Photo: Marco Grob

David Axelrod awoke at three in the morning and checked his BlackBerry. It was January 12, a few hours before Barack Obama would fly to Arizona for the memorial service for the victims of the Tucson shootings, and a few hours after Obama’s speechwriters had handed him a draft of the address he would give there. The president knew well that a big moment was at hand, that what was called for was more than mere eloquence, but a speech that was deeply … his. “I want to work on this,” Obama said to Axelrod upon examining the text. “I’ll have a redraft for you by ten or eleven tonight.”

But those hours had passed without any sign of the president’s revisions.

Now, as Axelrod combed his in-box in the predawn darkness, he saw an e-mail from Obama, time-stamped 1:20 a.m. Although the early portions of the draft remained largely intact, the president had thoroughly rewritten the crucial last two pages—from the call for a new era of civility in our discourse to the grounding of that challenge in the imperative of living up to the expectations of the fallen 9-year-old, Christina-Taylor Green. Axelrod recalled the last time his boss had taken such personal ownership of a piece of oratory: his speech on race in March 2008. Obama had labored over that one, too, late into the night, and after reading it in the morning, his message guru e-mailed him back, “This is why you should be president.” The Tucson speech inspired in Axelrod a similar reaction.

And not just in him. From the left, right, and center, the verdict was nearly unanimous: Here was a speech that was truly presidential, and that therefore—despite being driven by no crass political motives—became part of a larger political story.

Since the midterm elections, Obama and his lieutenants have been grappling with the implications of the self-described “shellacking” inflicted by Republicans on the president and his party, and laboring to devise a recovery strategy for the next two years. One of their chief conclusions is that Obama must occupy a higher plane than he did in the last two, elevating himself above the posturing, petulance, and incessant bile-spewing that have come to bedevil Washington in this age of incessant acrimony and polarization.

The lame-duck session in December—with the tax-cut compromise with Republicans as its centerpiece—presented Obama with his first opportunity to gain some altitude. The Tucson shootings offered another. And Tuesday night’s State of the Union address will extend him yet another.

But positioning and rhetoric are only part of the broader project under way inside the White House, which amounts to a full-scale reboot of the Obama presidency. The most visible manifestations of this involve personnel: the installation of William Daley as chief of staff, the departures of Axelrod and Robert Gibbs, the return to the fold of Obama’s 2008 campaign manager David Plouffe. Beneath the surface, however, substantial changes are afoot in every realm, from management structure and political strategy to communications, policy, and even the president’s conception of his own role—as he and his people try to navigate the newly Republicanized legislative landscape and gear up for what they now fretfully assume (after months of airily believing otherwise) will be a difficult reelection campaign.

For Obama, retooling on this scale does not come naturally or happily. Among the hallmarks of his political career has been constancy: a tight and basically static cadre of close advisers and a stubborn resistance to calls for midcourse corrections. Yet in a series of interviews in early January with senior White House officials and many of Obama’s closest confidants outside the building, a picture emerged of a president engaged in a searching, clear-eyed, and sometimes painful process of self-scrutiny, and now determined to implement a plan to fix what has ailed his enterprise—and himself. To put behind his White House the frenetic, transactional, shambolic style of former chief of staff Rahm Emanuel. To break out of the suffocating cocoon in which he and his team had swaddled themselves. To establish the kind of compelling narrative about where his administration intends to take the country and how it plans to do so that has been lacking since day one.

Judging the ultimate political impact of this endeavor will be impossible until November 2012. But contrary to the feral howling on the left or the applause of many Beltway tapioca centrists, the objective here has less to do with tacking to the center than with finding a way back home. What Obama seeks is to reconnect with the essence of why he was elected, to reanimate the unifying, postpartisan, pragmatic yet visionary persona that inspired so many in the first place. “What he wants,” says one of his friends, “is to be Barack Obama again.”

