FRONTLINE

>>Barack Obama is projected to be the next president of the United States.

>> Tonight on Frontline... >>They thought success would breed success.

>>"We'll move for a quick kill."

That's how they referred to it, a quick kill on Capitol Hill.

>>Their leadership told the members, "No!

Just say no."

>>There was a polarizing quality about Barack Obama that came roaring forward.

>>He was in a position to make demands and he didn't.

>>He's the first Nobel Peace Prize winner with a kill list.

>>I think he understands that the glory days are over.

Everything is going to be more challenging.

>>Now he gets another chance to be the guy who united the country.

>> In the week before his inauguration, a look back, "Inside Obama's Presidency."

>>Good evening, everyone, as we watch the making of the president 2008.

There are ten... >>As for the senator's schedule tonight, he is now at the Hyatt Regency Hotel.

He will watch the election returns and then... >>Ohio is gone for Obama... >>It is now 11:00 on the East Coast and Keith, we can report history.

>>Barack Obama is projected to be the next president.

>>Senator Barack Obama of Illinois will be the next president... >>NARRATOR: November 4, 2008.

On this night, in Chicago, inside Barack Obama's private world, the news began to sink in.

>>I kept watching Obama as he transformed from this young man to the next president of the United States.

This was a different man.

>>There are tens of thousands, maybe hundreds of thousands who have gathered in Grant Park in Chicago.

>>Ladies and gentlemen, the next first famil of the United States of America.

>>NARRATOR: Only four years earlier, he'd been a state legislator.

>>The look on his face to me looked like someone who finall understood the weight of the job that he had just won.

>>Almost as if the weight of the world had rested on his shoulders.

>>The road ahead will be long, our climb will be steep.

Two wars, a planet in peril, the worst financial crisis in a century.

But America, I have never been more hopeful than I am tonight that we will get there.

I promise you, we as a people will get there.

God bless you, and may God bless the United States of America.

>>NARRATOR: If he had any idea that night how difficult this would be, the next day would prove it.

>>So much for that Election Day euphoria... >>The economy has now lost 650,000 jobs just in the past three months... >>All eyes are now on Barack Obama to turn it around... >>NARRATOR: The cascade of bad news began with the economy.

>>Fear swept through the markets... >>He had to start thinking about this the day after he was elected.

>>This was the most eventful and consequential presidential transition in American history.

>>We were all worried about what we were seeing.

We knew that the credit system was pretty quickly headed towards something that looked a lot like seizure.

>>NARRATOR: The president-elect was told that in the two months since Lehman Brothers crashed, the panic on Wall Street had only gotten worse.

>>What we were facing was something that, really, he had never contemplated, never experienced.

>>NARRATOR: Unemployment was nearly seven percent and climbing.

The stock market was down more than 6,000 points.

>>There was a growing sense of calamity.

This could be the most climactic economic crisis in all of American history, that we were that close to a complete meltdown.

>>Obama at that moment gets a real glimpse of the future: disaster is coming.

>>At the end of the conversation, there is basically no bright spots.

And I say to the then president- elect, "Wow, that had to have been the worst economic briefing a new president's had in, you know, almost a century."

And the president says, "That's not even my worst briefing this week."

>>NARRATOR: There were the wars in Iraq and Afghanistan, the pursuit of Al Qaeda, and above all, a huge political challenge.

>>We can finally bring the change we need to Washington... We are ready to take this countr in a fundamentally new direction... >>NARRATOR: During the campaign, he had promised Americans he would fix the partisanship that plagued and divided Washington.

>>There is not a liberal America and a conservative America.

There is the United States of America.

>>It's the Inauguration Da of the nation's first African- American president... >>This is the biggest inaugural of all time in a countr that likes the word big... >>The first couple to arrive at the Neighborhood Ball... >>NARRATOR: On the very night Barack Obama was inaugurated, a group of Republicans quietly gathered to develop plans for taking on the new president.

>>A meeting, a dinner, took place in a famous steak house in downtown Washington, with Newt Gingrich as sort of the MC, as it were.

>>The thing I found disturbing this week... >>NARRATOR: At the gathering of GOP luminaries: top conservative congressmen Eric Cantor, Kevin McCarthy, Paul Ryan, Senate power brokers Jim DeMint, Jon Kyl, Tom Coburn, and event organizer Frank Luntz.

>>The room was filled.

It was a who's who of ranking members who had at one point been committee chairmen or in the majority, who now wondered, out loud, whether they were in the permanent minority.

>>The 44th president of these United States, Barack Obama.

>>Many of them had attended Obama's inauguration.

They had seen that breathtaking spectacle of a million and a half people on the Mall.

And it felt like a wholesale repudiation of the Republican Party.

>>They walked into that dining room as depressed as I've seen any elected members of Congress.

They lost every Senate seat they could lose.

They lost all these House seats.

The numbers were so great that they thought that they weren't coming back again, not for an election or two, but maybe a generation or two.

>>NARRATOR: As the night wore on.

the talk turned to the future.

>>Three hours, some of the brightest minds in the Republican Party debated how to be relevant.

