Barack Obama has filled his White House with all sorts of academic prodigies and propeller-heads, a crew more comfortable with the mortarboard than the flag pin. They are, as a group, masters of the art of the optimal, of creating great solutions on paper if not always in reality.

And so every now and then, sobering discussions occur behind closed doors, like the one in mid-April when a collection of Cabinet secretaries, former academics and political advisers gathered to discuss the Administration’s blueprint for a global-warming bill.

The experts called for a significant increase in the cost of carbon as a way to reduce Americans’ energy consumption — just as Obama had promised in the campaign.

Then the White House political minds at the table jumped in: Democrats in Congress were not going to just go along without some concessions.

"If you figure you need the Democratic votes to pass, you have to give the coal-state people something they can take home,” said a participant at the meeting, recounting the course of the conversation. Buying votes with concessions "would not be something that you would draw up in a case study at the Kennedy School of Harvard.

So it has gone in the first four months of the new Administration. Despite Obama’s early legislative victories — including passage of the largest stimulus bill in history — the new President has learned how limited his power can be, even when the Democrats control Congress.

While much of the political chatter continues to focus on the waning Republican opposition, Obama’s real challenge comes from within his own party.

With increasing frequency, Democrats have been scratching away at the promises Obama made during his campaign, watering down reforms, removing possible revenue sources and protecting key constituencies.

"I am under no illusions that suddenly I’m going to have a rubber-stamp Senate,” Obama said during his most recent prime-time press conference.

"I’ve got Democrats who don’t agree with me on everything, and that’s how it should be.” What he did not say aloud, but many whisper in Congress, is that those Democrats could determine — or undermine — his legislative legacy.

The Case for Arm-Twisting

In the meantime, small defections have become routine. Farm-state Democrats have blocked Obama’s plans to cut agricultural subsidies, while others have scoffed at his proposed $17 billion in spending cuts, which target pet projects.

Democrats on the Senate Finance Committee have shot down Obama’s plans to increase taxes on some charitable donations to fund health-care expansion.

Though under scrutiny for his close ties to lobbyists at the center of a corruption investigation, Pennsylvania Representative John Murtha, a Defense appropriator, pushed to add $9.3 billion to a war-funding supplemental bill, with line items like nearly $2.3 billion for C-17 cargo planes that the Pentagon calls unnecessary.

At the end of April, a dozen Senate Democrats helped hand Obama his first major legislative defeat by voting down one of the President’s big campaign pledges, a plan to allow bankruptcy courts to restructure the mortgages of strapped homeowners.

So infuriated was Illinois Senator Dick Durbin, one of Obama’s close allies, that he accused his colleagues of bending to the will of bank lobbyists. "They frankly own the place,” he told a Chicago radio station. The White House, by contrast, made no public comment on the defeat.

This silence speaks to the heart of the President’s legislative strategy. For every former professor working somewhere in the White House, Obama has at least as many former congressional hands who understand the egos, dead ends and shortcuts on Capitol Hill.

Whatever the eggheads may theorize, the Hill veterans have crafted an approach that neatly parallels his background as a community organizer and rarely seeks to dictate the legislative details, even if it means he does not always control the outcome.

"Every presidency learns from preceding presidencies. There are things you want to do different,” explains Obama’s chief of staff, Rahm Emanuel, who left a post in the House leadership to go to the White House.

Emanuel had worked for President Bill Clinton, who bungled his early legislative agenda by trying to force-feed legislation to Congress — and then being slow to compromise.

Obama is emerging, on the other hand, as a President who convenes the players, points them down the road and then lets the chips fall where they may.

Obama regularly gathers members of Congress at the White House to give them broad encouragement, not marching orders.

On May 5, he invited Democrats from the House Energy and Commerce Committee to a meeting at the White House, but he had no specific list of demands.

He asked only for a bill that could get industry support, deal with regional concerns and provide market certainty for future investment. Behind the scenes, his aides all but backed off from any arm-twisting.

"They are not at the negotiating table,” said Representative Rick Boucher, a Democrat from Virginia’s coal country and a lead drafter of the bill.

The hands-off approach has costs. What has begun to emerge from the House committee is a set of carbon-reduction goals and funding mechanisms that falls short of the President’s plans — and still might not pass muster with moderate Democrats in the Senate.

Members such as Indiana’s Evan Bayh, North Dakota’s Byron Dorgan and Nebraska’s Ben Nelson have already expressed skepticism about the proposal to cap carbon emissions and create a market for pollution permits.

Nelson also opposes Democratic proposals for a public health plan and the elimination of subsidies to private-sector student-loan firms, one of which is based in his state.

To deal with expected Democratic defections and ongoing GOP opposition, Obama has sought the ability to pass major parts of his health and education plan with a bare majority of Senate support.

But his main weapon is an avowed willingness to compromise on the details in order to garner enough votes, a strategy that has won him some applause. "He is not a my-way-or-the-highway type of leader,” says Nelson.

At some point, though, Obama may be forced to draw some lines in the sand with his party, especially as small defections turn into big price tags.

President George W. Bush’s legacy was tarred by his unwillingness to challenge the GOP leadership on its flagrant spending sprees.

Similarly, Obama’s more passive approach with Congress runs the risk of achieving broad victories that lack the policy punch he has promised — a health-care system, for instance, that covers just a fraction of the uninsured while making only a marginal dent in costs as the deficit threatens to explode.

"The principle we have is success,” Emanuel likes to say. The question, of course, is just what exactly success will mean.

TIME