Chapter 5

Landmark Achievement

The Affordable Care Act

Celebrations around the world greeted the news that Barack Obama had been elected the nation’s forty-fourth president. In Chicago, an estimated 240,000 people poured into Grant Park, the scene of bloody rioting during the 1968 Democratic presidential convention, to watch the election results and then to cheer and hail the president-elect and his family. Jesse Jackson Sr. shed tears as he heard the news that Obama had become the nation’s first Black president. Crowds large and small also gathered in cities and towns from San Francisco, Boston, and New York to Selma, Alabama; Gainesville, Florida; and Jackson, Mississippi. In each of these places, they watched together on television or on large monitors set up on the streets as the forty-seven-year-old senator from Illinois took to the stage with his family to deliver his first speech as president-elect. “It’s the answer told by lines that stretched around schools and churches” to vote, they heard him say about his election. “It’s the answer spoken by young and old, rich and poor, Democrat and Republican, Black, white, Hispanic, Asian, Native American, gay, straight, disabled, and not disabled,” he added.¹

Obama’s call for unity and hope that transcended all the fault lines of a heterogeneous and politically divided nation resonated powerfully with broad swaths of Americans who sought an alternative to what they regarded as an administration that had falsely led the United States into war in Iraq in 2002, revealed racial blinders in responding to the catastrophic damage in New Orleans as a result of Hurricane Katrina in August 2005, and shared responsibility for a looming financial disaster in 2008.

The immediate issues facing Obama as president-elect were filling his cabinet and other high-level positions within his administration and developing his response to the rapidly deteriorating economy. Despite the vetting effort conducted by his transition team, several of his appointments to cabinet and other high-level positions were forced to withdraw their names; these failures of the vetting process left even some of his supporters wondering about his competence to be president. Notwithstanding his largely successful efforts to prevent a depression and his achievement in saving the nation’s auto industry from collapse, his response to the economic crisis was also attacked from both the political right and the political left.

Once he took office, the new president sought to carry out the promise he had made throughout the campaign to provide affordable health care for every American. Aside from preventing a full-scale depression, this became his highest domestic priority. It is also became his single greatest domestic achievement.

Throughout the turmoil of his first two years in office Obama remained determined to get his proposals through Congress, both houses of which were controlled by Democrats. What was significant about this time was how he stayed true to his character and to the message he had been advocating throughout his political career. Unmoved by the attacks against him and his administration, he remained cool, dispassionate, and thoughtful. Already political commentators and others were referring to him as a pragmatic progressive. More than that, however, he remained committed to being a president healing the political wounds of the recent past by tying together liberal proposals with core conservative beliefs.

The Transition

Although Obama’s inauguration was still eleven weeks away and Bush was still making important decisions about the financial crisis and the war in Iraq, the president-elect acted as if he had already taken office. If this rankled the president, he did not show it. Throughout the transition, he remained gracious, kept his successor fully informed, and welcomed his input. Obama was grateful for the courteous manner in which the Bush White House treated him. “Only once did he say something that surprised me,” he later recounted about his first meeting at the White House with the outgoing president. “ ‘The good news, Barack, is that by the time you take office we’ll have taken care of the really rough stuff for you,’ ” Bush remarked. His comment did not comport with Obama’s view of an economy worsening day by day. “For the moment, I was at a loss for words,” he recalled. Finally, he merely congratulated Bush on the passage of TARP. “I saw no point in saying more,” he thought to himself.²

Just three days after being elected and only one day after his first press conference as president-elect, Obama held the first of what became eleven weekly transition addresses to the nation in which he acted very much as if he were already speaking from the Oval Office. “We must recognize that we only have one President at a time,” he said. “[Nevertheless], I want to ensure that we hit the ground running on January 20th because we don’t have a moment to lose… . First, we need a rescue plan for the middle class that invests in immediate efforts to create jobs and provides relief to families that are watching their paychecks shrink and their life savings disappear.” In his second transition address a week later, he went even further. “We must act right now… . If Congress does not pass an immediate plan that gives the economy the boost it needs, I will make it my first order of business as President.”³

The progressive agenda the president laid out appealed to the liberal wing of the Democratic Party, but it had the opposite effect on conservative forces within the Republican Party. Even among independents and moderates in both parties, there was skepticism among those who wanted change but were uncertain about what kind of change beyond replacing Bush with someone else. Seeking to establish bridges between these different groups as well as reasserting his own centrist political views, Obama incorporated conservative principles into his progressive platform. Carrying out his agenda, he said, “will require not just new policies but a new spirit of service and sacrifice, where each of us resolves to pitch in and work harder and look after not only ourselves, but each other.”⁴

Outgoing treasury secretary Henry (“Hank”) Paulson, a strong believer in the free market, was against doing anything to prop up the existing financial structure. He and the president of the Federal Reserve Bank of New York, Timothy Geithner, concluded, nevertheless, that the big banks and investment houses were simply “too big to fail”; that if they collapsed, they would take down with them the nation’s whole credit structure. The collapse of Wall Street would lead to the collapse of Main Street. Together they would set off a vicious chain reaction. Credit would freeze up. Local merchants and small manufacturers would not be able to borrow to replenish stocks and meet payrolls. The number of layoffs would grow, businesses would collapse, and stocks would decline in value. As large pension funds and individual IRAs dropped in value, retirees would face a drastic decrease in their incomes, and those intending to retire soon would have to rethink their retirement plans. Because of foreign investments in American bonds issued by these financial institutions, the crisis in the United States would spread worldwide.⁵