>>The point I made was that we had to be prepared in the tradition of Wooden at UCLA to run a full court press.

And we had to see how Obama behaved and to offer an alternative to what he wanted to do.

>>So, they decided that they needed to begin to fight Obama on everything.

This meant unyielding opposition to every one of the Obama Administration's legislative initiatives.

>>He could be defeated partly by his own ideolog and by his own behaviors.

>>The feeling was that if that group could cooperate and if that group could lead, that the wilderness might not be a generation away.

>>By the end of the evening, you began to realize, wait a second-- you've got Nancy Pelosi as an opponent, you have a clear choice of ideologies.

We have a tremendous amount of hard work to do.

But it's doable.

>>They all talked about this, and they began to get more and more optimistic, and they left feeling practically exuberant.

>>Inauguration day full of events.

Ten, count them, ten official inaugural balls... >>NARRATOR: Across Washington that evening... >>Stunning crowd of people... >>NARRATOR: The new president had no idea what the Republicans were planning.

>>Ladies and gentlemen, the president of the United States and the first lady, Michelle Obama.

(crowd cheering) >>NARRATOR: Surrounded by supporters at the inaugural balls, the mood was hopeful.

At last... >>President Obama did not have a full sense of what Washington was going to be like for him.

He had not been in the middle of these kind of down-and-dirty fights, the ugly realit of governing in Washington today.

>>You have, in Obama's case, gone within four years from being an Illinois state politician to the most famous person on earth, and you have confidence in both your judgment about what's the right way to go and your ability to make it go that way.

If he was too confident about being able to bring people together, one can understand, given the way he'd spent the previous four years.

>>Ball gowns are on their way to the cleaners, the party is over for both the new president and the nation... >>Well, what does Obama need to do to reassure Americans right now, and the markets... >>NARRATOR: That first week, the president had two goals: turn the economy around... >>We're talking about massive job creation... >>NARRATOR: ...and do it b working together with the Republicans.

>>So he's got some selling to do... >>Right now, the big debate in Washington is how big should the stimulus package be... >>He is facing many sobering challenges... >>In hammering out details for his massive economic recovery... >>He knew that he was dealing with a set of circumstances that required people to put politics aside and to address this crisis before it got worse.

>>NARRATOR: He'd put together a huge, $800 billion stimulus package designed to kick-start the economy.

And he tailored it to appeal to the Republicans.

>>Obama thought, "You know what, "I'm going to start off with something that is going to "look pretty appealing to these guys.

I'm going to have about 35%, 40% of this $800 billion package be in the form of tax cuts.

A lot of Democrats are going to hate that, but Republicans like tax cuts, and we can just get everybody on board from the beginning."

>>NARRATOR: He was told right from the start the stakes couldn't be higher.

>>This is the first of a series of tests.

And if he failed this one, what would it sa for his administration and his ability to deal with all the other challenges we're going to face?

>>President Obama promised the American people he would bring bipartisan solutions... >>NARRATOR: He decided to make a symbolic gesture: he'd come to them.

>>Mr.

Obama is hoping for support from both sides of the aisle... >>NARRATOR: Take his proposal to the Republicans on their own turf.

>>He'll try and sell his plan to the Republicans... >>NARRATOR: He headed right for the meeting of the Republican caucus.

>>It's a rare day when the President goes to the Capitol to meet only with members of the other party... >>Hello, everybody.

How are you?

>>He spoke extemporaneously about the stimulus.

He walked us through it probably 15 or 20 minutes, just his thought process and why he was advocating these policies.

And then he opened it up for questions.

>>NARRATOR: The Republicans were ready for him.

>>And it was really during that Q and A as the member stepped forward and asked some pretty, I think, appropriate questions about the amount of mone that we were spending, the debt that we'd be taking on, and I don't ever remember him saying, you know, "Okay we'll take a look at that."

It was more just defending his proposal as is.

>>NARRATOR: And the Republicans had a surprise for the new president.

>>He arrives there thinking they're all going to talk and come up with some kind of agreement; he's got all these tax cuts to offer them.

And he finds that they've already had a meeting and decided they're going to oppose the stimulus package.

And he was deeply burned by it.

>>Before he showed up, Eric Cantor sent out an email.

Said, not that "I'm voting against it."

Eric Cantor's email is: "We're against this."

>>Their leadership told the members "We're not for any of it."

No matter what it is, "No, just say no."

>>NARRATOR: He came out empty-handed and had to face the waiting press corps.

>>Hello, everybody.

>>How did it go?

>>We had a wonderful exchange of ideas, and I continue to be optimistic about our abilit to get this recovery package done... >>And we saw the president standing in the halls of the Senate in the Capitol.

I'll never forget that.

He still looked like a senator.

Of course, he's now the president of the United states.

What's he even doing sort of lobbying for this?

>>I think everybody there felt good about... that I was willing to explain how we put the package together, how we were thinking about it, and that we continue to welcome some good ideas.

All right?

>>It was a very strong signal that we were not going to get a lot of cooperation on this issue.

And if we weren't going to get it on this issue, it was doubtful we would get it on many others.

