Russel Sage Foundation

Employing a rich variety of data sources, a working group of nine leading scholars has analyzed and tracked the accomplishments, limits, and political dramas of the first two years of Barack Obama’s presidency during the 111th Congress.

Barack Obama won the presidency of the United States as the candidate of change, pledging to fundamentally transform domestic policy in many areas of national life—health care, environmental regulation, immigration law, labor policy, the financing of higher education, and taxes and revenue collection. As the Wall Street crisis escalated in the months before the 2008 election, financial system reform became one more item on Obama’s already extensive list of challenges. Obama’s election coincided with increased Democratic majorities in both houses of Congress, and many viewed the advent of his administration as a once-in-a-generation chance to significantly reorient U.S. public policy and reverse decades-long regulatory and tax trends that redistributed wealth and opportunity upward and widened the chasm between rich and poor.

Two years later, the record is mixed, and accompanied by political turnarounds. The Obama administration proposed redirections of federal activities in many key areas, and landmark legislation was passed that may fulfill some of the promise of Obama’s change-oriented presidency.  Yet the key achievements remain invisible to many Americans, including pundits engaged in assessing the first two years of this presidency. And in a number of areas, changes have been limited by partisan polarization and obstructionist tactics in Congress, even as a fragmented and increasingly politicized media has blared extreme and conflicting messages about politics. Amidst the clamor, citizens have become increasingly disillusioned with Washington DC, as they face a sluggish recovery from a deep recession marked by persistently high unemployment and slow-private-sector job growth. Although polls tell us that Republicans have even less credibility than Obama and the Democrats, the GOP is poised to make major gains in the midterm 2010 elections. The American public, once flush with excitement over the possibility of a new character and tone for politics and governance, now doubts that government can be used for positive purposes to widen opportunity and overcome economic threats – and gridlocked politics in coming months may confirm their worst fears. 

The project  provides a detailed and sweeping set of assessments of the accomplishments, limits, and political dramas of the first two years of Barack Obama’s presidency during the 111th Congress. With support from the Foundation, political scientists Theda Skocpol (Harvard University) and Lawrence Jacobs (University of Minnesota) formed a working group on President Obama’s Agenda and the Dynamics of U.S. Politics. The effort started more than a year ago, and has involved nine leading scholars tracking the course and fate of Obama’s efforts to reorient domestic policy during 2009 and 2010. Working group members traced developments in eight specific policy areas: health reform, financial regulation, energy and climate change, tax policy, higher education funding, primary and secondary school reform, immigration policy, and labor law reform.  They also shared insights to develop an overall perspective on Obama’s approach to domestic reforms amidst a deep economic downturn. Employing a variety of data sources, including public documents, speeches, media coverage, public opinion polls, campaign contribution records, and interviews with key actors, the scholars in this project identify what the Obama administration and its allies tried to do and when; trace successes, setbacks, redirections and failures.  Each author explains what happened, probes the foreseen and unforeseen political consequences, and situates the efforts and achievements of the early Obama presidency in the context of previous federal policies.  The papers tell us much about the workings and pathologies of U.S. politics today, and highlight the institutional and political constraints that channel and limit changes – especially changes intended to mitigate social and economic inequalities in the United States.

Pundits and politicians alike have compared Barack Obama’s ambitious policy initiatives to Franklin Roosevelt’s New Deal, which sought to alleviate the economic devastation of the Great Depression.  One of the unique features of this extraordinary and timely set of readable analyses, collected in the volume Reaching for a New Deal, is that it analyzes immediate developments by using comparisons to a variety of historical episodes including the New Deal, the Great Society, and the Reagan era. These comparisons cast into sharp relief the ways in presidential calls for policy change are buffeted by different types of economic crises, changing public moods, shifts in civic engagement and interest group activity, and the impact of media norms and operations on public debate. 

The volume is organized into three major sections.  The first section considers areas where the Obama administration managed majored legislative breakthroughs. The second section looks at realms where action occurred primarily through administrative means under Cabinet direction. And the third section probes the deadlocks and political conflicts that have so far blocked decisive action on that analyze to address inescapable challenges in immigration, energy and climate change, and tax reform. 

These first-rate studies take account of developments through the winter of 2010. The Foundation has published a book entitled Reaching for a New Deal: Ambitious Governance, Economic Meltdown, and Polarized Politics in Obama’s First Two Years, in 2011.  