These were the views Obama adopted. To prevent an economic catastrophe from happening, Paulson persuaded a reluctant White House to bail out the banks through passage in October 2008 of the Troubled Assets Relief Program (TARP), which allowed the Treasury to inject up to $700 billion (divided into two “tranches” or draws) into the nation’s banking system by purchasing its most troubled assets. Instinctively, the president-elect was against bailouts of this kind. He blamed the crisis on the excesses of the banking system, including the banks’ willingness to make subprime loans and then to package and sell them as top rated, safe securities. Most of his advisers during the campaign, such as former treasury secretary and chairman of the Federal Reserve Bank, Paul Volker, University of Chicago professor Austan Goolsbee, and former labor secretary, Robert Reich, wanted to nationalize or break up the nation’s biggest banks and financial institutions.⁶

As Obama met with Paulson and other administration officials, however, he became persuaded by their argument that allowing the existing banking structure to collapse would be economically catastrophic. As president-elect, he also grew increasingly influenced by a group of advisers from the Clinton administration, including former treasury secretary Robert Rubin, the president of the Federal Reserve Board of New York (FRBNY) Timothy Geithner, the former head of the Congressional Budget Office (CBO) Peter Orszag, and another former treasury secretary, Larry Summers. While they acknowledged the need for long-term reforms, including stress tests and larger capital requirements, they joined Paulson in emphasizing the need to save the existing banking structure through the infusion of public capital.⁷

The Democratic candidate for president forecast his plans for dealing with the financial crisis if elected to the White House in a speech he gave in the Senate on October 1 just before it approved the legislation establishing TARP. Like all Americans, he said, he was appalled that the lack of regulation of the nation’s largest banks allowed the crisis to develop. It was an outrage, he added, “to every American who works hard, pays their taxes, [and] is doing their best every day to make a better life for themselves and their families.” “There will be time to punish those who set this fire,” he continued. But this was not the time.⁸

He acknowledged that TARP was not perfect and promised legislation that would protect the interests of taxpayers and homeowners, including a pledge that every dollar spent on saving the banks would be paid back either by future bank profits or a fee imposed on financial institutions. Then he went even further. “As soon as we pass this rescue plan,” he stated, he and his colleagues had “to move aggressively with the same sense of urgency to rescue families on Main Street who are struggling to pay their bills and keep their jobs.” Among the measures they needed to pass were a large stimulus package that would save one million public jobs and rebuild the nation’s infrastructure. Congress also had to extend expiring unemployment benefits, give the middle class a reduction in taxes, and help homeowners stay in their homes. The government needed to tighten the regulations of the banking structure. First, however, the Senate needed to approve TARP “to prevent the possibility of a crisis turning into a catastrophe.”⁹

Once President Bush signed TARP into law on October 3, Obama emphasized the other side of his proposal for preventing another depression in the United States. He even made a number of new or expanded proposals, including a new American jobs tax credit, an additional tax incentive through the following year to encourage new small business investment, elimination of all capital gains taxes on investments in small businesses and start-up companies, and an emergency fund to lend money directly to small businesses to meet payrolls or to buy inventory. “Congress should pass this emergency rescue plan as soon as possible,” he remarked in a speech on October 13.¹⁰

Soon after the election on November 5, the president-elect announced his new economic team. In putting the team together he “decided to favor experience over fresh talent.” The team included Geithner as treasury secretary, Orszag as director of the Office of Management, and Christina Romer, a highly respected economics professor at the University of California, Berkeley, as chair of the Council of Economic Advisers (CEA). Volker was named to a lesser position as chairman of the Economic Recovery Advisory Board and Goolsbee as a member of the CEA.¹¹

Some progressives were disappointed by these appointments, especially those of Summers and Geithner. A brilliant economist who had served as president of Harvard University before being dismissed because of sexist remarks about women’s ability in math and science, Summers was known for his arrogant and dismissive demeanor. In contrast, Geithner, who was the protégé of Robert Rubin and Summers, and spent most of his career in the treasury department before being appointed in 2003 as director of the FRBNY, was withdrawn and reticent. Both played instrumental roles in fashioning TARP.¹²

Progressives who voted for Obama but were opposed to TARP resented the fact that he seemed to be adopting the very course that Bush and Paulson had proposed and gotten through Congress with the president-elect’s help. He ran in the primaries and general election as an agent of change. He portrayed both Hillary Clinton and John McCain as representing the status quo. Instead of change, he seemed to be advocating “more of the same”; instead of the break from the previous administration he promised, he appeared to be embracing its policies.¹³

These progressives were not wrong in their criticisms of the president-elect. What they failed to understand, though, was that he was never a pure ideologue. Throughout his career he came to embrace a set of core values, essential to which were the importance of community, the need for inclusion, and the uniting force of faith. He also combined a belief in such conservative values as the importance of individual responsibility, hard work, and a free market with a core progressive belief in the need of an active government to work toward a more perfect society. His ideal was that of thriving, vibrant, middle-class America.¹⁴

Ever since he was a community organizer in Chicago in the 1980s, Obama had grown skeptical of pure ideologues. Instead, he learned to incorporate into his own thinking, without accepting fully, the ideas of such ideologues as the advocate of community organizing, Saul Alinsky, who believed that entrenched power at the top could be toppled by organization at the bottom. Alinsky was correct, he believed, in emphasizing the importance of organizing locally to achieve a political agenda. The future president learned from his own experience in trying to organize residents of the Altgeld community in Chicago’s South Side how difficult it was to organize at the bottom when faced with entrenched opposition even from those seeking similar goals (in this case, local pastors and preachers). Successful political organization, he determined, required a more nuanced and pragmatic approach than Alinsky seemed to suggest.¹⁵

The president-elect might still have looked more widely for his cabinet and staff had the economy been different. Deeply concerned about the crisis facing the nation, he felt he could not take chances with the appointments he made. “As steward of the economy, he would need a seasoned team prepared from day one to grapple with a financial crisis that was spiraling out of control,” David Axelrod, whom he appointed as a senior adviser in the White House, later explained.¹⁶