Photographs: Clockwise from top left: Bill O’Leary/The Washington Post/Getty Images; Newscom; Michael Kovac/WireImage; Yuri Gripas/AFP/Getty Images; Joshua Roberts/Bloomberg/Getty Images; Scott Olson/Getty ImagesSee the Administration’s Ins and Outs, Above

The rebooting of Obama began in earnest right after Labor Day, when Pete Rouse began work on his biennial review of his boss’s operation. At 64, Rouse has been at Obama’s side since 2004, when he became the senator-elect’s chief of staff. Methodical and low-key, Rouse liked to say there were two ways to get things done inside an organization: whack-a-mole or moving boxes. So committed was he to the latter, systematic approach that Obama’s younger staffers taped a sign to his door that read CHIEF OF BOX MOVING.

By this past September, both Obama and Rouse, by then serving as one of his senior advisers, were aware that the White House was out of sorts and that some carton-shifting was in order—and that the impending exodus of National Economic Council head Larry Summers, National Security Adviser Jim Jones, and others created an opening for an overhaul. What they did not anticipate was that just as Rouse was getting down to business, Chicago mayor Richard Daley would announce that he wasn’t seeking reelection, which meant Emanuel would soon be on his way out, too. On October 1, Obama announced that Rouse would become the interim chief of staff, thus saddling him with two enormous jobs at once: running the White House while reinventing it.

But Rouse was undeterred. After spending much of October talking to people both on- and off-campus about what was and wasn’t working, he concluded that the White House’s troubles fell into three baskets—the first of them labeled “insularity.”

Few perceptions were more widely shared or loudly voiced around Washington than that the Obamans were huffing their own fumes. “You know the cliché about our strengths being our weaknesses? It’s true for them as well,” says a top political strategist in a previous White House. “I think they felt like if they had listened to conventional wisdom in 2007, they never would have run. When they hear criticism, they say, ‘Been there, done that, we’re gonna stay the course.’ There’s almost a Zen-like quality about how they’ve been in their own universe and their own bubble.”

The more pointed variant of this critique was directed specifically at Obama. Unlike 42—who loved to stay up late, jabbing at the speed dial, spending countless hours gabbing with local pols and businesspeople around the country to gauge the political wind and weather—44 not only eschewed reaching out to governors, mayors, or CEOs, but he rarely consulted outside the tiny charmed circle surrounding him in the White House. “What you had was really three or four people running the entire government,” says the former White House strategist. “I thought they put a pretty good Cabinet together, but most of those guys might as well be in the witness-protection program.”

A funny line, no doubt, but an overstatement, surely? Well, maybe not. “I happen to know most of the Cabinet pretty well, and I get together with them individually for lunch,” says one of the most respected Democratic bigwigs in Washington. “I’ve had half a dozen Cabinet members say that in the first two years, they never had one call—not one call—from the president.”

The second basket that Rouse identified had to do with a trap the White House had fallen into of being too tactical and reactive. To some extent, this was the result of the fusillade of crises and imperatives—the stimulus, TARP, the auto bailout—that hit the administration in rat-a-tat succession right from the get-go. But it was also a feature of Emanuel’s métier. “Rahm always wanted to win the day, win the week, at the expense of a longer-term focus,” says a senior White House official. “So we’d set up a plan to drive the economic message for a week, and then something would happen, so we would switch and do something different. The legislative calendar was all over the place. Everything had a certain madhouse quality about it.”

In the third of Rouse’s baskets was the failure to use Obama’s gifts as a communicator to full effect. He was overexposed. He was in the weeds. The thread got lost. “With these big legislative fights, he was almost like a prime minister or negotiator-in-chief,” says the same official. “The price for that was, we lost the vision, the inspiration.”

Though Obama grasped this last critique, he dismissed the charges of aloofness and insularity. When business complained that he was hostile, he cited all the times he had invited CEOs to the White House. When donors moaned about the fact that at the first year’s Christmas parties, he had done away with the tradition of taking pictures with the guests, Obama scoffed, “Big deal, they’ve all got pictures of me before.”

