Rocky Seas for Team Obama

After weeks of smooth sailing and cooing press coverage, the Obama team has been buffeted by a round of troubles, goofs and harsh reaction, much of that coming from Obama's own party. Politico reviewed the wreckage:

  • Obama ended his troubled search for CIA director by naming Leon Panetta. The immediate response: Sen. Dianne Feinstein (D-Calif.) fired off a statement of disapproval, giving a negative tilt to most coverage of the pick.

  • Obama floated his plan to name TV star Dr. Sanjay Gupta as surgeon general. House Judiciary Chairman John Conyers didn't even wait for the official announcement before leading a public campaign to kill the nomination. Gupta "lacks the relevant experience," Conyers wrote to colleagues.

  • As Obama makes plans to roll out a sweeping economic plan, Majority Leader Harry Reid gave interviews with Politico and The Hill newspaper and made clear he won't take marching orders from Obama. "I don't work for" Obama, he told us.

  • Even before Obama's plan was formally unveiled, House Speaker Nancy Pelosi made plain her displeasure with parts of Obama's emerging fiscal plan, which she believes does not move fast enough to raise taxes. "I couldn't be more clear," she said Thursday at her weekly news conference. "Put me down as one in favor of repeal [of the Bush tax cuts] as soon as possible."

  • Finally, once the package was unveiled, Obama's adviser got a frosty response to some provisions from Senate Democrats, who were kind enough to go public with their concerns. "I just don't think it works. I don't think that's going to give much lift to the economy, as well intended as it is," Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat, told Politico's David Rogers.

And that list didn't include the hasty retreat on Roland Burris or the embarrassing Bill Richardson withdrawal. Beltway media dean David Broder declares that the president-elect has taken a "drubbing" from these incidents. Broder finds that "after a near-perfect month of transition operations, Obama has stumbled twice in two weeks, first being caught unaware by the investigation of Bill Richardson, his choice for commerce secretary, and then being outmaneuvered by Burris and his tawdry sponsor, Gov. Rod Blagojevich."

It seems that the transition from campaigning to governing may not be as easy as Obama and his media fan club imagined. And things will only get tougher. There are two main challenges on the immediate horizon -- either one of which can bring what is left of the honeymoon to an abrupt end.

Hold on

Next week, the Senate will hold the confirmation hearing of attorney general nominee Eric Holder. This is shaping up to be one contentious outing as Sen. Arlen Specter and other Republicans prepare to delve into Holder's involvement with the Marc Rich and Puerto Rican terrorist pardons and the Elian Gonzales affair. It's not his legal views which are most at issue, but his character. And if Democrats and Republicans alike get the sense that Holder has played fast and loose with Justice Department guidelines, ethical standard and even with their colleagues (in his testimony during the 2001 Congressional probe of the Rich pardon, for example) Holder may have a sticky time getting out of the Senate Judiciary Committee (which may have a 9-9 split between the parties).

Although the Rich pardon has attracted the most attention recently, a startling story in the Los Angeles Times called new attention to his involvement in the FALN terrorist pardons. Career pardon attorney Roger Adams, who one suspects will pop up at he confirmation hearing, accuses Holder of having pressured Justice Department attorneys to reverse their recommendation to deny the pardons to the terrorists (who never expressed remorse). Holder presumably twisted arms of career attorneys to comply with the wishes of the Clintons (and aid Hillary's then upcoming Senate race). Senate Republicans will no doubt remind Senate Democrats of their attacks on Alberto Gonzales and other Bush appointees who allegedly "politicized" the department.

In the preparation for the hearings, Holder may not have done himself any favors. Indeed, he's given fodder to those who claim he places politics about propriety. He will be shepherded through the confirmation process by none other than Ron Weich, chief counsel to Minority Leader Harry Reid, and Sen. Pat Leahy's Chief of Staff Ed Pagano.

