts to this part of the budget would be deeper than anything we’ve ever seen in modern times.

Not only does their plan eliminate health insurance for 33 million Americans by repealing the Affordable Care Act, according to the independent Kaiser Family Foundation, it would also take away coverage from another 19 million Americans who rely on Medicaid, including millions of nursing home patients and families who have children with autism and other disabilities.

OBAMA: And they propose turning Medicare into a voucher program, which will shift more costs to seniors and eventually end the program as we know it.

But it doesn’t stop there.

Even if you make all the cuts that they’ve proposed, the math still doesn’t allow you to pay for a new $5 trillion tax cut and bring down the deficit at the same time.

So Mr. Romney and his allies have told us we can get the rest of the way there by reforming the tax code and taking away certain tax breaks and deductions that, again, they haven’t specified. They haven’t named them, but they said we can do it.

But here’s the problem: The only tax breaks and deductions that get you anywhere close to $5 trillion are those that help middle-class families afford health care and college and retirement and homeownership.

Without those tax benefits, tens of millions of middle-class families will end up paying higher taxes. Many of you would end up paying higher taxes to pay for this other tax cut.

And keep in mind that all of this is just to pay for their new $5 trillion tax cut. If you want to close the deficit left by the Bush tax cuts, we’d have to make deeper cuts or raise middle-class taxes even more.

OBAMA: This is not spin. This is not my opinion. These are facts. This is what they’re presenting as their plan. This is their vision.

There is nothing new, just what Bill Clinton has called the same ideas they’ve tried before except on steroids.

(LAUGHTER)

Now -- now, I understand I’ve got a lot of supporters here, but I -- I wanna speak to everybody who is watching who may not be a supporter, may be undecided ore thinking about voting the other way.

If you agree with the approach I just described, if you want to give the policies of the last decade another try, then you should vote for Mr. Romney.

(BOOING)

Now, like I said, I know I’ve got supporters here.

AUDIENCE MEMBERS: (inaudible)

OBAMA: No, no. You should vote for his allies in Congress. You should take them for their word and they will take America down this path.

And Mr. Romney is qualified to deliver on that plan.

(LAUGHTER)

No, he is.

(APPLAUSE)

I am giving you an honest presentation of what he’s proposing. I’m looking forward to the press following up and making sure that you know I’m not exaggerating.

I believe their approach is wrong.

(APPLAUSE)

OBAMA: And -- and I’m not alone. I have not seen a single independent analysis that says my opponent’s economic plan would actually reduce the deficit. Not one. Even analysts who may agree with parts of his economic theory don’t believe that his plan would create more jobs in the short term.

They don’t claim his plan would help folks looking for work right now. In fact, just the other week one economist from Moody’s said the following about Mr. Romney’s plan, and I’m quoting here: “On net, all of these policies would do more harm in the short term. If we implemented all of his policies it would push us deeper into recession and make the recovery slower.”

That’s not my spin. That’s not my opinion. That’s what independent economic analysis says.

As for the long term, remember that the economic vision of Mr. Romney and his allies in Congress was tested just a few years ago. We tried this. Their policies did not grow the economy. They did not grow the middle class. They did not reduce our debt.

Why would we think that they would work better this time?

(APPLAUSE)

We can’t afford to jeopardize our future by repeating the mistakes of the past. Not now. Not when there’s so much at stake.

(APPLAUSE)

I’ve got a different vision for America.

(APPLAUSE)

I believe that you can’t bring down the debt without a strong and growing economy. And I believe you can’t have a strong and growing economy without a strong and growing middle class.

(APPLAUSE)

OBAMA: This has to be our north star, an economy that’s built not from the top down but from a growing middle class; that provides ladders of opportunities for folks who aren’t yet in the middle class.

You see, we’ll never be able to compete with some countries when it comes to paying workers lower wages or letting companies do more polluting. That’s a race to the bottom that we should not want to win, because those countries don’t have a strong middle class, they don’t have our standard of living.

(APPLAUSE)

The race I want us to win -- a race I know we can win -- is a race to the top. I see an America with the best-educated, best- trained workers in the world; an America with a commitment to research and development that is second to none, especially when it comes to new sources of energy and high-tech manufacturing.

I see a country that offers businesses the fastest, most reliable transportation and communications systems of anywhere on Earth.

(APPLAUSE)

I see a future where we pay down our deficit in a way that is balanced -- not by placing the entire burden on the middle class and the poor, but by cutting out programs we can’t afford and asking the wealthiest Americans to contribute their fair share.

(APPLAUSE)

That’s my vision for America: education, energy, innovation, infrastructure, and a tax code focused on American job creation and balanced deficit reduction.

(APPLAUSE)

OBAMA: This is the vision behind the jobs plan I sent Congress back in September, a bill filled with bipartisan ideas that, according to independent economists, would create up to 1 million additional jobs if passed today.

This is the vision behind the deficit plan I sent to Congress back in September, a detailed proposal that would reduce our deficit by $4 trillion through shared sacrifice and shared responsibility.

This is the vision I intend to pursue in my second term as president because I believe...

(APPLAUSE)

... because -- because I believe if we do these things -- if we do these things more companies will start here and stay here and hire here, and more Americans will be able to find jobs that support a middle class lifestyle.

Understand, despite what you hear from my opponent, this has never been a vision about how government creates jobs or has the answers to all our problems.

Over the last three years I’ve cut taxes for the typical working family by $3,600.

(APPLAUSE)

I’ve cut taxes for small businesses 18 times.

(APPLAUSE)

I have approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his.

OBAMA: And I’m implementing over 500 reforms to fix regulations that were costing folks too much for no reason.

I’ve asked Congress for the authority to reorganize the federal government that was built for the last century. I want to make it work for the 21st century.

(APPLAUSE)

OBAMA: A federal government that is leaner and more efficient and more responsive to the American people.

I’ve signed a law that cuts spending and reduces our deficit by $2 trillion. My own deficit plan would strengthen Medicare and Medicaid for the long haul by slowing the growth of health care costs -- not shifting them to seniors and vulnerable families.

(APPLAUSE)

OBAMA: And my plan would reduce our yearly domestic spending to its lowest level as a share of the economy in nearly 60 years.

So, no, I don’t believe the government is the answer to all our problems. I don’t believe every regulation is smart or that every tax dollar is spent wisely. I don’t believe that we should be in the business of helping people who refuse to help themselves.

(APPLAUSE)

But I do share the belief of our first Republican president from my home state, Abraham Lincoln, that through government we should do together what we cannot do as well for ourselves.

That’s how we built this country -- together. We constructed railroads and highways, the Hoover Dam and the Golden Gate Bridge. We did those things together.

We sent my grandfather’s generation to college on the G.I. Bill together. We instituted a minimum wage and rules that protected people’s bank deposits together.

(APPLAUSE)

Together, we touched the surface of the moon, unlocked the mystery of the atom, connected the world through our own science and imagination. We haven’t done these things as Democrats or Republicans. We’ve done them as Americans.

(APPLAUSE)

OBAMA: As much as we might associate the G.I. Bill with Franklin Roosevelt or Medicare with Lyndon Johnson, it was a Republican, Lincoln, who launched the Trans-Continental Railroad, the National Academy of Sciences, land grant colleges.

It was a Republican, Eisenhower, who launched the Interstate Highway System and a new era of scientific research.

It was Nixon who created the Environmental Protection Agency; Reagan who worked with Democrats to save Social Security and who, by the way, raised taxes to help pay down an exploding deficit.

(APPLAUSE)

Yes, there have been fierce arguments throughout our history between both parties about the exact size and role of government, some honest disagreements. But in the decades after World War II there was a general consensus that the market couldn’t solve all of our problems on its own; that we needed certain investments to give hard-working Americans skills they needed to get a good job and entrepreneurs the platforms they needed to create good jobs; and we needed consumer protections that made American products safe and American markets sound.

OBAMA: In the last century, this consensus, this shared vision led to the strongest economic growth and the largest middle class that the world has ever known. It led to a shared prosperity.

It is this vision that has guided all my economic policies during my first term as president, whether in the design of a health care law that relies on private insurance or an approach to Wall Street reform that encourages financial innovation, but guards against reckless risk-taking.

It’s this vision that Democrats and Republicans used to share, that Mr. Romney and the current Republican Congress have rejected in favor of a no-holds-barred government-is-the-enemy market-is- everything approach.

