CONFIDENCE MEN.

Wall Street, Washington, and the Education of a President.

RON SUSKIND.

Part I.

THE TWO CAPITALS.

1.

September 17, 2010.

President Barack Obama dances lightly down the four marble steps to the Rose Garden and across the flagstones to a waiting lectern. He still glides, elegant and purposeful, in that tall man's short-step-a ballplayer returning to the court after a time-out.

Today, September 17, 2010, he has committed to putting some "points on the board," in the sports parlance of Rahm Emanuel, his chief of staff. The president needs to show the country that he hasn't lost his game, the ineffable confidence, the surety of stance and delivery that propelled a man with little political experience to scale cosmic heights and to realize what felt, on Election Day, like democracy's version of the moon landing.

Through recent history, America has considered itself something of a providential miracle, a country that kept finding reasons to believe in its Manifest Destiny. That faith, sorely tested over the past several decades, found itself restored with dizzying ebullience when Barack Obama and his beautiful family stepped onto the stage in Chicago's Grant Park as America's First Family. It was a sensation of such intensity as to startle many across the country and around the world into believing in the promise of America, the original and long-burning beacon of the democratic ideal.

The legacy of that moment is ever more found in the lengthening shadow it casts. In the nearly two years since, Barack Obama, like an archangel returned to earth, has been forced to walk the flat land and feel its hard contours. What, if anything, it has awakened in him remains unclear-at present, he is clearly struggling to get his bearings. And yet it is impossible to see the president and not search out signs of that man from Grant Park, who strode so boldly across history's confetti-strewn stage.

On this warm late-summer afternoon, with Congress out of session, Obama has convened the press to announce the launch of a new agency, the Consumer Financial Protection Bureau. It has been designed to protect American consumers from the predations of the financial services and banking industry, which over the past couple of decades has grown vast and insatiable by inventing, for the most part, new ways to market, sell, and invest in debt.

The woman standing awkwardly at Obama's left hip, Harvard Law School professor Elizabeth Warren, has become the nation's town crier on the subject of bankruptcy and debt. In the two years since the economic crisis, she has emerged from nowhere to trumpet the story of how debt was turned into a velvety weapon, how engorged financial firms deceptively packaged it, sold it as securities, and extracted usurious profits from American consumers, especially those in America's once-vaunted middle cla.s.s. The notion of a consumer financial product agency, a freestanding, independently funded ent.i.ty like the Federal Communications Commission, was originally hers, unveiled in an article she published in the spring of 2007. The truth is that no one much cared for the idea, until her unheeded concerns turned up at the center of the worst financial meltdown since the Great Depression.

So today is a long-delayed victory for Warren-almost. Somehow nothing in the Rose Garden is quite as it seems. The president praises Warren, whom he says he met at Harvard Law School, as though they are old friends. They're not, and Warren only became a professor at Harvard Law the year after Obama graduated from it. In fact, over the past two years, while Warren has seen herself lionized on magazine covers and in prime-time interviews as a leading voice for tough, restorative reforms, the president seems to have been studiously avoiding her. Part of the problem, clearly, is that she has been acting the way people expected and hoped that man from Grant Park would.

This has caused discomfort not only for the president, but also for his top lieutenants, including the boyish man in the too-long jacket at Obama's right hip, bunched cuffs around his shoes, looking more than anything like a teenager who just grabbed a suit out of his dad's closet. That's Treasury secretary Tim Geithner, looking sheepish. Only those in his inner circle at Treasury, though, can precisely read what's behind that expression: a string of private efforts across the past year to neutralize Warren. The previous fall, Geithner huddled with top aides to develop what one called an "Elizabeth Warren strategy," a plan to engage with the firebrand reformer that would render her politically inert. He never worked out a viable strategy-a way to meet with Warren without drawing undesirable comparisons-and so, like the president, he didn't.

What the Treasury Department did do, unbeknownst to Warren, was embrace demands from the banking industry to create a bureau under the condition that Warren would not be allowed to lead it. But as the financial-reform bill moved to a vote in early summer, industry lobbyists were so aggrieved at the idea of an agency-they felt it unsupportable under any conditions-that they didn't bother to call in their chits on Warren.