Photo: Pete Souza/White House

Emanuel’s ad-hocracy, meanwhile, didn’t faze Obama. The president’s friend and adviser Valerie Jarrett sometimes pointed out that not only had he never managed an operation, he’d never really had a nine-to-five job in his life. Obama didn’t know what he didn’t know, yet his self-confidence was so stratospheric that once, in the context of thinking about Emanuel’s replacement, he remarked in all seriousness, “You know, I’d make a good chief of staff.”

Those overhearing the comment somehow managed to suppress their laughter.

The midterms, however, slapped the president upside the head—and shattered his sense of complacency. “It is hard to describe how personally upset he was at some of the members we lost, how terribly he felt, especially about the ones that were in the tough districts who’d voted with him down the line,” says someone who knows Obama well. “It was a really tough time for him.”

Obama trusted Rouse’s judgment about what needed fixing but wanted more data. So in November and December, on his own initiative, he did something out of character: He let the outside in. Scheduling the appointments himself, sometimes on the sly, he invited a passel of Washington wise men to meet with him in the Oval Office with no staff present. Some of the names have been reported: former Clinton chiefs of staff John Podesta and Leon Panetta; former Reagan chief of staff Ken Duberstein; former Senate majority leader Tom Daschle and centrist jack-of-all-trades David Gergen; and, of course, Bill Clinton. But others have not. Longtime Clinton consigliere Vernon Jordan is one. And another, more surprising, is Matthew Dowd, who served as chief strategist for the 2004 Bush-Cheney reelection campaign. (Dowd declined to confirm the meeting, but the White House did.)

The grandees, being grandees, had no paucity of advice for Obama. They told him that he could and should get business done with John Boehner and Mitch McConnell. They counseled him, in the words of one, on “the social power of the presidency”—building relationships with friends and foes alike by inviting them to Camp David or aboard Air Force One, even (or especially) when he wanted nothing from them. Most pertinent, they reinforced Rouse’s tripartite diagnosis: Obama and his White House had to be less cloistered and more strategic, and employ the bully pulpit better.

Obama’s self-confidence was stratospheric. “You know, I’d make a good chief of staff,” he said.

Obama knew that the hardest change for him to make would be shattering his self-circumscription, but resolved to push himself to do so. “He’s got an enormous capacity to do what he has to do when he recognizes he has to do it,” the Democratic bigwig says. “During the campaign, he did a lot of things he didn’t like to do, and he actually got pretty good at it. A lot of it was just the bullshit—the receptions, the glad-handing, all the stuff you have to do to be political. You have to be extroverted plus, and he will never be extroverted, much less plus. But he’ll get better at this, because he knows he has to, and he will work at it.”

The lame-duck session let Obama put other elements of the advice he was hearing into practice. Extending the Bush tax cuts for the wealthiest Americans was not an outcome he relished, but he believed he had no choice—that digging in would lead nowhere good. “It would have demonstrated that nobody in Washington heard the message coming out of the elections about working together,” observes Gibbs. “Secondly, we would never have gotten START, ‘don’t ask, don’t tell,’ the 9/11 bill, and food safety. And thirdly, those initiatives plus the tax deal would have been, in essence, dead for the next two years. Look, in some ways it was good strategy, but we didn’t have a lot of options. We could have done, like, the Alamo, but that didn’t work out real well, either.”

Obama’s people insist they would have preferred to do the tax-cut deal without inciting the wailing of the left. But those Democrats pushing the Alamo strategy did the president a favor. They gave him the grounds to divorce himself from them, and hence to claim virtually all the political credit for one of the most productive lame-duck sessions in history.