And it is this shared vision that I intend to carry forward in this century as president because it is a vision that has worked for the American middle class and everybody who’s striving to get into the middle class.

(APPLAUSE)

Let -- let me be more specific.

Think about it: In an age where we know good jobs depend on high skills, now is not the time to scale back our commitment to education.

(APPLAUSE)

OBAMA: Now’s the time to move forward and make sure we have the best-educated, best-trained workers in the world.

(APPLAUSE)

My plan for education doesn’t just rely on more money or more dictates from Washington. We’re -- we’re challenging every state and school district to come up with their own innovative plans to raise student achievement. And they’re doing just that.

I want to give schools more flexibility so that they don’t have to teach to the test and so they can remove teachers who just aren’t helping our kids learn.

(APPLAUSE)

But, look, if we want our country to be a magnet for middle class jobs in the 21st century we also have to invest more in education and training. I want to recruit an army of new teachers and pay teachers better and train more of them in areas like math and science.

(APPLAUSE)

I have a plan to give 2 million more Americans the chance to go to community colleges just like this one and learn the skills that businesses are looking for right now.

(APPLAUSE)

I have a plan to make it easier for people to afford a higher education that’s essential in today’s economy.

And if we truly want to make this country a destination for talent and ingenuity from all over the world, we won’t deport hardworking, responsible young immigrants who have grown up here or received advanced degrees here. We’ll let them earn the chance to become American citizens so they can grow our economy and start new businesses right here instead of someplace else.

(APPLAUSE)

OBAMA: Now is not the time to go back to a greater reliance on fossil fuels from foreign countries. Now is the time to invest more in the clean energy that we can make right here in America.

(APPLAUSE)

My plan for energy doesn’t ignore the vast resources we already have in this country. We’re -- we’re producing more oil than we have in over a decade.

But if we truly want to gain control of our energy future, we’ve got to recognize that pumping more oil isn’t enough. We have to encourage the unprecedented boom in American natural gas. We have to provide safe nuclear energy and the technology to help coal burn cleaner than before.

We have to become the global leader in renewable energy, wind and solar and the next generation of biofuels, in electric cars and energy-efficient buildings.

(APPLAUSE)

So my plan would end the government subsidies to oil companies that have rarely been more profitable.

(APPLAUSE)

Let’s double down on a clean energy industry that has never been more promising.

And I want to put in place a new clean energy standard that creates a market for innovation, an approach that would make clean energy the profitable kind of energy for every business in America.

With growing competition from countries like China and India, now is not the time for America to walk away from research and development. Now is the time to invest even more...

(APPLAUSE)

... so that the great innovations of this century take place in the United States of America, so that the next Thomas Edison, the next Wright brothers, it’s happening here in Ohio, or Michigan, or California. (APPLAUSE)

My plan to encourage innovation isn’t about throwing money at just any project or new idea. It’s about supporting the work of our most promising scientists, our most promising researchers and entrepreneurs.

My plan would make the R&D tax credit permanent, but the private sector can’t do it alone, especially when it comes to basic research. It’s not always profitable in the short term.

And in the last century, research that we funded together through our tax dollars helped lay the foundation for the Internet and GPS and Google and the countless companies and jobs that followed.

OBAMA: The private sector came in and -- and created these incredible companies, but we together made the initial investment to make it possible.

It’s given rise to miraculous cures that have reduced suffering and saved lives.

This has always been America’s biggest economic advantage -- our science and our innovation. Why would we reverse that commitment right now when it’s never been more important, at a time when we have so much deferred maintenance on our nation’s infrastructure, schools that are crumbling, roads that are broken, bridges that are buckling?

Now is not the time to saddle American businesses with crumbling roads and bridges. Now is the time to rebuild America.

(APPLAUSE)

So my plan would take half the money we’re no longer spending on war, let’s use it to do some nation-building here at home. Let’s put some folks to work right here at home.

(APPLAUSE)

My plan would get rid of pet projects and government boondoggles and bridges to nowhere.

(LAUGHTER)

But if we want businesses to come here and to hire here, we have to provide the highways and the runways and the ports and the broadband access, all of which move goods and products and information across the globe.

My plans sets up an independent fund to attract private dollars and issue loans for new construction projects based on two criteria: How badly are they needed? And how much good will they do for the economy?

(APPLAUSE)

And finally, I think it’s time we took on our fiscal problems in an honest, balanced, responsible way. Everybody agrees that our deficits and debt are an issue that we’ve got to tackle.

My plan to reform the tax code recognizes that government can’t bring back every job that’s been outsourced or every factor that’s closed its doors.

OBAMA: But we sure can stop giving tax breaks to businesses that ship jobs overseas and start rewarding companies that create jobs right here in the United States of America, in Ohio, in Cleveland, in Pennsylvania.

(APPLAUSE)

And if we want to get the deficit under control, really, not just pretending to during election time...

(APPLAUSE)

... not just saying you really care about it when somebody else is in charge and then you don’t care when you’re in charge, if you want to really do something about it...

(APPLAUSE)

... if you really want to get the deficit under control without sacrificing all the investments that I’ve talked about, our tax code has to ask the wealthiest Americans to pay a little bit more.

(APPLAUSE)

Just like they did when Bill Clinton was president, just like they did when our economy created 23 million new jobs, the biggest budget surplus in history, and a lot of millionaires to boot.

And here’s the good news: There are plenty of patriotic, very successful Americans who’d be willing to make this contribution again.

(APPLAUSE)

Look, we have no choice about whether we pay down our deficit. But we do have a choice about how we pay down our deficit. We do have a choice about what we can do without and where our priorities lie.

I don’t believe that giving someone like me a $250,000 tax cut is more valuable to our future than hiring transformative teachers or providing financial aid to the children of a middle-class family.

(APPLAUSE)

OBAMA: I don’t believe that tax cut is more likely to create jobs than providing loans to new entrepreneurs or tax credits to small-business owners who hire veterans.

I don’t believe it’s more likely to spur economic growth than investments in clean energy technology and medical research, or in new roads and bridges and runways.

I don’t believe that giving someone like Mr. Romney another huge tax cut is worth ending the guarantee of basic security we’ve always provided the elderly and the sick and those who are actively looking for work.

(APPLAUSE)

Those things don’t make our economy weak. What makes our economy weak is when fewer and fewer people can afford to buy the goods and services our businesses sell.

(APPLAUSE)

Businesses don’t have customers if folks are having such a hard time.

What drags us all down is an economy in which there’s an ever- widening gap between a few folks who are doing extraordinarily well and a growing number of people who, no matter how hard they work, can barely make ends meet.

(APPLAUSE)

So Governor Romney disagrees with my vision. His allies in Congress disagree with my vision. Neither of them will endorse any policy that asks the wealthiest Americans to pay even a nickel more in taxes.

It’s the reason why we haven’t reached a grand bargain to bring down our deficit; not with my plan, not with the Bowles-Simpson plan, not with the so-called Gang of Six plan.

Despite the fact that taxes are lower than they’ve been in decades, they won’t work with us on any plan that would increase taxes on our wealthiest Americans.

OBAMA: It’s the reason a jobs bill that would put 1 million people back to work has been voted down time and time again. It’s the biggest source of gridlock in Washington today.

And the only thing that can break the stalemate is you.

(APPLAUSE)

You see, in our democracy, this remarkable system of government, you, the people, have the final say.

(APPLAUSE)

This November is your chance to render a verdict on the debate over how to grow the economy, how to create good jobs, how to pay down our deficit. Your vote will finally determine the path that we take as a nation, not just tomorrow, but for years to come.

(APPLAUSE)

When you strip everything else away, that’s really what this election is about. That’s what is at stake right now. Everything else is just noise. Everything else is just a distraction.

(APPLAUSE)

From now until then, both sides will spend tons of money on TV commercials. The other side will spend over a billion dollars on ads that tell you the economy is bad, that it’s all my fault...

(LAUGHTER)

... that I can’t fix it because I think government is always the answer or because I didn’t make a lot of money in the private sector and don’t understand it or because I’m in over my head or because I think everything and everybody is doing just fine.

That’s what the scary voice in the ads will say.

(LAUGHTER)

That’s what Mr. Romney will say.