In fact, they played it just so. The industry managed to get the proposed agency shrunk into a bureau that would live under the auspices of the Federal Reserve, the government's greatest mixed metaphor of public purpose and private self-regard, representing as it does the dual interests of a sound monetary policy and the health of the banking industry. Beyond that, the bureau's rules can be vetoed by a two-thirds majority of a panel of other financial regulators-an indignity of inst.i.tutionalized second-guessing known to few other agencies.

But after financial regulatory reform legislation pa.s.sed in July, the prospect of Warren at the bureau's helm quickly grew into a movement: complete with Internet write-in campaigns, online pet.i.tions, flurries of editorials, and even a viral rap video-certainly a first in the history of appointing government regulators.

Warren would seem the easiest of choices. Since his earliest days on the campaign trail, Obama had spoken pa.s.sionately about restoring competent government, and with it competent regulators. With the midterm elections less than two months away, he could have used a confirmation battle over Warren to draw a much-needed distinction between his administration and those, mostly Republicans, who dared to side publicly with America's big banks and financial firms. Warren's celebrated ferocity looked tailor-made to revive Obama's vast gra.s.sroots campaign network. Like an encamped army with nothing to do, the foot soldiers of the campaign had fought among themselves a bit, eaten the leftover rations, and then drifted back to private life. Field commanders still in touch with the White House signaled by midsummer that a Warren confirmation battle would rally the troops and, according to one, "at least show what we stand for." On the other side was the financial services industry, which hurled nonspecific attacks at Warren, claiming she was arrogant, disrespectful, and power-hungry. It had begun castigating Obama as "antibusiness," a charge the industry a.s.serts would be definitively confirmed by the appointment of Warren.

In mid-August, Warren was finally called in to meet with the president. Obama began their sit-down saying, "This isn't a job interview." It wasn't. The president had already decided what he was going to do, in a managerial style that had become his trademark: integrating policy options and political prognostication into a prepackaged solution-announced before the game even started.

Combatants over a Warren nomination will never take the field. Shuffling papers on the lectern in the Rose Garden, Obama says, with a few pa.s.sive locutions, that Warren will be on the search committee to find someone to run the bureau: "She was the architect behind the idea for a consumer watchdog, so it only makes sense that she'd be the, um . . ." He stumbles briefly, as though the text is pulling him off balance. ". . . She should be the architect working with Secretary of Treasury Geithner in standing up the agency." He adds that she'll be an adviser to both him and Geithner and "will also play a pivotal role in helping me determine who the best choice is for director of the bureau."

That's basically it. None of the troops are energized, and anyone who feared the financial debacle might produce a true innovation, a rock star regulator, is left unruffled.

The press conference ends with reporters shouting as the president turns to leave. One yells above the rest, "Why didn't you put her up for confirmation?"

A moment later the president walks from the Rose Garden to the bas.e.m.e.nt of the White House. Having finished with Geithner and Warren, he strolls unaccompanied, free of handlers and Secret Service, through a long subterranean hall on his way to the Situation Room.

"Hey, Alan, how you doing?" he pipes up, spotting a.s.sistant Secretary of the Treasury for Economic Affairs Alan Krueger coming the other way. Krueger carries an additional t.i.tle, held over from the nineteenth century: chief economist of the United States.

"Just fine, Mr. President," a somewhat surprised Krueger responds. "In fact, today's my birthday."

The two men stop to chat for a moment at the entrance to the White House mess. The president has grown to appreciate Krueger's input over the past eighteen months. A Princeton professor and frequent stand-in for Geithner at Obama's morning economic briefing, Krueger is something of an oddity in the upper reaches of government: he's an actual researcher. Typically, high-ranking economists do their substantive, elbows-deep research in the earlier stages of their careers. Not Krueger. Not only had he been publishing groundbreaking studies up until joining the administration in January 2009, but he had also gone so far as to commission targeted research over the past year, using Princeton funds and resources when he found the government's research apparatus too slow.

The current economic crisis, he felt, was too th.o.r.n.y and too unusual not to study with fresh eyes and first questions. Characterized by both rock-bottom interest rates and a catastrophic deleveraging spiral, the crisis defied most historical precedents from which actionable policies might be drawn. And the White House needed nothing so much as a stream of creative remedies, one right after the next.

