The Price of Politics (15 page)

Obama was jotting notes as he talked. A speechwriter and aides also took down what he said.

“I want to say this idea that we can’t get our deficit down without brutalizing Medicaid, it’s a dark view of America,” he said. He wanted that idea in the speech.

The Ryan view is that “we can’t afford to invest in our infrastructure.” In mid-March Obama had visited Brazil, Chile and El Salvador. “Can you believe in South America, they’re doing this stuff?” He had met with heads of state and they said, “The main thing in our country is to build up our infrastructure.” And these were the conservative leaders, he said acidly.

Obama was getting fired up as he worked through what to say and how to say it. He wanted a $4 trillion deficit plan too, but the cuts were too severe. The progressive and liberal base would be deeply distressed.

Sperling suggested an old trick from the Clinton years: Stick with the $4 trillion—that was easy to understand—but instead of projecting it over the traditional 10 years, do it over 12. No one would really notice. Few would do the math. By stretching the plan out and loading most of the cuts into its final years, the early cuts were substantially smaller.

As the draft was being polished, Obama recognized that he had gone past an opening offer to his final one. He had negotiated with himself and was presenting a compromise. His Blue Dog had risen; under this framework, there would be pain for all. When he announced the plan, he realized, he couldn’t describe it as a starting point for discussions. The framework was, simply, “where we have to be.”

He had been absent from the public debate for some time. It was now time to let the world, and the Republicans, know where he stood. “I’m not splitting the difference on Medicaid,” he said. He had gone as far as he was going to go. The speech was ready.

I
n the White House congressional relations office, preparations were under way for the president’s speech, scheduled for April 13, at George Washington University. A junior staffer noticed that Alan Simpson and Erskine Bowles, the co-chairs of the president’s fiscal commission, were invited, and suggested in an email that the other members of the fiscal commission should be too.

Including the seven who didn’t vote for it?

Well, someone said, that would be the polite thing to do.

Done. Do the polite thing.

So Ryan, Camp and Hensarling—three Simpson-Bowles no votes—received invitations to Obama’s speech.

Aha! Ryan reasoned, Obama is going to pull a Clinton-type compromise. He was going to “triangulate,” meaning he’d take ideas from both sides and devise what he thought would be a higher order or “third way.” Well, that was pretty much to the good, Ryan thought.

When he learned that Simpson and Bowles were invited, along with all the commission members, he thought, “Obama’s going to endorse Simpson-Bowles!” Maybe some health care entitlement and Medicare reforms could be devised. “We can get an agreement,” he thought.

So, on April 13, Ryan, Camp and Hensarling piled into Hensarling’s Jeep Cherokee for the trip across town to George Washington University.

• • •

At 10:40 a.m., Obama gathered the eight top congressional leaders from both the House and Senate in the Cabinet Room of the White House to preview his speech.

“I will speak about long-term debt resolution today,” Obama said, noting that the debate over the last few months on the continuing resolution had been just a “warm-up.” Not being totally frank, he added, “I feel good about how the negotiations proceeded.”

The president was going to urge repeal of the Bush tax cuts for the wealthy when they expired at the end of the next year, and he would not support Ryan’s proposals for Medicare change. Revenue and Medicare were going to be areas of contention. When Congress returned from its upcoming recess, they would have “a very short runway.”

Obama said he wanted the leaders to work toward a package that identified $4 trillion in savings—similar in size to the Bowles-Simpson plan. He wanted them to take a balanced approach, which would include increased tax revenue. “For us to do nothing on revenues is not a balanced approach.

“I’m calling on Joe Biden to lead a working group of House and Senate members from both parties. I’m asking everyone to work seriously to come to an agreement.”

Geithner reminded them that the federal government would run out of money in just over a month. He placed the date at May 16, but repeated what he had said in congressional testimony the previous week: He had financial tools that could push the drop-dead date out a further six to eight weeks, possibly to July 8. So the length of the runway was not clear. “We can’t get too close to the brink,” he said. “It will be too hard to undo the damage.”

It was a small window in which to act, Boehner agreed. “We need more revenue,” he added, contradicting his party’s line that excessive spending, not too little revenue, was the problem. Then he seemed to
catch himself and steered back to orthodoxy—“but we can get them through economic growth.”

Boehner’s claim relied on so-called dynamic scoring of the federal budget. The idea was that if the economy grew, people would make more money and pay more taxes. It seemed logical. The problem, however, was that the Congressional Budget Office could not calculate hypothetical revenue and accordingly would not count it in the official budget score. Even Congress’s own Joint Committee on Taxation gave limited credit for expected economic growth.

Harry Reid was exasperated. “We have all these theoretical plans,” he said, “but we need to figure out how to get this done.” They had a lot of work ahead. “I don’t know how we get from here to there,” he said with dreariness in his voice.

Biden turned to process, suggesting that each side appoint four people each from the House and Senate. He believed that each side would want someone from leadership as well as representatives of the Budget, Finance (Ways and Means in the House), and Appropriations committees. That would be a total of 16.

“Sixteen seems like too big of a group,” McConnell said.

Pelosi, to no one’s surprise, said she favored tax hikes for the wealthy, and recommended a budget developed by Chris Van Hollen, the senior Democrat on the House Budget Committee.

Obama said they could streamline or reduce the Biden group if necessary.

“Politics should stop on the debt limit,” said Senator Dick Durbin, the No. 2 in the Democratic Senate majority. To the president he said, “I disagree with you on Defense.” They should be able to find another $500 billion to cut over 10 years.

