12/01/2010 11:38 am ET | Updated May 25, 2011

Obama's Choices: Big Weeks Ahead

I decided to take a break from blogging over the last few days. I hadn't really taken any time off since the elections were over, and between the Thanksgiving weekend and being generally irritated by many of the events of the last month, it just seemed like a good time to mellow out for a few days -- and hopefully I didn't also, to steal a line from Woody Allen, ripen and rot. Plus, I was getting tired of writing about a bad economy, bankers ripping off everyone else and no one holding them accountable, and dumb insider D.C. political debates. But the life and death battle over issues that really do matter to regular Americans doesn't ever stop, and this is a huge couple of political weeks.

The next couple of news cycles will be dominated by the deficit commission report, the attempts by Bowles and Simpson to round up votes on the commission for it, and the Obama administration's reaction to it. The way Obama reacts to this, in particular, will be one of the most consequential and politically significant early signs of which path the administration wants to take going forward. If they decide to embrace this report, as many people are predicting, it means they have decided to choose the D.C.-centrist path toward political rehabilitation: get the Washington Post, the Third Way, and D.C. establishment all excited, and hope all that excitement trickles down to real voters someday. Given how unpopular the specifics of this plan are, and given that it takes away the fervent defense of Social Security and Medicare (Democrats' strongest political selling point right now), that would be a terrible political decision, making Obama's reelection hopes very dark.

A second option is the muddled option: Praise the commission for their "great work," say how glad he is that they are raising these issues, but issue a vague statement saying he doesn't agree with everything. The muddled option is a whole lot better than the first one, because actually embracing this plan is so terrible politically, but the muddled option will leave no one happy. It wouldn't be the first time this White House has chosen that strategy, but it sure does leave everyone cold.

Obama's final option is to thank the commissioners for their work, but to clearly state what things he disagrees with in the report: the things which target the middle class and vulnerable older Americans. Such a reaction would have the D.C. punditry scowling, but because it would be such big news, it would get a lot of attention. I think hard-pressed middle-class working families and senior citizens, two big groups that turned against Obama in the last election, would react very favorably to Obama standing up for them, and the Democratic base would have something to rally around and get excited about for the first time in quite a while.

Another huge issue on the plate for this week is that because of the new financial reform bill, the Federal Reserve will have to report on which big banks it helped bail out in the last couple of years. This is one of the most important stories to watch, and should generate an incredibly important discussion about why our government has done so much to help the big banks and way too little to help struggling homeowners and main street businesses. It should lead directly into a big debate over what the administration is going to do in terms of pressuring the banks to write down mortgages that are underwater. It will also lead directly into discussion about the Fed's critically important regulatory work on the swipe fee issue, because once again they will be deciding: Do we help the big Wall Street banks/credit card industry, or do we help Main Street American business and consumers?

Given that swing middle class voters think Obama is too tied to Wall Street, this report gives the Obama administration a genuine opportunity to show people which side he is on. While the deficit debate has huge long-term policy and short-term political consequences, the stakes on the Fed report and the mortgage/swipe fee issues flowing out of it will be monumentally important both to the economic and political situation.

Then there is the tax-cut issue. It sounds like Obama and congressional leaders from both parties had a friendly get-together yesterday, and warm bipartisan talk of compromise is in the air. I'm glad everyone is feeling so good about each other, but the devil is always in those pesky details -- or in this case, big stuff that is a lot more than details. If the compromise on the Democrats' part ends up looking like capitulation, because the "details" all favor the Republicans, that is a huge problem politically. Obama can't afford to be seen as weak from the start of his new relationship with the Republicans in Congress.

There is one final issue that is far from the headlines with all this other stuff going on, but it matters a huge amount for the future of this presidency, and that is the new chair and deputy for the National Economic Council. If we get a couple more Rubin clones in those positions, it means that any hope of bringing fresh new economic ideas to the team are fading. I really hope Obama understands how important it is to bring those new ideas, and a sense of political balance, to his economic team.

Progressives, and those who care about the president fighting for the middle class, will get a lot of signals in the next couple of weeks about which path he is going to choose to try and recover politically. Let's hope he doesn't choose the Washington centrist path, which almost ends up stiffing the middle class and Obama's political base at the same time. If he does that, it will be a very long two years, which I fear will likely end in Republican victory. But if Obama shows strength, and shows that his number one concern is to fight for the middle class, he can come back strong. We will have a lot better sense by the end of the year which path he chooses.