The Price of Politics (33 page)

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The consensus among Republican participants was that the White House meetings had run their course and that despite the fact that they had come to no solution there wouldn’t be any more. But Boehner thought he saw an opening. Maybe they were closer than it seemed.

The president is scared, he told Cantor. He sees no way out.

The speaker asked Cantor if he would support one last effort to secure a grand bargain with the president based on serious tax reform.

Cantor had his own worries. Default would be disastrous for the country, but it would also be a political catastrophe for him. Media coverage of the White House meetings had painted him as the obstructionist standing in the way of a deal. Right now, if the country went into default, he could wind up taking a disproportionate share of the blame.

It would be easier to get to 218 votes with a larger package, Cantor conceded. “Yes, let’s give it a try and see what happens.”

The media was focusing on the possibility that the McConnell plan to allow the president to unilaterally raise the debt limit was becoming
the most likely option. Reid had, that day, expressed support and Boehner had told reporters Thursday that the McConnell plan, while “less than optimal,” might look increasingly attractive as the country neared default.
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Reid thought the group was getting nowhere. His idea was that they push it off to a new special bicameral, bipartisan group, a kind of supercommittee. It would be made up of members of Congress and given the job of hashing out the details the high-level leaders were failing to agree on. The supercommittee’s proposal would then be submitted to the Senate and House. The recommendations would have to be taken or rejected in their entirety. It would be an up or down vote on an expedited basis.

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Boehner’s old friend and golfing buddy, Ohio Governor John Kasich, phoned him to offer help on the impasse. Kasich had been House Budget chairman in the 1990s when Gene Sperling was Clinton’s NEC director.

“Hey,” Kasich said, “I know Sperling real well.” They had worked on the 1997 budget deal together. “Can I help?”

Yes, Boehner said. Obama had to get serious. “I’m putting revenue up there, but they’ve got to have real entitlement reform and we have things on paper and it’s kind of like everybody understood and then we get another piece of paper back.” The paper did not reflect the rhetoric.

So Kasich called Sperling at the White House, suggesting that he meet with Boehner. Lew, he said, did not know how to get to yes.

Sperling realized it was not a compliment that they wanted him. It essentially meant, “Lew’s being too tough. Can we get Sperling?” He reported the Kasich call to Daley and Geithner. Both said that the Republicans did not get to decide who they would negotiate with, and a private meeting between Sperling and Boehner did not happen.

I
n the speaker’s suite on the second floor of the Capitol, they felt the pressure of the clock.

“We don’t want to go through another three weeks of Jack Lew nickel-and-diming,” Barry Jackson said, banging his fist on the table, “and moving shit around when we’ve got to draft legislation.”

We’ve got to get this back on the track of regular order, Boehner said. There was Senate process, House process. This had to be reduced to precise legislative language.

Would the White House bite? What was the path?

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On the morning of Friday, July 15, Boehner called the president to follow through on Jackson’s promise that it was not over.

Mr. President, I want to reopen talks on the grand bargain. He had a new offer, some big specifics. He was willing to do $800 billion in revenue over 10 years if there was comprehensive tax reform. “I’m willing to go this far on revenue. But I’ve got to make sure that the entitlement side is big enough to justify it. We need to get real entitlement stuff locked in, [so] nobody can touch it. That’s what makes me comfortable.” Would the president send Geithner and Daley up to the Capitol?

And Mr. President, the speaker added, please don’t send Jack Lew. The budget director talked too much, was uncompromising, and Boehner’s staff did not believe he could get to yes.

In an interview a year later, Boehner still had strong feelings about Lew.
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“Jack Lew said no 999,000 times out of a million,” Boehner said, chuckling. Then he corrected himself, “999,999. It was unbelievable. At one point I told the president, keep him out of here. I don’t need somebody who just knows how to say no.”

For his part, Lew felt he could rest on his record of getting to yes in every other negotiation over 30 years. He believed Boehner was impatient with details, irritated when he asked hard questions and insisted everything be fleshed out. “He wanted to be a speaker who accomplished something great and important,” Lew explained to a White House colleague, “but he wasn’t willing to go back to his caucus and push on taxes.”

The president was not comfortable with Boehner picking his negotiators for him.

“Look,” Boehner said, “we’re serious. We can do this.” They just needed to sit down and hammer it out.

Okay, the president said.

Obama sent Geithner and Daley that evening, and with Cantor by his side, the speaker presented an offer. The tone was very much, “We’ve tried everything else. Let’s try to get this done.” None of them had taken a day off in a month, and everyone was exhausted.

Boehner handed Daley and Geithner a two-page offer.
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The proposal extended the debt limit past the 2012 election, but it did so in two steps: an immediate $1 trillion increase in the debt limit backed up by $1.2 trillion in savings achieved by capping general spending over the next decade. The second step required cuts over 10 years to be negotiated in various programs: $250 billion in federal retirement, agricultural subsidies, higher education and various other programs; $200 billion in non-Medicare health programs; $250 billion in Medicare spending and altering the eligibility age; and additional cuts to Social Security by changing the eligibility age and reducing future cost-of-living increases.