As Obama prepared to set off for Hawaii for the Christmas holiday, he was walking on air. “He loved December, and we loved December, because it felt like what we came here to do,” says White House communications director Dan Pfeiffer. “We ran as a postpartisan problem-solver. We were endorsed by prominent Republicans. We got here, we tried to be that guy, Republicans basically turned their backs to us, and we had a choice: We could do nothing or we could do things. We chose to do things. That had consequences, political consequences. And so [the lame-duck session] gave us a chance to go back to being that sort of less partisan adult from the campaign.”

But as high as Obama’s spirits were, he still faced a series of fateful choices, especially concerning the makeup of his team. For the first two years, the White House essentially had been a closed loop. The questions facing him now were whether to stay that course or risk his own comfort for the sake of being more effective. The first and foremost place where the answers would become apparent was in his choice of chief of staff.

Bill Daley—the brother of the current Chicago mayor and the seventh child of the more storied one, a secretary of Commerce under Clinton, a chairman of Al Gore’s presidential campaign, and now a banker at JPMorgan Chase—was by no means an Obama insider, but he wasn’t exactly an outsider, either. Daley had been close to Axelrod for more than 30 years. And though he had known Obama mainly socially in the first half of the decade, Daley was the first person Obama consulted when, on the day after the midterms in 2006, he began formally deliberating about making a presidential bid. “Yeah, you gotta run,” Daley told Obama. “Why not? What have you got to lose? Can you win? I think you can.” Before Obama even had a chance to ask for his support, Daley guaranteed it: “If you’re running, I’m with you.”

Daley’s pledge put him in an awkward position with Hillary Clinton, who expected him to be with her. But Daley delivered the news to his former boss’s wife, and from then on was an adjunct to Team Obama. When the candidate’s donors turned restive at the sight of Obama lagging in late 2007, Daley was dispatched to soothe them. When people questioned Obama’s relentless focus on Iowa, he counseled Plouffe, “This is your strategy, and it may not work, but you have to stick with it.” When Rouse arranged a secret meeting with a group of Democratic heavies in the fall of 2008 to discuss Obama’s transition to governing, Daley was in the room. And when the transition unfurled, Daley was one of its two co-chairs on economic policy.

Yet for all this, Daley was not the first person considered to replace Emanuel. The outgoing chief of staff himself initially pushed hard for Ron Klain, Joe Biden’s chief, to succeed him, but the idea faced internal opposition. Tom Donilon, then deputy national-security adviser, was in the mix, until Obama decided to name him Jim Jones’s heir. Daschle, Panetta, and Podesta were all floated, but Obama preferred to confer the interim title on Rouse—telling him that, in the end, he might ask Rouse to accept an upgrade.

After the midterms, however, Emanuel—who remains in constant e-mail contact with Obama—began pressing the case for Daley. (Bill and his brother have been among Emanuel’s biggest supporters since he first ran for Congress.) So did Axelrod. “Here you have a guy who’s a grand master in politics, understands how to move things in this town, but isn’t of this town,” Axelrod explains. “Someone who has run major corporations and gets the whole economic thing … and he ran a presidential campaign.”

In mid-December, Daley flew to Washington and met with Obama in the Oval Office. A few nights later, Obama and Rouse had dinner together in the White House residence and discussed the respective pros and cons of picking Daley or sticking with Rouse. Although Rouse at first had been a reluctant conscript, his wariness about keeping the job was ebbing. In his favor was his trust level with Obama, no easy thing to earn, along with the depth of his relationships in the building and his pacifying influence on the place. And his management of the lame-duck session had yielded a smashing success.

But Rouse could see a stronger case for Daley: that he could help deal with all three baskets of problems he had identified. That Daley wasn’t an intimate of Obama’s, along with his vast range of contacts in politics and business, would address the issue of insularity. He had a terrific capacity for strategic, long-range focus. And he would be a powerful outside spokesman, a face of the administration on the Sunday shows—a role Rouse would only have embraced were the alternative being tied up and dragged naked down Pennsylvania Avenue.