Most progressives, including even those who would later become some of his harshest critics, were at first willing to go along with his new economic team. After Paulson announced that most of the $350 billion in TARP funds would be funneled to a few selected financial institutions like AIG in order to keep them from failing instead of buying out the toxic assets of smaller institutions so that they could lift the virtual freeze in lending, progressive Democrats began to speak out more forcefully against TARP. They were also incensed by the fact that only about $1 billion of TARP funds was set aside to help homeowners with subprime loans renegotiate their loans with lenders to prevent a massive wave of foreclosures.¹⁷

Even more disturbing to many of these same progressives was the size of the stimulus package that the incoming administration put together ($787 billion), which was far lower than what they believed was necessary. As Obama prepared to take the oath of office on January 20, the economy seemed to have collapsed. Eight million workers had lost their jobs. Unemployment had risen from 5 to 7.6 percent. The economy had contracted by 8 percent. Trillions of dollars had been lost in the stock market. Average housing prices had dropped by more than 30 percent. Estimates of the amount needed to stop the nation’s economic slide and turn these figures around ranged as high as $1.2 trillion, a figure put forth by Obama’s own CEA chairman, Christina Romer. He turned down the chairman’s recommendation. He was persuaded by others in his administration, including Summers and Emanuel, that Congress would never pass any measure above the mid- to upper-$700 billion range, especially given the huge bailouts needed to rescue the nation’s financial and banking industries. “There’s no fucking way,” Emanuel remarked.¹⁸

As many as two million people, the largest turnout for a presidential inauguration, flooded into the streets of Washington, DC, and the National Mall from the steps of the Capitol to beyond the Washington Monument. The president-elect played little role in putting together the details of his inauguration. Instead he vacationed in Hawaii, going through Toot’s belongings, swimming in the ocean, enjoying time together with his half sister Maya and her family, and playing basketball with some of his old teammates from high school. He tried to pretend he was not surrounded by the new security attached to him after being elected president, including Navy Seals, and a Coast Guard cutter in the distance when he swam.¹⁹

Mostly, though, he thought about what was yet to come. He mixed self-confidence with uncertainty about the future. He knew that politics were not just going to be tough, they were going to be brutal. He also worried about the impact of his role as the nation’s leader on his family. He was aware that Michelle’s greatest concern remained that their daughters, Malia and Sasha, be able to enjoy a normal childhood. While he was more confident than she that they would be able to do so, he shared some of her worries. He was pleased, therefore, when Michelle’s mother, Marian Robinson, whom he described as following a doctrine “of no fuss and no drama,” agreed to live with them in order to help raise the children and be there for Michelle when he was away from the White House.²⁰

The day before the inauguration, he and his family were inspired by a concert at the National Mall adjacent to the Lincoln Memorial of leading figures in the musical world. Young and old filled the two-mile Mall and sang and danced along with the music believing that a new period in American history was about to begin.²¹

Instead, Obama’s speech the next day turned out to be a combination of remarks that Franklin D. Roosevelt and Ronald Reagan might have made. His theme was conquering the challenges of the present by returning to the principles of the past. “On this day,” he remarked, “we gather because we have chosen hope over fear, unity of purpose over conflict and discord.” At the same time, he added that the nation’s problems were “parallel and proportional to the … unnecessary and excessive growth of government” and that only by committing to the same virtues of individual responsibility, entrepreneurship, and hard work that had sustained the nation since its establishment could America’s recovery be achieved. “Our nation,” he emphasized, “has never been one of short cuts or settling for less… . Rather, it has been the risk-takers, the doers, the maker of things—some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path toward prosperity and freedom.”²²

His twenty-minute speech was well received nationally. Most commentators acknowledged that there were no memorable phrases in his address, such as John F. Kennedy’s 1960 remark, “Ask not what the country can do for you but what you can do for the country.” A few journalists went even further, saying it lacked the soaring language and inspirational tone of Obama’s best speeches, such as his keynote address at the Democratic Party Convention in 2004 or his Philadelphia speech on race in the National Constitution Center in 2008. Some conservative commentators expressed anger at the lack of respect they claimed he showed for Bush, who, he suggested, had jettisoned American ideals in order to pursue security.²³

The consensus, however, was that the speech was well delivered and motivating. “Just as he reshaped the Democratic Party to win its nomination, and the American electorate to defeat John McCain,” the New York Times editorialized, “Mr. Obama said he intended to reshape government so it will truly serve its citizens.” “It was a moment of hope,” the Washington Post added, “because Mr. Obama sought to combine a sober acknowledgment of the perils the nation faces … with an unflappable assurance that they can be overcome.”²⁴

The First Hundred Days

Besides his economic team, Obama moved quickly after being elected president to fill other cabinet and high-level positions, a task made easier by the fact that he had begun to put together a transition team well before the election. As his chief of staff, the president-elect named Congressman Rahm Emanuel of Chicago, a close friend, who, at the time of his appointment, was serving as chairman of the Democratic caucus, but had earlier served as an assistant to the president for political affairs during the Bill Clinton administration. He was known for his hard-charging personality and frequent use of expletives. Obama later described him as “hugely ambitious, and manically driven,” who was “smarter than most of his colleagues in Congress and not known for hiding it.” According to the incoming president, when he asked the congressman to be his chief of staff, he responded,“No fucking way,” but then relented.²⁵

As his secretary of commerce, Obama named Governor Bill Richardson (D-NM), who had a long record of cabinet and sub-cabinet-level positions. In January, Richardson announced that he was withdrawing his name from further consideration after a grand jury began looking into charges that his administration had exchanged contracts in return for political donations. The next month Nancy Killefer, the president’s choice for the newly established position of chief White House performance officer, and former senate majority leader Tom Daschle, one of his mentors, whom he had appointed to head the Department of Health and Human Service (HHS), also announced that they were removing their names from further consideration because of issues having to do with payment of back taxes.²⁶