(gavel bangs) >>On this vote the yeas are 246... >>NARRATOR: But Obama's party controlled the Congress.

>>The conference report is adopted.

>>NARRATOR: And without a single Republican vote in the House, the stimulus bill passed.

>>So much for the president's charm offensive.

Today it was all partisan rancor and name calling.

>>Not one Republican voted for it, turning a cold shoulder to the president's appeal for bipartisan support.

>>Obama learns that being president is about understanding the constraints and, frankly, working the system rather than changing the system.

>>Growing backlash against Wall Street.

As for the compensation for the CEOs at four of the biggest... >>Gave out 18.4 billion in bonuses... >>NARRATOR: Then, just a few weeks into his presidency, another Wall Street problem: the huge bonuses.

The bonuses fueled public anger over the hundreds of billions of dollars in federal bailouts initiated by the Bush Administration.

>>It really, really grates with most people that our tax mone went to support these institutions.

And then when the rest of the country was in the worst of the recession, you saw the big traders and the heads of the Goldman-Sachs's of the world walking out with these multimillion-dollar pay packages.

>>Do the banks need to be held accountable for their part... >>NARRATOR: And in Washington, news about the banker bonuses didn't go over well in the Oval Office.

>>...got more than $18 billion in bonuses... >>The bonus and the compensation stuff made him more angry than I'd ever seen him.

I remember him, like, really standing up out of his chair in the Oval Office and just being really pretty livid.

I mean, the one thing he would not stand for was the American people being played for as chumps by these banks, and that was something he just really didn't like.

>>NARRATOR: Some on the president's staff saw this as an opportunity to get tough on the banks.

>>David Axelrod, Obama's top political adviser, very much wanted some scalps.

Robert Gibbs, who was the press secretary, but also very senior political aide, wanted scalps.

>>NARRATOR: White House economic adviser Larry Summers pushed the president to take strong action-- even seizing a troubled bank.

>>One school of thought was, well, we need to take over, to shut down, to nationalize the weakest of the banks.

Wall Street would see that if you gamble with the country's fortunes and you fail, you're going to get shut down, you're going to lose.

>>NARRATOR: But there was a deep divide among the president's economic advisers.

Treasury Secretary Timothy Geithner urged Obama to take a cautious approach.

>>Geithner didn't want to do it, because it would kind of create this risk.

It would create this conception that the government was going to come in and mess with these banks, and that that would frighten off private investors.

>>NARRATOR: Only the president could make the decision-- bold action against Wall Street banks or cautious support to strengthen them.

While the bankers waited, Obama kept his own counsel.

>>For the economy, this is what free-fall feels like.

>>When will the recession end?

>>NARRATOR: The nation's top bankers were summoned to the White House.

>>The president invited 15 of the... >>After leveling some very harsh words at bankers... >>NARRATOR: The president wanted to talk to them.

>>Looking for accountability from the nation's banking leaders, today President Obama is meeting with CEOs of some of the nation's... >>Thirteen bankers were called into a room to meet with the president of the United States.

They were told that they were going to be chastised, that this was going to be the opportunit for the president to vent the public's anger.

>>NARRATOR: They headed some of the largest banks in the country.

Throughout the crisis, they had received massive bailouts.

>>Walking into that meeting, these guys have not been this nervous since they were in nursery school.

They're ultimately powerful, sovereign men atop their institutions, but now they know that they really could get whacked.

>>NARRATOR: No one knew what to expect: Summers' bold action or Geithner's cautious encouragement.

Now they'd find out what the new president wanted to do.

>>Obama comes in, and he's all business.

>>NARRATOR: There were few pleasantries exchanged.

Obama spoke first.

>>The president made it pretty clear when he talked to us, you know, "We're between you and the pitchforks, guys.

And you need to just acknowledge that."

>>The bankers have essentially made a decision that they're prepared to go along with what needs to be done to resolve this problem, to get the public back on the side of corporate America.

>>NARRATOR: But as the meeting progressed, to their astonishment, it became clear the president was in no mood for confrontation.

>>What's interesting is that the next statements and the rest of the meeting essentially is Obama skinning back as fast as he can on that pitchfork's punch.

And he says right after that, "What we have, gentlemen, is a public relations disaster that's turning into a political disaster.

And I'm here to help."

>>I interpreted it as kind of a watershed time.

Banks are the catalyst to get us out of this morass we're in.

You can talk so long about the past, but at some point, you've got to look at the present and the future.

And I thought that's what he was saying.

>>NARRATOR: The president had decided.

He would wait on reforming Wall Street, and adopt the cautious approach.

>>I think the president sees himself as a pragmatist: "Let's get through this.

"Let's be pragmatic.

"Let's not shoot for the moon and miss.

"Let's accomplish as much as we can, but let's do it with "the certainty that we know we can produce "by taking this a little more cautiously."

>>NARRATOR: And the president required no firm commitments from the bankers.

>>I think it's clear it was an opportunity lost.

He had a room full of very frightened CEOs.

He was in a position then to make demands, and he didn't.

>>He didn't want to disturb the banks.