The administration undershot the crisis, convincing itself by the summer of 2009 that the economy had turned the corner and, at the same time, recognizing that it would be a jobless recovery of stunning disparities, with restored GDP growth alongside fast-rising unemployment. In fact, internal administration projections in June 2009, when unemployment was at 8 percent, noted that joblessness would average a whopping 9.8 percent in 2010. Krueger and others began to work furiously to find innovative ways that the government might stimulate job growth. Being a close friend of both National Economic Council chairman Larry Summers, who was his graduate adviser at Harvard, and Office of Management and Budget director Peter Orszag, whom he mentored at Princeton, made Krueger one of the few people to whom both of Obama's top economic advisers deferred. All to no avail. After the stimulus bill was pa.s.sed in February 2009, little else happened on the jobs front for a year and a half. Proposals were talked to death without resolution; the few that were adopted tended to lack a coherent political strategy to make them legislative reality. The day before, the Census Bureau had announced that poverty had hit a fifteen-year high. Even the Wall Street Journal's editorial page had bemoaned that middle-cla.s.s incomes dropped a stunning 5 percent between 2001 and 2009, a lost decade laying claim to the country's worst economic performance in half a century. Unemployment stood at precisely the 9.8 percent the administration's prognosticators had foretold.

Obama, who was at the center of this dispiriting process, tried to keep things light and breezy in the hallway with Krueger. He seemed improbably ebullient, wanting to talk.

"So, how old?"

"A little older than you," Krueger says. "Just turned fifty."

Obama steps back, appraisingly.

"Fifty? You're looking pretty good for fifty."

He means it. Krueger notices for the first time that the president, a year his junior, has really aged in office, bits of gray hair now sprinkling his crown, wrinkles growing around his eyes. Krueger is about to say, "Well, my job's easier than yours," but he catches himself and instead goes with "You should see me on the basketball court." Maybe this will win him an invitation to one of Obama's famous five-on-fives.

None forthcoming, and Obama closes it out. "So what are you doing for your birthday?"

"Going back to Princeton," Krueger says. He's a breath away from adding: soon for good.

He's through with D.C. He has decided to return home a day after the midterms, exhausted for sure, but more than that, tamping down the sense of missed opportunity. As the two men part, he can't help but wonder if Obama feels the same way. How could he not?

Waiting in the Oval Office are Jann Wenner, the founder of Rolling Stone magazine, and his executive editor, Eric Bates. They have been there for an hour, since just before the Elizabeth Warren event, waiting and preparing for an interview with the president. Rolling Stone, failing to score an Obama interview since the campaign, has nonetheless gone through a renaissance in the past two years, dealing some of the most forceful criticisms of Wall Street and Washington and the collusion between the two, with targeted shots directed at both Goldman Sachs and Obama himself.

So, for the president, today is all about forcefully answering the charge from the progressive community-and a great many independents-that what got him elected has not been evident in his governance. The administration's strategy is to emphasize that the distance between the hopes of Grant Park and the trimmed ambitions of legislative pragmatism is not a fissure, rupture, or acquiescence, but rather the hard reality of governing in a partisan era. All the better for those words to appear in an organ of criticism, which is why Rolling Stone was chosen.

Obama enters his famous office and compliments Wenner, the stylish, aging hipster, on his colorful socks: "If I wasn't president, I could wear socks like that." Then he settles himself into a wing chair between marble busts of his heroes, Abraham Lincoln and Martin Luther King, Jr.

Obama is ready to rebut criticisms head-on. But the questions today do not pose much of a challenge, beginning with standard fare about the state of the economy he inherited and Republican obstinacy that, the president notes, reared up a day before his inauguration even, when he learned that the Republican Caucus would vote as a bloc against the stimulus package, even though it included tax cuts and other features they'd asked for.

Fifteen minutes have pa.s.sed before he gets the first tough question, about how his "economic team is closely identified with Wall Street and the deregulation that caused the collapse."

The president gives a revealing response, noting that while Tim Geithner and the proud and obstreperous Larry Summers never actually worked for Goldman Sachs, "there is no doubt that I brought in a bunch of folks who understand the financial markets, the same way, by the way, that FDR brought in a lot of folks who understood the financial markets after the crash, including Joe Kennedy, because my number-one job at that point was making sure that we did not have a full-fledged financial meltdown."

