WASHINGTON (By Michael Scherer, Time) September 3, 2010 — The Barack Obama that most Hoosiers remember voting for can still be found on YouTube. He stands before a cheering Elkhart high school gymnasium in August 2008, tireless, aspirational, promising a new America of jobs and hope. "We can choose another future," says the newcomer with the funny name. "So I ask you to join me."

Today that view of Obama is harder to find in Indiana. A couple of weeks back and a dozen miles west of Elkhart, hundreds gathered in another school gym — except this time it was for a job fair. With the local unemployment rate above 12% and rising again this summer, about a third of the employer display tables stood empty. Julie Griffin, who voted for Obama in '08, sat down at the room's edge, well dressed and discouraged. After 23 years as a payroll administrator at a local RV plant, she got laid off 18 months ago. "Really, what has he been doing?" she said when I asked about Obama's efforts to help people like her. "I guess I don't know what he is doing."

Across the gym floor, Joe Donnelly, Elkhart's pro-life, pro-gun Democratic Congressman, worked the crowd. He was part of the moderate wave that won Congress for Nancy Pelosi in '06, and he was re-elected with 67% of the vote while campaigning for Obama in '08. The President has since returned to the region three times, but Donnelly is nonetheless fighting for his political life. In a recent television ad, an unflattering photo of Obama and Pelosi flashes while Donnelly condemns "the Washington crowd." This is basically a Democratic campaign slogan now: Don't blame me for Obama and Pelosi. "I'm not one of them," Donnelly told me when I caught up with him. "I'm one of us."

This shift in perception — from Obama as political savior to Obama as creature of Washington — can be seen elsewhere. When Obama arrived in office in January '09, his Gallup approval rating stood at 68%, a high for a newly elected leader not seen since John Kennedy in 1961. Today Obama's job approval has been hovering in the mid-40s, which means that at least 1 in 4 Americans has changed his or her mind. The plunge has been particularly dramatic among independents, whites and those under age 30. With midterm elections just nine weeks off, instead of the generational transformation some Democrats predicted after 2008, the President's party teeters on the brink of a broad setback in November, including the possible loss of both houses of Congress. By a 10-point margin, people say they will vote for Republicans over Democrats in Congress, the largest such gap ever recorded by Gallup.

White House aides explain this change as a largely inevitable reflection of the cycles of history. Midterms are almost always bad for first-term Presidents, and worse in hard times. "The public is rightly frustrated and angry with the economy," says Dan Pfeiffer, Obama's communications director, explaining the White House line. "There is no small tactical shift we could have made at any point that would have solved that problem." In more confiding moments, aides admit that the peak of Obama's popularity may have been inflated, a fleeting result of elation at the prospect of change and national pride in electing the first African-American President. As one White House aide puts it, "It was sort of fake."

But while these explanations may be valid, they are also incomplete. A sense of disappointment, bordering on betrayal, has been growing across the country, especially in moderate states like Indiana, where people now openly say they didn't quite understand the President they voted for in 2008. The fear most often expressed is that Obama is taking the country somewhere they don't want to go. "We bought what he said. He offered a lot of hope," says Fred Ferlic, an Obama voter and orthopedic surgeon in South Bend who has since soured on his choice. Ferlic talks about the messy compromises in health care reform, his sense of an inhospitable business climate and the growth of government spending under Obama. "He's trying to Europeanize us, and the Europeans are going the other way," continues Ferlic, a former Democratic campaign donor who plans to vote Republican this year. "The entire American spirit is being broken."

One explanation for Obama's steep decline is that his presidency rests on what Gallup's Frank Newport calls a "paradox" between Obama and the electorate. In 2008, Newport notes, trust in the federal government was at a historic low, dropping to around 25%, where it still remains. Yet Obama has offered government as the primary solution to most of the nation's woes, calling for big new investments in health care, education, infrastructure and energy. Some voters bucked at the incongruity, repeatedly telling pollsters that even programs that have clearly helped the economy, like the $787 billion stimulus, did no such thing. Meanwhile, the resulting spike in deficits, which has been greatly magnified by tax revenue lost to the economic downturn, has spooked a broad sweep of the country, which simply does not trust Washington to responsibly handle such a massive liability.

The Overreach

Rather than address these concerns as the economic crisis grew, Obama made a conscious choice to go big with government reforms of health care and energy. The bailouts of the auto companies, the rescue of Wall Street and the new regulation of banks and the financial industry only deepened the public's skepticism, especially among independent voters. Rather than dwell on the political problems, the President pushed his team forward, believing, in the words of top adviser David Axelrod, that "ultimately the best politics was to do that which he thought was right."