OBAMA: That’s what the Republicans in Congress will say.

Well, you know, that may be their plan to win the election, but it’s not a plan to create jobs.

(APPLAUSE)

It’s not a plan to grow the economy. It’s not a plan to pay down the debt. And it’s sure not a plan to revive the middle class and secure our future. I think you deserve better than that.

(APPLAUSE)

At a moment this big, a moment when so many people are still struggling, I think you deserve a real debate about the economic plans we’re promoting. Governor Romney and the Republicans who run Congress believe that if you simply take away regulations and cut taxes by trillions of dollars, the market will solve all of our problems on its own. If you agree with that, you should vote for them. And I promise you, they will take us in that direction.

I believe we need a plan for better education and training and for energy independence and for new research and innovation, for rebuilding our infrastructure, for a tax code that creates jobs in America and pays down our debt in a way that’s balanced.

I have that plan. They don’t. And if you agree with me, if you believe this economy grows best when everybody gets a fair shot, and everybody does their fair share, and everybody plays by the same set of rules, then I ask you stand with me for a second term as president.

(APPLAUSE)

In fact -- in fact, I’ll -- I’ll take it a step further. I ask your vote for anyone else, whether they’re Democrats, independents, or Republicans who share your view about how America should grow. I will work with anyone of any party who believes that we’re in this together, who believes that we rise or fall as one nation and as one people.

(APPLAUSE)

OBAMA: Because -- because I’m convinced that there’re actually a lot of Republicans out there who may not agree with every one of my policies but who still believe in a balanced, responsible approach to economic growth and who remember the lessons of our history, and who don’t like the direction their leaders are taking them.

And let me -- let me leave you with one last thought: As you consider your choice in November...

(AUDIENCE CHEERS)

OBAMA: Don’t let anybody tell you that the challenges we face right now are beyond our ability to solve.

You know, it’s hard not to get cynical when times are tough. And I’m reminded every day of just how tough things are for too many Americans.

Every day I hear from folks who are out of work or have lost their home. Across this country I meet people who are struggling to pay their bills, or older workers worried about retirement, or young people who are underemployed and burdened with debt.

I hear their voices when I wake up in the morning and those voices ring in my head when I lay down to sleep.

And in those voices I hear the echo of my own family’s struggles as I was growing up and Michelle’s family’s struggles when she was growing up, and the fears and the dashed hopes that -- that our parents and grandparents had to confront.

Well, you know what? In those voices I also hear a stubborn hope and a fierce pride and determination to overcome whatever challenges we face.

(APPLAUSE)

And in you the American people I’m reminded of all the things that tilt the future in our favor. We remain the wealthiest nation on Earth. We have the best workers and entrepreneurs, the best scientists and researchers, the best colleges and universities. We are a young country with the greatest diversity of talent and ingenuity drawn from every corner of the globe. So, yes, reforming our schools, rebuilding our infrastructure will take time. Yes, paying down our debt will require some tough choices and shard sacrifice. But it can be done. And we’ll be stronger for it.

(APPLAUSE)

OBAMA: And what’s lacking is not the capacity to meet our challenges, what is lacking is our politics. And that’s something entirely within your power to solve. So this November you can remind the world how a strong economy is built, not from the top down, but from a growing, thriving middle class.

This November, you can remind the world how it is that we’ve traveled this far as a country, not by telling everybody to fend for themselves but by coming together as one American family, all of us pitching in, all of us pulling our own weight, this November you can provide a mandate for the change we need right now. You can move this nation forward, and you can remind the world once again why the United States of America is still the greatest nation on Earth.

Thank you.

God bless you.

God bless the United States of America

Obama’s Second Term

Ryan Lizza

THE NEW YORKER

6 18 2012

 November, 1984, President Ronald Reagan was reëlected in a landslide victory over Walter Mondale, taking forty-nine states and fifty-nine per cent of the popular vote. The Reagan revolution was powerfully reaffirmed. Soon after, Donald Regan, the new chief of staff, sent word to a small group of trusted friends and Administration officials seeking advice on how Reagan should approach his last four years in office. It was an unusual moment in the history of the Presidency, and the experience of recent incumbents offered no guidance. No President since Dwight D. Eisenhower had served two full terms. John F. Kennedy was assassinated. Lyndon Johnson, overwhelmed by the war in Vietnam, had declined to run for reëlection in 1968. Richard Nixon resigned less than seventeen months into his second term. Gerald Ford (who was never elected) and Jimmy Carter were defeated. By the nineteen-eighties, it had become popular to talk about the crisis of the Presidency; a bipartisan group of Washington leaders, with Carter’s support, launched the National Committee for a Single Six-Year Presidential Term.

Regan’s effort to foresee a successful second term is documented in a series of memos at the Reagan Library. President Obama, who in November could face one of the tightest bids for reëlection in history, has periodically spoken of his admiration for Reagan. “Ronald Reagan changed the trajectory for America,” he told a Reno, Nevada, newspaper in early 2008. “He just tapped into what people were already feeling, which was we want clarity, we want optimism.” From the inception of his Presidential bid, Obama has sought to present himself as a leader with far-reaching ideas, and has prided himself on his ability to look past the politics of the moment. To the degree that he is able to ponder his strategy for the next four years, it’s natural to think he might steal a glance at the Reagan playbook. Responding to Regan’s confidential memo, Tom Korologos, an adviser to every Republican President from Nixon to George W. Bush, told the Reagan White House that the second term should be viewed from the standpoint of the President’s intended legacy.

“It seems to me that the President needs to decide what his legacy is going to be,” Korologos wrote on January 24, 1985, a few days after Reagan’s second inaugural. “What is he going to be the most proud of when he’s sitting at the ranch with Nancy four and five years after his Presidency? Is it going to be an arms control agreement? Is it going to be a balanced budget? Is it going to be world-wide economic recovery? Is it going to be a combination of all of this: peace and prosperity? . . . Every speech; every appearance; every foreign trip; every congressional phone call and every act involving the President should be made with the long-range goal in mind.”

Every President running for reëlection begins to think about his second term well before victory is assured. In early 2009, Rahm Emanuel, Obama’s first chief of staff, told me that the White House was already contemplating the Presidency in terms of eight years. He said that it was folly to try to accomplish everything in the first term. “I don’t buy into everybody’s theory about the final years of a Presidency,” Emanuel said. “There’s an accepted wisdom that in the final years you’re kind of done. Ronald Reagan, in the final years, got arms control, immigration reform, and created a separate new department,” that of Veterans Affairs.

Obama’s campaign is well aware that he may end up like Jimmy Carter or George H. W. Bush, the two most recent one-term Presidents, who were both defeated despite some notable—even historic—accomplishments, including the Camp David Accords, under Carter, and the Gulf War, under Bush. The country remains closely divided, and the economy is teetering again. After several months of relatively positive news, the employment report released in June was gloomy. Barring a disastrous revelation or blunder, Mitt Romney will be a more formidable opponent than many assumed during his rightward lurch to secure the Republican nomination.

Many White House officials were reluctant to discuss a second term; they are focussed more on the campaign than on what comes after. But the ostensible purpose of a political campaign is to articulate for the public what a candidate will do if he prevails. “It’s a tension,” David Axelrod, Obama’s longtime political adviser, said. “On the one hand, you don’t want to be presumptuous in assuming a second term. But campaigns are about the future, and there is an imperative to spell out where we’re going.”

Obama has an ambitious second-term agenda, which, at least in broad ways, his campaign is beginning to highlight. The President has said that the most important policy he could address in his second term is climate change, one of the few issues that he thinks could fundamentally improve the world decades from now. He also is concerned with containing nuclear proliferation. In April, 2009, in one of the most notable speeches of his Presidency, he said, in Prague, “I state clearly and with conviction America’s commitment to seek the peace and security of a world without nuclear weapons.” He conceded that the goal might not be achieved in his lifetime but promised to take “concrete steps,” including a new treaty with Russia to reduce nuclear weapons and ratification of the 1996 Comprehensive Nuclear Test-Ban Treaty.