To compare Geithner and Summers to Joe Kennedy is a reach. Kennedy was so instrumental for Roosevelt in setting up the Securities and Exchange Commission because he knew Wall Street from the inside as a master operator, had made all the money he could ever need, and, crucially, was bursting with zeal to move into the public sector and never look back, even if it meant that his old colleagues from Wall Street wouldn't invite him to dinner ever again. There has been no one remotely like this in a position of real power under Obama-especially not Summers or Geithner. The irony of Obama's Joe Kennedy reference is that a comparable figure, in equal measures expert and unenc.u.mbered, is precisely what he has needed, and lacked. This is something Obama surely knows at this point.

There are more answers of this sort going forward: clever-respectfully acknowledging opponents' positions, even those with thin evidence behind them, that then get st.i.tched together into some pragmatic conclusion-but hollow. With today's Warren announcement also part of the broader counterattack on progressives' criticisms, the president then unabashedly champions Warren, speaking as though he has named her head of the bureau. A light bit of chat about Paul McCartney and the Obama girls closes out the lengthy (hour-and-change) interview. Obama bids the visiting journalists adieu and leaves to confer with aides outside the office.

Then suddenly he's back, enlivened and ready to say something-as if the person the journalists had sat with for the last hour in the Oval Office was not the person he'd intended for them to meet.

"One closing remark that I want to make: It is inexcusable for any Democrat or progressive right now to stand on the sidelines in this midterm election. There may be complaints about us not having certain things done, not fast enough, making certain legislative compromises. But right now, we've got a choice between a Republican Party that has moved to the right of George Bush and is looking to lock in the same policies that got us into these disasters in the first place, versus an administration that, with some admitted warts, has been the most successful administration in a generation in moving progressive agendas forward. The idea that we've got a lack of enthusiasm in the Democratic base, that people are sitting on their hands complaining, is just irresponsible."

He continues, pa.s.sionate, punching the air, throwing some jabs at 527s and the Roberts Court, which had freed companies to spend at will, without disclosure, as political actors, leaving Democrats heavily outspent in the current midterm campaign. Then he brings it to a crescendo.

"We have to get folks off the sidelines. People need to shake off this lethargy, people need to buck up. Bringing about change is hard-that's what I said during the campaign. It has been hard, and we've got some lumps to show for it. But if people now want to take their ball and go home, that tells me folks weren't serious in the first place."

The speech he's referring to "during the campaign" was witnessed by only a few hundred people. It was the darkest moment of his run, in early October 2007, after an American Research Group poll put him 33 points behind Hillary Clinton, with only three months to go until the all-important Iowa Caucus. Obama gathered his National Finance Committee, the campaign's top givers, in the auditorium of a Des Moines hotel for a do-or-die meeting. He explained to them that they were running a different kind of campaign, a genuine from-the-bottom-up, gra.s.sroots effort, that it had never been done before, not like this, and that it took time for those roots to take hold. The heavy hitters nodded: fine, they understood the concept. But it wasn't working. The dispiriting national polls were one thing, but a recent Des Moines Register piece had Obama running third in Iowa.

Obama listened to them air their doubts for an hour or so before responding. Then his gaze, filled with the flinty resolve of tough love, swept over the crowd.

"Did you think I was kidding when I said this was the unlikely journey? I never said this was going to be simple or easy. You thought this would be simple? Change is never simple. Change is hard." He dug deep, his voice dropping to a whisper. "Listen, I know you're nervous. I understand. But if you're nervous, I'll hold your hand. We're going to get through this together. I promise we will. And if we can win Iowa, we'll win this country." Many of those in the room, among them not a few Wall Street financiers, cheered, moisture creeping into their eyes. They opened their wallets, one last time, giving a campaign on life support a final transfusion. Of course, he did go on to win Iowa and "win this country."

Now Obama is in the depths again, but there's no one's hand to hold. No one, outside of a few people in this iconic building, understands what the past two years have held, or what they've revealed to this man and those gathered tightly around him.

By being himself-an alluring and inspiring self, supremely confident yet expressing humility, speaking powerfully of grabbing history's arc and bending it toward justice-Obama became the first black president. But more and more, walking the halls of this building, he doesn't feel like himself-someone who could bring people together, who could map common ground and, upon it, build a future.