The withdrawal of two cabinet nominees raised issues about Obama’s vetting process and forced him to make a public statement admitting his mistake. “I’m here on television saying I screwed up,” he told Brian Williams of NBC’s Nightly News. Raising even more questions about his ability to lead the nation was his response after he took office to the financial and banking crisis that seemed to get worse each day as the number of housing foreclosures, unemployed, and personal bankruptcies continued to rise. Most experts agreed on what contributed to the severity of the financial crisis, such as the housing bubble, easy credit, exotic financial instruments, and lack of regulation of the banking industry. They disagreed on what sparked the flames threatening to consume the entire economy.²⁷

Liberals and progressives who had gone along with Obama’s appointment of economic advisers, most of whom seemed to represent the tired economics of the Clinton administration, and supported a bank bailout, began to speak out against his rescue plan. He was also attacked by the Republican opposition on Capitol Hill. Although Democrats controlled both houses of Congress as well as the White House, in the Senate Republican minority leader Mitch McConnell made clear that he would do everything in his power, including not supporting a single measure the president proposed, to make his a failed presidency.²⁸

Despite the criticisms that began to be logged at the new president from both the left and the right, he remained cool and steady as he moved quickly to direct the nation through the shoals of increasingly troubled waters. He issued a series of executive orders, the most important of which were the closing of Guantanamo Bay, which held the most dangerous members of the militant terrorist group known as Al-Qaeda, and prohibiting the use of torture against captured combatants in the Middle East. On January 24, he gave his first presidential weekly speech. Two days later he followed it up with an interview on the Arabic television station, Al Arabiya, and on February 9, he gave his first prime time press conference. Meanwhile, he ordered the first drone strikes of his presidency against terrorist leaders in the mountains of west Pakistan, and signed into law his first piece of legislation, the Lilly Ledbetter Fair Pay Act, which provided equal pay for equal work regardless of sex, race, or age. In signing the law, he thought about Toot, who never received the same salary as her male counterparts at the bank where she worked. “The legislation I was signing,” the former president later recounted, “wouldn’t reverse centuries of discrimination. But it was something. That’s why I ran I told myself.”²⁹

In his weekly address and press conference, the president emphasized the same themes he had stated in his inaugural address. Both times he stressed the importance of getting his stimulus package through Congress. “We begin this year and this Administration in the midst of an unprecedented crisis that calls for unprecedented action,” he began his weekly address. “What we have to do right now is to deliver for the American people,” he added at his press conference. That is why he proposed his stimulus package, which could create between three and four million jobs over the next several years. He was aware of the skepticism about the size and scale of his stimulus package. In response to such concerns, he promised complete transparency in deciding where and how stimulus funds were spent. “But if we act now and act boldly,” he concluded, “if we start rewarding hard work and responsibility once more” and become less partisan, “we will emerge from this trying time even stronger and more prosperous than we were before.”³⁰

One thing that stood out in the new president’s remarks was his decision to subordinate efforts he had been making at reaching across party lines to passing his stimulus package. Since being elected president, he had met with both the House and Senate Republican caucuses, retained Robert Gates as secretary of defense, and nominated two other Republicans to his cabinet: Congressman Ray LaHood (IL) as secretary of transportation, and Senator Judd Gregg (NH) as secretary of commerce (a nomination that Gregg ultimately turned down). He even met with conservative columnists at the home of one of the most widely read and respected of these journalists, George Will. But he felt burned by Republicans who lined up solidly against his stimulus package. “I can’t afford to see Congress play the usual political games,” he remarked at his press conference. “Doing nothing—that’s not an option from my perspective.”³¹

Another aspect of Obama’s press conference, which would become more apparent throughout his presidency and ultimately harm him, was his seeming inability to give short, direct answers to the questions he was asked. His well-known skills as an orator failed to translate into his dealings with the media. He was both too resolute and commanding, and too professorial and pedantic in his answers. As one journalist put it, “his answers were an oddly unexciting combination of familiar talking and wonky dissertations.”³²

Instead of reporters raising their hands and shouting to be heard as in prior presidential news conferences, Obama also prepared a list ahead of time of the journalists he called on for questions. The ones they asked were wide-ranging and included topics on foreign policy, the president’s plans for the future, and his reaction to the use of steroids by professional athletes. In the one-hour conference, however, he took only thirteen questions and permitted only one follow-up. Rather than being the transparent president he promised, he seemed more of a gatekeeper, guarding against probing inquiries, and creating a gulf between himself and the reporters in charge of covering him.³³

Peter Baker of the New York Times described the message the president conveyed in his press conference as “gloomy rather than inspirational.” As in his campaign for president, he proved more effective in small gatherings. Both before and after his meeting with reporters, he held a series of town meetings and similar gatherings where he promoted his stimulus package and sought once again to inspire the nation with his promise of change. Wherever he went, he was met by cheering crowds often chanting “Obama, Obama.” Poll numbers indicated that twice as many Americans supported Obama on the economy as they did congressional Republicans.³⁴

Still the sands below Obama were shifting. The voices that began to speak out against him grew louder after he decided to extend the bailout to include the American automotive industry, recommended a stimulus package smaller than what they believed was necessary, and made clear that his first priority would not be jobs for unemployed Americans but the passage of an affordable care act.³⁵

Almost as threatening to the nation’s economy as its faltering financial structure was the imminent collapse of two of the nation’s largest automobile manufacturers, General Motors (GM) and Chrysler, both of which were on the verge of bankruptcy. Although industry experts differed over how this happened, few disputed the fact it was the result of a number of issues, ranging from global competition, rising oil prices, the inability of consumers to take out loans, and changing consumer tastes, to listless executive leadership and too many brands, dealerships, and cars. Industry experts disagreed largely on the apportionment of blame.³⁶