In 2010, Obama negotiated a new Strategic Arms Reduction Treaty with the Russians and won its passage in the Senate. But, despite his promise to “immediately and aggressively” ratify the C.N.T.B.T., he never submitted it for ratification. As James Mann writes in “The Obamians,” his forthcoming book on Obama’s foreign policy, “The Obama administration crouched, unwilling to risk controversy and a Senate fight for a cause that the President, in his Prague speech, had endorsed and had promised to push quickly and vigorously.” As with climate change, Obama’s early rhetoric and idealism met the reality of Washington politics and his reluctance to confront Congress.

Obama’s advisers say it is more likely that the President would champion an issue with greater bipartisan support, such as immigration reform. Obama has also said that he hopes to have the time and the attention to address a more robust aid agenda for developing countries than he was able to muster in his first term. These issues will loom over his potential second term, awaiting a push from the President. So, too, will the lingering question of who Obama “really” is: an aspiring compromiser, a lawyerly strategist, or a bold visionary willing to gamble to secure his legacy.

Whatever goal Obama decides on, his opportunities for effecting change are slight. Term limits are cruel to Presidents. If he wins, Obama will have less than eighteen months to pass a second wave of his domestic agenda, which has been stalled since late 2010 and has no chance of moving this year. His best opportunity for a breakthrough on energy policy, immigration, or tax reform would come in 2013. By the middle of 2014, congressional elections will force another hiatus in Washington policymaking. Since Franklin Roosevelt, Presidents have lost an average of thirty House seats and seven Senate seats in their second midterm election. By early 2015, the press will begin to focus on the next Presidential campaign, which will eclipse a great deal of coverage of the White House. The last two years of Obama’s Presidency will likely be spent attending more assiduously to foreign policy and shoring up the major reforms of his early years, such as health care and financial regulation.

As William Daley, who served for a year as Obama’s chief of staff, put it, “After 2014, nobody cares what he does.”

II

Sooner or later, every reëlected President confronts the frustration lurking in a second term: reëlection to power does not necessarily grant more of it. Richard Nixon and his aides were obsessed with using a second term to take command of a federal government that they believed was hostile to the President and his agenda. “Faced with a bureaucracy we did not control, was not staffed with our people, and with which we did not know how to communicate, we created our own bureaucracy,” White House aides wrote in a 1972 memo found in the files of H. R. Haldeman, who later went to prison for covering up Watergate crimes.

Nixon gave his aides detailed directions about how to flush unsympathetic bureaucrats from the government after he won reëlection. Early in the 1972 campaign, he wrote his aides with instructions for a “housecleaning” at the C.I.A.:

I want a study made immediately as to how many people in CIA could be removed by presidential action. . . . Of course, the reduction in force should be accomplished solely on the ground of its being necessary for budget reasons, but you will both know the real reason. . . . I want you to quit recruiting from any of the Ivy League schools or any other universities where either the university president or the university faculties have taken action condemning our efforts to bring the war in Vietnam to an end.

Nixon’s paranoid theory was that none of his second-term priorities—from his China policy to his health-care plan—could be addressed until the White House controlled the rest of his government. The housecleaning efforts were not technically a part of Watergate, but they were a harbinger of his second-term self-immolation.

The Reagan Administration quickly grasped that whatever power it had gained through reëlection had to be spent judiciously. As part of Regan’s brainstorming exercise about the President’s second term, Alfred Kingon, then the Assistant Treasury Secretary, urged the President to choose his top priorities with care. The best that Reagan could hope for was victory on a few big initiatives. “Please remember that there are about 50 or 60 issues going at once,” Kingon wrote. “We can only keep track of 20 or 25, concentrate on a mere handful and hope to have legislative success in a fraction of that.”

James Baker, Reagan’s chief of staff preceding Regan, wrote to the President after the election and made a similar point. “Unlike the campaign in 1980, you have campaigned with little specificity,” he told the President. (Reagan’s “Morning in America” theme had not been burdened with detailed policy proposals.) “There are very many items that any right-thinking president would want to achieve,” Baker wrote. “But frankly, there are too many. You must set priorities.”

A key challenge for a second-term President lies in managing the delicate balance between what he wants (his priorities) and what he thinks the public wants (his perceived mandate)—and taking care not to confuse the two. George W. Bush was less adept at this than Reagan. Bush approached his second term with two broad goals. In foreign policy, he attempted to steer his White House away from the radicalism of the first four years. During the 2004 campaign, Bush came close to jettisoning the two people—Vice-President Dick Cheney and Defense Secretary Donald Rumsfeld—most associated with extreme views of how to handle post-9/11 foreign affairs. After the election, Cheney saw the influence of his principal ideological opponents—Stephen Hadley, the new national-security adviser, and Condoleezza Rice, the new Secretary of State—rise, especially on issues such as Syria, North Korea, and the Administration’s policy on torture. Cheney’s recent memoir boils with his indignation at being sidelined. At a National Security Council meeting in 2007, Cheney made the case for bombing a Syrian nuclear reactor. “After I finished,” he writes, “the President asked, ‘Does anyone here agree with the Vice President?’ Not a single hand went up around the room.”

Domestically, however, Bush miscalculated his position. Early in his second term, he made a strong play for Social Security reform; it failed miserably, for lack of Democratic backing. “If I had it to do over again, I would have pushed for immigration reform, rather than Social Security, as the first major initiative of my second term,” Bush lamented in his memoir. “Unlike Social Security, immigration reform had bipartisan support.”

In 2005, Bush won approval of an energy bill, a trade agreement, and a bankruptcy-reform bill. But the remainder of his Presidency was consumed by scandal (the Valerie Plame case, the N.S.A.’s warrantless wiretapping program, the firing of eight U.S. Attorneys for political reasons) and by badly managed catastrophes (Katrina, deterioration in Iraq, the crash of financial markets). The Democrats took over Congress in 2006, and on Election Day in 2008 Bush’s Gallup approval rating stood at twenty-five per cent.

There is an argument, common on the right, that if Obama is reëlected he will pursue a more ideological, even radical, agenda because he will be unbound by the moderating influence of another election. As Dick Morris, of Fox News, put it in March, “A second term for Obama would bring on a socialist nightmare hellscape as he moves further to the left.” This argument is often bolstered by noting that Obama recently told the Russian Prime Minister, Dmitry Medvedev, that he would have “more flexibility” to pursue negotiations on missile defense “after my election.” Ed Morrissey, of the conservative blog Hot Air, warned that the comment should cause voters “to fear an Obama second term.”

But a President who has won reëlection can also feel less tied to his political base and more free to shift toward the political center. At the start of Reagan’s second term, Kingon advised the White House that the victory had allowed him to pursue policies that would advance only with bipartisan support—a precondition for success, given that Democrats controlled the House. Kingon noted that only twenty per cent of Americans agreed with Reagan’s anti-abortion policy and that many Americans voted for Reagan “knowing that he believes in these things but understanding that he would not push for them.” He argued that this was the implicit promise of the Reagan reëlection campaign. Aggressively pursuing social issues, Kingon wrote, would substantially diminish the President’s political support, and would risk failure in other key areas. “I think it is important to remember that there is a point beyond which popular Presidential support erodes, and he can do nothing, e.g., Jimmy Carter,” Kingon warned.

Reagan largely heeded this advice, and he had one of the most successful second terms in American history. He passed immigration reform, a major reform of the tax code, and an arms-control treaty with the Soviets. He also appointed two conservative Supreme Court Justices, Antonin Scalia and Anthony Kennedy. He ended his Presidency with an approval rating of more than fifty-five per cent.

Obama entered office with what many considered a mandate. Taking advantage of large majorities in Congress, he spent the first two years passing major Democratic legislation: financial regulation and health-care reform. But the second two years were devoted to managing the gridlock created by the backlash against the first two, with a resurgent Republican Party intent on Obama’s defeat.

Axelrod told me that Obama has learned from recent history. “President Bush claimed a mandate after the last election and took steps that he never ran on,” Axelrod said, pointing to Bush’s miscalculation on Social Security. “You have to govern boldly, but with the humility of knowing that you can’t assume that people embrace your case—you have to make it, even after the election. The thing that trips you up, and certainly tripped up Bush, is the assumption that, if you win, somehow you can then embark on an agenda that is wholly different from the one you campaigned on.”

If Obama aims to leave a legislative mark in his second term, he’ll need two things: a sense of humility, and a revitalized faction of Republican lawmakers willing to make deals with the President. Given the polarized environment and the likelihood of a closely divided Congress, it seems more implausible to suppose that Obama would turn radical in his second term than that he would cool to his Democratic base.