He wanted them on their side so that things were as calm as possible.

There would be basically business as usual.

>>Today the Obama Administration did indeed extend them an olive branch.

>>It looks like the country's financial giants may have turned a corner.

>>NARRATOR: The bankers who left the meeting had alread received more than $180 billion from the federal government with almost no conditions.

Many of the president's liberal supporters were outraged.

>>No strings attached?

I mean, everybody else-- homeowners, everybody else who's trying to get a loan, everybody on Main Street, small businesses-- not only are the not able to get loans, but if they get anything, there are huge strings attached.

How in good conscience, in good faith, can we not ask the banks, demand from the banks, some conditions upon getting bailed out?

That just seemed incredible.

>>So if you look at their stock prices, Citigroup was at 98 cents just a few weeks ago, it is now up 75%.

>>Banks are able to borrow money at little or no interest.

>>NARRATOR: As the bankers left, inside the White House, the president had already moved on.

>>He was told at one point by an adviser, "Your legacy is going to be preventing a second Great Depression."

And he says, "That's not good enough for me."

I mean, it wasn't enough for him to simply stop the economic problem.

He wanted to have a positive transformative agenda.

>>NARRATOR: He wanted to take on health care reform.

Once again, his advisors were divided, worried about the political consequences.

>>The White House had a debate about whether they should actually go forward with it.

Vice President Biden was opposed to doing it, absolutely opposed to doing health care.

>>So I said, if you're going to do this, go into it eyes open, know what the consequences are, and what the potentiality for success is.

>>He was presented with all the political arguments, and he said, "I get the politics of this, "but if we don't do this now, it probably doesn't get done."

And he said, "And what are we doing here?

I mean, are we going to put our approval rating on the shelf and admire it for eight years?"

>>This is a huge issue the president is taking on now.

>>The question is, could health care reform really happen?

>>NARRATOR: He had been in office only six weeks.

Once again he would try to prove that bipartisanship could work.

He gathered in one room at one time all sides in the debate.

>>They're talking about lawmakers, doctors, nurses, hospitals...

Bringing together lawmakers and interest groups...

Cabinet officials, members of Congress, the White House team conferring on how to overhaul health care.

>>The president trying to get his game on, take control of the process.

>>Many of these players for years, if not decades, had a record of opposing any sort of health care reform efforts.

>>And what a remarkable achievement that would be.

Something that Democrats and Republicans, business and labor, consumer groups and providers, all of us could share extraordinary pride in finall dealing with something that has been vexing us for so long.

The cost of health care... >>NARRATOR: In these first days a fragile coalition seemed possible.

>>So let's get to work.

Thank you.

>>NARRATOR: But to keep it together, Obama had to move quickly.

>>And that calculation is we'll move for a quick kill-- that's how they refer to it, "a quick kill on Capitol Hill."

>>It was thought that we... the Senate was going to have a bill by June, we would have a bill by July.

And we would go to conference and this would be over.

>>NARRATOR: The president was reminded that things have a wa of slowing down in Congress.

>>Going to take you live to a Senate Finance Committee hearing looking at health care... >>The process, particularly in the Finance Committee, just felt like that race that was being run starting on January 20th all of a sudden hit some mud, and people's shoes got pretty soggy and pretty heavy.

>>NARRATOR: Republicans sensed opportunity.

Mitch McConnell was the Senate minority leader.

>>McConnell was saying, "Don't agree to anything.

"Don't agree to anything.

"Keep me informed, but keep talking."

>>The Republicans were very clever in what they did.

They pretended they were interested in this.

I call it the dance of the seven veils.

I'm going to be there, and then I'm not, and I'm going to be there, then I'm not, now you see it, now you don't.

It was all an illusion.

>>And meanwhile, the clock is ticking, the calendar is moving, and it's getting later and later and later.

And the weight of public opinion is turning against this health care plan.

>>Some members of Congress are telling the President to slow down... >>Still a long way to go before the House and Senate agree on... >>That pretty much puts a fork in the massive bill... >>NARRATOR: By August, as Congress headed home for the summer recess, there was still no bill.

Some in Washington wondered whether health care reform could survive.

>>Let's take a breather for a month... >>Heading into the summer recess is a period of great frustration for the White House.

Everything was getting stuck.

Everything was slowing down.

And as they head into August, they didn't recognize what's about to hit them.

>>Victory on his health care plan is still far from assured.

>>You want to kill my grandparents, you come through me first!

>>God will take care of health care.

>>You dirty thieves!

>>We can't afford it!

>>Afro-Leninism!

>>Anger, by the summer of '09, had reached a boiling point.

>>Radical communists and socialists!

>>There was a polarizing quality about Barack Obama that kind of came roaring forward.

>>Baby killer!

Abortion is murder!

>>And became much more obvious to people with the rise of the Tea Party and the battles over health care.

>>There is an ugliness with these fringe people who are comparing the president to Hitler.

>>In that first week of August, the anger was spilling out, and I think members themselves were a bit taken aback by the intensity of that anger.

>>... and the rest of your damn cronies up on the hill!

>>There was anger out there and members of Congress listened and they were scared.

