Obama's Playbook for Governing

He'll blaze a centrist path to forge consensus, frustrating the far left and right wings.

By Richard Sammon, Senior Associate Editor, The Kiplinger Letter

November 10, 2008

President-elect Barack Obama will govern from the center. He not only wants to, he has no other option. His historic win was built on a broad coalition, one that went beyond young and minority voters. He won about 55% of moderates and independents, as well as almost half of college-educated whites. That wave put him in office and one he'll reflect in much policy- and decision-making, including in the people he appoints. Governing from the middle is also what he feels most comfortable doing.

Obama's mandate isn't ideological. It's a mandate for a new style of politics. He didn't win because of any specific policy plan he promoted or because he fanned the most partisan fires. He won because voters were fed up with what they felt was a president and Congress who didn't listen to the public and constantly locked horns, seemingly unable to work together.

Obama persuaded voters that he could change the way Washington works, but delivering on this promise won't be easy. Politics is a rough and tumble world for a reason: People disagree, often passionately, on complicated and controversial issues. And jockeying for political power is always part of the equation. Still, members of Congress heard the voters, too, and they are serious about wanting to find bipartisan solutions. On some issues, that just won't be possible, but on others, if there's enough political will to compromise, significant legislation will be in reach.

Obama is already signaling moderation, telling business and labor leaders, for example, that he won't rush on key issues that divide them. And he's trying to tamp down expectations from groups that helped him get elected, warning them not to expect sweeping change overnight.

There's little room for error and no time to waste. Obama will move quickly on his transition, putting his campaign's vast organizational might to the task. Look for him to name his White House staff and Cabinet by Thanksgiving, It will include political stars, experienced Washington hands and several Republicans. Chief of staff-in-waiting, Rahm Emanuel, plays hardball, but he knows how to work with Republicans to get things done. As a senior advisor to President Clinton, he assembled coalitions for welfare reform and North American Free Trade Agreement. Another plus: Emanuel is close to House Speaker Nancy Pelosi, which is sure to pay off in cooperation between the White House and Congress.

Planning for the first 100 days is already well under way, but Obama and his staff will keep most of the details under wraps. They know there can be only one president at a time, and they don't want anyone to doubt who is in charge now.

One issue won't wait until Jan. 20: the economy. Ending the recession and reigniting growth will dominate Obama's first year -- maybe even his entire term. The election didn't change the economic fundamentals, and neither can Obama. Democrats are planning a two-part stimulus -- a bill with between $60 billion and $100 billion for jobless benefits, food stamps and infrastructure spending to be passed by this month's lame-duck Congress and a more sweeping measure in January or February. It will include tax cuts for the most Americans, with the aim of getting more money in people's pockets quickly. Congress will pay for this tax relief by canceling the scheduled repeal of the estate tax. Instead of disappearing in 2010, the $3.5-million exemption and 45% maximum tax rate in effect for 2009 will be extended for at least a year. But the weak economy will delay Obama's tax rate hikes on high-incomers until 2010 at the earliest.

Obama will get involved quickly in managing the debt rescue program. Treasury Secretary Hank Paulson wants Obama's aides to help choose top personnel to administer the program, and he wants his successor to start work alongside him as soon as possible.

Best bets for the Treasury job are Timothy Geithner, the president of the New York Federal Reserve Bank, Larry Summers who held the position under Clinton, or N.J. Gov. Jon Corzine, an ex-senator and former head of Goldman Sachs. Geithner, at 47, has the energy and experience without the political baggage that Summers and Corzine carry. And he's had a role in managing the crisis.

Look for Paul Volcker to get a significant job, perhaps heading a board created to oversee an overhaul of the entire U.S. financial regulatory structure. The former head of the Federal Reserve under Presidents Jimmy Carter and Ronald Reagan was an early supporter of Obama and has served as a key economic adviser.

Setting a legislative agenda for Obama's first year will be another challenge. Democrats will go for some low-hanging fruit, such as more health care for kids, federal stem cell research and making equal pay claims easier. Meanwhile, they'll map strategy for health care, energy policy and other big picture plans, such as overhauls of immigration law, Social Security and Medicare, which require compromise and broad bipartisan support.

Having Democratic majority in the Congress certainly helps, but Democrats are a rather diverse group. Obama, Pelosi or Senate Majority Leader Harry Reid of Nevada won't easily control them. Many conservative Democrats were elected this year and in 2006, and they often split with their more liberal leaders. They're also much more concerned about deficits, which will force delays in programs favored by Obama. On top of that, congressional Democrats, especially chairmen, who were stymied by Bush for eight years have their own set of legislative priorities, many of which Obama will likely reject. Certainly on some issues, it will be like herding cats, even if they are all in the same party and all of them voted for Obama to begin with.

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