“I join the speaker,” Cantor said. “We don’t want to default on the debt.” He projected a penetrating gaze from behind his glasses. They needed to decide what parts of the budget were open to negotiation. Referring to the Republicans in the House, he said, “I, we as a conference, won’t raise taxes.”

It was a direct challenge to a main tenet of Obama’s proposal—that taxes should go up on the wealthy. But to Cantor, the consummate
vote counter, it was also a simple statement of the facts. The new Republican majority had dozens of Tea Party adherents who not only would never vote to raise taxes, but were on the record saying they wouldn’t raise the debt limit. Virtually all the House Republicans saw spending cuts as the path to long-term resolution of the deficit. Obama didn’t have the votes to raise taxes.

At first, Obama avoided answering Cantor’s comment and shifted to what he said was a “very good point” on the need to define exactly what would be on the negotiating table. Each side, he said, would “have to give a little bit” to show the markets they were serious. Then he returned to the revenue issue. “You have all said we can’t deal with revenues.” That was “a thing that we can’t give on too.”

The president stated what everyone knew: Revenues and Medicare would be “the central areas of disagreement.” Maybe a down payment could be made, “with a little pain for everyone.

“Give Ryan credit. There is a choice; we can’t have everything and not pay for it.”

Steny Hoyer, now the House Democratic whip, suggested they should shoot for solving this in the next month—by June 8, not July 8. “The more we hold the debt limit hostage, the worse off we are.”

“We can’t play chicken with the debt limit,” Obama agreed. But, he added, “We can’t ask either side to swallow something that is fundamentally irreconcilable with their beliefs.”

Biden laid out his theory of the case: “Find the sweet spot on what we can get done and leave something to be resolved in the next election.” You get some, we get some.

Geithner expressed his concern. “We can’t have a ‘Countdown to Default’ on every TV station.”

The president made a final point. These talks would be serious. “Whoever is at the table has to be able to speak for you.”

• • •

A few hours later, Obama headed half a mile down Pennsylvania Avenue to deliver his speech at George Washington University. Sperling
was mingling with the crowd when someone waved at him. Who is that tall man who waved at me? he wondered as he put on his glasses.

It was Ryan. And his two Republican cronies. None of the three had voted for Simpson-Bowles. How had they been invited? And this was the day the president was taking off the gloves. Sperling hurried back to Daley with the warning, and Daley sprinted backstage to get to the president.

Too late.

• • •

Michigan Representative Dave Camp, a tall, spare Midwestern Republican, arrived sharing Ryan’s assumption that Obama was about to endorse Simpson-Bowles. Camp, who had taken over the chairmanship of the House Ways and Means Committee in January, had been surprised when he received the invitation. But if the president was endorsing Simpson-Bowles, Camp figured, it was important for him to be there—to show that he wanted to be part of the process.

He took his reserved seat in the front row, on the end and next to Ryan.

Waiting for the president to be introduced, Camp looked off to the side of the auditorium and spotted Sperling peering toward him and his companions. People were milling around the room, greeting one another.

Why doesn’t he come over and say hello? Camp wondered. He’s looking at us.

• • •

When the president took the podium he was only about 25 feet away from the first row of the audience, but with the spotlights in his eyes, he didn’t spot the three Republican House members. As Ryan took his seat, he glanced over to his left and saw a photographer with a long telephoto lens, on a unipod, aimed straight at him.

That’s weird, Ryan thought. Why me? It was like a photographer at a football game zeroing in on the end zone.

Obama rolled gently into the subject, speaking of American unity. “We’re all connected,” he said, and then he jabbed.
⁸⁸

The plan and vision, he said, “presented and championed by Republicans . . . would lead to a fundamentally different America than the one we’ve known, certainly in my lifetime. In fact, I think it would be fundamentally different than what we’ve known throughout our history.

“A 70 percent cut in clean energy, a 25 percent cut in education,” he said. “These are the kinds of cuts that tell us we can’t afford the America that I believe in and I think
you
believe in.”

Ryan sat stiffly in his chair, refusing to give the man with the telephoto lens a hint of his chagrin. This wasn’t an olive branch. This was not Bill Clinton, not triangulation, not Simpson-Bowles. This was what he called “game-on demagoguery.”

Ryan’s worst suspicions about the president were realized: Obama wasn’t just phoning it in for Pelosi and Reid, he really believed this stuff.

In one of the speech’s harshest sections, Obama attacked not only Ryan’s plan but his entire vision. “It says that 10 years from now, if you’re a 65-year-old who’s eligible for Medicare, you should have to pay nearly $6,400 more than you would today. It says instead of guaranteed health care, you will get a voucher. And if that voucher isn’t worth enough to buy the insurance that’s available in the open marketplace, well, tough luck. You’re on your own. Put simply, it ends Medicare as we know it.”

He warned that “up to 50 million Americans” would lose Medicaid coverage—grandparents, the poor, the middle class, “children with autism or Down syndrome.”

Over the top, Ryan was thinking.

Camp felt the same way. Ryan’s initial plan had included vouchers. But the Ryan budget that was on the verge of passing the House did not. It offered premium support, which meant the amount of government support would rise in response to premium increases—very different from a flat voucher program, he thought.

Camp thought the president was deliberately mischaracterizing the
Republican position. It seemed the sort of attack that would have been more appropriate on the campaign trail.

All these cuts, Obama continued, are offered in exchange for a $1 trillion tax break for the wealthy. “They want to give people like me a $200,000 tax cut that’s paid for by asking 33 seniors each to pay $6,000 more in health costs. That’s not right. And it’s not going to happen as long as I’m president.”

The Republican plan, he said, was “less about reducing the deficit than it is about changing the basic social compact in America.”