>>(chanting): Kill the bill, kill the bill, kill the bill... >>NARRATOR: It had been less than eight months.

Health care reform had stalled, bipartisanship had collapsed, and there was still trouble with the economy.

It was time to turn things around.

In early September, he headed for New York, to the very Wall Street banks he had accommodated earlier.

>>President Obama visits New York toda to deliver a major address to Wall Street.

One year to the day after the fall of Lehman Brothers.

>>President Obama went to Wall Street today to mark the one year anniversary of the collapse of Lehman Brothers.

>>NARRATOR: Obama came to persuade the big bankers to join a push for reform.

>>Immediate action to reform financial regulation... >>We've seen bail-outs, stress tests, an alphabet soup of Treasury and Fed programs... >>He decides to have a meeting that's literally steps from Wall Street, right?

I mean, Federal Hall is... you can walk down to the exchange floors.

>>NARRATOR: Washington's power brokers were there, congressional leaders, his economic team... >>The president of the United States.

>>NARRATOR: But the titans of Wall Street didn't show up.

>>Essentially, none of the big figures from Wall Street show up to hear the speech.

They all just stay in their offices and do their work.

>>They don't even show up to the speech.

It wasn't like the speech was scheduled, you know, without notice.

They just had better things to do that day.

>>NARRATOR: Earlier the president had taken the cautious course; none of the bank CEOs had been fired.

>>If you go have a speech on Wall Street and people from Wall Street don't even show up for your speech, and you're the president of the United States, what more public display can you make to try and force these guys to come and participate?

And they apparently just felt like they could just wash their hands and walk away.

>>It's a very difficult day for Barack Obama.

>>We will not go back to the days of reckless behavior and unchecked excess that was at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses.

>>Once everything's calmed down, once the banks have gotten what they want, once revenues have gone up again, once things seem stable, they just completely disengaged.

And there was no wa for the White House to force them to the table.

There was nothing that the White House could do.

>>NARRATOR: The speech had not gone well.

In the end, Obama would leave it to Congress to address financial reform.

>>The young president prepares to deliver the most important speech of his first term in office... >>NARRATOR: Meanwhile in Washington, the president turned his attention back to health care.

>>President Obama gets ready to take the stage... >>NARRATOR: He summoned a joint session of Congress.

>>After consulting with a number of people, I think the president concluded, "I need to take back control of this."

>>Madame Speaker, the president of the United States!

(applause) >>He understood that his presidency was at stake.

He understood that he was asking people to make a very difficult vote.

He also tried to explain the historic opportunity.

>>His audience really in that speech wasn't the public in general, it was the people sitting in that chamber.

>>The time for bickering is over.

The time for games has passed.

Now is the season for action!

Now is when we must bring the best ideas of both parties together and show the American people that we can still do what we were sent here to do.

>>It was an attempt to sort of recapture the high ground.

It was an attempt to bring the debate back to a loftier level.

>>If you misrepresent what's in this plan, we will call you out.

>>NARRATOR: But the tone immediately sunk to a new low.

>>There are also those who claim that our reform efforts would insure illegal immigrants.

This too is false.

The reforms I'm proposing would not apply to those who are here illegally.

>>You lie!

(congresspeople shouting) >>That's not true.

>>A lone congressman says, "You lie."

>>You lie!

>>NARRATOR: It was Republican representative Joe Wilson from South Carolina.

>>It crystallized this moment in Washington.

It crystallized the anger, it crystallized the fervor of the opposition.

>>An outburst that continues to reverberate across the country.

>>Totally disrespectful, no place for it.

>>How did we get to the point where it's okay to yell "You lie" at the president while he's speaking to Congress?

>>NARRATOR: With partisan tensions and the American people increasingly unhappy with the bill, many of the president's top advisers believed health reform was now dead.

>>Everyone on the team was very discouraged.

His head of legislative affairs, Phil Schiliro, said, "Mr. President, unless you are feeling lucky, "I just don't think we're going to get this done."

And the president got out of his chair and walked over to his desk and looked out the window and said, "Phil, where are we?"

And Phil says, "We're in the Oval Office."

And the president said, "And what's my name?"

And he said, "Barack Obama."

And he said, "Well, of course I'm feeling lucky.

Now, get back to work and figure out how to get this passed."

In the end, they told him if he wanted to get it done, he would have to abandon bipartisanship and take on the Republicans.

>>The choice was do nothing or to do something with the tools you had and the majority you had.

He chose to do that.

>>NARRATOR: Once again, Barack Obama the campaigner hit the road to sell the bill.

>>Do not quit!

Do not give up!

We keep on going!

We are going to get this done!

We are going to make history!

We are going to fix health care in America with your help!

God bless you!

And God bless the United States of America!

>>But first, down to the wire on health care reform.

The House votes just hours from now... >>NARRATOR: It had taken more than a year.

On Sunday, March 21, 2010... >>It is a 15-minute vote... >>NARRATOR: The president asked the Democrats in Congress to take what they call a "hard vote"-- a potentially career-ending vote-- for an unpopular bill.

>>The motion is adopted.