The collapse of these two industrial giants could mean the loss of millions of jobs in auto plants spread throughout Michigan, Ohio, and Indiana as well as job losses among their suppliers and the local economies of towns and cities dependent on them. To prevent this disaster from happening, President-Elect Obama persuaded a reluctant Bush administration to provide $17.4 billion in TARP money to keep GM and Chrysler afloat until he took office. As president, he decided to provide the two companies with a total of $80.7 billion in TARP funds, in return for the government assuming a controlling interest in GM, forcing out its CEO, Rick Wagoner, and replacing him with a group of Wall Street investment bankers led by Steven Rattner, who was soon referred to as the “czar” of the auto industry. To encourage car sales, he adopted other provisions, most notably a measure providing a subsidy to consumers who traded their gas guzzling “clunkers” for new, more fuel-efficient models.³⁷

Commentators who had opposed the use of TARP funds to save the nation’s largest financial institutions argued that they should be allowed to fail without further government action. They were disturbed that TARP funds were once again being used to save two more “too-big-to-fail” firms, GM and Chrysler. The administration did this first by forcing both GM and Chrysler into bankruptcy. Then it effectively nationalized GM by using TARP money to buy a controlling interest in the newly restructured firm while compelling Chrysler to be bought out by the Italian company Fiat. Many critics also objected to the administration firing Wagoner rather than leaving the decision up to GM’s board of directors, as was customary.³⁸

The head of the United Steelworkers, Leo Gerard, also spoke out against the lack of labor voices around the president, while the leader of the United Auto Workers (UAW), Ron Gettelfinger, protested against the concessions plant workers were forced to make, including agreeing to a two-tier system in which newer workers received drastically reduced hourly wages. Even leading Democrats from the auto-producing states, such as Representative Sandy M. Levin and his brother, Senator Carl Levin, both from Michigan, spoke out against the nationalization of GM and Chrysler, and the cutbacks being forced on them in terms of models, plant closings, and dealerships.³⁹

Opinion polls also showed strong public opposition to the auto bailout. A CNN/Opinion Research Corporation Poll conducted in April found that 76 percent of respondents preferred letting GM and Chrysler go into bankruptcy rather than giving them more federal assistance. In an NBC/Wall Street Journal survey conducted in June, 53 percent of those polled disapproved of the government providing loans and financial assistance to Chrysler and GM, while only 28 percent approved. Other polls showed similar results.⁴⁰

Despite the widespread opposition to the auto bailout Obama remained resolute in his decision to save GM and Chrysler. Reflecting as a former president about the lost jobs he could not save as a community organizer in Chicago’s South Side, he recalled how, as president, he thought about the jobs he could save across Michigan, Indiana, and Ohio by the bailout. According to him, his “mind wander[ed] back to [his] earliest days as an organizer in Chicago, when [he’d] meet with laid-off steelworkers in cold union halls, or church basements to discuss their community concerns.”⁴¹

Obama’s determination paid dividends. The bailout lasted from December 2008 to December 2014, when the Treasury Department sold its last shares of GM’s assets for a total of $70.5 billion, or a net loss of $10.2 billion. Despite the cost to the Treasury, GM and Chrysler emerged as profitable companies producing higher quality cars with better fuel efficiency, safety, and affordability than before the bailout. As a result of the changes demanded by the president, model lines were cut back, plants and dealerships were closed, and jobs were lost. Almost every economist who studied the automobile industry agreed that, absent the changes demanded by the White House, the losses in each of these categories would have been far greater than they were.⁴²

In his first one hundred days in office (a benchmark used by political analysts to measure an administration’s legislative success against the significant legislative accomplishments of the first one hundred days of Franklin D. Roosevelt’s administration), the president had successfully pushed for legislation providing legal protection for women seeking equal pay, got Congress to pass on February 17, 2009, a $787 billion stimulus bill to promote short- and long-term economic growth (the American Recovery and Reinvestment Act or ARRA), and helped save the US automobile industry. He also helped expand health insurance for children, and, at the end of May, he nominated Sonia Sotomayor to be the first Hispanic Supreme Court justice.⁴³

Passage of the Affordable Care Act

His greatest accomplishment, however, was passage in March 2010 of the Affordable Care Act (ACA), a complex piece of legislation of 2,400 pages covering virtually every aspect of health care. Its major purposes were to make health-care insurance available to every American not already covered by insurance while containing the rapidly rising costs of health delivery. Since Roosevelt’s administration in the 1930s, opponents of national heath insurance had been able to fend off these efforts for universal coverage by pinning on them the label of “socialized medicine”—a system, these opponents claimed, by which the blunt force of government would be imposed upon the people without their consent.⁴⁴

Obama was sensitive to the need to reform the nation’s health system. Although the majority of Americans were already covered by health insurance (mainly through their employers, or, for those over sixty-five, by Medicare and Medicaid), over forty-six million other Americans lacked any form of health insurance, mainly because they could not afford it. Insurance companies could also deny coverage to those with preexisting conditions and apply lifelong limits on the dollar amount of health-care coverage. The total cost of health care in the United States ran between two and three times the equivalent care in other industrial countries without any evidence of a higher quality of health-care delivery. The lack of adequate health coverage was the single greatest cause of personal bankruptcy.⁴⁵

Until Obama ran for president, he had not made the need for a comprehensive plan of national health insurance a high priority. As the media began to pay increasing attention to the problems of the nation’s health system and the hardships individuals and families encountered because of the lack of health coverage, he began to focus more of his attention on developing a program of national health care.