Obama returned from Hawaii and met again with Daley on January 5. The choice was now upon him. By a long shot, the easier and safer path would have been to stick with Rouse, a beloved figure in the White House whose permanent elevation would have been greeted by a standing ovation in the West Wing. But Obama had come to believe that, for all of Rouse’s many and evident virtues, he needed new blood and new thinking, even if—especially if—it pushed him outside of his narrow comfort zone.

Before offering the job to Daley, however, Obama—out of respect for his interim chief’s fealty and judgment—gave Rouse effective veto power over the decision. “If Pete had said ‘I want this job’ or ‘I think this is a big mistake,’ the president wouldn’t have done it,” a senior White House official says. But Rouse—as Obama must have intuited he would—professed no qualms. “I’m totally in support of this and comfortable with it,” he told the president.

The next day, when Obama unveiled the move, the reaction was applause from the Establishment and anguished ululating from the left. But both responses were based on misreadings: that the pick was designed to mend fences (or curry favor with) business and Wall Street; that it represented a pivot to the sensible (or mushy) middle.

While it’s true that Daley worked for a bank, led the charge in the passage of NAFTA, and criticized the pursuit of health-care reform, the picture is not that simple. His appointment was endorsed by the likes of Howard Dean, Robert Reich, and Bob Shrum—hardly a pro-triangulation triumvirate. “I just think the world of him,” says Shrum, who worked with Daley on the Gore campaign. “He’s tough-minded and he’s fair-minded. Obviously, he’ll talk to the business community, but I think all this liberal brouhaha is foolish. He’s not gonna change, nor would he want to change, in this role, what Obama intends to do.”

Chris Lehane, another Gore veteran, agrees. “Whichever way this president wants to go, Bill is gonna make sure that it’s done in the most effective way possible,” Lehane says. “The thing about Bill is that he plays to win, and how he plays to win is by getting shit done in a really smart way.”

What Daley’s selection meant most immediately was that another key piece of the personnel puzzle could fall into place: the naming of Gene Sperling the following day as head of the National Economic Council. (With Daley as chief of staff, the main alternative to Sperling, investor Roger Altman, would have been a financier too far.) These announcements alone would have made the first week in January a huge one in terms of the changing face of the White House. But the additions were coupled with subtractions that mean as much or even more.

The day after the Daley announcement, I paid a call on Axelrod in his West Wing office, though the mood of the meeting made it feel more like the departure lounge. I noted that Axelrod, who has lately adopted a diet that involves green vegetables and is working out with Obama’s trainer, was a shadow of the man he had been during the campaign—he looked terrific. But he sounded exhausted, weary in the way of a person who has run a double marathon at a sprinter’s pace and who hasn’t had a decent night of sleep since at least 2004. “It gets to you after a while,” he said. “I thought to myself when I jumped on the plane to come back here this time, ‘Man, if I had another year to go, or even another six months, I’m not sure I could get on this plane.’ ”

Axelrod, in fact, will be vacating the building in the next couple of weeks, as will Gibbs. This turn of events took Washington somewhat by surprise. For the past two years, Axelrod had been telling people that he planned to split late this spring. And Gibbs was reported—notably in a profile in the Washington Post this past April—to be pining to step out of the press office and up into a broader role with a grander title.

The news that both are leaving now spurred the political class into a fit of theorizing. Karl Rove opined in The Wall Street Journal that Rouse had “likely told the president he must deny Mr. Gibbs a larger White House policy role and instead ease the acerbic press secretary out.” Much the same sort of speculation—and not only among those with intent as malign as Rove’s—has circulated concerning Axelrod. “I don’t think Obama was especially well served by either of them in the White House,” says an A-list player in a previous Democratic administration. “It’s the same with every president. They come to town and the campaign people are their family, but as they learn that there’s a difference between campaigning and governing, the campaign people get washed out.”

But there may be less here than meets the jaundiced eye when it comes to the Obamans. White House officials point to the arrival of Plouffe as a key driver of Axelrod’s accelerated timetable. “It would be almost impossible to have Axe and Plouffe here at the same time for an extended period,” says a senior aide. “One of everyone’s concerns, Axelrod’s included, going forward is overlapping portfolios, and his and Plouffe’s would have been almost entirely overlapping.”