Disputes among his top advisers have become so acute, so fierce, that the president has had to step in and mediate many of them himself. He's not getting what he needs to manage this daunting job, and some advisers have become convinced that his lack of experience, especially managerial experience, may be his undoing; that, at a time of peril, the president may simply not be up to the demands of this moment. But his grat.i.tude for those who've ushered him to power, and have walked with him through battle, gets in the way of tough love, at least with those closest to him. There are top aides he's wanted to remove for months or even longer, but can't seem to. He knows he should, that no organization can run without accountability.

But today, as he runs between events and interviews-struggling to square the circle between pitiless reality and high ideals that, on Election Day, allowed him to claim kinship with FDR-President Obama is feeling oddly buoyant.

In the past few days, he's caught a break. The mayor of Chicago decided not to run for reelection. That means his chief of staff, Rahm Emanuel, will be seeking "other opportunities" and the president won't have to worry about firing him.

All taken care of. Emanuel will be out by month's end to resume his political career. Many other top advisers are now planning their exits.

After that, maybe Obama can at least attempt a fresh start, a next chapter. There's no perch, anywhere, like the presidency, with the daily burdens of office, the weight of history-and all in a fishbowl, with the world, some of it malevolent, watching every move. Which is why a president who doesn't feel quite like himself often portends a crisis of leadership. But change presents opportunity-always-and the ground is now shifting beneath Obama's feet. And soon enough, the president of the United States may get a chance to resume his conversation with the men whose busts stare from the cabinet behind his favorite wing chair, looking, with icy grandeur, over his narrow shoulders.

2.

The Warning.

Senator Barack Obama slipped out of the swelter of an unbearable Washington day-August 1, 2007, with the temperature nosing up toward a hundred degrees-and into the nondescript, six-story building a few blocks from the U.S. Capitol. This office, his campaign headquarters, abuts Armand's Original Chicago Pizzeria, and with windows open to catch a faint breeze, the air inside smelled of baked dough and marinara.

And a pinch of doubt. Running for president was turning out to be harder than Obama had figured, which was not to say he'd expected it to be easy. He said all the time that "change is hard" for anyone, and he included himself. But the nature of the challenges seemed to surprise him, demanding that he narrow the scope of his personality and exhibit more discipline than even he, a disciplined man, was accustomed to.

What had become clear to those at campaign headquarters and beyond was that the senator had lost his early rhythm, his perfect pitch. This sort of thing happened; Babe Ruth led the league in strikeouts the same year he hit sixty homers. But everything had been going so well. Obama's ascent was already one of the most astonishing in modern political history: from lowly state senator to presidential candidate in just three years.

He had become a sensation on the power and perfect cinema of a few brilliant speeches. First, the show-stealing turn at the 2004 Democratic National Convention: "I stand here knowing that my story is part of the larger American story . . . and that, in no other country on earth is my story even possible." Then his declaration of candidacy on a freezing February day in Lincoln's own Springfield, Illinois: "If you sense, as I sense, that the time is now to shake off our slumber, and slough off our fear, and make good on the debt we owe past and future generations, then I'm ready to take up the cause, and march with you, and work with you. Together, starting today, let us finish the work that needs to be done, and usher in a new birth of freedom on this earth." Heady and stirring, with the artful finish that yoked together two of Lincoln's most famous lines.

But it was hard to know how even Lincoln's rhetorical genius would have met the awesome challenge of modern politics: to explain hugely complex problems and offer first-step solutions in all of sixty seconds. Hillary Clinton could do it just like Lincoln split wood: steady and true, swing by swing, as the clock ticked-fifty-four seconds . . . fifty-five . . . fifty-six-her final summarizing sentence would hit its period and leave her three seconds to step back and consider what she had said, as though it had all just dawned on her. Obama watched her, on stage after stage, suppressing his amazement. He found the demands confounding and unreasonable, and he responded with a professorial mien, oddly uncertain, offering what felt like introductions to dissertations never to be completed.

