Last night on the Daily Show Jon Stewart asked the President whether some of the frustration of his supporters could be traced to a seeming promise of the Obama campaign to transform the system, rather than working within the system, in order to bring substantive policies [...] My sense is that most Presidents have worked "within the system" in order to bring about change, and that the cooperation of industry (or at least some part of industry) is necessary for reform to succeed. Is this correct? Have there been any instances in American history where a President has "transformed the system" in order to bring about reform?I'd say that FDR's original New Deal, especially the NRA, was pretty system-transforming while it lasted. I'd also say that mobilization was system-transforming, in both the Wilson and FDR cases. All of those, though, happened by incorporating industry.
Outside of that...well, there's lots and lots of reform, over time, although often it takes place at the other end of Pennsylvania Avenue. The reforms of the House of Representatives from 1959-1975 into a creature of the majority party are terribly important, but don't really get associated with a particular president, although Kennedy and Johnson were involved. The reforms in the way the presidency is organized, which mainly took place during the Truman and Eisenhower years, are also really important.
But of course those sorts of things aren't what the question is really about. To that I'd say: the American system is set up so that large interests usually have an opportunity to weigh in on major policy shifts that affect them. That doesn't mean they're always bought off; sometimes, they choose to fight and win, and sometimes they choose to fight and they lose.
I haven't seen the Stewart interview yet, but the obvious thought experiment is to imagine Hillary Clinton as president, without the transformative rhetoric. Had she carried out the exact same policies and policy style (which, by the way, I think is fairly likely in most cases), would liberals have the same reaction? Mostly, I think so -- and remember, a large part of that is that most liberals are overall mostly happy with Obama. I do think that there's something to the idea that Obama primed liberals to look for transformational political reform that he then could not deliver. I think, though, that most liberal disappointment with Obama (to the extent it exists, which again I'd caution is pretty minimal according to polling) stems from specific policy outcomes that liberals don't like (DADT so far, some economic policies, civil liberties issues, climate, public option). We could argue about whether that disappointment is misplaced...I think in many cases it is, while in some it is not...but regardless, I don't think that those complaints go away if his campaign rhetoric had been different.