Gibbs, for his part, says that he never gave serious thought to becoming a senior adviser because the role simply didn’t suit his temperament. “I like having a known set of duties,” he tells me. “I don’t want an undefined portfolio.” After recharging his batteries and raking in some bucks on the lecture circuit, Gibbs intends to train his energy on providing Obama’s message operation with something absent in the first two years: an aggressive outside game. “The president said, ‘What is our biggest void here?’ ” recalls another top adviser. “We don’t have a Begala and Carville out there. We’ve got nobody out there in D.C. on cable making our case. Who’s gonna do that? That’s not Axe’s thing—Robert’s that guy. He’s pugnacious, he’s good on TV, we need him out there. What I like to joke is, he’s a better-looking version of James Carville.”

The notion that Axelrod and Gibbs were pushed out further ignores the central roles that both will play in Obama’s reelection bid. Contrary to suggestions that Gibbs might merely be a consultant to the campaign, he assures me that he plans to take a formal full-time job with it—as communications director or a senior strategist. And Axelrod expects to play a part very similar to the one he enacted in 2008, as the self-styled “keeper of the message.” “If we were fired,” Axelrod notes wryly, “putting us to work for the campaign would be a weird assignment.”

Even so, few would dispute that Obama’s communications efforts have been far from perfect. To be fair, some of the problems owed to the nature and the sheer profusion of measures undertaken by the administration. “By necessity, there was such a flurry of activity that went on for almost the whole two years,” says Axelrod, “that we never really got traction on some of our messaging. You talk about all the great things we’ve done—many of them were lost because they were just hidden in this pile of stuff.”

“If we were fired,” Axelrod notes wryly, “putting us to work for the campaign would be a weird assignment.”

But Axelrod admits that many of the wounds were self-inflicted. “No. 1, we overloaded the message circuit board,” he says. “No. 2, so much of it was tied to Congress; I think we were too Hill-centric. A lot of that by necessity, but nonetheless, we came here basically saying that the answers to America’s problems were not all in Washington but out in the country, and that we wanted to do things differently. I think the optics did not speak to that to the degree they should have. No. 3, I think we overused him. There was a period of time in the eighties when the Bears weren’t very good, and they would hand Walter Payton the ball on every play: It was Payton left and Payton right and Payton up the middle. He was the greatest running back of all time, arguably, but still it became kind of a dreary game plan. And, you know, we have one of the great political performers of our time. But I think we degraded that to some degree by using him as much as we did in the ways we did.”

None of these issues escaped the notice of Obama. Nor did the fact that the White House’s relationship with the Washington press corps had grown needlessly fractious and hostile. The decampment of Axelrod and Gibbs—“two of the people closest in the world to him, they’re like his relatives,” says one Obama adjutant—will no doubt be wrenching and disorienting for the president; almost uniquely and almost every day, they have been beside him since the start of his meteoric rise. At the same time, however, their joint exit will provide Obama with an opportunity to hit the reset button.

At the center of that process will be Plouffe. To skeptics regarding the depth of the makeover, his reentry into the president’s orbit amounts, in the words of one Democratic insider, to “switching out the Tweedledees for Tweedledum.” But to Obama, Plouffe represents something different: an essential component of the president’s gambit to move forward by reaching back.

That Plouffe is a kind of postmodern Metternich—a delegate-counting, data-crunching, spreadsheet-wielding political and organizational genius—is an article of faith among the people around Obama, and especially those who served alongside him in 2008. “The things that worked so well on the campaign,” says a senior member of that squad, “were a product of David’s style: to set out strategic goals, measure everything against those goals, and if the things that were being proposed didn’t advance those goals, to say, ‘I’m sorry, we can’t do those things.’ It meant sometimes being unpopular, but it advanced the ultimate cause.”