The prepared speech, meticulously crafted and delivered, was his forte. So that very August morning, he led with his strength-a finely wrought policy address to highlight his one major difference with Clinton and most of the Democratic field: early opposition to the Iraq War. The contours of the current foreign policy debate turned out to have been mapped back in October 2002, when members of Congress, among them Clinton, authorized the invasion of Iraq. The then-unknown Illinois state senator spoke out against the decision at the Federal Plaza in Chicago. Little noted at the time, Obama's speech was cited exhaustively through the first seven months of his presidential campaign, particularly its Lincolnesque finish: "We ought not, we will not, travel down that h.e.l.lish path blindly. Nor should we allow those who would march off and pay the ultimate sacrifice, who would prove the full measure of devotion with their blood, to make such an awful sacrifice in vain." To summon the dreadnought term "in vain," even as the country marched to war back in 2002, was indeed audacious. Hoping to make the leap from debating highway bonds in Springfield to debating the country's future at the heart of the national fray, Obama astutely noted that the deaths in wars of necessity were materially different from those in wars of choice, and that the latter carried a distinct and dangerous moral liability.

While the country had moved in Obama's direction, granting him precious political capital, to be president he would have to go beyond a simple antiwar stance to paint his own compelling picture of "America in the world." Hence the morning's address, given at Washington's Woodrow Wilson Center, covering everything from "getting out of Iraq and onto the right battlefield in Afghanistan and Pakistan" to "restoring our values and securing a more resilient homeland." The speech was tough, hawkish even, and doubled down on his offhand comment from a month back-criticized by Clinton as naive-that he would reverse Bush's policy of refusing to negotiate with rogue states, including Iran. "Presidents," he said, "can't only meet with people who will tell them what they want to hear. President Kennedy said it best: 'Let us never negotiate out of fear, but let us never fear to negotiate.' "

An audience of former national security officials and veteran reporters, definers of the conventional wisdom, responded that he was no Jack Kennedy. They swiftly connected his speech's opening statement of support for a Wilson Center scholar imprisoned by the Iranians with its summation that "Iran presents the broadest strategic challenge to the United States in the Middle East in a generation." By early afternoon, online and cable news pundits were saying that Obama was now openly threatening the Iranians.

"Did I say I was going to bomb Iran? Did you hear me say that?" Obama groused into the speakerphone, as he settled into the second-floor conference room at campaign headquarters.

"No, Barack," said the crackling voice of Dan Tarullo, a top Treasury official under President Clinton, now advising Obama on the economy. "I definitely didn't hear you say that-or anything like it."

Obama exhaled in frustration, drawing sympathetic nods from a group of economists gathered around the conference room table. It was two o'clock and they had booked the room for the next two hours, an eternity in the minute-by-minute scheduling of a campaign. Even before the lukewarm response to that morning's speech, the reason for today's meeting was clear: attention-grabbing domestic policies looked like the only way his campaign was going to generate forward motion. Obama needed some-and fast. An NBC News/Wall Street Journal poll released the day before showed Hillary Clinton with a 21-point lead.

Obama grabbed a water bottle, nodded to his economic team leader, Austan Goolsbee, and settled into that mindful, Zen hyper-focus that had, since his law school days, impressed just about everyone who saw it.

Goolsbee opened the meeting by running through a few top items-relations with China, capital gains taxes-then guided the discussion over to free trade. There was no real sense of urgency to any of this, however, and for seemingly good reason. GDP growth was still strong, unemployment was at 4.7 percent, and inflation was low. With the Fed keeping interest rates low, credit continued to flow so cheaply that few could refuse borrowing. Goolsbee took advantage of a small lull in the conversation to introduce a newcomer to the group.

Alan Krueger-at that point a top economic adviser to Hillary Clinton-was doing a bit of candidate shopping today. The value of the Princeton professor, to any candidate, was not only his contacts but his ec.u.menical appeal at having managed to retain the respect of both warring kingdoms of economics: the rationalists, with their abiding faith in the profitable mathematics of market efficiency, upon which much of the financial and political realms still relied; and the behaviorists, led by Krueger's Princeton friend Daniel Kahneman, who'd teased out the subtle biases that impel seemingly sensible actors to act against their best long-term interests. The latter group was clearly on the rise.

Krueger broke out a set of packets from his briefcase that showed why. The country, relying ever more singly across three decades on unregulated markets and the "wisdom of crowds"-of each rational economic actor, from steelworker to housewife to CEO, acting in his or her own best interest-was displaying dangerous imbalances. Certain groups were racing forward, increasing their lead. Many others, falling farther and farther behind. There were countless debates about whether the economy was in a postindustrial transition that revealed the lights of Joseph Schumpeter's "creative destruction," soon to yield more robust and widely distributed prosperity, or of simply destruction that increasingly profited those who were already ahead, as in a marathon where only the leaders got to grab cups at the water table.