It wasn't long before deep cracks in Obama's coalition began to appear. This past June, Peter Brodnitz of the Benenson Strategy Group, a firm that also polls for the White House, asked voters which they preferred: "new government investments" or "cutting taxes for business" as the better approach to jump-start job creation. Even among those who voted for Obama, nearly 38% preferred tax cuts. When Brodnitz offered a choice between government spending cuts to reduce the deficit and investments in "research, innovation and new technologies," one-third of Obama voters chose the cuts. The evidence throughout the poll, commissioned by the think tank Third Way, was unmistakable: roughly 1 in 3 of the President's 2008 supporters had serious questions about government spending solutions for the economy. In Nevada, a state Obama won with 55% of the vote, only 29% of likely voters this year think the President's actions have helped the economy, according to a recent poll by Mason-Dixon Polling & Research. "A lot of this was really inevitable, or at least pretty predictable," says Indiana Senator and former governor Evan Bayh, a Democratic expert at getting elected in the Rust Belt. "We have a lot of government activism at a time when skepticism of government efficiency is at an all-time high."

It's not as if the White House didn't see this coming. After a meeting in December 2008 about the severity of the economic crisis, Axelrod pulled Obama aside. He recalls saying, "Enjoy these great poll numbers you have, because two years from now, they are not going to look anything like this." But even as Obama aides were aware of a growing disconnect, it didn't seem to worry their boss. Instead, the ambitious legislative goals usually trumped other priorities. Both in the original stimulus package and then in the health care and energy measures, the White House ceded most of its clout to the liberal lions who controlled the Democratic majorities in the House and Senate. That maneuver helped assure passage of reforms, but it also confirmed some of the worst fears about how Washington works. "I'd rather be a one-term President and do big things than a two-term President and just do small things," he told his team after Republican Scott Brown was elected Senator in liberal Massachusetts and some in the Administration suggested pulling back on health reform.

For Democrats in conservative districts, like Representative Jason Altmire in western Pennsylvania, the President's approach always spelled trouble. "Even though the leaders in Congress understood that a lot of these things are not going to be popular, they were at a point in their careers where they realized that this is what they have been waiting for," says Altmire, who is favored to win this year, in part because he voted against most of the President's agenda, including health reform. "It was true overreach."

For someone who so carefully read the political mood as a candidate, Obama has been unexpectedly passive at moments as President. Whereas other Democrats had hoped to spend the late summer talking about two things — jobs and the unpopularity of many Republican policies — the White House has been distracted by a string of unrelated issues, from immigration reform to a mishandled dismissal of a longtime USDA official to the furor over the proposed Islamic cultural center and mosque near Ground Zero. On Aug. 31, Obama gave a prime-time speech about the partial troop pullout from Iraq, touching on jobs only tangentially, before spending the following day in an intensive effort to restart the Middle East peace process. "It is inconceivable that a team so disciplined during the presidential campaign can't carry a message with the bully pulpit of the White House," says one Democratic strategist working on the midterm elections. "It's politically irresponsible, and Americans have little patience for it."

As his poll numbers fell, Obama responded with his perpetual cool. His appeals to the grass-roots army that he started, through online videos for Organizing for America, took on a formal, emotionless tone. He acted less like an action-oriented President than a Prime Minister overseeing some vast but balky legislative machinery. When challenged about his declining popularity, the President tended to deflect the blame — to the state of the economy, the ferocity of the news cycle and right-wing misinformation campaigns. Aides treated the problem as a communications concern more than a policy matter. They increased his travel schedule to key states and limited his prime-time addresses. They struggled to explain large, unpopular legislative packages to the American people, who opposed the measures despite supporting many of the component parts, like extending health insurance to patients with pre-existing conditions or preventing teacher layoffs. "When you package it all together, it can be too big to succeed as a public-relations matter," says Axelrod.

