The Price of Politics (44 page)

Pelosi and her chief of staff, John Lawrence, also arrived and went to the Oval Office. Obama, Biden and Geithner were there. Krone sat between Lew and Nabors.

“Harry,” the president began, “I hear you have kind of an outline, a framework of something.”

Reid began to lay out the two-step $2.7 trillion debt limit extension, then stopped. He was not a details guy. “Well, let David just tell you what it is,” he said.

So the 44-year-old chief of staff began. It was highly unusual for someone to pass the ball so completely to a staffer. In all his years in Washington, Nabors had never seen a staff person from the Hill so on the hook.

Krone had always been nervous about the White House’s ability to get a deal on the debt ceiling. He didn’t think the Republicans wanted a deal in the first place, and warned everyone to be prepared for failure.

“Okay,” Obama said.

Krone started reading.

“Do you have copies?” Obama asked.

Krone handed them out. The plan included the $1 trillion from OCO as the trigger for the second step. Boehner and McConnell had secretly pledged to honor it, Krone said.

“I don’t trust these guys,” the president said dismissively. “How can I trust their word that they’ll agree to use OCO? I don’t like it.”

Sitting there on the Oval Office couch, Krone either would not or could not conceal his anger.

“Wait a second,” the president said, interrupting someone else who was about to speak. “David has something else. I can tell David has something else to say.” It wasn’t hard to reach this conclusion. Krone was tightly wound.

“Mr. President, I am sorry—with all due respect—that we are in this situation that we’re in, but we got handed this football on Friday night. And I didn’t create this situation. The first thing that baffles me is, from my private sector experience, the first rule that I’ve always been taught is to have a Plan B. And it is really disheartening that you, that this White House did not have a Plan B.”

Several jaws dropped as the Hill staffer blasted the president to his face.

“So I don’t have a lot of options, in the past 36, 48 hours, to put together,” Krone continued. All the leaders agreed on this plan. “So I’m going by what they said. You may not like it. But we are now finding ourselves in a situation where we’re supposed to be the good guys. We’re supposed to be the ones that fend off an economic catastrophe. And what we find ourselves is now, with no deal, we’re going to have to root for the worst possible things to happen in order to prove to the Republicans that you cannot be so callous and let the debt limit expire.

“That is a horrible position that we’re in,” Krone continued. “And so this may not be the perfect deal, but it’s the only deal that we have on the table right now in the situation that we find ourselves.”

Nabors was watching Krone, whom he knew well, during his discussion with the president. Krone was extremely protective of Reid and of the Senate. But Krone’s closeness to Boehner’s chief of staff, Barry Jackson, meant that Krone was speaking through a big megaphone, essentially for the leaders of both the Senate and the House. What Nabors read on Krone’s face seemed genuine. It said, I can’t do any better. This is it. This is the best that we can get out of these guys.

“I understand what you think you’re doing,” the president said. “I’m not going along with that. I’m not doing that. The one thing that we need to bring stability to this economy is not throwing the debt limit increase back into the political arena. I’m not doing that under any circumstances. So if that means that I’m not signing this bill, I’m not signing the bill.”

Krone wasn’t finished. “If we’re not going to come to an agreement on this two-step plan,” he said, “then we’re going to find ourselves saying, gee, hope really bad things happen.” This would prove how immature the Republicans are, and the Democrats would be able to say look at what the Tea Party Republicans have done.

“David,” the president said, “I get what you’re trying to accomplish here. I can’t trust these guys.”

Reid believed he could trust them, although he didn’t say so. He could trust them, he believed, because Boehner and McConnell were more scared of Harry Reid than they were of Barack Obama. And Republicans’ reluctance to expose their secret agreement on OCO would only be another reason for them to make sure the trigger for the supercommittee never went off.

John Lawrence, Pelosi’s chief of staff and a 40-year veteran of the Hill, realized that Krone’s monologue, besides being extraordinary, revealed the extent to which Reid could not be controlled by Obama. Reid was a loose cannon. Though he would probably come
around and succumb to party and White House discipline, at the moment he was flying on his own and jeopardizing a deal at the most delicate time.

• • •

Jack Lew agreed with Reid that the administration should take the counting of OCO more seriously. The Republicans had counted it as savings in the Ryan budget, after all. In this case, however, with verbal promises rather than something in writing, it was not acceptable. “Mr. Leader,” he said to Reid, “we have to know what we are agreeing to. It can’t be ‘subject to.’ It has to be something that we agree to now. It can’t be ‘trust me, we’ll do it later.’ If people aren’t willing to say now what they’re willing to do, there’s reason to doubt that they’ll be able to do it later.”

As presented, the two-step debt limit increase relied on some absurd kind of double-secret promise that OCO would be okay later, but not now. It almost guaranteed another showdown.

Nabors agreed with Lew and told Krone, “If they could do OCO in the future, they can do OCO now.”

Plouffe had an idea. If Boehner was introducing his bill, then Reid should introduce one also. That way the news stories the next day would say both Boehner and Reid were in the game with competing bills.

• • •

After the meeting, Obama made a beeline for Krone. The others, not knowing what might happen, stepped back so the president and Krone could talk, but they still overheard Obama’s words.

“I’m sorry,” Obama said, putting an arm around Krone’s shoulder. “You didn’t deserve that. I know how hard you’re working, and I know we wouldn’t even have a chance without you.”

Obama later suggested to several staff members that he ought to call Krone and apologize.

“David doesn’t get upset,” Nabors said. “Don’t worry about it.”

