What the Economic Stimulus Process Demonstrates About Leadership


In the Thursday, September 9, 2010, New York Times, Matt Bai, a political columnist, in an article entitled “In Obama Economic Stance, Risk of Confusion,” points out that President Obama made a significant, and probably mistaken, decision to turn the crafting of the 2009 stimulus legislation over to Congress. As Bai points out, the legislation could have achieved one or both of two goals: first, to create targeted, short-term economic stimulus; or second, to fund longer-term investments in infrastructure, technology, and human capital that would have provided the foundation for sustainable growth and competitiveness.

As Bai points out, while the legislation had some investments that accomplished each of the two goals, neither potential goal was adequately pursued with the stimulus legislation. Instead, as Bai stated, Congress essentially used the legislation to address the most vocal “demands of disparate constituencies.” There is a political consequence to this conclusion, which is that the majority of Americans now consider the stimulus legislation to have been a failure. Bai quotes Rahm Emanuel, the White House Chief of Staff, “you should never let a serious crisis go to waste.” The crisis, which precipitated the passage of the legislation created an opportunity for fundamental societal change that was not taken.

President Obama did not step up and take a leadership position early in his Administration, and, therefore, left a critical situation up for grabs. He did the same thing early in the health care debate, before deciding that he was going to make health insurance reform a signature initiative.

What are the lessons for leadership? First, every leader has to look at every situation, large and small, as an opportunity to make a statement about what matters to him or her. Delegating the task of defining what a major piece of legislation will do is a major failure of leadership. Congress is not a unified body with a particular leadership character; it is a very fragmented legislative body in which broad policy are inevitably compromised and traded off against short-term constituent demands. Many people believe that great leaders build a strategy by facilitating a “consensus” among those they lead.

This is misguided. A leader should test his or her strategic vision among those being led, and make refinements or adjustments based on their feedback. However, groups do not develop strategic visions; individuals do. We expect a President of the United States to have a broad strategic vision, even if we do not agree fully with it. President Obama’s vision was imperfectly formed during the campaign; it is virtually impossible to create or solidify it during the high-pressure process of making decisions as a President.

Second, the best opportunities to define a leader’s priorities often arrive in situations different from those in which a leader envisions the opportunity. The more important the leadership position, the truer this is. The leadership position of President of the United States is one in which every moment of every day is an opportunity for the President to establish and articulate priorities. Very often, the most long-lasting impacts from a leader’s tenure come from less visible decisions that, at the time, seem unimportant, compared with more urgent and visible decisions that are evaluated under a magnifying glass.

President Lincoln’s signature achievement was winning the Civil War and, as part of that effort, initiating the process that ended slavery. However, a less visible, but almost as important, initiative was the Morrill Act, which created the framework for settling the western states, for establishing land grant colleges and universities, and for extending the benefits of landownership to a much larger group of Americans. The Civil War victory saved the United States as a unified country; the Morrill Act, often called the “Homestead Act,” enabled a larger group of Americans to create a growth economy in large chunks of the United States that had been underdeveloped. Also very important, although less visible, was the public-private partnership that led to the process of building a transcontinental railroad, which started during Lincoln’s term, but finished in 1869. Lincoln had a strategic sense that all of these initiatives were going to be critical to the sustainability of the United States over the long term.

Third, a leader needs to understand that the media and style of communication matter as much as the message. President Obama was a transformational campaigner in building a grass roots movement that drew young people into the political system in a much larger way than they had ever been engaged. Whatever anyone might feel about President Obama’s political positions and actions, we can admire and applaud what he was able to do in broadening the role of young people in politics.

Unfortunately, this has not continued as explicitly or systematically as it did during the campaign. The fund-raising component has continued, but the attempt to create mechanisms for young people to participate meaningfully in public service has not. In fact, the power, protectionism, and seniority focus of public sector unions has actually worked against more informal mechanisms for young people to be more active in the process of governing.

When I think of the potential for young people to participate in public sector activities and establish a public sector career, I think of organizations like Teach for America or City Year, which engage college graduates in the process of improving our educational systems, which are badly failing in the communities in which these organizations deploy their members. At the same time, what has happened in the last 20 months is that the Obama Administration, which has been strongly in favor of education reform, has not had the courage of its convictions to transform and dismantle the most dysfunctional aspects of the educational union establishment.

The other very damaging decision, although the Obama Administration acted quickly to try to correct its mistake, was the firing of Shirley Sherrod, the Department of Agriculture manager. The underlying message of the Obama campaign was that there are many second chances, and that President Obama could be a symbol of second, third, and fourth chances whose ancestors overcame repeated setbacks to enable him to aspire to a better life, and achieve the Presidency. The Sherrod firing sent a different message: whatever you achieve in life can be taken away arbitrarily because someone decides it is politically expedient to do so.

Many people asked my humble opinion during the 2008 campaign about what I saw in President Obama. My answer then was that, as a person wildly inexperienced in leadership positions, he would make many mistakes in his first two years, but that he had the intellectual and emotional intelligence to learn from his mistakes and become a far better president as time went on. Bill Clinton followed that path, although he was far more experienced in leadership when he became President.

At this stage, it is unfortunately the case that it is very difficult to tell whether President Obama has learned from the mistakes he made in situations like the stimulus legislation and is poised to grow in his role. There are promising signs, like his recent speech on infrastructure investment, but there are also troubling signs like his attack on higher income people, in which he appears to take the view that wealthy people achieve their position through greed, ruthlessness, or luck. Undoubtedly, many get wealthy without adding societal value, but most wealthy people I have met have delivered great value to others on their way to wealth and after having been successful.

From each of our vantage points, we need to support and reinforce those initiatives from the President of which we want to see more, and to take elected officials to task, particularly the President, for those we want to disappear. I would define each category as follows:

  • Is the President exerting leadership of all the people, not just a narrow constituency? For example, his leadership in education, with programs like Race to the Top, is clearly designed to provide broad-based leadership. A speech to a union audience attacking “the wealthy” is not.
  • Is the President focused on building long-term capacity? His speech on Labor Day focused on rebuilding this country’s infrastructure is clearly focused on building long-term capacity, as was his investment in health information technology in the stimulus legislation.
  • Is the President willing to challenge the American people to take responsibility and ownership of their problems, or does he let them off the hook by blaming others? For example, his education speeches and policies make it clear that he believes that there is a shared responsibility to improve the ability of Americans to compete globally. His thinking on job creation blames everyone in sight for the high unemployment rate, including his predecessor.

There are other markers of leadership, but these would be three on which I would focus.