Miller Center

Barack Obama: Domestic Affairs

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Presidential Transition and Appointments

Since 1933, when the Twentieth Amendment to the Constitution moved up the date of the President’s inauguration from March 4 to January 20, new Presidents-elect have had about eleven weeks to make the transition from candidate to President. Several important tasks must be accomplished in this period if the transition is to be successful. None is politically more important than appointing the White House staff and the cabinet. None is personally more important than preparing the new President's family for life in the White House.

During the summer of 2008, Obama appointed John Podesta, the president of the Center for American Progress, a liberal think tank, and former chief of staff in the Clinton White House to begin preparing for the transition that would occur if Obama won the election. In October, President George W. Bush appointed a transition team to work cooperatively with whichever candidate was elected. As a result, Obama was able to hit the deck running as soon as the results were in on November 4. Just two days later, Obama announced that Representative Rahm Emanuel of Chicago would be his chief of staff.

The Obama transition team announced further high-ranking White House staff appointments in short order, with most of them going to friends and personal loyalists of the new President. As senior advisers to the President, Obama appointed David Axelrod, his chief campaign adviser, Pete Rouse, his Senate chief of staff, and Valerie Jarrett, his longtime Chicago friend and supporter. Robert Gibbs, Obama's press secretary during his Senate and presidential campaigns, was chosen as White House press secretary, and Chris Liu, Obama's legislative assistant in the Senate, became cabinet secretary. Other important staff appointments went to: Jim Messina and Mona Sutphen (deputy chiefs of staff), Greg Craig (White House counsel), Ellen Moran (communications director), and Phil Schiliro (legislative liaison). Obama also named former Marine general James L. Jones as his national security adviser, former Treasury secretary Lawrence Summers as director of the National Economic Council, and veteran congressional staffer Melody Barnes as his domestic policy adviser. Former Congressional Budget Office director Peter Orszag was appointed head of the Office of Management and Budget and Leon Panetta, a former member of Congress who had served in several administrations, was chosen as director of the Central Intelligence Agency director and retired Admiral Dennis Blair as director of national intelligence.

In appointing the cabinet—that is, the heads of the fifteen executive departments—Obama relied in part on the "team-of-rivals" approach that presidential historian Doris Kearns Goodwin attributed to Abraham Lincoln in her 2005 book, Team of Rivals: The Political Genius of Abraham Lincoln. Obama first appointed Hillary Rodham Clinton, his chief opponent for the Democratic presidential nomination, as secretary of state. Obama's nomination of another election rival, Bill Richardson, as secretary of commerce, foundered when Richardson subsequently withdrew because of a potentially embarrassing grand jury investigation into a state contract in New Mexico. Obama also included two Republicans in the cabinet, inviting Bush's secretary of defense, Robert Gates, to remain in that position, and appointing Representative Ray LaHood of Illinois as secretary of transportation. Other cabinet appointments went to: Timothy Geithner (treasury), Eric Holder (attorney general), Janet Napolitano (homeland security), Hilda Solis (labor), Shaun Donovan (housing and urban development), Steven Chu (energy), Arne Duncan (education), Ken Salazar (interior), Tom Vilsack (agriculture), Eric Shinseki (veterans affairs) and Kathleen Sebelius (health and human services).

After the midterm elections in 2010, as President Obama recovered from the "shellacking" the Democrats received, he instituted personnel changes in his administration. His chief of staff, Rahm Emanuel, resigned in October 2010 to return to Chicago to run for mayor. In January 2011, President Obama appointed William Daley to replace Emanuel. Daley, whose father and brother had both been mayor of Chicago, had worked on various Democratic campaigns, served in the Clinton administration, and been a banker on Wall Street. Obama's press secretary, Robert Gibbs, resigned in February 2011 and was replaced by Jay Carney, a journalist who had served as Vice President Biden's director of communications. Similarly, Obama's senior adviser, David Axlerod, was replaced by David Plouffe, who managed the Obama's 2008 presidential campaign.

Financial Troubles

Like Franklin D. Roosevelt in 1933 and Ronald Reagan in 1981, Obama had to address a major economic crisis as soon as he was inaugurated on January 20, 2009. The nation's leading banks and other financial institutions were in serious danger of collapse. The economy had stopped growing and was hemorrhaging jobs, with the unemployment rate nearing 10 percent. Housing prices were in freefall, leading to numerous foreclosures.

Even before taking the oath of office, Obama had endorsed President George W. Bush's Troubled Asset Relief Program (TARP), a $700-billion initiative to rescue the nation's major banks by lending enough money to keep them solvent. As President, Obama also directed some TARP funds to General Motors and Chrysler in an effort to keep the automobile industry from going bankrupt. TARP worked—all the banks and auto companies survived and by the end of 2009 they already had repaid the government more than $600 billion—but many voters perceived the program as a bailout for wealthy bankers and corporate executives.