III

After every Presidential election, the winner likes to declare why he won, often in terms that set the tone for the following year. “I earned capital in the campaign, political capital, and now I intend to spend it,” Bush said at his first post-election press conference on November 4, 2004. Cheney went further: “President Bush ran forthrightly on a clear agenda for this nation’s future. And the nation responded by giving him a mandate.” But, as his defeat on Social Security soon made clear, Bush had no mandate.

The idea of a mandate from the people defies the intentions of the Founders and is contrary to the way that most early Presidents viewed their role, according to Robert Dahl, the Yale political scientist. Early Presidents argued on behalf of their policies with appeals to the Constitution rather than to the people. Even Abraham Lincoln and Theodore Roosevelt, who asked for sweeping new executive powers, did so with strictly constitutional arguments rather than with populist ones.

The concept of a mandate was essentially invented by Andrew Jackson, who first popularized the notion that the President “is the direct representative of the American people,” and it was later institutionalized by Woodrow Wilson, who explicitly wanted the American government to be like the more responsive parliamentary system of the United Kingdom. Like Jackson, he argued that the President was the “one national voice in the country.” Every President since Wilson has at least implicitly adopted this theory, and the Presidential mandate has become enshrined in our national politics.

But the idea is mostly a myth. The President and Congress are equal, and when Presidents misinterpret election results—especially in reëlections—they get into trouble. In a 2006 book, “Mandate Politics,” the political scientists Lawrence J. Grossback, David A. M. Peterson, and James A. Stimson apply some fancy methodological techniques to congressional voting patterns and find only two modern cases in which Presidents had true mandates, which they define as elections that push members of the opposition party in Congress toward the President’s positions on key issues. This occurred in 1965, when Johnson passed the Voting Rights Act, and in early 1981, when sixty-three Democrats helped Reagan pass his first budget in the House. The media interpreted those elections as representing tectonic changes in politics, and members of Congress followed along. The changes in congressional behavior didn’t last long, but they enabled both Presidents to achieve major legislative victories in their first year.

But in 1965 and 1981 the two parties were still ideologically mixed. Liberal Northern Republicans voted with Johnson, and Reagan, even though the Democrats controlled the House, could rely on dozens of conservative Democrats to support his agenda. Unlike those periods when some members of Congress feared crossing the President, in 2009 almost all Republicans were willing to bet that Obama’s popularity was temporary. Instead of fearing a new Democratic tide and helping a popular President pass his agenda, almost all Republicans united in opposition, and in 2010 they took over the House and gained seats in the Senate. Obama’s aides speak of a victory in November not in sweeping terms of realignment but simply as an opportunity to nudge Republicans away from a policy of pure obstructionism and toward some limited compromise around a few key issues.

“The hope is that some of the moderate Republicans—if there are any left—are like, ‘Look, we tried it your way, we lost the election,’ ” a senior Obama adviser said. “You have to compromise in American politics and divided government. But it depends on whether the interpretation, if Obama wins, is that Republicans didn’t coöperate enough or that they coöperated too much.”

One thing is nearly certain: if Obama wins in November, his margin of victory will be among the narrowest in history. Since 1916, seven Presidents have won a second term, and all of them exceeded the percentage of the popular vote that they received in their first election. With each reëlection since Nixon’s, the President’s margin of victory over his opponent has steadily declined. In 1972, Nixon won another term by a popular-vote margin of twenty-three points. In 1984, Reagan won his reëlection by eighteen points. In 1992, Clinton won his by nine points. In 2004, Bush beat John Kerry by just 2.5 points, the smallest margin of victory for the reëlection of a President since the nineteenth century. Obama won in 2008 by seven points. If he manages to win this year, it is likely to be by less than that, which would make him the first President in a hundred and twenty-four years to win a second term by a smaller margin than in his initial election. Whatever a mandate is, Obama won’t have one.

IV

Reëlected Presidents often enjoy a brief respite after their second campaign. The new Congress isn’t sworn in until January, and the interregnum is used to hire new members of the Administration and plot out a fifth-year agenda. But the aftermath of the 2012 election will be unlike any other transition in memory. Election Day is November 6th. Fifty-five days later, on New Year’s Eve, the size and the scope of the federal government are scheduled to be radically altered. Federal tax rates for every income group will shoot up to levels not seen since 2001. Payroll taxes for employees will jump by two percentage points. Unemployment benefits for some three million Americans will be cut off. The Pentagon will start the new year with a fifty-five-billion-dollar budget cut. The budget allocated to everything from the F.B.I. to the Park Service to meat inspections will be slashed by the same amount. Soon after, federal payments to doctors who treat patients using Medicare, the federal health program for the elderly, will be slashed by about a third.

The huge increase in taxes and the precipitate drop in government spending would equal an economic contraction of more than five hundred billion dollars, more than three per cent of G.D.P. The impact could send a fragile economy back into a recession. “It’s two to three times bigger in negative terms than even the biggest year of the stimulus was in positive terms,” Austan Goolsbee, Obama’s former chairman of the Council of Economic Advisers, said. It is this frightening confluence of fiscal time bombs, starting on December 31, 2012, that has earned the name Taxmageddon.

What’s more, sometime in mid-February the government will reach the limit of its authority to borrow money. If Congress doesn’t raise the debt ceiling, the United States will default on its loans and will no longer be able to pay all its bills—to doctors, defense contractors, Social Security pensioners, Chinese bondholders, and almost anyone else who receives funds from the federal government.

Although the Presidential campaign seems to be dominated by absurd minutiae, such as Romney’s and Obama’s respective treatment of canines and Donald Trump’s theories about the President’s ancestry, at some point this year the debate will focus on the looming fiscal crash. When that happens, the election may end up being a referendum on what to do about it. Obama will need to beat back Romney’s charges that he’s a hapless economic steward, and somehow make the case—unpopular thus far—that the economy’s woes are best treated by raising taxes and spending. Yet, in a quirk of history, a reëlected Obama could suddenly find his best historical opportunity thrust upon him.

Here the arc of Obama’s Presidency begins to resemble that of Bill Clinton’s. Both pursued bold domestic agendas in their first two years before Republicans made large midterm gains in Congress, which led to repeated clashes over fiscal issues. The outcomes of Clinton’s battles, including the government shutdown of 1995, weren’t sorted out until after the 1996 Presidential election. An Obama Administration official told me, “The first year of Clinton’s second term was the resolution of the climactic moments of his third year. I suspect a similar opportunity will open up here.”

Clinton’s reëlection victory made possible a breakthrough on the budgetary issues that had divided him and Republicans for two years. “The ideal conditions for both sides to come together and get something done are when you have a President who is at the peak of his power but is not going to benefit politically from it,” the official said. Solving Taxmageddon would be a major policy achievement, and Obama could argue that he had fulfilled his promise from the 2008 campaign: that he would bring the two major parties together to forge bipartisan agreements.

Last year, though, offered a painful reminder of how simplistic that campaign theme was. By the end of 2011, five groups of bipartisan leaders had tried to negotiate a settlement on all the major tax, entitlement, spending, and deficit issues. Each one failed. First there was the Simpson-Bowles commission, created by the White House. Its report appeared in December, 2010, with a tough series of proposals of exactly the kind that Obama had asked for. But, as it turned out, the President was not about to trim Social Security benefits and end popular tax deductions without Republicans in Congress agreeing to do the same.

In May, 2011, shortly after a government shutdown was averted, Vice-President Joseph Biden and the House Majority Leader, Eric Cantor, two politicians opposed in ideology and temperament, held talks exploring whether a deficit deal was possible. This time, they had a major incentive to reach an agreement: the debt ceiling had to be raised by the end of the summer. The Cantor-Biden talks ended two months later, and Obama and Speaker John Boehner worked until July to reach a “grand bargain” of modest tax hikes, entitlement reforms, and spending cuts. A fourth group, consisting of three Republicans and three Democrats in the Senate, dubbed the Gang of Six, ended up torpedoing the Obama-Boehner negotiations when it came to light that they were negotiating a plan to raise far more revenue than the deal that Obama was ready to strike with Boehner.

