The Price of Politics (26 page)

Boehner called the president.

The big deal isn’t going to come together, the speaker said. I don’t want you to walk into that meeting tomorrow thinking that it is. I’ll be at the meeting, he added, but I think we’re going to have to find some other way to get this done. The gap between us is too great.

Boehner said House Republicans needed to start looking for a Plan B, and would start a second set of negotiations in Congress.

Disappointed, the president tried to talk Boehner out of it. “I still want to make this pitch. I still think we can get there.” He was going to present the big deal as a possibility anyway.

• • •

In an interview, the president recalled that he had been feeling “fairly optimistic” about reaching a deal.
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He had gone to Camp David for part of the weekend, which was where Boehner reached him.

“He calls me and says, you know what? I’m going to have to walk away from this right now. And to his credit, he said, I’m not closing the door to ever doing anything on this, but right now, I’ve just got to pull away from the negotiations. And I spent probably half an hour to 45 minutes trying to persuade him not to leave the negotiations.

“I said, you know what? The country is anxious and it is scared. And we’d just gone through the worst financial crisis since the Great Depression. And if you and I announced a deal, I think that the public would overwhelmingly support it. And despite resistance from both your caucus as well as the Democrats on Capitol Hill, we would win over the American people. Because it would be stark evidence that government can still solve big problems. So my basic pitch was—and I continue to believe this—that if he and I walked out together and said, we have arrived at a deal that is going to reduce our deficit, reduce our debt in a balanced, fair way, that overwhelmingly we could have won the support of the American people.”

Speaking to others in the White House, Obama had wondered if the pullout was just another symptom of Boehner’s inability to control
the Republican conference. Boehner had realized that doing a deal with Obama would put his speakership in jeopardy, and didn’t want to take the risk.

• • •

Nabors, wearing shorts and sneakers, was out enjoying the beautiful summer day when his phone rang.

“We’re going to go public,” Barry Jackson said. “We can’t accept the offer. We’re pulling out.”

“What?” Nabors said. “But I sent you a piece of paper. And we haven’t heard back from you on the piece of paper.”

They had just exchanged one set of overall offers and another set of tax principles.

It was the decision, Jackson said. “Necessity.”

Nabors called the White House and gave Daley the news. Daley ordered the senior staff called back in.

• • •

Gene Sperling’s BlackBerry was ringing, but the NEC chairman, playing tennis, couldn’t hear it.

Eventually, he looked over at the phone and saw there was a message from the White House. Everyone come back, it said. The tone suggested big news—almost an Osama-bin-Laden-is-dead kind of urgency. Get to the chief of staff’s office at once.

Whoa, thought Sperling, immediately starting to rush back. He phoned the White House at once. “What’s this about?”

Boehner’s threatening to pull out.

Oh man, Sperling thought, this thing is accelerating! A threat was a good, even necessary, sign. They were going to cut a deal. It was going to happen. A veteran of the budget, tax and deficit negotiations during the Clinton years, Sperling knew a threat to walk generally preceded serious negotiations. It meant: Time to put your real cards on the table. He was excited as he raced back to the White House.

By the time Sperling arrived in Daley’s office, Nabors was handing out a single sheet of paper with Boehner’s statement:

“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes.
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I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase.”

What’s this? Sperling asked. Is this what they say they’re going to put out? The threat? Clever making it sound so final.

They’ve put this out, Nabors said.

“What do you mean they put it out?” Sperling demanded. “It’s already to the press?”

Yes and yes. The wire services had picked it up a little after 4:30 p.m.

Sperling was stunned. It’s just over? An exchange of paper and no call, no contact, not even a word or a hint about how to get to a deal?

Was it possible that
The Wall Street Journal
had such influence? Was the Boehner-Cantor tension so great that the speaker could not construct a graceful, face-saving exit? Was it so tense that Boehner could not even be seen as negotiating? Or was it that they didn’t have Grover Norquist on board? What was clear was that Boehner had just got blown up. If someone doesn’t come back to the table, they don’t want a yes in any form.

Sperling was baffled. Hundreds of years of the history of negotiations suggested, strongly, that this is not the way you do it. There is discussion, an offer, then a counteroffer, and so forth, round after round. How could you ever get to closing with these people if they wouldn’t even talk? If Boehner wasn’t willing to come back to the table, it meant he didn’t want to hear. God, Sperling said, I sure wouldn’t want to date these people.

Or maybe Boehner knew it was going to blow up in his face, Sperling thought, and he was going back to build support. Where? How? Was it because Boehner seemed to be willing to play with this idea of decoupling the Bush tax cuts, letting them all expire and then only voting for a continuation for the lower brackets? Or had they misread
that? Obama still clung to the idea that Boehner and the Republicans could then technically say they hadn’t raised taxes. They could say they had not done anything but cut taxes again for the middle-and lower-income taxpayers.

What the fuck? Sperling said.

The president’s estimated 25 percent chance of a deal with Boehner now appeared to be zero.

Lew saw it differently. The Boehner offer of $788 or $800 billion was their limit. It was the most they could do and still go back and say “We’re not raising a dollar of new taxes,” he told a White House colleague. “And they had to be able to say that.”

The Boehner announcement of a pullout was a bit abrupt, Lew conceded. However, he said, “I viewed it through the lens of, what does this tell you about where the House Republicans are? And not necessarily where the policy is.”