Instead of shifting course, Obama spoke dismissively about Republican efforts to play "short-term politics." He continued the near weekly visits to new green energy manufacturing plants, repeating promises of an economic rebirth that remains, for many, months or years away. And he missed opportunities to strengthen his connections with his supporters: local political capos complained privately that Obama had a tendency to touch down in their backyards, give a speech and scoot after less than an hour. By the end of the summer, the disconnect had grown so severe that only 1 in 3 Americans in a Pew poll accurately identified him as a Christian, down from 51% in October 2008. At the same time, the base voters Obama had energized so well in '08 went back into hibernation. They were nowhere to be found in the '09 gubernatorial elections in New Jersey and Virginia, tracking instead with pre-Obama historical patterns. While liberals attacked him from the left on cable television, many of his core supporters weren't paying attention. In a rich irony, many of the same groups Obama turned out for the first time in record numbers had suffered the most from the recession and were the most likely to tune politics out. "One of the challenges on the Democratic side is, it's been very hard for voters to make connections between what is happening in Washington and what is happening in their lives," says Anna Greenberg, a Democratic pollster.

Can He Rebalance?

At the White House, advisers take comfort in the fact that at this point in their presidencies, both Ronald Reagan and Bill Clinton scored slightly lower approval ratings than Obama. And the dominant analogy for the past few months has focused not on 1994, when Clinton lost a Democratic Congress in a huge Republican wave, but on '82, when Reagan lost just 26 seats in the House. Like Obama, Reagan was facing rising discontent at the midterm, driven by huge unemployment numbers that peaked at 10.8% at year's end. But as the economy rebounded, Reagan's governing philosophy, "Stay the course," was vindicated. He won re-election by an enormous margin.

Outside the White House, only a few of the President's Democratic allies take much solace in this history, in part because the current economic slump appears far more lasting than the one Reagan faced. Most experts from both parties say Obama will have to rebalance his politics in 2011 to be re-elected in '12. That's partly because of the growing belief that the Republicans will win the House in November and, if their stars align, have a good shot at taking the Senate as well. Elsewhere, in state houses and in governors' races, Republicans are poised for a broad comeback. Regardless of the exact outcome, it is clear that Obama's brief window of one-party rule has closed. That outcome alone may vindicate Obama's decision to make the massive reforms while he still had the votes. It will never be known for certain just how much a more centrist legislative strategy would have improved the Democrats' midterm outlook.

But two years is the equivalent of multiple lifetimes in politics, and there are signs that Obama is already pivoting away from plans to engineer massive reforms in energy policy, global-warming response and immigration law to less-stirring, more-popular challenges like reducing the deficit and reforming taxation and entitlements. What little margins Obama does have to push major reforms through are sure to shrink away in the coming months. "I think the next couple of years, we've got to focus on debt and deficits," Obama told NBC News after his summer vacation. "We've got to focus on making sure that we make the recovery stronger. And a lot of that is attracting private investment."

Back in Indiana, the evidence of Obama's political failure is particularly glaring. During his early, heady days in office, the President decided to make Elkhart a personal cause. A once thriving manufacturing center of 50,000 on the Michigan-Indiana border, famous for its musical instruments and recreational vehicles, the Elkhart region saw the steepest jump in unemployment of any metropolitan area in the nation during the economic crisis. That helped Obama win Donnelly's district by 9 points, nearly George W. Bush's margin in 2004, and Obama returned to Elkhart just weeks after taking office. "I promised you back then that if elected President, I would do everything I could to help this community recover," he announced. "And that's why I've come back today."

Since then, he has been back twice more, once to speak at Notre Dame and once to herald a new electric-vehicle plant that would be built with federal support. In the southern end of the district, thousands of jobs at parts plants were saved when Obama decided to bail out the auto companies.

Yet all of Obama's personal and financial appeals have been swamped by the depth of the recession and have had little visible effect. Donnelly, who flies home every weekend to work in his district, felt obliged to run against Obama to save his job. And his Republican opponent, Jackie Walorski, says she is often approached by Obama voters who want to vent. "This has burned people," she says. "Their words, not mine: 'Betrayed by the health care vote.' 'What are they thinking when it comes to spending?' 'Broken promises when it comes to jobs.' " At one recent Walorski house party, held at dusk beside a cornfield, two attendees, Matthew and Frances Napieralski, identified themselves as former supporters of the President. "He's not what I voted for," said Matthew, who runs a plastic-injection-molding shop in town. "It's a shame that they led us to believe one thing," said Frances, "and then everything changes."

For now, Obama's aides hope that the controversial reforms in health care and financial rules will produce benefits felt by voters, if not by November 2010, then two years later. That would vindicate the President's vision of government as a solution and not just a problem. Even in Indiana, the disappointment is matched by a real yearning for a leader who can make a difference. "I think he's trying," says Griffin, the laid-off payroll administrator who said she didn't know what Obama had done for her. "Nobody can turn it around overnight."