Instead of a grand bargain, in late July the White House and Republicans agreed to raise the debt ceiling enough for about eighteen more months of government borrowing, and they created yet another bipartisan group to address the long-term fiscal issues. This group was called the Super Committee, and Obama and Congress agreed: if the committee could not find a solution, government spending in 2013 would automatically be reduced by a hundred and ten billion dollars, a cut known in Washington budgetese as “the sequester.” The Super Committee failed.

If Obama wins, his immediate task will be to settle more than a decade’s worth of deferred arguments about how big the government should be and who should pay for it. By this spring, the gamesmanship had begun. “It’s a discouraging day to talk to me,” a top White House official fumed. That afternoon, May 15th, Boehner had delivered a speech in which he insisted that Republicans would not raise the debt ceiling next year unless a dollar in government spending was cut for every dollar of new borrowing. “I just can’t believe somebody, even him, would say something that irresponsible again,” the official said.

Notwithstanding Boehner’s antics, there is a possibility that a second Obama term could begin with major deficit reduction and serious reform of taxes and entitlements. A similar opportunity arose in the second terms of Reagan (who in 1986 signed into law a historic tax-reform bill) and Clinton (who in 1997 reached a significant budget deal with Republicans). Although both victories occurred when the two parties were less polarized, many White House officials regard the successes as encouraging precedents. Several senior Clinton officials involved in the 1997 deal now work for Obama, including Jacob Lew, Obama’s chief of staff, and Gene Sperling, the head of the National Economic Council.

“You have a dynamic that is similar to the nineteen-nineties,” one White House official said. “There are a number of areas where a Republican Congress and a Democratic Administration sat down, couldn’t get an agreement, and eventually said, ‘No, we’re going to have to take this to the country. We’ll see how the country resolves that.’ ” He added, “Who knows what the new landscape will be? It really depends on who controls Congress.”

Almost every permutation of government control is possible after November. There are plausible scenarios in which either party could be in charge of the House, the Senate, or the White House. If the election were held today, the Democrats likely would gain some seats in the House and lose some seats in the Senate, and Obama would be narrowly reëlected. Under these conditions, the White House is cautiously optimistic that a compromise could be reached.

“If both chambers are more evenly divided, it could be a recipe for actually getting some things done,” David Plouffe, Obama’s senior adviser, said. “Because of the closeness, neither party’s going to be able to do anything on its own, so either zero gets done for two years or there is kind of a center.” He argued that, despite the failures of the five bipartisan groups that had tried to negotiate a budget deal last year, there was movement on the toughest issues. For Democrats, the most painful decision is how far to go in making changes to entitlements like Medicare and Social Security. For Republicans, the biggest hurdle is agreeing to higher government revenues. “By the end, more Republicans said they’re open to revenue than at the beginning,” Plouffe said. “And at the beginning Democrats were very cool to any entitlement reform. By the end, they were willing to do something. That’s what we learned.”

Clearly that’s an optimistic spin, given Boehner’s recent remarks. Yet Plouffe and other Obama officials who were involved in the talks insist that the G.O.P. caucus in the House is not as monolithically opposed to a deal as one might think. Last year’s talks taught the White House that there are divisions between the hard-right Tea Party faction that is unilaterally opposed to any tax hikes and more traditional Republicans who are so concerned about the long-term deficit that under some circumstances they would vote for higher taxes. Plouffe said that the key will be whether Boehner is prepared to alienate the Tea Party bloc.

“All the paperwork’s done!” he said. “We know what the options are. It’s all been done! It’s not like they’re starting from scratch.”

Over in the Senate, there is a hint that the ice could thaw if Obama wins. Several senators from both parties have begun to meet behind closed doors to address the looming fiscal crisis, with the aim of delivering a tax-and-budget package by September. “Everyone is kind of holding their cards, because we realize that it’s not game time yet,” the Tennessee Republican Bob Corker told Politico last week. In late May, Mitch McConnell, an architect of the G.O.P. strategy of non-coöperation since 2009, also told Politico, “I think we have plenty of members in the Senate on both sides of the aisle who fully understand that we weren’t sent here just to make a point—that we were sent here to make a difference.”

Several White House officials I talked to made it clear that if a deal, or at least the framework for a deal, is not reached before December 31st Obama would allow all the Bush tax cuts to expire—a tactic that would achieve huge deficit reduction, but in a particularly painful and ill-conceived fashion. The Administration is preparing for that outcome, and Republicans may not be willing to budge without the threat of this cataclysm. Plouffe said, “I think we’re going to have the ability to tell the American people, ‘Hey, your taxes may go up on January 1st because these guys refuse to ask the wealthy to do anything. Hey, there are going to be cuts in spending that aren’t done as smartly as they could because these guys won’t agree to ask anything from the wealthy.’ ”

The White House believes that Obama needs to change the psychology of the congressional Republicans and that, if his reëlection won’t do it, perhaps Taxmageddon will. “To get anything done in the second term,” another White House official said, “the President has to convince the Republican Party that obstructionism is a losing strategy.”

V

Increasingly, hints of Obama’s second-term vision are becoming evident on the campaign trail. On June 1st, Obama spoke before a luncheon crowd at a farm-to-table restaurant in a converted warehouse in the North Loop of Minneapolis, just yards from the Mississippi River. The restaurant, the Bachelor Farmer, is owned by two sons of the Minnesota governor, Mark Dayton. They had designed a special menu, which highlighted fresh produce grown on the restaurant’s roof, and the staff wore matching ties made to commemorate the President’s visit. A hundred people who each gave five thousand dollars to the President’s campaign dined on a salad of house-smoked pork and a choice of roasted chicken or Copper River sockeye salmon (a vegetarian menu was also available), as Obama spoke about the politics of his potential second term.

He noted, as he does with some frequency these days, that his original vision of a bipartisan Washington was a mirage. “My hope, when I came into office, was that we would have Republicans and Democrats coming together because the nation was facing extraordinary challenges,” he said. “It turns out that wasn’t their approach—to put it mildly.” He insisted that the G.O.P. had moved too far to the right to make bipartisanship possible. He and John McCain had agreed on issues like immigration, climate change, and campaign finance. “The center of gravity for their party has shifted.”

But maybe, Obama said, his reëlection would halt that trend. “I believe that if we’re successful in this election—when we’re successful in this election—that the fever may break,” he said, “because there’s a tradition in the Republican Party of more common sense than that.” He noted a few areas of possible compromise: deficit reduction, a highway bill, immigration, and energy policy. He repeated the phrase that is becoming a mantra for his campaign: “If we can break this fever.”

If President Obama can indeed guide the parties toward an agreement that puts the federal government on a sustainable fiscal path, it would be a substantial achievement and would vindicate his early promise as a bipartisan leader. After that, he might have just one more chance to achieve a major domestic accomplishment before the next round of elections, in 2014. Gene Sperling noted that first-time Presidents are quickly confronted by the reality of whatever situation they’ve inherited. “President Clinton used to say to us, ‘Look, this is what every Presidency is like—you come in with your agenda and vision, and the fact is, whether you want it or not, ultimately a lot of the legacy for Presidents is how they handle the hand they were dealt as opposed to what they might have thought their agenda was going to be,’ ” Sperling said. “To me, in many ways, health care was President Obama making a decision that he was going to hold on to part of the vision that he had set for the country.” A second term, Sperling continued, could put Obama “back to where he might have wanted to have started his Presidency.” The big question that Obama will face is: “What are the things we’re doing to make ourselves compete so that globalization is working for the middle class, as opposed to what happened the previous decade?”

The President’s list of options will be short. Obama has been a national politician since 2004, and the priorities he’s discussed haven’t changed much since then. Depending on the makeup of Congress, he might first have to consider whether he needs to play offense or defense. If the President gets past the grand bargain, “it would be a legacy achievement,” Goolsbee, who has known Obama since 2004, said. “Then he would have to decide: Is the next issue protecting and establishing the health plan, or moving on to something new? Because it seems clear that the President’s opponents are going to try to take apart the law.”

There are hints that the Supreme Court could simply strike down the Affordable Care Act. It also might strike down the health-care mandate but leave the remainder of the law intact. In that case, it is likely that several provisions regulating insurance markets would send insurance premiums soaring. Insurance companies would be forced to take on expensive new patients regardless of preëxisting conditions, yet without the anticipated new revenue from young and less expensive patients who would have been forced to buy insurance. Obama would face a choice: replace the mandate with a new policy or remove the remaining market reforms.