• • •

Later Sperling questioned Jackson. “Barry, someday when this is over, you’re going to have to explain to me how a negotiation is: Someone gives their first offer, the other side gives their first offer, and you end it with no discussion?”

“It’s not over yet!” Jackson said loudly, wagging his finger.

Jackson knew Boehner’s view was simple: They had no choice but to succeed. “We will not default,” Boehner had said time and time again, both publicly and privately. But they would falter if the debate was about tax increases. The speaker had to shift the debate to the more abstract issue of tax reform. But how, in the cauldron of the moment?

• • •

Boehner’s announcement had caused a separate but related set of headaches for Nabors. The speaker had publicly announced the end of talks that the White House had never publicly acknowledged in the first place.

It wasn’t long after Boehner’s press release that Nabors’s BlackBerry began lighting up with calls from angry Democrats in Congress.

“What talks?” they wanted to know.

• • •

In an interview later, Boehner described his decision to withdraw from discussion of the big deal as a sort of strategic deception.
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“I was trying to push the president,” he said. “I always believed that the big deal was the only way to get there and I still wanted the big deal. But I was trying to make him understand, hey, this isn’t working, and try to rattle him a little bit into getting serious.”

Boehner said he was concerned that they were running out of time to act.

“It’s July. I know how long it takes to move a bill and to write a bill,” he said. “This stuff doesn’t happen overnight. But they don’t have a clue. He doesn’t have a clue and his staff doesn’t have a clue.”

Boehner said the upshot of his conversation with Obama was that “he understood he’d better get serious. I think I’d succeeded in what I was trying to accomplish.”

• • •

Asked about Boehner’s explanation for pulling out, Obama said in an interview, “At this stage, I know what my bottom lines are.
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So I’m not rattled, and I’m never overly optimistic. I just want to solve the problem. So what I say to him is, John, we’ll keep on talking. And let’s see if we can still get something done. Either way, we’re going to have to resolve this debt ceiling situation.”

After speaking with Boehner, he said, “I’m disappointed, because my feeling is we’ve missed an opportunity to resolve this in a way that would have as much upside in the markets and for the economy and world confidence as we ended up having on the downside when it didn’t, when things almost came to the brink.”

O
bama was being subjected, dramatically, to the long, torturous ways of budget negotiations and Washington deal making. There is nothing quite like it. But he also saw his particular responsibilities as president constraining his ability to bargain.

“We have to acknowledge we’re governing,” he told his inner circle. “It’s like King Solomon. We just have to accept we’re the mom who’s not willing to split the baby in half. And we’re not going to have as much leverage.”

To Jack Lew, the president’s analogy was crucial to understanding Obama’s position in the debt limit battle. Obama was saying that, as president, he had to be able to go out into the world and explain what he was doing with the U.S. economy. Unlike some in Congress, he couldn’t pretend that default was an option.

Obama was admitting that he was constrained. He would have to take a worse deal than he would normally accept. The Republicans knew it, and they knew he knew that they knew it. This gave them extraordinary power. So they were pushing their agenda to its outer limits.

The question remained, just how bad a deal was the president willing to consider? And how much could he allow Republicans to push
before defections from the Democratic side scuttled any chance of a deal?

And there was a broader problem, the president had warned them. It was quite possible that some would be willing, consciously or unconsciously, to drive the car off the cliff. There were Democrats who would rather have the political fight than get a deal.

Too many were focusing on who was winning the political exchange of the moment. Yes, Obama said, he would get support for the deal from the business community, the media and the opinion pages. But was that enough? Even at great political cost, he was going to have to be responsible, be the adult.

There was the chance that the economy would go under. If that happened, it would be on his head. The Republicans would bear some responsibility, but the headlines and the history books would record unambiguously that the economy sank during the Obama presidency.

Plouffe had been sitting in on the pre-briefs. There was no more important business. He agreed with the president’s constant assertion, “We can’t default.”

“By stipulating to that,” Plouffe said, “you’ve lost an enormous amount of leverage.” He was worried that the economy was beginning to deteriorate significantly. It couldn’t take much more of a beating. If there was a default, it could take not weeks or months, but years to recover from it. And it would sink Obama’s reelection.

If I get criticized by Democrats, Obama said, for taking a deal I can defend on policy and substance, I’ll have to take it.

Senior staff were painfully aware that the Democrats in Congress had caught the scent of some kind of political victory. Nabors would often hear it: Just let the thing default, and we blame the Republicans.

“We’re actually running this country,” Nabors argued back. “We’re not going to run it into the ground. We have a Constitutional responsibility to solve this problem.”

• • •

In an interview, Obama later recalled using the King Solomon analogy.
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“That’s true. There’s no doubt that the challenge we had here was ultimately I and Tim Geithner were responsible for averting another financial meltdown, two years after we’d just had a financial meltdown. And so my interest in not playing chicken, or seeing any miscalculation here that leads to a default, was profound.

“And there’s one other context to all that, though. By the time you read this quote—by the time I said those words—what’s already becoming apparent is that this new House is not feeling a similar sense of urgency. And you have very prominent members of the House Republicans who are not only prepared to see default, but in some cases are welcoming the prospects of default. Think it would be a good thing, that it would be a tonic to shock the system. So I’m already at this point getting concerned that Boehner may miscalculate and not be able to deliver on his caucus even if we end up striking a deal. And as a consequence, throughout these discussions, I am very concerned about not making Boehner look weak. And I’m understanding of the fact that he, every time he goes into his caucus, has to throw them a bone. And they can’t see this as a victory for me.