CONTENTS (PDF)

Introduction

Reaching for a New Deal: Ambitious Governance, Economic Meltdown, and Polarized Politics in Obama’s First Two Years

After 2008 brought a decisive victory for Barack Obama and enhanced Democratic margins in the House and Senate, many observers felt the door was open for a second New Deal, especially because candidate Obama had highlighted growing inequalities in the United States and promised to redirect federal benefits, taxes, and regulations to enhance opportunity and security for the middle class. The usual institutional obstacles to rapid policy change slowed progress on presidential priorities; and Democratic majorities were always certain to wane by 2010. Extraordinary circumstances also proved daunting. Unlike FDR in the 1930s, Obama took office just as a financial and economic crisis was starting. He joined with the previous Republican administration to bolster Wall Street and the banks, but did not or could not forestall rising and persistent unemployment. Republicans decided on a strategy of all-out opposition to the President's initiatives, hoping to benefit from economic sluggishness and public disillusionment in the 2010 midterm elections. Partisan polarization is at an all-time high; Senate filibuster practices are now routinely invoked to stall all sorts of decisions; and today's media structures and practices magnify oppositional voices and make it hard for the President to get any consistent message across to most citizens.      Despite all of these obstacles, President Obama and his allies have achieved major legislative breakthroughs in health reform, higher education reform, and financial regulation. In addition, Administration officials have used regulatory powers to promote labor and school reforms. But major national dilemmas about immigration, energy and environment, and taxes remain unresolved, as attempts at compromise legislation have stalled in Congress and partisan posturing runs to extremes. The future for Obama's presidency, whether or not he wins a second term, will be even more daunting than the first two years, as Republicans gain ground in Congress and the public becomes increasingly frustrated with the inability of the federal government to promote job growth and tackle national challenges. Obama has made a start on the second New Deal he promised and his administration is determinedly implementing reform legislation. But it remains to be seen whether new steps will be rolled back or undercut, and whether further efforts to use federal powers on behalf of broader opportunity and security for most Americans can make headway in a stormy political environment, in which anti-government conservatives and interests determined to preserve privileges will have greater leverage. 

Legislative Landmarks

Hard-Fought Legacy: Obama, Congressional Democrats, and the Struggle for Comprehensive Health Reform

On March 23, 2010, President Obama signed into law a landmark in U.S. social provision, the Patient Protection and Affordable Care Act of 2010. For many decades, reformers and previous presidents had sought reforms to expand health insurance coverage while also controlling rapidly rising health care costs. All had failed, until Obama and Democrats in Congress brought a fifteen-month process to successful legislative conclusion, enacting Affordable Care with bare majorities of only Democratic votes. Early in 2009, Obama chose the risky course of making comprehensive health reform a top priority, despite the fact that he took office during a major economic crisis. His White House set broad themes for reform and stressed long-term cost controls, and then let Congressional committees work out compromises with major health industry stakeholders. Republican ideas were solicited and incorporated into major bills. But when Republican Congressional leaders turned to all-out opposition, legislation could advance only through intricate compromises between liberal and moderate to conservative Congressional Democrats. Final legislation almost failed when Senate Democrats lost a seat and could no longer break a filibuster.       But in the end, the election of Republican Scott Brown not only failed to stop reform, but opened the door to a more egalitarian version of health reform passed by majoritarian procedures. Affordable Care is now on the books, yet must be implemented at the national and state level in an intricate process stretching over the next five to ten years. Opponents are calling for repeal -- or, failing that, for major changes in spending, regulations, and taxes. Looking forward, and taking for granted a less propitious political environment in Congress, President Obama's signature health reform seems likely to survive as a legislated framework, but it may experience modifications that will, in the end, make the law less effective at regulating business and health care practices that lead to inexorably higher costs, and less beneficial to lower and middle-income Americans.

Eliminating the Market Middle-Man: Redirecting and Expanding Support for College Students

Suzanne Mettler (Cornell University) evaluates the administration’s initial efforts to broaden access to college. She explains how Obama was able to recalibrate a student-loan system that favored private lenders—by establishing government-issued loans and generous tax tuition credits – yet at the same time lost traction on other initiatives, such as creating guaranteed Pell Grant funding.

The Contest of Lobbies and Disciplines: Finance Politics and Regulatory Reform in the Obama Administration 

In July 2010, President Obama signed into law the most far-reaching legislative regulation of the American financial sector since the New Deal. This essay examines the legislative success or failure of the Obama Administration’s various proposals for financial reform, focusing upon five themes: (1) leverage restrictions and capital requirements, (2) restrictions on proprietary trading, (3) regulation of derivatives and swaps, (4) regulation of credit ratings agencies and (5) a consumer financial protection agency. I conclude that substantive and transformative statutory reform was accomplished in most of these areas, though critical proposals were watered down through lobbying, often in ways that eluded the public eye. The legislation leaves numerous decisions and operations for agency regulators to implement; this reflects both a penchant for delegation in the legislation, as well as the centrality of existing agencies as lobbying and framing agents in the politics of financial reform. Post-signing battles over appointments to the consumer protection agency and ongoing adjustments by banks to divorce their proprietary trading operations from their core services may intimate something about the legislation’s likely accomplishments. In perhaps the most subtle but substantial change accomplished in the past two years, reform politics pried open the previously restricted and privileged network of voices, perspectives and officials that participate in the making of American financial policy.