• • •

Reid and Pelosi left the White House and said nothing to the crowd of reporters who, as
The New York Times
reported, “had been encamped there for the third consecutive weekend, awaiting an agreement.”
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Reid gave Krone a ride back to the Capitol. The majority leader was almost like a father to him.

It was a tough situation, Reid said, and Krone had handled himself well. There was no other path, no other option. “You stood up to him,” Reid said. “He needed to hear it, and nobody was telling him.”

• • •

Asked about the meeting with Reid and Krone, Obama said, “What I said to them is essentially, any short-term deal is not going to be acceptable.
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We can go back to the drawing board, but we’re running out of time. They need to understand we’re not going to do a short-term deal.”

Obama also remembered having a conversation with Reid about a short-term deal, apparently later.

“Harry told me that he had never arrived at an actual deal that would involve a short-term debt ceiling increase. He did say that that was offered to him. I think he was sounding out whether I thought that was the only way to break the impasse. And I told him, ‘You know what? It’s not worth breaking the impasse to do that.’

“There were just practical elements to this. We would have already used up all the discretionary cuts that I thought, in good conscience, we could do. We’re now in a situation where those have been pocketed, and now we’re having a whole new negotiation about arriving at a whole other $1 trillion.”

• • •

After more pressure from Obama, Reid changed course.

Late that night, the majority leader released a $2.7 trillion deficit reduction plan. At least publicly, it looked like he had given in.
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It differed from the plan put together by the congressional leaders in two
key respects. There was a single-step debt limit increase that would last through 2012 because the OCO savings of $1 trillion was counted immediately. No second debt ceiling vote would be needed.

The plan, Reid said publicly, met the two key Republican criteria. “It will include enough spending cuts to meet or exceed the amount of a debt ceiling raise through the end of 2012 and it will not include revenues.”
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These appeared to be big concessions because there was no new revenue or tax increases. But it also contained no Medicare cuts. And OCO was no longer going to be treated as a piece of shit.

Using OCO, Boehner later told me, “Just did not pass the straight-face test.
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I told Harry and Mitch and Jon Kyl and God knows how many others who looked at this, I said, guys, we aren’t going to do any gimmicks here. No gimmicks. I told Harry, we’re not doing gimmicks. Harry must’ve asked me a hundred times whether he could use that money. No. Oh, I know he believes in it. Oh, I know he does. It’s an easy out. It’s the same old Washington kick the can down the road. But he thought when it got down to the end, maybe I’d buy it. But I never did buy it. Reid’s liberals were all over him.”

This was not quite the full story. Boehner had made a secret deal with McConnell, Reid and Pelosi to use the OCO money.

O
n Monday, July 25, at a meeting of the House Republican conference, Boehner floated the congressional proposal, christened the Budget Control Act. It called for the $1.2 trillion in 10-year cuts, and established a supercommittee to come up with what he initially set at another $1.8 trillion in deficit reduction. The plan would increase the debt limit by about $1 trillion right away—the short-term extension Obama loathed—and would allow a second extension of $1.2 trillion only if the committee was successful in identifying the additional $1.8 trillion in cuts.

Boehner asked for support even as he admitted the deal was “not perfect.”

The announcement set the House Republicans on a collision course with Reid’s $2.7 trillion plan, which had been released the night before.

The White House publicly endorsed Reid’s plan.
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“Senator Reid’s plan is a reasonable approach that should receive the support of both parties,” said White House spokesman Jay Carney. Urging House Republicans to adopt the Reid plan, he added, “The ball is in their court.”

On the Senate floor, McConnell said that Reid had gone back on his word. He said the majority leader had given his approval of the congressional
plan over the weekend, and had only turned against it after Obama forced him, an accusation Reid vehemently denied.

• • •

In an interview later, McConnell said that he didn’t think the president wanted a deal.
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“The president chose not to get a deal done,” he claimed. “And the irony of it is, I remember saying this to the president himself, ‘This would actually help you. Because people think you hide under your desk all the time and never do anything tough. And everybody who’s knowledgeable in the country knows that a long-term solution to the entitlement problem is the key to the future of our country. I would remind you, Mr. President, that Ronald Reagan carried 49 out of 50 states the year after he raised the age for Social Security. I’m not asking you to commit political suicide here.’ ”

What did the president say? I asked.

“He just smiled,” McConnell said, adding that he didn’t think that the president could count on Pelosi and Reid. “It would have taken some political courage on his part. But I do know the way this town works, and when a president decides to make a big deal, his party falls in line.” But it was “a failure of presidential leadership. He was not Reagan. He was not Clinton. At a critical moment, when we had a process in place to get solved the single biggest long-term threat to this country . . . It was very disappointing.”

On Monday afternoon, Brendan Buck, part of Boehner’s communications team, got an email from a White House correspondent for one of the major television networks.

The president is asking the networks for broadcast time tonight, it said. You guys need to do the same.

Boehner’s staff quickly got on the phone to the television networks. If the president gets to make his case, we should get to make ours, they argued. The networks agreed.

Boehner was not pleased. Major public speeches were not his preferred forum, but he realized he had to do it.

Kevin Smith, Boehner’s communications director, was worried. Even with time to prepare, delivering a response to a presidential speech was fraught with peril. On the day after the State of the Union address, nobody talks about the person who delivered the rebuttal unless they didn’t do a good job. Boehner had only hours.

• • •

In dueling speeches, Obama and Boehner appealed for public support. Default and credit agency downgrading would have a direct impact on all Americans, Obama said. “Interest rates would skyrocket on credit cards, on mortgages and on car loans, which amounts to a huge tax hike on the American people.
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We would risk sparking a deep economic crisis—this one caused almost entirely by Washington.”