The Price of Politics (39 page)

“We have two paths here. We can do the $800 billion and you’ll get fewer Democratic votes. And I don’t know exactly how many we’ll get. Or we could go up an extra $400 billion, in which case you’re going to get a lot more Democratic votes. And it will have a much easier time clearing the Senate if we can hang on to enough Republicans.”

Told that some of his senior staff in the room during the call believed the two paths were $400 billion in more revenue or smaller entitlement cuts, the president initially said he didn’t believe that was accurate but, “It may be that that is in the context of the fact that we still don’t have a deal yet. So keep in mind, for example, Boehner’s still asking for $125 billion or something in Medicaid cuts. So I may have said to him—which I would have been saying anyway—we can’t go up to $125 billion. I might, if we have [revenue at] $1.2 trillion, might be able to do a little bit more and still hang on to Democratic votes. You see what I mean? So you’ve got a fluid situation in which we have not yet determined what kind of entitlement cuts are on the table. And we’re in a situation in which the revenue has not yet been settled.

“You have at this point a set of variables. Variable number one is, how much revenue? Variable number two is, how significant are the entitlement changes? And variable number three is, how many votes can Boehner provide? And we’re trying to see how this Rubik’s cube gets put together. So that’s the context of the conversation that I had with Boehner. I want to be very emphatic here: At no point did I say, John, take it or leave it. At no point did I say, John, I’ve got to have $400 billion more or we don’t have a deal. What I said to him was, you have to tell me how many votes do you plan to put on this thing? Because I’ve got to then go back to Nancy and Harry and find out from them what it is that they think they can do. Because there’s no point in us going out there if it turns out that we don’t have the votes.”

• • •

Jack Lew, who was among those in the room during the call, heard the president’s end of the conversation and gave this account to a White
House colleague: “I remember Thursday extremely well, actually. The president called the speaker and said, ‘We can go one of two ways. We could have a bigger package with more revenue or we could have a smaller package with less revenue. What we can’t do is we can’t be in the place we’re at—the high end of our tolerance on entitlement cuts and at the low end of what is acceptable on revenue.”

Lew summed up: “After the Gang of Six came out, our ability to get Democratic votes was just going to be different based on that. We still could get Democratic votes. We go higher on revenue, we’ll be able to do more on long-term entitlement reform. If not, we’ll still do changes. We’ll still do things that are hard. But it’s not going to have as much. And they were kind of path A and path B. I can go with either one.”

Plouffe’s version was still different. The president’s political adviser believed the conversation focused on votes, with the president telling Boehner, “If you need a decent number of Democratic votes, we may need, for revenue, in the $400 billion range.”

And the president, in Plouffe’s version, was emphatic. He told Boehner: “If you can’t do that, then we’re just going to have to look at the entitlements and we’ll have to obviously keep most of what’s in there, but we might have to dial some of that back a little bit. . . . The president was very clear: If you can’t do more revenue, then we’re just going to have to look at the entire package.”

Plouffe realized that no matter how the president had phrased it, he had offered “a door Boehner could walk through to shut this thing down. There’s no doubt it was a lifeline for Boehner to say, ah, this is my reason to break this thing off—more revenue.” Maybe it was a risk that had to be taken.

The Gang of Six was the stated reason, but it was also an excuse to try to get terms more favorable to the Democrats. The president had started the negotiations with one sword, the decoupling of the high-end Bush tax cuts, but had just handed another one to the speaker.

• • •

The president then met with Nabors.

“Rob,” he asked, “what do you think our votes look like?”

In the House, Nabors said, instead of the 120 to 130 votes he had previously hoped they could get, it was probably down to 75 to 90. But if the president said he needed 120 votes, Pelosi would go into full operations mode. She would get the bodies; she would figure out a way to get to 120.

Nabors thought she was shrewder and tougher than anybody really knew. She would kick ass. She was an old-school leader. Pelosi wanted lots of hands—bloody ones if necessary—on the knife. “She is absolutely nails,” he had concluded.

The president was in operations mode himself, acting like the chief whip. What about the potential Republican votes?

Because Boehner was apparently not doing a vote count, that was a bit of a mystery, Nabors replied.

How about the Senate? the president inquired.

“I think the Senate is going to be hard,” Nabors said. “Absent any muscle, we’d be in the low 20s probably. But with some muscle, we’re probably in the mid to high 30s to low 40s. As a result,” Nabors went on, “we’re going to need 15, 20 Republicans to show up to get us to 60. I don’t think we should put what we think we can get on the table. We need to be prepared to go to McConnell and say—and overachieve—‘Mitch, are you prepared to put up 30 people? Because we can put up 30 people.’ ” Then if we got 40 to 45 Democrats, that would be fantastic. Added value, he explained.

Afterward, Obama said to Sperling and Nabors that he thought he had a deal. Get Reid and Pelosi in here.

• • •

Asked in an interview whether the Gang of Six releasing their plan had made it more difficult for Democrats to line up votes, Obama recalled, “I think that’s kind of the buzz around Washington.
¹⁹⁷
And look, there’s no doubt that there’s a school of thought among some progressives that we shouldn’t be even having this negotiation at all. And at this point . . . the whole legend that somehow we got outmaneuvered in the continuing resolution has taken root in the blogosphere among some folks.”

Was it correct that Nabors felt, prior to the Gang of Six, that you could get 120 House Democrats?

The president disagreed. “The view was that if Boehner was willing to settle for 120, 130 votes, that we would work to make up the difference. I’m not sure we got up to 120. I didn’t think that he would ever go for something where the Democratic minority in the House was supplying most of the votes for this thing. I didn’t think that his caucus would abide by that. But I did think that we could get to a point where, if the deal had enough revenue, you could picture Boehner getting 120 or 130 votes, us supplying 90, or maybe even up to 100, and we could get something done.” The magic number, of course, would be 218 total.