Change Through Regulation and Administrative Action

The Unsurprising Failure of Labor Law Reform and the Turn to Administrative Action

This chapter analyzes the most recent attempt at labor law reform during the first two years of the Obama Administration. To account for failure, I argue that several long-term institutional and political obstacles present throughout 20th century American politics including the geographical concentration of labor, the conservative coalition in Congress, combined with antimajoritarian features of the American state, continued to be insurmountable for the labor movement. More short-term factors such as the Obama Administration’s policy sequencing, the role of interest groups, especially the Chamber of Commerce’s intense opposition, organized labor’s strategic choices, and declining public opinion of unions also help explain labor law reform failure in 2009-2010. However, in lieu of the unsurprising failure of labor law reform, President Obama has advanced some labor policy reforms through administrative politics—appointments and rulemaking—with the potential to strengthen unions politically. 

Surprising Momentum: Spurring Education Reforms in States and Localities

Lorraine McDonnell (University of California, Santa Barbara) describes the Obama Administration’s K-12 agenda, and places it in the larger context of prior federal and state education policy, including the Elementary and Secondary Education Act (EASA). McDonnell traces the ideas and politics responsible for Obama’s agenda, and shows how stimulus funding—which requires state laws to fall in line with federal priorities—has sped up state-level educational reforms and provided the administration with unprecedented leverage for encouraging shared practices across the states.  McDonnell also identifies the future challenges facing education reform. 

Failed Bargains and Intensifying Conflict

Obama's Immigration Reform: A Tough Sell for a Grand Bargain

Immigration reform in the United States typically takes the same form as 1986's Immigration Reform and Control Act (IRCA). That is, it creates a "grand bargain" that marries a legalization of millions of illegal immigrants with increased efforts at border control. IRCA failed miserably, and the number of illegal immigrants in the country at that time has grown to nearly 11 million. President Barack Obama, like George W. Bush before him, has sought a similar grand bargain to reform that would offer a plan to legalize the undocumented and increase border enforcement. Obama has not yet delivered for several reasons. The main reason is the negative meanings attached to grand-bargain reform arising from IRCA's failure that taught opponents to not make more grand bargains, as well as the common view of illegal immigrants as undeserving of aid. There are several other obstacles to reform, including the great number of veto points for opponents to stop a bill, the Republican strategy of total opposition, the Great Recession, and the new front created by states such as Arizona creating their own immigration measures. Chances for reform appear slim but are most likely to increase if reformers move to incremental reform focusing on legalization for undocumented children and/or agricultural workers; if reformers gain more strength from a big push by evangelical groups or big businesses; or the GOP changes its strategy and seeks to back reform to appeal to the growing number of Latino voters. In that case, Obama could win reform even if Republicans take control of a least part of Congress. This would allow both parties to take some credit for immigration reform.

Cold Front: How the Recession Stalled Obama's Clean-Energy Agenda

Judith Layzer (MIT) analyzes Obama’s attempts to address the looming problem of climate change by promoting a transition to a clean-energy economy. Layzer examines how efforts to pass climate change legislation were undercut by regional economic concerns and exacerbated by the economic recession. Layzer shows how the White House has used administrative tools to circumvent congressional deadlock and further some of the President’s goals in transforming national energy production.

Paying America’s Way: The Fraught Politics of Taxes, Investments, and Budgetary Responsibility

Andrea Louise Campbell (MIT) tracks the fate of Obama’s campaign pledge to return to a more progressive tax code by rolling back the Bush tax cuts for households in the top 5 percent of the income distribution, while increasing taxes on capital gains and dividends.  Campbell lays bare the sources of Obama’s failure and anticipates coming debates over the budget deficits and federal tax policy. 

Together, these timely and sharply drawn studies provide a vivid overview of the Obama administration’s agenda – and its successes, set-backs, and political reverberations. At a time when journalists, citizens, and analysts are all attempting to understand what is happening in a pivotal and tumultuous period in American politics, Reaching for a New Deal offers telling facts and bracing analysis.  These studies deliver close-up examinations of the country’s policy challenges, accompanied by a big-picture understanding of what the first two years of the Obama presidency reveals about possibilities for—and limits on—change in U.S. public policy.