President Obama Weighs
His Economic Legacy
Eight years after the financial crisis, unemployment
is at 5 percent, deficits are down and G.D.P.
is growing. Why do so many voters feel
left behind? The president has a theory.
By ANDREW ROSS SORKINAPRIL 28, 2016
Two months ago, across an assembly-room table in a factory in Jacksonville, Fla., President Barack Obama was talking to me about the problem of political capital. His efforts to rebuild the U.S. economy from the 2008 financial crisis were being hit from left, right and center. And yet, by his own assessment, those efforts were vastly underappreciated. “I actually compare our economic performance to how, historically, countries that have wrenching financial crises perform,” he said. “By that measure, we probably managed this better than any large economy on Earth in modern history.”
It was a notably grand claim, especially given the tenor in which presidential candidates of both parties had taken to criticizing the state of the American economy — “Many are still barely getting by,” Hillary Clinton said, while Donald Trump said that “we’re a third-world nation.” Asked if he was frustrated by all the criticism, Obama insisted that he wasn’t, at least not personally. “It has frustrated me only insofar as it has shaped the political debate,” he said. “We were moving so fast early on that we couldn’t take victory laps. We couldn’t explain everything we were doing. I mean, one day we’re saving the banks; the next day we’re saving the auto industry; the next day we’re trying to see whether we can have some impact on the housing market.”
The result, he said, was that he lacked the political capital to do more. As his presidency nears its end, this has become an increasingly common refrain from Obama, who, despite his prodigious skills as an orator, has come to seem more confident about his achievements than about his ability to promote them. “I mean, the truth of the matter is that if we had been able to more effectively communicate all the steps we had taken to the swing voter,” he said, “then we might have maintained a majority in the House or the Senate.”
The president had come to this factory, built by Saft America for the manufacture of state-of-the-art lithium-ion batteries, for a kind of belated victory lap. One of Obama’s first major acts as president was to sign the American Recovery and Reinvestment Act, and some of the money in that bill went to Saft. Now batteries were rolling off the line, and Obama had stopped by to shine the national spotlight on how far we had come since the financial crisis.
But the president did seem frustrated. As he tried to sum up his economic legacy in Florida, our discussion stretched to twice as long as planned, seemingly to the consternation of the Secret Service. When we got back on Air Force One, he sent an aide to ask if we could continue the conversation; when I joined him again, he looked as if he’d been stewing over something. He quickly returned to the topic of public perception. “If you ask the average person on the streets, ‘Have deficits gone down or up under Obama?’ probably 70 percent would say they’ve gone up,” Obama said, with some justifiable exasperation — the deficit has in fact declined (by roughly three-quarters) since he took office, and polls do show that a large majority of Americans believe the opposite.
Obama is animated by a sense that, looking at the world around him, the U.S. economy is in much better shape than the public appreciates, especially when measured against the depths of the financial crisis and the possibility — now rarely even considered — that things could have been much, much worse. Over a series of conversations in the Oval Office, on Air Force One and in Florida, Obama analyzed, sometimes with startling frankness, nearly every element of his economic agenda since he came into office. His economy has certainly come further than most people recognize. The private sector has added jobs for 73 consecutive months — some 14.4 million new jobs in all — the longest period of sustained job growth on record. Unemployment, which peaked at 10 percent the year Obama took office, the highest it had been since 1983, under Ronald Reagan, is now 5 percent, lower than when Reagan left office. The budget deficit has fallen by roughly $1 trillion during his two terms. And overall U.S. economic growth has significantly outpaced that of every other advanced nation.
Gene Sperling, the former director of the National Economic Council who spent hours inside the Oval Office debating and devising the president’s economic strategy, told me, “If we were back in early 2009 — when we were coming to work every morning with clenched stomachs, with the economy losing 800,000 jobs a month and the Dow under 7,000 — and someone said that by your last year in office, unemployment would be 5 percent, the deficit would be under 3 percent, AIG would have turned a profit and we made all our money back on the banks, that would’ve been beyond anybody’s wildest expectations.”
There are, of course, many reasons so few Americans seem to be celebrating. “How people feel about the economy,” Obama told me, giving one part of his own theory, is influenced by “what they hear.” He went on: “And if you have a political party — in this case, the Republicans — that denies any progress and is constantly channeling to their base, which is sizable, say, 40 percent of the population, that things are terrible all the time, then people will start absorbing that.”
But as Obama also acknowledged, the public anger about the economy is not without empirical basis. A large swath of the nation has dropped out of the labor force completely, and the reality for the average American family is that its household income is $4,000 less than it was when Bill Clinton left office. Economic inequality, meanwhile, has only grown worse, with the top 1 percent of American households taking in more than half of the recent gains in income growth. “Millions and millions and millions and millions of people look at that pretty picture of America he painted and they cannot find themselves in it to save their lives,” Clinton himself said of Obama’s economy in March, while on the campaign trail for his wife. “People are upset, frankly; they’re anxiety-ridden, they’re disoriented, because they don’t see themselves in that picture.”
It is this disconnect that haunts Obama. He has, by his own lights, managed the recovery as well as any president ever could, with results that in many cases exceeded his own best hopes. But despite the gains of the past seven years, many Americans have been left behind. Something has changed, and as he prepares to leave office, Obama seems to understand that his economic legacy might be judged not just by what he has done, but by how the results compare to a bygone era of middle-class opportunity, one that perhaps no president, faced with the sweeping changes transforming the global economy, could ever bring back.