>>The 216th vote comes over, a big cheer erupts.

>>It's 219 to 212.

No votes are Republicans... >>All Democrats, no Republicans... >>Not a single Republican in the House or the Senate voted for the health care bill.

It's a huge piece of legislation, and it is extremely unusual.

When any of the other major programs were passed, signed into law, they were ultimatel done with both Democrat and Republican votes.

>>NARRATOR: It was victory, but experienced Washington knew the president would pay for it.

>>It came at a high price, the entire first year basicall dedicated to this, having their hopes for bipartisanship dashed.

>>NARRATOR: Now, he and his party would have to wait for a verdict from the electorate-- the midterm elections.

>>An historic election for the Republican Party... >>It's a whole new political world for the President... >NARRATOR: In November of 2010, the president's party suffered a significant defeat... >>Now the Republicans back in power in the House of Representatives... >>NARRATOR: For them, the midterm elections were a disaster.

>>Democrats are nursing a major midterm hangover.

>>It was really one of the first times when the countr had a chance to register their opposition to Obama.

>>Tuesday's election was a game changer... >>And boy, did they.

>>Repudiation of the president and his policies... >>And that, I think, came as a surprise to this person who thought that people pretty much loved him.

>>The GOP gaining at least 58 seats.

>>I can tell you that, you know, some election nights are more fun than others.

Some are exhilarating; some are humbling.

>>NARRATOR: Many of those Democrats who had taken the "hard vote" to support Obama's health care bill had lost.

>>Team Boehner and Team Obama dig in their heels... >>NARRATOR: Now the House belonged to the opposition.

>>A president trying to figure out what he does with this... >>President Obama acknowledged that he'd taken a shellacking... >>I now pass this gavel and the sacred trust that goes with it to the new speaker.

God bless you, Speaker Boehner.

>>NARRATOR: Speaker John Boehner had 87 new Republican lawmakers, many of them deeply conservative.

>>These were not people who spent 25 years in politics.

In fact, that was a big strike against you.

They were elected not to sell out the way so many politicians had done, that they were elected to speak truth to power.

>>They'd spent the last two years running around, particularly a lot of these new Congressmen in their districts, saying absolutely horrible things about the President-- his ability to lead, his ideology, his integrity, his birth certificate.

These are not easy people to deal with.

This is a very difficult, ideological caucus, with a very strong sense of self-righteousness and great vitriol and animosity for the president.

>>NARRATOR: For the president, it was a whole new game.

>>I think he understood that the glory days were over, that the moment of celebration of Barack Obama was passed and he was heading into a much tougher, more trenchant period of his presidenc when everything was going to be difficult, when everything was going to be more challenging.

>>NARRATOR: Like all his predecessors, the president had one arena where he could act on his own.

>>You are clear to engage him.

>>Let's go, roll it in.

(explosions) >>Good shot.

>>Go for the vehicle... >>All American presidents hit that moment where they come to the conclusion that dealing with Congress is simply too difficult, and they become foreign policy presidents in part because they have so much more leeway.

But for Barack Obama, I think this happened early.

>>Today, we got the Obama plan for leaving Iraq... >>President Obama announced the current phase of the war is coming to an end... >>NARRATOR: Early on, Obama had set a timetable for withdrawing troops from Iraq.

>>Within 19 months... >>He came into office promising to get out of Iraq.

His rise had a lot to do with his opposition to the Iraq war.

And I don't think he ever looked back.

>>NARRATOR: But there was another, secret side to Obama's approach to the world.

Candidate Obama had been critical of much of the Bush administration's top secret war on terror.

As president, it was a different story.

>>His people made it clear that in the terrorism arena, he was going to be as tough if not tougher than the Bush people.

He was going to be extraordinarily aggressive.

He and his people reviewed all existing ongoing CIA covert operations and with the exception of aggressive interrogations, endorsed all of them, and doubled down on a number of them.

>>NARRATOR: At the center of Obama's covert war: targeted killings-- death by drone.

>>The fact that Barack Obama would be the guy that leads America into this world of Predator drones and Navy seals and cyber warfare and sort of the dark arts of the Special Forces and the CIA-- and that would be a major part of his foreign policy-- I don't think anyone would have predicted that.

>>He's the first Nobel Peace Prize winner with a kill list.

And it is very disappointing to his base.

It is very disappointing to civil liberties supporters who thought he was going to be much more of a stereotypical liberal.

>>NARRATOR: In the spring of 2011, Obama's covert war scored a significant victory.

It began with a single piece of intelligence.

CIA Director Leon Panetta had learned Osama bin Laden might be living in a compound in Pakistan.

>>The intelligence case was entirely circumstantial.

Nobody saw Osama bin Laden, had a full ID on him.

>>How could he live for many years inside a walled compound and never leave?

Why would Osama bin Laden want to be 35 miles from Islamabad?

Why would he want to be steps awa from Pakistan's equivalent of West Point?

Did any of this make sense?

>>NARRATOR: The president called together his national security team.

>>He said to his National Security team in the situation room, "I want everybody to tell me "what your view is, what you would do, what your recommendation is."