One option for replacing the mandate is to push the uninsured into the new system by requiring them to sign up for insurance when applying for other government services, such as food stamps or school loans. But the prospects for this sort of legislation are bleak. “We looked at this,” a former Obama aide said. “We thought it was less constitutional than the mandate. Among the moderate Democrats, the idea that you would pass a bill like this is unimaginable.”

Whether the Supreme Court overturns the law in part or in full, the White House will need to respond publicly. “The strategy is to just go on the offensive and say, ‘Look at Citizens United, look at the health-care decision, look at Bush v. Gore,” the former aide said. “We have an out-of-control activist court, and Romney will make it worse. That’s Plan A. Plan B is nothing.”

Even if the Court leaves the law alone, Obama may find himself fighting Republican attempts to defund it or to remove the mandate legislatively. If the House is still in Republican hands, even if he were to successfully navigate Taxmageddon he could easily find himself back in a situation like 2011 and 2012, when almost no bills moved forward.

But it seems plausible that Obama could have time for one more big policy change. What would it be? Several of his advisers talked about pursuing housing reform; the economy is still being dragged down by the seven hundred billion dollars in negative equity from homeowners who are stuck in houses worth less than their mortgages. The problem has bedevilled the White House since 2009, because any of the truly effective solutions requires a version of the awful politics of a bailout: people or institutions that acted irresponsibly will be rewarded.

“Somebody has to eat the seven hundred billion dollars,” Goolsbee said. “There’s no way to cover up the fact. Either the banks and mortgage holders have to take seven hundred billion dollars of losses or the government has to come up with seven hundred billion dollars of subsidies to cover these costs. Or you can try to split it. But every significant policy that anyone can come up with has a really big price tag.”

Another major initiative under discussion is energy policy, but the politics of energy are almost as fraught as those of housing. As a candidate, Obama talked in stirring terms about the threat from global warming. In June, 2008, on the night he won the Democratic nomination, he declared that his victory marked “the moment when the rise of the oceans began to slow and our planet began to heal.” But climate change will remain a divisive issue after the election. Among Obama’s conservative critics, his call to halt the rise of the oceans is a frequently mocked piece of oratory. And one of the biggest failures of his first term was the Administration’s inability to win a deal on cap and trade—originally a Republican idea.

Obama talks about energy in most of his speeches, but, in contrast with 2009, when the centerpiece of his program was a cap-and-trade approach to reducing carbon emissions, his goal today is unclear. Early discussions on Capitol Hill suggest that, in a wide-ranging deal, a carbon tax might be part of a grand bargain to settle Taxmageddon. The proposition is not as absurd as it sounds. In 1997, the budget deal struck by Clinton and the Republicans was not so much a meeting in the middle as a swap of major priorities. “That was a deal of trades,” one former Clinton official said. Clinton won policies such as a new children’s-health program, a higher-education tax cut, and some progressive changes to the welfare bill that he signed into law in 1996. “We won those things and then we just gave the Republicans big Medicare savings, and we let them cut the capital-gains tax for rich people.”

Obama’s 2010 fiscal deal with the G.O.P. was similar: he swapped an extension of all the Bush tax cuts for more stimulus. In a situation where many favored policies of both parties are on the table, a carbon tax—a heretical idea during the past few years, given the weak economy and high fuel prices—could be resurrected. Still, the Administration seems uncertain what its energy policy is; many of the stated goals are contradictory. Independence? Low energy prices? Reduction of carbon emissions? Job creation? Environmental protection? Unless Obama’s energy policy regains its clarity, a legislative breakthrough in a second term is unlikely.

Several White House officials said that the issue that Obama seems most passionate about is infrastructure. (One insider Democrat joked that Obama’s passion for infrastructure is matched only by that of the Vice-President, who loves trains.) Obama wants to spend an extra hundred and fifty billion dollars on infrastructure during the next six years and reform the process by which projects are awarded, so that it’s more about merit than about patronage. In 2009, he was aggravated when he was told that none of the money from the stimulus would be spent on a signature project, a modern-day Hoover Dam or Interstate Highway System. A bold infrastructure package has all the hallmarks of a major Obama policy: it would create jobs, it has a government-reform component, and it could establish a legacy in the form of an upgraded power grid or a high-speed train, with which Obama might forever be associated.

But if, as seems likely, Obama will have just one chance of achieving a major piece of domestic legislation in his second term, the most promising focus, according to current and former aides, would be on immigration. “When you look at the whole second term, the biggest issue I think is fiscal soundness, which is the predicate for real economic improvement and growth,” Bill Daley, Obama’s former chief of staff, said. “And then the second big issue I see would be immigration reform.” The DREAM Act, which would legalize undocumented aliens who had come to America as children if they enrolled in college or joined the U.S. military, would be an obvious place to start.

Obama’s advisers believe that the politics of immigration may be the only chance for bipartisanship after Taxmageddon. After a party loses, it goes through a period of self-examination. If, despite the lacklustre economy and a general dissatisfaction with the direction of the country, Obama manages to defeat Mitt Romney, the explanation may be a simple matter of demographics: the Republican Party can no longer win the Presidency without increased support from nonwhite voters.

“If we win, Latino voters will play a big role in that,” David Plouffe said. “The Republican Party is going to have to make a decision. I don’t think it’s much of a decision, actually. They’re going to have to moderate.” The White House is so convinced of the centrality of Hispanics to the current election and its aftermath that Plouffe told me he has been preparing for months for an onslaught of advertisements from a pro-Romney group attacking Obama from the left on immigration, arguing that Obama’s deportation and border-security policies have been too Draconian.

One of the lessons from “Mandate Politics” is that the magnitude of a victory is not as important as defying expectations. Republicans won’t coöperate with Obama simply because he’s won, just as Bush’s 2004 reëlection did nothing to move Democrats. But if the 2012 results reveal that the G.O.P.’s weakness among minority voters, especially Hispanics, is dire, political opportunities that seem unlikely today could quickly become conventional wisdom after November. Romney understands this. “We have to get Hispanic voters to vote for our party,” he recently said at a private fund-raiser, unaware that reporters could hear him. Failure to do so “spells doom for us,” Romney said. A rule that holds up quite well in American politics is that the longer a party remains out of power the more moderate it becomes.

VI

On a recent Friday at the White House, Plouffe stood in front of a map of America, talking about swing states. In some elections, he said, two candidates may try to hide their differences as they woo moderate voters. But this year the Obama campaign would insure that the competing ideologies of the two major parties are not blurred. “Everything we do has to be with that in mind,” Plouffe said.

He named some recent examples. In 1992, Clinton and Bush agreed on certain aspects of free trade and welfare reform. In 2000, Bush ran on a more progressive education platform than his Republican colleagues. McCain once supported a cap-and-trade system and a version of immigration reform now condemned by almost all Republicans. There would be no such “zones of commonality” this time around. “On every major issue, every one, there are stark differences,” he said. “It’s much more ideological.”

This tone is a sharp change. Obama campaigned from 2004 through 2010 as a bridge between competing orthodoxies—a view of the world that flowed directly from his unique biography. In “Barack Obama: The Story,” by David Maraniss, Obama says, “What I retained in my politics is a sense that the only way I could have a sturdy sense of identity of who I was depended on digging beneath the surface differences of people. The only way my life makes sense is if, regardless of culture, race, religion, tribe, there is this commonality . . . and that we can reach out beyond our differences.”

Now Obama is emphasizing the ideological divide, not the bridge across it. “A lot of the tussles that we’ve had over the last three and a half years have had to do with this difference in vision,” he told the audience in Minneapolis, “and it will be coming to a head in this election.”

Much of the talk of bold contrasts is a strategic necessity. Obama wants voters to cast their ballots based on the platforms of the two candidates, not on the record of his first term. The tactic comes with risks, but it helps divert attention from a seeming inability to promote his successes thus far, such as health care (so long as it lasts), financial regulation, and a soft landing after the economic crisis. Never mind that this strategy defies the judgment of most academic studies of voting behavior: that voters largely decide on incumbents based on a retrospective judgment of the economic situation during the last year or so in office.

