Missing the Moment for Tax Reforms

Article excerpt

While I was out ill for six weeks in December and January, the world changed. Before that, the White House had badly misjudged the political climate. When I went to Ohio with Vice President Biden, he did his best to ignore the evidence of economic pain, giving a pep talk to skeptical factory workers and telling me and other reporters that he believed Democrats would retain their majorities in both the House and Senate.

The election rout came as a shock to President Obama and his administration. But Obama took the lesson and acted promptly. The first step in moving back to the center was to liberate himself from his dependence on Nancy Pelosi and Harry Reid and cut his own deal with Mitch McConnell, the Republican minority leader of the Senate. In return for a temporary extension of the Bush tax cuts, Obama got not only big pieces of his own economic agenda but approval of the arms treaty with Russia and the termination of "don't ask, don't tell."

Thus fortified, he began to repair the White House, giving it a distinctly Clintonian cast. He had already hired Jack Lew, a skilled negotiator, as his budget chief. He brought in my friend Bill Daley, a politically savvy operative with strong business and banking ties, as chief of staff, and Clinton administration veteran Gene Sperling as his top economic adviser. Liberal Democrats fretted but the vibes from Washington to Wall Street were good.

Then fate intervened. The Tucson massacre provided the kind of occasion when all of the American people turn to the president to express their horror and grief but also their determination to reach out to each other and recover. As Ronald Reagan and Bill Clinton had done before him, Obama did not disappoint. His address to the memorial gathering reminded everyone why his voice had been cherished during the 2008 campaign -- and why they might want to keep it in the White House.

Everything was cued up for the recovery process to climax at the State of the Union address. It played well with the public, with its invocations of bipartisanship and its bursts of economic optimism. But it lacked a centerpiece.

Obama called this a "Sputnik moment," but offered no such ambitious enterprise. …