October 11, 2015

Retrospective On President Obama’s First Year

Not surprisingly, since this is the first anniversary of President Obama’s inauguration, and the special U.S. Senate election in Massachusetts has produced a result that seemed inconceivable six weeks ago, a Republican victory, many people have asked my opinion of President Obama’s performance.

I met the President four different times before he was elected, three of those times at National Urban League events. President Obama struck me as a person with virtually unlimited growth potential and tremendous intelligence and character, and I still believe he has those qualities.

At the same time, I remind myself that he had no executive experience of any significance before he secured his first executive job, being President of the United States. I expected him to make some rookie mistakes because of his inexperience as a chief executive, and he has.

For example, one lesson I repeatedly learned as the CEO of a large company is that the CEO’s words and actions are under a magnifying glass continuously, and he or she has to watch every word and action to avoid unintended consequences. The President has this problem magnified many times beyond what I confronted. When the President made an off-handed comment that he did not believe it was a good idea for companies to use taxpayers’ or shareholders’ money to take management or sales recognition trips to go to Las Vegas and stay at luxury casino hotel, he was trying to attack wasteful management and sales junkets.

However, many more reward and recognition trips were cancelled because business executives got intimidated by the President’s remarks. Many of these trips were rescheduled in other locations not as visible as Las Vegas. In Las Vegas, the losers were the employees of those casinos, many of whom are single mothers working in physically demanding jobs.

The second, much bigger, rookie mistake was the President’s handling of the health care issue. He overreacted to the lessons of the Clinton health care debacle of 1993. Whereas the Clintons shut out Congress from the process of developing the legislation, President Obama gave up too much control to members of Congress who had no natural leader to bring them together. I learned the painful lesson not to delegate critical tasks to unaccountable groups and committees. There has to be a single person accountable to deliver the results, and that person and I needed to be aligned.

The Congress is not a hierarchical organization with a single accountable policy leader. It has spokespeople and leaders who facilitate the assembling of majorities, but the legislation never had a single champion who had a clear set of strategic priorities given him or her by the President. Former Senator Daschle could have played that role had he been selected as HHS Secretary. Senator Kennedy also could have played that role, but he was terminally ill. Ultimately, an issue as critical and as divisive as health care cried out for single-point responsibility below the President. He did not create that accountability, and, as a result, he lost control.

A leader has to understand that every decision made will be judged against the leader’s stated core values. The recent “compromises” such as the one that exempted unions from the “Cadillac plan” excise tax was extremely clumsy in the way it was handled. I recall reading that Andy Stern of SEIU made some comment to the effect that the unions contributed over $60 million to the President’s election campaign and expected something for it. This comment suggested that the President and the Congress were compromising their principles to pay back powerful supporters. Along with the other “compromises,” which had no apparent logic other than to secure votes, this deal suggested that the President was not driven by principles or values, but by the desire to “win,” which was not the way he portrayed himself during his campaign or during most of the first year of his presidency.

The biggest issue President Obama and government officials have at all levels is the horrific misallocation of taxpayer money, especially stimulus money that went to states to enable them to preserve a number of inefficient processes and jobs. As a person who has visited government offices frequently over the years and who was in a business that dealt extensively with government agencies, I believe that the fundamental problem of government is that elected officials decided that public sector jobs were a way to bring people into the middle class, whether or not they had the capabilities and the performance to merit being there.

The whole debate about performance management of teachers is the most visible example of this, with the Connecticut Educational Association (a union that represents teachers in many communities here in Connecticut) fighting so aggressively to keep teachers from being evaluated on performance that it will forego significant federal grants from the “Race to the Top” program.

However, this pathology goes far deeper. At least the teachers do a real job, and, arguably, most of them deserve to be paid at a good, middle-class level. What I observe as I encounter government functions is the phenomenon of “make-work” jobs, that is, jobs that, in a competitive or private sector economy would not exist. I remember visiting the state office building in Sacramento, California, in 2003, when the State already had a huge and growing budget deficit. When I entered an elevator, I was dumbfounded to encounter a uniformed elevator operator. The last time I recall seeing elevator operators was back in the early 1960’s at department stores.

The ultimate bad “make-work” job, in my opinion, which symbolizes everything wrong with government, is the highway toll collector. When automated technology could eliminate the need for toll collectors, government retain congestion-creating toll plazas and collectors.

President Obama needs to set an example of leadership by confronting the fact that too many people have secured middle-class compensation and benefits solely because they were lucky enough to get a unionized public sector job.

I hope that he does so. He has shown great moral courage in supporting and energizing the education reform movement. Whatever else he has done wrong, he has gotten this right, and deserves a lot of credit.

He also shows a great deal of thoughtfulness in how he presents complex issues, and made some good early moves in health information technology, prevention and wellness, and health care quality.

He needs to show similar courage and foresight across a far greater range of issues. I believe President Obama has the capacity to grow into a great president, but he must learn from what went right and wrong in his first year. It is most important what he does now, particularly in understanding what the voters have told him in the recent elections in Virginia, New Jersey, and Massachusetts.