Obama's first major recommendation to Congress was for an $800-billion economic stimulus package: the American Recovery and Reinvestment Act. About one-third of the money involved grants to state governments to keep them from laying off public employees or reducing unemployment compensation; about one-third went for bridges, highways, sewage treatment facilities, and other infrastructure projects; and the remaining third was for middle-class tax cuts. Although Obama hoped to pass the Recovery Act with bipartisan support, not a single Republican House member and only three Republican senators voted for it. Democratic control of Congress was strong enough to secure its passage, however, and President Obama signed the act into law on February 17, 2009.

Health Care Reform

Obama wanted to do more as President than put out fires. He also sought to enact a major reform of the nation's health care system. Health care reform had been a leading Democratic Party goal since the presidency of Harry S. Truman. In 1965, Lyndon B. Johnson had secured the enactment of Medicare for older Americans and Medicaid for the poor. The next two Democratic Presidents, Jimmy Carter and Bill Clinton, each failed to persuade Congress to pass legislation to guarantee health care coverage for everyone else. Although Obama had only promised during the election campaign to address this issue "by the end of my four-year term," he decided that his best chance of success was during his first year in office, when his popularity was likely to be at its highest.

Obama faced major hurdles in achieving health care legislation. Although Democrats in Congress were united in support of reform, they were divided about what form it should take, with some insisting that the federal government offer a "public-option" (that is, government-run) coverage plan and others urging that private coverage be extended to those who lacked it. More than three-fourths of Americans had private health insurance in some form, and despite the steeply rising costs of health care, many of them worried that changing the system might make their own situation worse, as well as adding to the federal budget deficit that the Recovery Act had already sent soaring to more than $1 trillion per year.

In the face of these obstacles, Obama resolved that any reform proposal would have to be budget-neutral—that is, save as much money as it spent. He accommodated the interests of the pharmaceutical and hospital industries, both of which had helped to sink President Clinton's health care bill through massive advertising and extensive lobbying. He invited Congress to share in developing the bill, in contrast to the secret process of legislative formulation that Clinton had employed.

These efforts alone were not enough to secure passage, especially when members of Congress encountered angry opposition to "Obamacare" from the newly formed, grassroots conservative Tea Party movement in a series of August 2009 town-hall meetings in their home states and districts. The President, frustrated that he was not getting through to the American people, decided to speak to the nation in a prime-time address to Congress on September 9, 2009.

"The plan I'm announcing tonight would meet three basic goals," Obama declared. "It will provide more security and stability to those who have health insurance. It will provide insurance to those who don't. And it will slow the growth of health care costs for our families, our businesses, and our government." Specifically, "individuals will be required to carry basic health insurance—just as most states require you to carry auto insurance. Likewise, businesses will be required to either offer their workers health care, or chip in to help cover the costs of their workers."Obama's argument was overshadowed to some degree when, in response to his declaration that the "claim . . . that our reform effort will insure illegal immigrants . . . is false," Republican representative Joe Wilson of South Carolina shouted, "You lie!" from his seat in the House chamber. But the speech succeeded in arresting the months-long decline in public and congressional support for reform. In this altered political environment, the President launched a successful campaign to persuade members of Congress in face-to-face meetings. By year's end, both houses of Congress had passed different versions of health care reform legislation. On March 23, 2010, after some elaborate legislative wrangling to get the House to pass the Senate bill, Obama signed the Patient Protection and Affordable Care Act into law. One week later he signed the Health Care and Education Reconciliation Act, which restored some of the House's preferred features.

Policy Initiatives and Supreme Court Appointments

President Obama's other domestic policy initiatives included the Lily Ledbetter Fair Pay Act for women and Secretary of Education Arne Duncan's Race to the Top program, which created a competition among states for $4.5 billion in extra funding tied to public school reforms authorizing more charter schools and tying teacher evaluations to student learning. In 2010, Obama persuaded Congress to enact financial reform legislation, the Dodd-Frank Wall Street Reform and Consumer Protection Act, designed to prevent economic meltdowns like the one he inherited when he took office.

Two vacancies occurred on the U.S. Supreme Court during Obama's first two years in office. David Souter retired in 2009, and John Paul Stevens retired in 2010. Both were liberal justices, and Obama nominated two liberals to replace them: federal appeals court judge Sonia Sotomayor, the first Hispanic Supreme Court nominee in history, and Solicitor General Elena Kagan. Senate Republicans did not strenuously resist either nomination because replacing liberals with liberals did not affect the Court's ideological balance. The Senate confirmed Sotomayor on August 6, 2009, by a vote of 68 to 31, and then it confirmed Kagan on August 5, 2010, by a vote of 63 to 37.

Budget Negotiations

Facing a new Republican majority in the House of Representatives and an enlarged Republican minority in the Senate, President Obama spent much of 2011 on the defensive. Most of 2011 was dominated by congressional Republicans' efforts to legislate massive cuts in domestic spending in order to bring down the annual trillion-dollar federal budget deficits. Democrats in Congress fiercely resisted these efforts, leaving the President caught in the middle. Obama shared the Republicans' goal of long-term deficit reduction, but worried that immediate reductions in federal spending would stifle the still struggling economic recovery. He also thought that any deficit reduction plan should include tax increases on high-income individuals and households, a policy he had pursued since announcing his candidacy for president in 2007.