Plouffe’s reintegration into Obamaworld has always been a given. Back in 2008, the campaign manager told the candidate that, with his spouse expecting to give birth just after Election Day, he had no intention of joining the White House in the first half of Obama’s term—but that after what Plouffe now calls a “two-year sabbatical,” he would be there if Obama needed him.

For the moment, Plouffe sits in a windowless cubby across the hall from Axelrod’s lair, readying himself to assume a range of responsibilities more sprawling than anyone’s save Daley. He will be in charge of communications and the press office. He will oversee the political shop. He will work with Jarrett in managing outreach to interest groups and business. And he will be the White House’s de facto chief strategist—an assignment about which he has views so crisp and sharp they could cut glass.

“As you know, I’m a big believer in strategy,” Plouffe tells me. “This is an industry where it’s really hard not to get driven to the tactics, because you’re scored every day more on the tactical, and because internally, you say, ‘We’re proud that we stuck to our strategy today,’ but you get no external ratification of that. You normally get criticism. So part of the goal is to have a longer-term horizon, which is the way [Obama] is instinctively oriented. And I think that’s gonna be a test each and every day: Can you look down the horizon a little bit and not be buffeted by the winds of the moment?”

In this respect, Plouffe, even more than Daley, is the obverse of the former White House chief of staff: Calm, cool, and relentlessly collected, he is the anti-Rahm. It may be that Emanuel’s manic energy and deal-making prowess were essential to Obama’s achievements in the first two years; certainly the president believes that. But he also clearly feels that in the phase ahead, he needs more of the rigor and discipline that Plouffe can provide.

What Plouffe insists—and insists, and insists—he will not be providing is shadow management of Obama’s bid for reelection. “I’m not a big believer in people redoing their jobs; I don’t think you do them as well as you did the first time,” he says. “Obviously, I’m going to have the appropriate interface with the campaign”—which will be managed by outgoing deputy chief of staff Jim Messina, to whom Plouffe is close—“but my operating philosophy, and the president agrees, is that this campaign is not going to be driven out of the White House.”

“Appropriate interface” is one of those innocuous-sounding phrases that can contain multitudes—and here’s betting that the task will keep Plouffe plenty busy, especially with the reelect being headquartered in Chicago. Many politicos believe that putting it there is lunacy; that no amount of geographical hocus-pocus can confer outsider status on an incumbent president; that the benefits of being outside the Beltway are vastly outweighed by the loss of proximity to the principal. But Plouffe avidly argues otherwise: that being in Chicago will enable the campaign to be in closer touch with ordinary voters, and also less prone to leaks or becoming suffused with conventional wisdom. Moreover, he is confident that the tightness of the Obama team is such that proximity matters little. “It isn’t like in 2008, Barack Obama was in our headquarters twice a week holding strategy meetings—he was out campaigning,” Plouffe says. “We made a lot of decisions by conference call, and, you know, it worked out okay.”

Where there’s little disagreement is over the dawning sense that 2012 is shaping up to be a larger lift than the White House expected a year ago. “They are very worried—they weren’t, but they are now,” says a Democrat who has Obama’s ear. “One reason is the total collapse with independents. A second is the loss of support among women. And third, at the end of the day, even though the economy maybe feels a little better, it’s still not gonna be great next year.”

Plouffe’s take is a bit more sanguine, but far from Pollyannaish. “The president right now is sitting with a job approval rating of just over 50 percent, despite the economy,” he says. “In a presidential-election-year electorate, the Latino vote is playing a stronger and stronger role. So from an Electoral College standpoint, right now I’d rather be us than the other side. That said, we live in an enormously close, 50-50 country. So we should assume—and it may be hard for me to take this approach if Sarah Palin is their nominee, but I will try—that whoever runs against us is a deadly serious threat and we’ll be in a very close election. You have to assume that you’re gonna have to do everything right to get 270 electoral votes.”