And he got a very mixed response.

I think of the people in the room, it was probably 50%, roughly, were in favor of the raid option that we ended up taking.

>>NARRATOR: Only the president could make the final decision on whether to send U.S. troops into Pakistan.

>>He also knew that if it had gone wrong, there would not only have been dramatically negative consequences for the men he sent in, and for our country's security, but also for his own politics.

It very well could have been a career-ending decision.

>>NARRATOR: The president decided to authorize the operation for Sunday, May 1.

>>I think that was one of the longest days that he's had as president.

He said to us at the time that the minutes were feeling like hours, as we waited for the operation to begin.

>>NARRATOR: They waited for the signal that bin Laden was in the compound.

>>Admiral McRaven provided the call sign "Geronimo KIA"-- "killed in action."

And at that point, people kind of started to make eye contact and there was this sense of not just relief, but great pride and admiration in what had taken place.

And nobody spoke until the president said to everybody around him, "Looks like we got him."

>>The United States has conducted an operation that killed Osama bin Laden, the Leader of Al Qaeda.

>>NARRATOR: The killing of Osama bin Laden was a high point.

>>Thank you, and may God bless the United States of America.

>>Bin Laden is dead!

Bin Laden is dead!

>>A man with thousands of Americans' blood on his hands... (thunder) >>NARRATOR: That spring, the president would face another dramatic confrontation, this time with the new Republicans in Congress.

It began with a warning from Treasury Secretary Timothy Geithner: the country was in danger of running out of cash.

>>Geithner says, "We could trigger a depression "worse than the 1930s.

"It will be indelible.

It will be... it will last for generations."

Tim Geithner is one scared Secretary of the Treasury.

>>The stakes are very high.

And so there is a great deal of...

I think you can only call it panic.

>>NARRATOR: The new Republicans in Congress were threatening to vote against raising the debt ceiling.

If Congress didn't act by August 2, the federal government would be unable to pay its bills.

>>In 2010, when all these Republicans were running for Congress, many of them avowed Tea Partiers and the rest of them riding the Tea Party wave, the subject of the impending debt ceiling came up frequentl and virtually all of them campaigned saying... pledging not to raise the debt ceiling.

>>NARRATOR: Early on, Republican freshmen attended orientation sessions.

Republican strategist Frank Luntz ran one of them.

>>And I asked the question, how many of you are going to vote for the debt ceiling?

And only three or four of them raised their hands.

And I said, if you vote for the debt ceiling, the people who put you in office are going to knock you out.

>>If you vote for the debt ceiling, you're voting for your own death certificate, political death certificate.

>>NARRATOR: For his part, the president decided to tr something new: personal politics.

He figured he could connect to the Republican leader, John Boehner.

>>Obama told his staff, John Boehner is a country club Republican, a golf-playing, cigarette smoking deal-maker.

>>NARRATOR: The president invited Boehner to play golf with him at Andrews Air Force Base.

>>And afterward, they go back to the clubhouse, and they're having a drink; there's a photo op.

And it's at that point when Boehner says to the president, "Hey, you know, on this debt ceiling stuff, we ought to do something big."

>>NARRATOR: On and off for weeks, Obama and Boehner met in secret.

>>Boehner calls these "The Nicorettes and Merlot Sessions."

The president is having iced tea and chewing a Nicorette.

And Boehner is having a glass of Merlot red wine and smoking a cigarette.

>>NARRATOR: It was Obama's dream negotiation.

A bipartisan deal.

>>If the speaker and the president could come to a deal, and they both, as we used to say, hold hands and kind of jump off the ledge together, then they could not ram through, but they surely, with the strength of their positions, would have a very good chance to sell them the package.

>>NARRATOR: The president offered entitlement cuts.

The speaker offered increased revenue from taxes.

With less than two weeks to go, they thought they had a deal.

It became known as the grand bargain.

>>It's not every day that the speaker comes to see the president quietly and says, "I'm willing to do a deal" that everybody knows is going to be dangerous for him, politically.

>>NARRATOR: Back at the Capitol, Boehner would have to convince the new Republicans to go along.

>>John Boehner discovers that deal making is not part of the program for a lot of these freshmen who have just come into office on the strength of conviction politics.

>>These freshmen understood what Washington was about and chose not to be of Washington.

And so they wouldn't cave like a typical politician did because they weren't typical politicians.

They got elected on principle, not on politics.

>>NARRATOR: As the week wore on, Obama began to worry about the grand bargain.

>>He calls Boehner that night and leaves a voicemail.

Boehner doesn't pick up.

>>The President said, "Get back to me tonight, John."

The president didn't hear.

I think he called me around 10: 00, 10:30 and said, "Have you heard anything," I said, "No."

I tried to reach the speaker and I had his cell phone, and he didn't answer.

Which is very unlike him, because he always answered his cell phone.

I reported that I hadn't heard back from him yet.

So we were, there was... trying to figure out what the hell was going on here.

>>The White House, they get kind of angry as time goes on, because they start to understand that they're getting double-crossed in some way and Boehner won't call back.