As he spoke, Plouffe, a math whiz who has been compared to Dustin Hoffman’s character in “Rain Man,” sometimes wrote down the numbers as he spoke them: two hundred and forty-one, the number of Republicans in the House of Representatives last year when he was negotiating with them; 11/6, the date of the election. He had no illusions that 2012 would look like 2008, and pointed to the tiny group of states that would decide the contest. “We’ve been preparing all along for a kind of race where we have to win it fifty to forty-nine in seven states,” he said. “We’re facing, Grind it out in Virginia and Colorado and Ohio.”

It took considerable arm-twisting to get Plouffe to think past the details of the daily campaign and consider the long view. “If we win,” he said finally, “January of 2017, what do we want to look back and be able to say? One, we’ve recovered from the recession. Second, our economic and tax policies in this country are more centered on the middle class and on people trying to get in the middle class. Third, the big unmet challenges—health care, education reform, energy, immigration, and reducing the deficit in the right way—we met them.

“We’ve also ended a period of war while taking out our leading terrorist enemies,” he added. “Think about that! That’s a pretty important book of business, and I think that’s the legacy he’d like to leave.”

VII

After I talked with Plouffe, I wandered down to the basement of the White House to meet with Ben Rhodes, Obama’s deputy national-security adviser. That day, Obama was meeting with François Hollande, the new French President; the building was filled with foreign-policy luminaries. Secretary of State Hillary Clinton was climbing up the staircase alone as I descended.

Rhodes’s windowless office has a large printer marked with a sign that says “Classified.” On his desk was a thick briefing book, “The President’s Trip to Camp David for the G8 Summit.” (“It would be shockingly boring to you, I think,” Rhodes said.) Rhodes is also a speechwriter, and part of his job is to help transform the untidy, sometimes contradictory business of the Administration’s foreign policy into a coherent world view. When I asked him what his favorite speech-writing resources were, he pulled a few books from a shelf: “American Speeches: Political Oratory from the Revolution to the Civil War,” William Safire’s “Lend Me Your Ears,” and a collection of Lincoln’s speeches and writings. “You can actually lose yourself for an hour or two in that stuff,” he said.

The final two years of a second term need not be a loss for a President. All but exiled from domestic affairs, Presidents inevitably focus more attention on foreign policy, where many leave a lasting mark. Rhodes said that he is just beginning to research in a more formal way how foreign policy was conducted in the second terms of recent Presidents, but he knows how important it could be to Obama’s legacy. “I’m aware of the fact that Presidents in the last couple of years just kind of go into that,” he said. Next year, Obama will have more flexibility to make foreign visits. “We didn’t travel much this year, and just after an election year we’ll have a lot more time to travel,” Rhodes said.

The Obama project of the first four years was to end the two wars it had inherited and move the U.S. away from defining itself globally in terms of a multigenerational struggle against terrorism. (The ten-year defense budget that Obama announced earlier this year shifts the Pentagon away from planning for the types of multiyear nation-building exercises that America undertook in Iraq and Afghanistan.) Instead of conducting massive land wars, Obama’s terrorism policy became defined by targeted assassination of Al Qaeda leaders by teams of Navy SEALS and Predator drones. In coöperating closely with Israel to develop Stuxnet, a computer virus aimed at Iran’s nuclear program, the U.S. engaged in the first known act of pure cyberwarfare against another country. Obama has revealed himself to be more hawkish than either his supporters or his opponents expected.

Only recently has Obama begun to implement a post-post-9/11 foreign-policy vision. Its most significant aspect is the so-called “pivot” toward the Pacific, where the U.S. has spent a great deal of diplomatic energy strengthening economic and military relationships with Burma, Vietnam, the Philippines, Thailand, and other Southeast Asian nations in an effort to counterbalance China’s rise. (In November, Obama also announced that U.S. marines will now be stationed in Australia.) The rebalancing of American power from the Middle East to Asia will continue if Obama wins reëlection.

“When we went to Asia last November, it was the first trip that we’d taken where everything we were talking about and doing was affirmative initiatives that had begun under our Administration,” Rhodes said. “It felt like, Boy, this is what American foreign policy could look like if we weren’t anchored in these wars.” He added, “We want the U.S. to be able to essentially help set the agenda in the Asia-Pacific region.”

Foreign policy is often determined by unanticipated events, but the U.S. relationship with China could end up being a defining issue in a second Obama term. China currently faces the prospect of a major financial and political crisis. In “Confront and Conceal,” a new book about Obama’s foreign policy, David Sanger notes that China is also about to experience a dramatic transformation in its leadership; many have observed that the next generation of Chinese officials is likely to be more nationalistic than its predecessors and more alarmed by Obama’s policies in the Pacific. Sanger points out that “roughly 70 percent of China’s leadership jobs will be turning over in 2012,” a change that could be the foreign-policy equivalent of Taxmageddon. One of Obama’s “most senior diplomats” tells Sanger, “If we get China wrong, in thirty years that’s the only thing anyone will remember.”

Obama’s other second-term foreign-policy priorities include a renewed push for peace between the Israelis and the Palestinians. But the President would not get personally involved, as his two predecessors did, unless he was certain that Israel’s Prime Minister, Benjamin Netanyahu, wanted a deal. (The White House assumes that Netanyahu is hoping for a Romney victory.) In an Obama second term, containing Iran might take precedence over a Middle East peace agreement, even as the Administration continued to try to manage the post-revolution transitions across the region and North Africa. Obama doesn’t believe that there is much he can do to change the status quo in North Korea. Meanwhile, the situation in Syria threatens to become a focal point in the November election. Romney has begun to attack Obama’s wait-and-see policy and has called for arming the Syrian opposition. Soon, Obama may have to decide if he wants to push harder to topple President Bashar al-Assad, possibly by force.

When I asked Rhodes about a historical analogy to Obama on foreign policy, he replied, “I think Reagan is actually the best recent model, because he laid down some very ambitious rhetorical markers and he reoriented foreign policy from his predecessor in many respects, and a lot of the dividend on that started to come on line the second term.” He went on, “A lot of the threads of stories that we’ve begun—from Asia to the Arab Spring, to even Africa, to Middle East peace—the ability to complete the story in the second term will go a long way toward defining the legacy of the President.”

Rhodes reminded me of a story told in David Halberstam’s book “War in a Time of Peace,” which covers foreign policy during the Presidencies of Clinton and George H. W. Bush. Lee Hamilton, the former chairman of the House Foreign Affairs Committee and Rhodes’s former boss, met with Clinton shortly after the 1992 election and tried to interest him in a long list of foreign-policy challenges. “Lee, I just went through the whole campaign,” Clinton said, “and no one talked about foreign policy at all, except for a few members of the press.” Hamilton responded that Clinton was wrong, and noted that all Presidents eventually realize their legacy in foreign policy. He recited a list of recent examples: Johnson and Vietnam, Carter and Iran, Bush and the Gulf War. Years later, when Clinton was consumed with war in the former Yugoslavia, air strikes in Iraq, and a late effort to reach a Middle East peace accord, Hamilton knew that he had been vindicated. Rhodes said, “The President can make a huge mark on the world, and often that’s what people remember.”

There is a symmetry to Obama’s experience on foreign and domestic policy which may shed light on what a second term would offer. Early in his first term, the President opened negotiations with Iran and failed to speak out as the regime began killing protesters in the Green Revolution. “It turned out that what we intended as caution, the Iranians saw as weakness,” a senior national-security adviser to Obama told Sanger. Obama’s first efforts to engage China were rebuffed for similar reasons. Obama hardened his approach to both countries. He attacked Iran’s nuclear program through cyberwarfare, built a coalition to punish the country with U.N. sanctions, and warned that he would use military force to keep Iran from obtaining nuclear weapons. On China, he began to reach out to its neighbors to make the U.S. a counterweight in the region. Afghanistan presented an equal challenge: Obama spent his first years fighting his generals, who sought to maneuver him into sending more troops and prolonging the nation’s commitment there. He eventually gained the upper hand and won the policy he wanted: withdrawal.

Congressional Republicans aren’t Iranian mullahs or five-star generals, but Obama’s approach to them is beginning to look familiar, as coöperative idealism gives way to hard-nosed realism. As his first term ebbs and threatens to take him with it, Obama seems to be learning how to be a forceful President. Whether he’ll be remembered as a great one depends on his reëlection. ♦

Read more http://www.newyorker.com/reporting/2012/06/18/120618fa_fact_lizza#ixzz1xcZQqpxa