The Price of Politics (28 page)

There was a sickening silence. This was the elephant in the room. They were not addressing the long-term problem.

“I believe the larger deal still is achievable and preferable and is the right thing to do,” the president said. “In the meantime, I will listen to the ideas about a smaller deal. $2 trillion, it’s a lot of pain, it’s tough votes, and we have not solved the problem. We’re going to reconvene for an hour or two tomorrow. We’ll walk through what we are talking about. We should all be explicit. The speaker has always said it’s easier to do a big deal. In the meantime, I don’t want anyone trying to move legislation to make points.”

Reid said he wanted to bring a couple of other members of Congress to the meetings.

“If we do . . .” Obama replied, his voice trailing off. “No,” he added politely, “we’re not going to expand. Then everyone else is going to bring their people.” They would then have to move to a bigger room, he added.

“If we have to offset the revenue,” Biden summed up, “then we can’t get above $2 trillion.”

With $2 trillion in cuts, they could add an equivalent amount to the debt ceiling. “How long would $2 trillion get us?” Obama asked.

Geithner said, “$2.4 trillion would get us to February of 2013. $2.1 trillion debt limit increase would get us to December of 2012.” That would be a month after the election.

If they didn’t get to that $2 trillion, they could be bumping up against the debt ceiling before the election, requiring another nightmare negotiation at the worst possible political moment.

Afterward, Reid approached Cantor. “I don’t know you that well,” the Senate majority leader said to the House majority leader. “I appreciate your honesty.”

They didn’t agree but, perhaps meaning other than himself, Reid said, “You were the one person in the room who said what you actually thought.”

• • •

In Boehner’s office, his staff couldn’t believe the president’s demand that congressional leaders meet daily at the White House until an agreement was forged.

Boehner had already concluded that the whole thing was a pointless dog-and-pony show. Was the president really naive enough to think that he could get all those members in a room and come to an agreement on a deal? That never happened.

Just the fact that Obama thought this might be productive was a sign to Boehner’s people that the president simply didn’t understand how Congress worked and didn’t know how to negotiate. Boehner said he hated going down to the White House to listen to what amounted to presidential lectures.

In McConnell’s office, the feeling was the same. Rohit Kumar, the minority leader’s top policy adviser, thought the White House meetings showed that the White House didn’t understand how legislative deals were made.

These agreements aren’t struck by the president and congressional leaders meeting face-to-face, Kumar said. They were done by people like him. You have guidance from the leaders. You have principles you have to adhere to. You’re given a set of red lines you can’t cross.

Watching his staff prepare for a series of White House meetings frustrated Kumar. It was a waste of a dwindling resource: time.

D
uring the eight years he spent working in the Bush White House, Barry Jackson believed he had developed understanding and respect for the office of the presidency.

“You do not be disrespectful of the office of the president,” he told the staff in Boehner’s office. “You just don’t. It’s the worst job in the world. They don’t need people kicking them in the shins for the heck of it.”

But in the speaker’s office, respect for the office didn’t extend to the man who occupied it.

Jackson believed that Obama lacked courage, was a poor negotiator, and was completely out of his element in dealing with Congress.

When Boehner returned from some of his first private meetings with Obama, he and Jackson discussed what they saw as the president’s psychological motivations.

In one discussion of entitlement reforms, Boehner reported that Obama said, “John, I make $2 million. You can’t expect me to ask somebody to take a cut in their benefits if I’m not willing to take a cut.”

It’s almost like he’s ashamed that he’s been blessed and he’s made money, they concluded. It’s as if he’s guilty of his success.

“Oh, my God,” they imagined the president saying, “I’m so embarrassed
that I’ve done well, and I need to make sure that I do my self-flagellation.”

On top of that, Boehner felt that the White House underestimated him. He had negotiated No Child Left Behind with Ted Kennedy in 2001. He negotiated the Pension Protection Act of 2006. He was a guy who knew how to do big deals and how to work with Democrats.

The White House didn’t respect him. They dismissed him.

• • •

At 11:15 a.m. on July 11, the president appeared in the White House Briefing Room for a long press conference to explain what was going on with the negotiations. It was classic Obama. You had to listen very carefully and read the transcript several times to spot the inconsistencies.

“The things I will not consider are a 30-day or a 60-day or a 90-day or a 180-day temporary stopgap resolution of the problem,” he said.
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He would not bend. But later he said the problem was the inflexibility of the Republicans. “I do not see a path to a deal if they don’t budge, period. I mean, if the basic proposition is, ‘It’s my way or the highway,’ then we’re probably not going to get something done.”

Later, the president issued his equivalent of a “my way or the highway” declaration. “I will not accept a deal in which I am asked to do nothing. In fact, I’m able to keep hundreds of thousands of dollars in additional income that I don’t need, while a parent out there who is struggling to send their kid to college suddenly finds that they’ve got a couple thousand dollars less in grants or student loans.”

At the end he temporized, “So this is not a right or left, conservative/liberal situation.”

But everyone knew that was precisely what it was, try as the president might to smooth the edges of the partisan divide.

Later that morning at the Capitol, Boehner held a press conference in response, saying, “The American people will not accept—and the House cannot pass—a bill that raises taxes on job creators.”
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He reiterated his requirement that any agreement include spending cuts larger than the increase in the debt limit.

“This is the message we will take, again, to the White House today, and hope that we can work our way through this.”

• • •

“We’re going to start by hearing from the Republicans on a possible trimmed-down version, kind of the medium-sized deal,” Obama began that day’s meeting in the Cabinet Room. “I’m in listen mode.”