It is extraordinary that current Senate staffers would work for the executive branch nominee -- a fundamental violation of the separation between the branches of government. These aides are employed by and paid by the Senate, which is supposed to be performing its institutional obligation to examine and, if appropriate, confirm the executive branch's nominees. Granted they are of the same party as the incoming administration, but are key aides of the senators -- who are supposed to be evaluating the qualifications, character and experience of the nominee -- appropriately tasked with double duty to make sure Holder gets through  that evaluation unscathed? Do they write and answer the questions for the nominee? And why would they be permitted to do all this on the Senate's payroll?

A Capitol Hill insider had this to say:

I can't think of another example of a current Senate staffer facilitating a nominee's confirmation.  If the Senate is really conducting an independent review of the nominee, doesn't this arrangement undermine it?  Would you ever let a judge's legal clerk act as the lawyer for a defendant?  That's why we have conflict of interest restrictions for lawyers.

It only adds to irony that it is Holder's own alleged conflicts of interest which will be at issue in his hearing.

As for President-elect Obama this will only add to the sense that the "Chicago Way" -- an embrace of questionable characters and an aversion to real reform -- remains his Achilles heel. And should Holder fail to get confirmed, or emerge so damaged from the hearing to be of reduced stature and influence, the Obama team will have to explain how yet another nominee with ethical concerns made it through its vetting process. The question looms: Is the Obama team tone deaf when it comes to ethics?

A trillion is a lot of money

Even more than a rocky confirmation hearing, President-elect Obama's fortunes may flounder on the shores of a stimulus package, so vast and so packed with mines that virtually everyone has reason to dislike some aspect of it. His tax "cuts" have drawn fire from both ends of the spectrum. Democrats don't like the idea of tax cuts at all, while Republicans are figuring out these don't amount to much at all. Americans for Tax Reform explains:

Obama wants to create a new business tax credit for firms that make new hires or forego layoffs.  During the campaign, this was the "Patriot Employer" concept widely derided as central planning through the tax code.  In order to get this tax credit, an employer would have to open themselves up to unionization, pay wages at a rate set by the government, and provide health care the government deemed "acceptable," among other mandates.

The cornerstone of the "tax cut" part of the Obama $1 trillion plan is to create a new refundable "Making Work Pay" credit of $500 per adult and $1000 per dual-income working couple.  This would phase out at $75,000 of income for couples and $40,000 of income for singles.  For some people, this new tax credit would be an income tax cut -- that is, a direct reduction of income taxes owed.

For most recipients of this new credit (and for all recipients of the expanded "Additional Child Tax Credit" he has discussed with Congressional Democrats), this would not be an income tax cut at all.  According to the IRS, 40% of families do not have a tax liability today.  You can't cut income taxes for families that don't pay income taxes.  This is nothing more than welfare through the tax code.  When this proposal is scored by Congressional and Administration budget experts, they will properly label this as spending -- and they will be correct.  Spending money on someone who already has no tax liability is not a tax cut -- it's welfare.

And of course, fiscal conservatives and the public at large are fretting over the enormous spending figures which will sink us further in debt -- if it doesn't first set off a new round of 1970s-style inflation. The Obama team may have banked too heavily on the new president's popularity, expecting their stimulus plan to sail through within days of his inauguration. Now it seems that mid-February is an ambitious deadline.

Along the way both Democrats and Republicans will seek to add or subtract from the Obama plan. Speaker Nancy Pelosi still wants to raise taxes on the rich, while Republicans are dismayed by the absence of any tax rate cuts. And both sides will fight over the amount and type of spending. At the end of the day it is not clear that Republicans join in what is sure to be a massive spending bill. They may instead force Democrats to walk the plank alone, putting enormous pressure on the so-called Blue Dog Democrats to jettison their usual aversion to fiscal discipline.

So reality is setting in: governing is much harder than campaigning, and President-elect Obama is not the infallible figure the media has made him out to be. In Washington there are dozens of ways to get knocked off course, especially when the captain of the ship lacks prior executive experience but has no shortage of bravado.

How the president-elect navigates through the next couple of weeks will help determine the course for his first year. For now, it seems that it won't be all smooth sailing.