Though couched in budgetary alchemy, the Republicans offered what amounted to $800 billion in new revenue over the next 10 years, to be achieved through major tax reform.

The $800 billion number had been floated before, but here it was in writing. It was a breakthrough. Geithner said the administration would accept it. Daley and he said they were less receptive to the two-step debt ceiling increase. As Boehner knew, the president was adamant on this and had vowed not to agree to a short-term extension. Just ask Eric.

“Go back and take it to the president,” Boehner said. “Think about it, whatever you’ve got to do, and give me your reaction.”

Geithner and Daley replied that clearly it was a serious offer, and agreed to take it to the White House.

Nabors read the two-page offer. The two-step process was unacceptable. The health care cuts were too deep, and why were they throwing Social Security into the mix? It really had nothing to do with the deficit. Doing so was just gratuitous piling on. It was a step backward. So he sat down at his computer to red-line the draft.

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Later that evening, Pelosi and Hoyer, at their request, met with Boehner in his conference room. Pelosi had found out that Boehner and Obama were negotiating again.

If this is going to get through the House, it’s going to need both Republican and Democratic votes, Pelosi said. You’re going to lose some of your guys. Tell us what you need, and we’ll tell you how involved we need to be in the process.

Tell me what you’re willing to do, Boehner said. Would she and the Democrats agree to changes in Medicare that actually impacted beneficiaries?

Pelosi declined to answer. She fished for more details, but Boehner was not forthcoming.

“Why don’t we let staff have a conversation about this?” he suggested, a tactic he often used to extricate himself from unproductive discussions.

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It had been a tough week for the speaker. “There was one point before this,” he later recalled, “in the week before this, the middle of July, when my senior staff came in.
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And one by one described to me how I was risking my speakership continuing this conversation” with the president. “I looked at them. I just listened to all what they had to say, leaned back, and said, ‘So be it.’

“I’m sure most of my staff was scared to death of what the hell I was up to. Fine.

“I’m trying to use the debt limit to leverage the political process to produce more change than it will if left to its own devices. It’s not rocket science. This debt issue bothered me before I got here 22 years ago. And I’m sure as hell going to do something about it. Because I need this job like I need a hole in the head. And I don’t think what the president understood or some others understood is that I didn’t really care.” If he lost the speakership, he said, he would be comfortable.

S
unday morning, July 17, Boehner, Cantor and their senior staff entered a Secret Service building, and walked through a tunnel to the White House for a 10 a.m. meeting in Daley’s office. The White House had two offerings. The first was fresh pastries from the nearby Corner Bakery. The second was a four-page counteroffer. Nabors had finished his changes to the proposal presented in Boehner’s office on Friday night.
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We appreciate the offer you made on Friday, Daley began. The White House viewed it as serious and constructive. He then turned the discussion over to Geithner.

The two-step debt limit approval process was not something the White House could live with, Geithner said. The debt limit negotiations were already having a negative effect on the financial markets. Why would they want to set it up so that the country would have to go through this again? “The president is just not bending on this issue,” he said.

“We have to get this passed and out of politics,” Daley said.

Barry Jackson chuckled to himself. This was about the president’s reelection. It seemed to be Obama’s only marker: How can I do this to my political benefit?

They went through the White House’s counteroffer, beginning
with caps on general spending. This time, Jack Lew was in the room. Boehner and he immediately started haggling.

The Republicans hadn’t been specific about a total budget number for 2012. Lew wanted $1.047 trillion. Boehner came back with an offer of $1.040 trillion.

The White House agreed to the $1.2 trillion in spending cuts over 10 years, but added a firewall that required that they be split evenly between Defense and other general spending. Republicans resisted. The congressional appropriations committees ought to be allowed to make those spending choices.

Geithner said that the savings from winding down the wars in Iraq and Afghanistan—the Overseas Contingency Operations fund—should be counted in the grand total. He conceded that this wasn’t real savings, but it was a peace dividend and it made the overall total look bigger. “We need to have this because the ratings agencies and markets believe in this stuff.”

Fine, Boehner said. He was past arguing about OCO.

The White House plan offered a level of cuts to other general spending that was comparable to what Boehner had proposed. But the administration plan envisioned plowing a portion of that savings into an extension of unemployment benefits. Boehner agreed to it.

The discussion moved to the debt limit. The White House wanted an immediate increase of $1.6 trillion and a guarantee that an additional $900 billion would be available to the president, subject to McConnell’s plan that would allow Congress to express disapproval without actually preventing the increase.

The increase would be offset by additional spending cuts that would have to be negotiated by Congress, and the White House proposed a trigger mechanism that would automatically cut spending and raise taxes if Congress did not come to an agreement. The trigger was to be designed so that its impact was equally offensive to both parties.

Why is the White House so insistent on a trigger? Boehner asked. Wasn’t the looming federal default trigger enough? If that’s the hammer hanging over us, we’ll find a way to get this done, he said.