In the spring of 2007, the candidate issued a position paper, “Barack Obama’s Plan for a Healthy America,” which promised to lower health-care costs while “ensuring affordable, high-quality health care for all.” Included in the plan were provisions for subsidizing the insurance premiums of middle-class Americans who could not afford to pay for them and a set of provisions for modernizing the nation’s health-care system. Among them were $10 billion to replace the nation’s antiquated system of keeping most medical records on paper with electronic record keeping and for reimbursing physicians based on the quality of the care they provided rather than on the present system of fee-for-service.⁴⁶

On May 29, Obama unveiled his plan in a major speech at the University of Iowa. He began by recounting the story of a small-business owner in an Iowa town who, after seventeen years, was free of cancer, but who found himself and his family on the verge of bankruptcy because of high monthly premiums. “This is not who we are,” the candidate declared. “We are not a country that rewards hard work and perseverance with bankruptcies and foreclosures.” Even large corporations like GM and Ford were becoming uncompetitive because they were paying far more to cover their employees than their competitors operating in countries with national health insurance.⁴⁷

To deal with this problem, Obama outlined his plan for universal health care predicated on one first proposed by the conservative American Heritage Foundation (AHF) in 1989 as an alternative to single-payer health care. It later became the basis of Massachusetts’ recently enacted statewide system of health care signed into law in 2006 by Republican governor Mitt Romney. On one crucial matter, Obama’s plan was even more conservative than the AHF proposal or the Massachusetts legislation. Unlike them, his plan did not include the individual mandate, which required every American to have health-care coverage or face a penalty. He opposed the mandate believing it would be intrusive, unenforceable, and unnecessary since most individuals, young and old, would want the security provided by insurance coverage.⁴⁸

Reminding his audience at the University of Iowa of the resistance to Medicare fifty years earlier by special interests and those fearful of big government, the president told the gathering that he expected similar resistance to his own health-care program. Just as reformers of the 1960s were able to overcome this resistance, he predicted the same would happen with health reform. “Never forget that we have it within our power to shape history in this country,” he concluded. “It is not in our character to sit idly by as victims of fate or circumstance. The time has come for affordable, universal health care in America.”⁴⁹

His unveiling of his health plan marked a crucial step for him. Until he offered his plan, he was often criticized for being too inexperienced to be a serious candidate for his party’s presidential nomination. The thoroughness and specificity of his plan began to deflect some of those criticisms. Because polls showed that voters ranked health care among their top concerns, it also put him in good stead with many of these voters, who may not have earlier taken his candidacy seriously.

During the primary debates, health-care reform became a major issue between Obama and Clinton. The two rivals agreed on the urgency of health reform legislation and even of the specifics of a measure, such as subsidies for middle-class families earning above the poverty level, and the so-called public option, a government-run health-care plan to compete with the private market. They disagreed, however, over whether a program of universal health care should include an individual mandate. In contrast to Obama’s plan, Clinton insisted that a program of national health insurance had to include a mandate requiring most individuals to have minimally essential health insurance, just as car owners were required to purchase liability insurance. Otherwise, she maintained, those who were young and not in need of care would opt out of the insurance market, driving up the costs of health coverage for the nation’s aging and sicker population that insurance carriers would still be required to cover.⁵⁰

Next to dealing with the economic crisis facing the nation, health-care reform remained Obama’s highest priority after taking office. “My interest in healthcare went beyond policy or politics,” he later recalled. “Each time I met a parent struggling to come up with the money to get treatment for a sick child, I thought back to the night Michelle and I had to take a three-month-old Sasha to the emergency room for what turned out to be viral meningitis.” He also thought about the costs his mother faced because of her terminal cancer. “Passing a health care bill wouldn’t bring my mom back… . But it would save somebody’s mom out there.”⁵¹

For the president, expanding the nation’s health system to include all Americans was more than a moral imperative: pragmatic considerations were also involved. In return for his endorsement during the primaries, he had promised Senator Ted Kennedy of Massachusetts, who was dying from inoperable brain cancer, to make it a central goal of his administration. Its achievement would also fulfill the needs and goals of a varied group of constituencies. The most obvious of these were the uninsured. They included not only the poor, but the middle class, such as small business owners, independent contractors, those with preexisting conditions, the underinsured, and those employed by businesses not offering health coverage. Through cost containment measures, Obama also sought to end the spiraling cost of health care, which was increasing at about twice the rate of inflation and threatened to hold back the nation’s economic recovery.⁵²

The president realized the many obstacles he would have to overcome before achieving what his predecessors had failed to accomplish. Even within his own administration he encountered strong resistance, including from his chief of staff, Rahm Emanuel. Along with other staff members, Emanuel argued that the new president’s first priority should be creating jobs for the growing number of unemployed Americans through rebuilding the nation’s crumbling infrastructure, which was not only needed but was also politically less risky than attempting to overhaul the nation’s health system.⁵³

Outside his administration, the president knew he would encounter formidable opposition from the groups vested in the existing health system—from insurance providers and pharmaceutical companies to the doctors and hospitals on the front line of health delivery. Fearing that he might propose, in lieu of the private market, a government-run health-care plan being promoted by more left-wing members of the Democratic Party, the insurance industry launched an extensive campaign against the so-called public option. Afraid that he would press for price controls on prescription drugs, the pharmaceutical companies prepared a multimillion-dollar ad campaign against the idea.⁵⁴

In addition to opposition from within the health industry, Obama was aware that the nation’s polarized political environment and escalating budget deficits also stood in the way of enacting health reform. Similarly, he knew he would encounter strong resistance from conservatives ideologically opposed to big government and from those who were satisfied with their existing health insurance. Finally, he was sensitive to the fact that in 1993 the Democratic-controlled House of Representatives had rejected reform legislation prepared by Hillary Clinton. This was, in part, because of an effective ad campaign against the act. Mostly, though, it was because of the measure’s complexity and lawmakers’ resentment of the fact that they had played no part in developing the legislation.⁵⁵

The president decided, nevertheless, that the goal of making health care available to every American was too important to be replaced with less ambitious objectives, especially since the Democrats controlled the House by a comfortable margin and had the sixty votes in the Senate needed to defeat any filibustering attempt by the Republicans against health care. On February 24, 2009, he presented the outlines of his health-care proposal in his first address to Congress. The country, he said, could not afford to put health-care reform on hold. “The cost of health care has weighed down our economy and conscience long enough. So let there be no doubt, health-care reform cannot wait. It must not wait and it will not wait another year,” the president concluded.⁵⁶