P
elosi was facing a rebellion among House Democrats. As just one example, Representative Corrine Brown from Jacksonville had said plainly and openly that Obama could kiss Florida good-bye if he messed with Social Security and Medicare.

Pelosi and Reid arrived at the White House and met with the president, Lew and Nabors in the Oval Office.

“I’ve got to do this,” the president said. As part of a 10-year package he was offering Boehner over $1 trillion in domestic and Defense cuts plus another $650 billion in entitlement cuts—Medicare, Medicaid and Social Security. The minimal goal was $800 billion in revenue through tax reform. He also explained that he was trying to get $400 billion more on the revenue side, which would take it up to $1.2 trillion through tax reform. “I don’t know if I’ll be able to get it. If I can’t, I’ll try to make it more acceptable to us a bit.”

“You guys went off and negotiated a deal without me,” Pelosi said, echoing what Reid had said earlier in the day, “and you expect me to bring people along?” She rattled off a list of House Democrats, from the liberal Sandy Levin to Steny Hoyer, the whip, who would “hate” the deal.

“Why, Mr. President,” she said, “would you give these guys anything for $800 billion in revenue? You’re going to get that anyway.”
She was referring to the prospect of ending the high-end tax cuts for the rich, which the president had insisted to her and to others that he would not extend. Time and time again he had told her, “Never again.” He would not allow an extension of those Bush tax cuts as he had in 2010.

Putting Social Security cost-of-living adjustments on the table would take away an issue that had defined the difference between the two parties, she said.

“If we do anything on Social Security,” the president said, “we’re not using any of that money for deficit reduction. We’re putting the money back into the system.” This seemed contrary to the offer Nabors had sent to Boehner two days earlier, which had included “benefit changes.”

Considering Medicare beneficiary cuts, she said, would allow the Republicans to get well on the Ryan budget. They would claim that the Democrats also wanted to cut health insurance for the elderly, again removing the distinction between the parties.

We think we can get all the Medicare savings from the doctor and hospital providers, Obama said, and not from the elderly beneficiaries.

The idea of raising the eligibility age for Medicare was a surprise, she said.

It would not change the standard of living for the elderly in a meaningful way, the president argued, and the change could give them 10 years to deal with Medicare’s skyrocketing costs. He acknowledged that none of this was designed to fire up the party base.

What about Medicaid? she inquired.

It was under other health care savings, Obama replied, and the savings would be a very small component. “We think we can get it from sort of reducing improper payments.

“You need to understand how close we are to being downgraded,” the president said, “and what the downgrade would mean, not just to us but in the context of the world economy.”

“You have to understand how hard this is,” Pelosi said.

“Most of this is in the range of conversations that we’ve all been talking about all along,” the president said. “And at the end of the day,
this gets us where we need to go. We all believe that we need to put the budget back on track.”

Reid sat there stone-faced and hardly said a word.

“I totally disagree with this,” Pelosi said. “I don’t think you should do this.” They were giving up way, way too much. But on the other hand, she said, “You are our president, and we are in a time of crisis.” If he decided he had to do it, she would make sure he had every opportunity to present his case.

The president said he was expecting to hear back from Boehner. “When I get John on the phone,” he asked, “can I tell John we can produce Democratic votes?”

“I’ll see,” Pelosi replied.

Reid would not commit and was grumpy. “You guys went off and talked to Boehner again,” he said, shaking his head in disbelief. The administration had been screwed many times before. What did they think would happen this time? Reid was also not going to go along with a full 18-month extension of the debt limit, as the president was insisting. He wanted the Senate to retain some leverage.

After Reid and Pelosi left, Nabors turned to the president.

“I’m nervous,” he said. In an understatement, he added, “I don’t know where this is going.”

Lew concurred.

“Nancy has always been there for us,” the president said, and he was confident she would be again.

Though her words fell far short of a personal commitment, Nabors said he agreed. Her “I’ll see” meant she was just trying to figure out how to get the votes. She would be all-in.

But they agreed they still had a Harry Reid problem.

• • •

The president later recalled the meeting with Reid and Pelosi this way:
¹⁹⁸

“Well, I lay out for them what we’re talking about. And then I say to them, with great specificity, I say to them, I don’t know yet what Boehner is going to do. He is going to come back to me and tell me what his preferred path is. I need to get a sense from you, if he does not
go along with additional revenue, are you guys still prepared to put up votes and work with me to go ahead and do a deal with $800 billion as opposed to 1.2 trillion? And I asked Nancy, I asked Harry, and I asked each of these folks. And I say to them, look, we’re at white-knuckle time here, so you guys have to be straight with me. If you don’t think you can do it, you let me know.”

He agreed that Pelosi worried that cuts to Medicare beneficiaries could remove an important distinction between Democrats and Republicans.

“Well, I think generally speaking, all the Democrats felt that for Democrats to join with Republicans in anything that could be painted as a Medicare cut when there was a huge difference between Democratic and Republican positions on Medicare generally was bad politics. And I think Nancy felt that. And in fairness, I think substantively, they also felt—legitimately so—that these are very vulnerable populations.

“Now, what I told them is I had talked to my Medicare and Medicaid experts. And I was not willing to do anything that I thought was going to actually affect the care of vulnerable populations, and I felt confident that the package we had come up with would preserve and protect Medicare and Medicaid as the social safety net that we all care so deeply about. But I also told them it’s an untenable position to say, we’re not going to do anything on Medicare and Medicaid when that’s one of the biggest drivers of our budget deficit.