Cantor handed out copies of a six-page PowerPoint presentation.
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The Republican majority leader claimed there was agreement on some $233 billion in cuts to various programs such as federal civilian retirement plans ($36 billion), military retirement plans ($11 billion), postal reform ($11 to $26 billion). Attacking waste and fraud could save up to $40 billion and reducing agricultural subsidies could net $31 billion. Various other cuts or savings, such as requiring increased co-payments for the retired military personnel covered by the TRICARE health care plan, would save $17 billion.

There was at least another $30 billion in higher education and food stamp cuts. They were highlighted in yellow on his PowerPoint because the Democrats had not agreed, he said.

“Well,” Obama said, “my ranges are a bit different. When we look at civilian retirement and military, you have bigger ranges. Some say that should be more like $10 billion, not $36 billion. Let’s set aside higher education and food stamps. If we do that, then the range is more like $200 to $280 or $290.” It looked like a good start, but not bold. “So I look at this and say we could pocket around $200 billion without much controversy.”

Lew mentioned undergraduate student loans, higher education and undergraduate food stamps.

“Maybe there’s something in there we could do,” Obama said.

On the food stamp program, Cantor said, “High error rates have been associated with the program. Since the feds fund the program but the states administer it, there’s not a lot of incentive to control for errors.” So policies and reforms could be put in place to yield some significant savings.

Durbin thought Cantor was being hypocritical. The only fraud Cantor
saw involved poor people. But when he spoke, Durbin tempered his language, simply reminding Cantor that plenty of fraud existed in other programs too. He specifically noted “gross abuse” in federal payments to for-profit schools.

On food stamps, Obama said if there was error, “then let’s go after it. If it makes it more complicated to get into the system, then I’m opposed to it.

“So on military and civilian retirement,” he continued, “it looks like there’s a wide separation. We would propose some additional savings out of aviation [fees] and program integrity that’s higher than what you said.”

Lew noted that the administration anticipated getting no more than $2 billion out of food stamp error rates. The Republicans saw 10 times that, up to $20 billion, but that included some $4 billion from duplicative job training programs.

On job training, Lew said, “I’m a proponent of consolidation . . . so I’m happy to have that conversation.”

• • •

In Cantor’s health care slides, the depth of the division was evident. There was roughly $17 billion in agreement on a dozen small-scale Medicare and Medicaid cuts, plus supposed agreement on $50 billion in savings from home health care and skilled nursing facilities payments. He identified another $38 billion in savings, but according to his deal, these would not happen until after 2019—eight years hence. The two sides disagreed on more than $208 billion in health care cuts.

Cantor had taken about 10 minutes. To experienced hands, it sounded increasingly like a congressional subcommittee debate.

“It’s a reasonably fair presentation,” the president said in response. “There are some ranges in dispute, particularly home health. We’re more like 30 and you have 50. On [Medicare] bad debt, there’s no philosophical objection here, but we have a difference in ranges. On beneficiaries, we have a difference.”

Biden said the savings on Medicaid might only be $50 billion instead
of the $100 billion on Cantor’s chart. Some of the other numbers were also too high. “So we look at this as that we’re closer to $200 billion” than to Cantor’s $334 billion.

“Listen,” Cantor said, “this is a package that can get 218 votes.”

“Well,” Hoyer declared, “you’re not going to get any votes on our side without revenue.”

Pelosi echoed Hoyer. “This is really hard to sell without revenue.”

“Time is of the essence,” Reid said. “I feel like we’re talking past each other. Let’s face it, the Republicans won’t agree to the grand deal. The Democrats in the Senate won’t do this middle-of-the-road with Medicare and Medicaid, so the middle deal is gone. Then the only option is some small package.”

It was an accurate, if bleak, summation of where they were.

“Hold on!” Obama insisted, putting the brakes on Reid. “Let’s just complete this exercise.”

Reid was unrepentant. “We can do something for two years,” he replied. “We’ll create a commission. Equal Republicans and Democrats. Only members of Congress.” The committee would present a deficit reduction package and both the House and Senate would give the unamended package an up or down vote.

Cantor noted that the House-passed budget saved $1.7 trillion in general spending and the administration had proposed saving $813 billion on domestic and Defense. Splitting the difference would be a total savings over 10 years of $1.2 trillion. “We had talked about $1.1 in the Biden. We can clearly get to $1.2, $1.3.”

“Partially correct,” Durbin said, “but we have to have equal cuts to security and nonsecurity.” This was the firewall.

“We never agreed to firewalls,” said Cantor. Republicans did not want equal cuts to come from Defense spending.

“In the absence of firewalls,” Obama said, “we wouldn’t even agree to $1 trillion.”

“The Appropriations Committee is the place for these discussions to choose between Defense and non-Defense,” Cantor said, “security and nonsecurity.”

“If we did that,” the president said, “we’d have a shutdown on every bill. We’d end up playing three-dimensional chess. Discretionary [general spending] is the least of our problems. We can have that debate later.”

Boehner seemed to agree. Simply put, the White House and the Democrats were going to be able to sell a deal to their rank and file because of Defense cuts. Republicans would sell the same deal on non-Defense cuts. “Any kind of firewall creates problems on both sides,” Boehner said. “Why are we creating problems for ourselves today?” In other words, they could fight it out later.

McConnell urged them to “lock down numbers” for the next two fiscal years.

Lew said they had to address the short-funding of the Pell college grants, a Democratic and Obama favorite aimed at assisting college students, because the annual cost was now more than $20 billion.