On March 5, he called together representatives from the medical, hospital, pharmaceutical, and insurance companies for a well-publicized White House forum on health care. Ailing Senator Kennedy also made a surprise appearance. “The purpose of this forum,” Obama stated, “is … to determine how we lower costs for everyone, improve quality for everyone, and expand coverage to all Americans. And our goal will be to enact comprehensive health care by the end of the year.”⁵⁷

Providing quality health care for every American, Obama warned again, was not only the right thing to do, it was necessary to save the nation’s economy. “At the fiscal summit that we held here last week, the one thing that everyone agreed was the greatest threat to America’s fiscal health … is the skyrocketing cost of health care… . That’s why we cannot delay this discussion any longer.” “That’s why today’s forum is so important—because health care reform is no longer just a moral imperative, it’s a fiscal imperative.”⁵⁸

Instead of confronting the major interest groups within the existing health system, as had been Clinton’s approach to health reform, the president (and congressional leaders) decided upon a strategy of neutralizing stakeholder opposition by working with them in developing a plan. All sectors of the health industry would have to make financial concessions, he remarked. As part of that process, he proposed a $634 million health-care reserve fund that would be paid in part by targeted cuts in payments to insurance and drug companies, doctors, hospitals, and other providers, and he vowed to fight attempts to water down the package. He made clear, however, that his purpose was not to replace the existing health system with a new one but to work within the system. He also stressed how his initiative offered health-care providers the opportunity to tap into a huge new market of individuals and families who had not been able to buy insurance or who, in the case of younger Americans, did not think they needed it.⁵⁹

The administration’s strategy of working within the health-care industry paid off. In May, the insurance companies agreed to allow greater government regulation of the industry as long as it did not include the creation of a public option. Through their representatives, other health-care sectors, like drug makers and hospitals, also gave their conditional support for more regulation of health care.⁶⁰

In another effort to avoid the mistakes of past administrations, Obama emphasized that while he would work hard to reform health care, he would leave it to Congress to develop the plan. His roles would be advocate, lobbyist, and consultant to the lawmakers as they worked through the complexities of developing a legislative package. He would also be there to put out any brush fires that might develop along the way. Through the first six months of the struggle to gain approval of what became the Affordable Care Act (ACA), he stuck closely to this hands-off approach. In July, House Speaker Nancy Pelosi and the chairpersons of the Committees on House Ways and Means, Energy and Commerce, and Education and Labor revealed their plan for overhauling the nation’s health-care system.⁶¹

Over the spring and summer, however, opposition to health-care reform began to harden as efforts continued on the part of the Democratic left to include in the legislation the public option. On Capitol Hill Republicans, and some Democrats, who were against the whole concept of comprehensive health insurance, spoke out against health-care reform as did Republicans who believed they were not being consulted in the legislative process. The opposition was strong enough to prevent approval of the health-care bill past the August deadline the president had set for passing the legislation.⁶²

To keep up public pressure for a sweeping reform measure, the White House got the governors of several states to hold health-care forums where Obama made video appearances. The Democratic National Committee (DNC) also helped arrange house parties, rallies, and other events throughout the country and conducted an eleven-city campaign-style bus tour with a colorful bus featuring the slogan, “Health Insurance Reform Now: Let’s Get It Done.” As a way of striking at the home base of Obama’s Republican opponent, John McCain, the bus tour began with a rally at a labor hall in Phoenix.⁶³

Opposition to the legislation, even among Democrats, remained strong enough that in September, the president decided to deliver a major speech on health care before a joint session of Congress. In his address, he warned once again of the economic necessity of health-care reform and of the responsibility of government to make health care available to every American. The ACA was based on a “belief that in this country, hard work and responsibility should be rewarded by some measure of security and fair play,” he said. “Put simply, our health-care problem is our deficit problem. Nothing even comes close.”⁶⁴

So poisoned was the atmosphere on Capitol Hill that when Obama said his plan would not pay for health care for illegal immigrants, Republican congressman Joe Wilson of South Carolina shouted “you lie.” Not until November 7 did the House narrowly pass (219 to 212) the ACA. Only one Republican supported the measure, while thirty-four Democrats joined the rest of the Republicans in voting against it. Despite an intense lobbying effort by the insurance industry against the public option, it was included in the measure.⁶⁵

In the Senate, the hurdles to passage of health reform legislation remained even more difficult than in the House. In September, reform legislation finally came to the floor from the Senate Finance Committee, headed by Max Baucus, a conservative Democrat from Montana. In order to prevent a Republican filibuster of the bill, Democrats needed the vote of every one of the sixty Democratic senators in the upper chamber. The problem was that even though the bill was less expansive and less expensive than the House bill, a few of them still had reservations about the measure. Two days before the Senate was to vote on the measure, the insurance industry complicated matters even more by releasing a report claiming health-care premiums would increase sharply under the bill.⁶⁶

In order to win the votes of swaying Democrats, the White House and the Democratic leadership began making deals. “Politically and emotionally,” Obama later wrote, “I would’ve found it a lot more satisfying to just go after the drug and insurance companies and see if we could beat them into submission… . But as a practical matter, it was hard to argue with Baucus’s more conciliatory approach.” Without the agreements, he would not get the sixty votes needed for passage of the ACA.⁶⁷

Accordingly, the administration and leadership agreed not to support the public option if it were brought up on the floor, which pleased Senator Joe Lieberman (CT) and other conservative senators. To win the vote of Senator Evan Bayh (IN) they lowered proposed taxes on medical device makers. For Senator Mary Landrieu’s (LA) vote, the administration agreed to extra Medicaid funds to correct accounting problems having to do with Hurricane Katrina.⁶⁸