Doing everything right is a tall order for a president even in the best of times, and with the GOP in control of the House and the unemployment rate at 9.4 percent, these are hardly the best of times for Obama. For all the encouraging glimmers of late, the real test of Obama’s rehabilitation is yet to come—as Bill Clinton, that grand master of political rehab, would surely be the first to tell him (and maybe already has).

The Clinton resurrection of 1995 and 1996 is, of course, cited ad infinitum and ad nauseam as a precedent for what Obama is attempting to pull off now. And the parallels are plain: the refurbishment of the White House staff, the efforts to stake out a place apart from and above the linthead extremes in both parties. On the critical question of how to deal with the GOP, too, Obama is likely to adopt a Clintonian posture: cooperate when possible, confront when necessary, and exploit Republican overreaching.

In truth, Obama is in some ways—his strong and climbing poll ratings, the weakness of the nascent Republican presidential field—in a stronger position than Clinton was at the same point in his first term. But in two respects of gargantuan importance, Clinton was better off: He had a persuasive economic narrative that he had been honing and hammering for years, and a real economy over which he was presiding that was on the brink of a historic boom.

Obama has neither. When it comes to the latter, the president’s ability to effect improvement is severely constrained. And when it comes to the former, Obama continues to search somewhat haltingly for a set of themes that resonate. Early in December, in a speech in North Carolina, the president declared that America was facing “our generation’s Sputnik moment,” in which we had to double down on investments in education, innovation, and infrastructure or risk falling dangerously behind our foreign rivals, China in particular. Because it came at the height of the frenzy over the tax-cut deal, no one paid the speech much attention. Expect to hear echoes of it in the State of the Union and beyond.

But Obama, unlike Clinton, was not elected on the potency of his economic platform or his economic wordplay. He was elected on a more amorphous set of promises—and the disjuncture between them and the ensuing reality has been and remains his biggest problem. “The president didn’t get a huge chunk of the vote to do health-care reform or do a stimulus package or financial reform or all the rest of it,” says one of the grandees who met with Obama after the midterms. “The reason people voted for him was to change Washington. And he accomplished the subcategories in a way that made Washington even more toxic and polarized.”

For Obama, the next two years will in part be about attempting to lower the temperature, to leach the toxins from the system. And in that pursuit, divided government might, paradoxically, prove to be his friend. Having achieved so much in the past two years, much of Obama’s agenda now is to protect those accomplishments—both in the short term and in the long term, by winning reelection—and playing defense is inherently less provocative than playing offense. And the areas in which Obama will take the initiative are ones where common ground may well exist with the opposition: curbing the deficit, education reform, free trade, and possibly tax reform.

Will Republicans cooperate? Perhaps, perhaps not, but that may be beside the point. “In the first two years, controlling both houses of Congress and having the White House meant there was little to no responsibility that was required of the other party—so people compared us to ourselves, or to the perfect, and you always lose that argument,” says Gibbs. “Now there’ll be some ability to compare where each entity wants to take the country, and that will shape in a finer way the values and visions of all those involved. The president’s going to get out of town a lot. The president’s going to tell a story and show the country what he’s doing, why he’s doing it, and where we want to go—rather than just dealing with Monday’s or Tuesday’s or Wednesday’s problem.”

Nowhere in the Constitution is the spinning of yarns enumerated as a responsibility of the president of the United States. Yet the most successful of them in our recent history—Roosevelt, Reagan, Clinton—were all masters of the art. For a variety of reasons, Obama lost his storyteller’s touch, and also his connection to what made so many vest so much hope in him to begin with: his apparent capacity to lift the country up and calm it down at the same time. Has he figured out how to reclaim that brand of mojo? Not yet, not fully. But at least he understands he must, which is a start. “It’s kind of like with a 12-step program,” says the grandee. “Before you can begin fixing your life, you have to admit you have a problem.”



Heilemann Talks Obama’s Remaking on Morning Joe