Krueger pa.s.sed around copies-eighteen slides, each a chart of blazing, graphed insight. Taken together, the charts dug beneath the standard confidence-affirming economic indicators to reveal underlying fragility in the U.S. economy.

The first chart, "Growing Together (19471973) vs. Growing Apart (19732005)," might have been called "A Crisis of the American Dream." It showed the glory days, those first twenty-five years after World War II, when real income for all families grew at nearly 3 percent a year and the highest increases flowed to those at the bottom, in greatest need. Since 1973, the chart showed, income growth had been negligible, less than 1 percent annually, for four-fifths of all families. The top 5 percent of the country had done very well, with family income rising about 2 percent a year, but real hourly wages had fallen for almost everyone else, failing even to keep pace with inflation.

Other charts looked at the fortunes of specific demographic groups, showing their earnings increasingly driven by educational attainment, a strengthening area for women. Men, on the other hand, had seen a dramatic downdraft in almost every measurement since 1983, including a startling decline in job stability for all age groups.

Krueger put it to Obama bluntly. The American workforce was on an unsustainable course: overworked, heavily stressed, inadequately insured against rising health costs, and moving more deeply into debt each year. Other economists at the table jumped in to say that household debt, commonly between 30 and 50 percent of GDP, had more than doubled since 2000, to almost 100 percent of GDP. Savings rates, usually around 10 percent of income, were now negative. Like a car with rusted axles, the group agreed, the American worker needed to hit just one deep pothole-a big medical bill, a broken furnace, a salary cut, a lost job-and the wheels would come off.

"And the weakest link in this chain is the country's male workforce," Krueger added, explaining that men had been steadily dropping out of the labor market since the early 1990s. The losses had been stanched and obscured in part by the housing boom, which had brought with it plenty of construction jobs.

Obama turned to Goolsbee.

"But aren't we already seeing excess capacity in housing?" he asked. "Aren't values starting to plateau?"

Then everyone at the table had something to say. Talk about housing values will do that. The presumption still existed that real estate prices were special, defying basic laws of economic gravity, but this view had begun to erode. Federal Reserve chairman Ben Bernanke had claimed a few weeks before that losses resulting from the subprime mortgage mess would not exceed $100 billion, about one-third the size of the 1990s savings-and-loan crisis, and spoke of how the Fed's two-decade, liquidity-above-all policy would keep credit flowing and continue to buoy residential and commercial building, at least for now.

Obama took a swig from his water bottle and sat up, ramrod straight. "Okay, in year two of my administration, when the housing bubble finally bursts, I come to you guys as my economic advisers and say, 'What do we do!' Well, what do we do?"

Feeling suddenly like advisers to the president, the group burst into a debate about where ten million low- to moderately skilled male workers might go. Obama mentioned his energy policy, the current core of his domestic platform.

"Tops, we'd be producing just two million jobs, in all the areas: wind, solar, all renewables," Goolsbee said. "And some of that will be offset by expected job losses in the oil sector, if we ever get that far."

It was a disappointing number. Others groped around for "sunrise" industries that might catch fire, with a targeted government subsidy lighting the match. It did not take long to settle on the health care sector, which was growing steadily as the population aged. That was where the jobs would be: nurse's aides, companions to infirm seniors, hospital orderlies. The group bandied about ideas for how to channel job-seeking men into this growth industry. A need in one area filling a need in another. Interlocking problems, interlocking solutions. The Holy Grail of systemic change.

But Obama shook his head.

"Look, these are guys," he said. "A lot of them see health care, being nurse's aides, as women's work. They need to do something that fits with how they define themselves as men."

For a politician, Obama laid claim to a heavy dose of the writer's sensibility: an inclination to look, deeply and unsentimentally, at the inner workings of the human heart. As the campaign kicked up, this side didn't appear very much, or certainly not as often as it did a decade before, when he finished writing Dreams from My Father, a book in which he deconstructs himself, piece by piece, and then rebuilds the corpus to display an extraordinary map of ident.i.ty-with its many conflicts and comforts-in the modern world.