The deal for which the White House was most criticized by lawmakers and journalists was with Senator Ben Nelson, a conservative Democrat of Nebraska, who had made clear that he was going to vote against the measure unless the administration agreed to exempt his state from a provision of the bill requiring all states to pay 10 percent of the costs of an expanded Medicaid program. In what became known as “the Cornhusker Kickback,” the White House caved in to Nelson’s demand. Unlike the other states, where the 10 percent requirement would be phased in over a number of years, Nebraska would have the cost of its Medicaid expansion fully funded from Washington. With this and other concessions agreed to by the White House, the Senate, in a rare Christmas Eve session, passed the health-care measure on December 24 by a vote of 60 to 39.⁶⁹

Under normal circumstances, the House and Senate would then have resolved their differences in conference committee before sending the health-care measure to President Obama for his signature. In August 2009, however, Senator Kennedy died, and in a special election to fill his seat, Republican state senator Scott Brown, promising that he would vote against the ACA, defeated the Democratic candidate, Attorney General Martha Coakley, in this normally safe Democratic state. Since the Democrats now lacked the sixty votes necessary to defeat a Republican filibuster, it appeared to most political observers that Obama’s gamble in making health care his highest domestic priority had failed.⁷⁰

At first, the president was stunned by Scott’s victory in Massachusetts. “I know that at the time, all of us felt we’d committed a colossal blunder” in making passage of the ACA the White House’s highest priority, he later recounted. But after the initial shock wore off, he began a concerted effort to sell the public on the ACA. “The president said to us that he would do anything, he would call anyone, meet with anyone. He will speak anywhere. He will do whatever it takes to make the case,” recalls White House Communications Director Dan Pfeiffer. In response to Republican complaints that they had been left in the dark in the development of a health-care measure and that the whole legislative process lacked transparency, the president held a summit at Blair House at the end of February, attended by leading Democrats and Republicans and carried nationally on television, to try to iron out their differences on health-care reform.⁷¹

Instead of resolving these differences, the forum highlighted them. When Democrats tried to make the case that the two parties were closer than they thought, Republicans countered that the gap between the two parties was too vast. Republican senator Jon Kyl (AZ) summed up the fundamental difference between the two sides: “Does Washington know best about the coverage people should have, or should people have the choice themselves.” Concluding the summit, Obama observed, “Politically speaking, there may not be any reason for Republicans to want to do anything. But I thought it was worthwhile to make the effort.”⁷²

While the president was reaching out to the public and to Republicans, House Speaker Pelosi, a gifted politician and tactician, who was as fully committed to comprehensive reform as Obama, worked her skills on her caucus. Her strategy was to get the caucus to vote for the Senate bill without changes. The measure could then be amended in a way that would satisfy most House concerns through a budget process known as reconciliation, which allowed for no legislative debate and required only a majority vote. Only in this way, Pelosi told the Democrats, could a health reform measure win final approval on Capitol Hill.⁷³

One amendment Obama made clear he would oppose was inclusion of the public option, which, he decided, would never be approved by those who feared a government takeover of the nation’s health system. This was enough to keep a number of Democrats from voting for the bill, but on March 21, the House passed the Senate measure by the barest possible majority (219 to 212) with thirty-four Democrats and all Republicans voting against it. At a White House ceremony in the Oval Office two days later, the president signed the ACA into law. “What had happened … wasn’t just Barack Obama talking to the American people about health care,” explained Nancy-Ann DeParle, the president’s Health Reform Director. “It was also the Democratic House and Senate becoming a team, as opposed to the House versus the Senate, which is basically what it had been for the last year.”⁷⁴

Throughout the legislative process, Pelosi had resented the pressure Obama had placed on her. She was angry with the White House for not having consulted more with the House leadership. Her relationship with Senate Majority Leader Harry Reid of Nevada was also strained. Pelosi objected to what she regarded as Reid’s arrogant disregard of the House and of her unique problems in trying to maintain unity among her caucus of 257 disparate Democrats.⁷⁵

That said, Pelosi and Obama had found a way to pass a landmark piece of legislation establishing a national health insurance framework. The measure promised to make affordable health care available to all Americans while also improving the quality and reducing the costs of the nation’s health-care system. While the ACA touched on virtually every facet of the nation’s health-care system, its most immediate benefits for most Americans included subsidies for the uninsured so that they could buy insurance in competitive state exchanges (or a federal exchange for those living in states without exchanges). Insurers would also have to cover all Americans regardless of preconditions and without caps on the amount of their coverage. In addition, the measure provided funds to expand state-run Medicaid programs for the states’ most indigent populations and extended family coverage to include young adults under the age of 26. To offset the costs of expanded coverage, all Americans would be required to have health coverage (the individual mandate) or pay a fine that could amount by 2017 to 2.5 percent of their taxable income.⁷⁶

What is almost as significant as the ACA itself was how conservative it was, having been built on the conservative principles of the American Heritage Foundation and implemented in Massachusetts by a Republican governor. Instead of seeking to replace the privately structured health system in the United States, the president sought to reform it. Instead of launching a broadside against the health industry, he sought to work with it. Throughout the struggle over reform, Obama also acted pragmatically even as he sought to combine conservative principles with progressive values. At first he rejected the individual mandate. While he initially supported a public option, he withdrew his backing for it when he realized the strong opposition against it. While he believed in the moral imperative of health-care reform, he also emphasized its economic necessity as a way of dealing with the fiscal crisis he faced when he took office.

Finally, the president’s image of Americans who deserved health-care coverage was one of an aspiring or hardworking middle class, many of whom were small businesspeople or entrepreneurs, trying to live the American dream but stricken with medical hardships and unable to afford insurance. His vision of health reform was consistent with his overall political philosophy predicated as it was on a combination of pragmatism, on the one hand, and progressivism and conservatism, on the other.