>>NARRATOR: By Friday, Speaker Boehner called a press conference.

>>We get this announcement that there's going to be a briefing in Boehner's conference room.

We don't know.

We still think there's a deal.

We think this is to announce a deal.

And I get to the conference room, and Boehner's in there and he's sort of chuckling around with reporters or joking about his tan and been on the golf course and he seems in a good mood.

>>NARRATOR: He left the waiting press.

Now he was ready to return the president's call.

>>The speaker called back, and by then everybody knew what was going on.

The president was pretty ticked.

We were all pretty ticked.

>>In the Oval Office, when the president is on that phone call, Rob Nabors, the head of congressional relations, sees the president is so angry, Nabors worries that he's going to break the phone receiver.

Boehner put it quite succinctly.

He said the president was angry, and so angry and so hot, he was spewing coals.

>>NARRATOR: Outraged, Obama immediately called his own press conference.

>>Good evening, everybody.

I just got a call about a half hour ago from Speaker Boehner.

It is hard to understand why Speaker Boehner would walk awa from this kind of deal, and frankly, I think that one of the questions the Republican Part is going to have to ask itself is, can they say yes to anything.

Can they say yes to anything?

>>Tensions were unbelievably high.

You know, this is now one week from D-Day.

>>NARRATOR: Then it was Boehner's turn.

>>Now let me just say that dealing with the White House is like dealing with a bowl of Jell-O.

They refuse to get serious about cutting spending and making the tough choices that are facing our countr on entitlement reform.

That's the bottom line.

>>We're heading into the weekend with the best opportunity for preventing economic cataclysm on a global level from occurring... is now gone.

There is no deal.

>>Congress now has less than a week to come up with a plan to raise the debt ceiling.

>>No sign of a deal, and the clock is ticking.

>>Another White House meeting failed to break the deadlock.

>>NARRATOR: Just hours before the deadline expired, a compromise that pushed the problem until after the presidential election.

>>The deal that finally emerged was one that everybody hated.

It was the creation of a committee to try to come up with enough spending cuts to meet a target.

And if they failed, to put in place a mechanism for automatic cuts that would meet those targets.

>>NARRATOR: The compromise created what would become known as the fiscal cliff.

Bipartisanship had failed.

Obama would once again have to recalibrate.

>>Once the grand bargain fails, once he, frankly, has proven that he could not bridge the divide between himself and John Boehner, that he was wrong about the nature of American politics, he was wrong about how close the two parties were to each other ideologically, his message shifts to, "You know what, American people?

"We have two ideologies in this countr and you've got to pick one or the other."

>>President Obama is battling for his own second term.

>>NARRATOR: Three and a half years after he came to Washington on a promise of change... >>A different President Obama out on the campaign trail today.

>>NARRATOR: Barack Obama returned to the campaign trail, himself changed.

>>A difficult road ahead for the president.

>>I think you see today a President Obama with a thicker skin, more jaundiced eyes.

Has grown more skeptical, even cynical, perhaps, about Washington.

>>NARRATOR: As he made the case for reelection, the man who promised to transcend differences emphasized them.

>>If I said the sky was blue, they said no.

If I said there were fish in the sea, they said no.

They figured, "If Obama fails, then we win."

>>It's hard to believe that it is the same person who was talking about bringing Red America and Blue America together, because he is now a polarizing figure.

>>Because of their policies, the Republicans messed up so bad... >>Having seen the collapse around Washington from the debt ceiling debacle, he knew he had to go into a different mode.

And he was prepared to do it.

And it was a much tougher campaign, it was a grittier campaign.

It was not a message of uplift in the same way, by any means, that the first campaign was.

>>It's the same agenda that they've been pushing for years.

>>And his entire campaign message is about the differences between the two parties, not the similarities.

>>This is a CBS News Special Report.

>>NARRATOR: By November 6, the campaign was over.

>>Barack Obama has been reelected.

>>The president wins this battle.

>>Another four years for President Barack Obama.

>>The President won a big electoral victory, but his margin of victory was by no means a landslide.

Most incumbents do a little bit better the second time around; he did worse the second time around.

So he has a lot that he has to deal with.

>>I believe we can seize this future together.

>>NARRATOR: That night, the divisive rhetoric from the campaign was gone.

>>...because we are not as divided as our politics suggest.

>>The first theme he returns to after the election is the old Obama.

Goes back to the famous line.

>>We remain more than a collection of red states and blue states.

>>And delivers it with gusto.

>>The United States of America.

>>In his first four years, he wasn't as successful as I think he promised to be in 2008.

He's now won reelection.

It's a whole new day and he's got another shot.

>>And together, with your help and God's grace, we will continue our journey forward.

>>But I think it is a lot harder the second time around.

The words alone won't do it.

It has to be through a series of actions that we'll see.

>>Thank you, America.

God bless you.

God bless these United States.

(crowd cheering) >>Go to pbs.org/frontline for analysis from top journalists and historians on the highs and lows of Obama's first term, a closer look at the top items on the president's agenda for his second term, plus watch all of Frontline's programs on the Obama presidency and explore our interviews with top administration insiders.

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