How Obama Can Bounce BackHe needs to show Americans how health care reform, Wall Street reform, and the stimulus are connected.

The most important elections of last week took place not in Virginia or New Jersey or even in New York's 23^rd congressional district, but in Westchester, Nassau, and Rockland counties, New York suburbs voting for county executive. These are three prosperous suburbs of NYC that voted solidly Democratic recently in almost all races but are actually dominated by independent, nonideological voters. In Westchester and Nassau, incumbent Democrats who were expected to coast to victory were either thrown out—Andy Spano lost in Westchester by 14 percent—or are hanging on—Tom Suozzi of Nassau is in a dead heat with 8,000 paper ballots to be counted. Yet in Rockland County, Republican incumbent C. Scott Vanderhoef coasted to an eight-point win over a well-liked challenger.

These races offer a deep and troubling message for the White House. Voters may not be enthusiastic about the hard-right agenda of some Republicans, but they are very dissatisfied with what Democrats have been doing. They are seeking greater evidence of actual change in an economically anxious environment. Let me reduce the Democrats' challenge to two words: produce and explain.

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Voters are understandably fed up with skyrocketing property taxes, rising unemployment, soaring deficits, and a stagnating standard of living. No surprise there. Frustration and pent-up anger trump any desire to be kind to well-meaning leaders. New Jersey Gov. Jon Corzine did about as well as a governor could do in a desperate economy and a gridlocked political world. But that didn't matter. Independents chose an outsider without a plan over a hardworking and capable leader. Nassau County Executive Suozzi has actually been a leader in New York's effort to reduce property taxes and reform Medicaid, but good faith efforts aren't enough.

All this has real meaning for Barack Obama. A year after the elation of "change we can believe in," there is a sense of drift and loss of leadership. The president is seen as too much the bystander as Congress wades through a multitude of mind-numbing debates, compromises, and amendments, apparently reducing any bold idea to a lowest common denominator. This may be the legislative process, but it has sapped the public admiration of a president who was so recently viewed as embodying vision and strength.

With the economy still losing ground—unemployment at 10.2 percent is more important to most people than the rise in the equity markets—the efforts to reform health care and the financial markets don't interest many voters. Most of the independent middle-class voters who rejected the Democratic candidates in the critical races this year have health insurance. While they may support extending it to the uninsured, doing so will not assuage their anxiety about their own economic situations. Nor will creating a new bureaucratic entity to address "systemic risk" in the financial markets.

Now is the moment the president must present Americans with a larger strategic purpose. Just as he did with his magnificent speech about race at the critical point in the presidential campaign, he must now frame the economic debate by explaining the new model that guides government. If health care reform, pay czars, and systemic risk regulators appear simply to be disconnected dots, the public will not understand that the Obama administration is helping to create a new model of government as market facilitator and market protector—a government that makes markets work, rather than a government that coddles certain special market participants. Government must serve as an as aider and abettor in permitting transitions—by permitting and helping investment in new sectors and technologies—rather than rebuilding a broken status quo.

But this needs to be explained to the public. The wrath of middle-class independent voters will not be assuaged by another speech about health care alone. Or about Wall Street abuses alone. Rather, the president must articulate what the totality of his reform agenda means for our economic security over the next decade.

He must explain how financial services reform is part of a larger restructuring of the traditional capital markets to ensure that access to financing is fair for small- and medium-size companies as well as for Goldman Sachs—because the dynamism we need will spring from new business enterprises. The Democrats should refocus the stimulus to prioritize necessary infrastructure, such as high-speed rail, universal high-speed Internet access, and fundamental R&D on genomics, robotics, and batteries.

The president and his allies must also explain that health care reform is not merely morally compelling—nobody should go without the security that comes from having health insurance—but also essential for our economic competitiveness. Just ask GM.

Taken together, these policies will remake the market through investments in traditional capital, human capital, and physical capital. These measures can and will work. We just need to hear them described in a way that weaves them into a theory and strategy.

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