During the summer of 2011, Obama secretly negotiated with the new Speaker of the House, Republican representative John Boehner of Ohio, to see if they could agree on a deficit reduction plan. In early August, the two leaders came close to an agreement that would impose $800 billion in tax increases and $3.2 trillion in spending reductions over a ten-year period. But when a small group of Republican and Democratic senators offered a deficit-reduction plan of their own that included $1.2 trillion of tax increases, Obama realized that he would lose the support of his party if he stuck with his and Boehner's agreement on the smaller amount. President Obama told Boehner he needed $400 more in taxes before he could agree to their deal, and the Republican leader, aware that most members of his party's caucus opposed any tax increases at all, broke off negotiations.

In lieu of the aborted $4 trillion deficit reduction agreement, Congress and the president settled on a more modest plan in which Congress would create a "super committee" of House and Senate Republicans and Democrats, whose purpose was to identify $1.2 trillion in tax increases, spending cuts, or some combination of both by the end of 2012. If the committee failed to reach an agreement, then the plan stipulated that $1.2 trillion in spending cuts would automatically take effect, half in defense and half in domestic programs. The rationale was that the threat of "sequestration" would motivate Republicans who did not want to see the defense budget cut and Democrats who did not want certain domestic programs cut to pressure the super committee to reach an agreement. This did not happen. As political scientists David Lewis and Terry Moe have written, "the super committee failed miserably, and most of 2012 was then wasted as legislators looked toward the November elections and refused to bite the bullet on the deficit issue. "

The Start of the Second Term

As with most two-term administrations, the period between the election and the second inauguration saw numerous changes in the cabinet and White House staff. Of the four "inner cabinet" posts, the heads of all but the Justice Department (Attorney General Eric Holder) decided it was time to move on. Obama chose Massachusetts senator John F. Kerry to replace Hillary Clinton as secretary of state, former Nebraska senator Chuck Hagel to replace Leon Panetta as secretary of defense, and White House chief of staff Jack Lew to replace Timothy Geithner as secretary of the treasury. Deputy national security adviser Dennis McDonough took Lew's place as chief of staff, and White House counter-terrorism adviser John Brennan was named as director of the Central Intelligence Agency (CIA). Brennan and Hagel faced sharp questioning in their Senate committee hearings, but the other nominees—for these posts and others, including secretary of labor and secretary of energy—sailed through the confirmation process largely unscathed.

Obama's second Inaugural Address, delivered on January 20, 2013, was traditional in some ways and innovative in others. Like most such addresses, he struck unifying themes grounded in the American experience. He opened the speech, for example, by quoting the Declaration of Independence's statement that "all men are created equal, and are endowed by their Creator with certain unalienable rights." But as the address unfolded, Obama became more specific than has been customary on such occasions. Among the issues he raised were climate change, same-sex marriage, and health care reform. The unifying theme of the address was that policies such as these would help to fulfill the ideals stated in the Declaration.

In his February 12, 2013, State of the Union address, Obama elaborated on the agenda that he offered at the inauguration, while adding to the list calls for greater federal support for early childhood education, immigration reform to provide a path to citizenship for undocumented immigrants, an increase in the minimum wage, and new gun control legislation. The last of these issues had taken on special urgency after December 14, 2012, when a young gunman shot and killed twenty school children and six teachers and staff members at Sandy Hook Elementary School in Newtown, Connecticut. Obama also called on Congress to avoid the $85 billion of across-the-board cuts in the federal budget—half in defense and half in domestic programs—that were scheduled to take place automatically on March 1st if legislators could not agree on another plan for achieving deficit reduction. The scheduled automatic cuts were a consequence of the decision Congress made in August 2011 to achieve $1.2 trillion in deficit reduction over a ten-year period through "sequestration" if no other method could be agreed on. Obama wanted Congress to forestall the first scheduled sequester by raising taxes and making targeted cuts in spending. Sequestration took effect on March 1st as scheduled. Although the immediate impact was limited, Obama warned of the long-term effects of sequestration on the economy and unemployment.

Congressional Republicans were loath to do nearly all of what the President wanted, and cited the fact that he had not emphasized these issues during the campaign and therefore could claim no mandate for them from the voters. An important exception was immigration reform, which many Republicans were open to—not because of Obama, but because their dismal performance in the election among Latino voters made them want to repair their image as an anti-immigrant party.

Citation Information

Consulting Editor

Michael Nelson

Professor Nelson is the Fulmer Professor of Political Science at Rhodes College and a nonresident senior fellow at the Miller Center. He has published twenty-three books, including:

The Elections of 2008 (CQ Press, 2009)

The American Presidency: Origins and Development, 1776–2007 (with Sidney Milkis, CQ Press, 2007)

How the South Joined the Gambling Nation: The Politics of State Policy Innovation (with John Lyman Mason, LSU Press, 2008), which won the V.O. Key Award for Outstanding Book on Southern Politics.