The Price of Politics (48 page)

Is everybody okay with that? McConnell asked. You need to talk to Boehner about that.

Biden checked. Boehner was okay. Though it was still a big issue with his Tea Partiers, he had a three-part deal that could pass the Senate, and a balanced budget amendment was not part of it.

Nabors, who was closely monitoring Biden’s McConnell whispering, thought that it was instructive to watch McConnell. The minority leader loved to be the one doing the negotiating. “But McConnell never wanted to have his hand on the knife,” Nabors remarked. “A whole series of books could be written about McConnell.”

Biden and McConnell also agreed that none of the cuts in the $1.2 trillion, 10-year cap on general spending would begin in the next 18 months. They would not hit until January 2013. Again, both sides would postpone any real, immediate cuts to federal spending.

• • •

In Congress, they had been working on reestablishing regular order. “Let’s set the 302s for this year and next,” Jackson said. The 302(a) and 302(b) are the legislative allocations for general spending. He was particularly interested in how much would go to Defense in the budgets for the next two years.

Soon Boehner’s staff and Jack Lew got in a wrestling match over the Defense numbers. The White House wanted less Defense spending in those two years. It also wanted a so-called firewall between Defense and other budget categories. By stipulating that a specific portion of cuts come from each side of the firewall, this ensured that Defense absorbed what Democrats considered a fair share of the cuts.

Too much, Boehner decided. Not enough for national security, and the House Republicans would never accept such limits on Defense, though it probably only amounted to between $2 and $4 billion. He passed word to McConnell. It fell to Rohit Kumar to call Jack Lew.

“This is bullshit!” Lew said, exploding. “We’re not bending.”

Nabors, who had known Lew for more than 15 years, had never seen his friend so exercised. “Jack just went nuts,” Nabors said. Everyone was exhausted. Nabors found himself yelling at his colleagues in the West Wing, or screaming at an imaginary Boehner or McConnell. “Screw you!” he’d bellow. “You’re willing to throw the global economy overboard? We’re really going to fight over what amounts to $2 billion? Then fine, let’s have this fight.”

Nabors was now focusing on the doomsday scenario, and he went to his computer to check on the opening of the Asian markets. Nearly everyone in the West Wing was staring at one computer screen or another, looking at Asia. The markets opened slightly higher and remained in positive territory throughout the day.

When Asia didn’t tank, Nabors said, “All right, we’ve got a couple of hours.
²⁴⁵
We’ve got a little bit of time to make this work.” If the markets had dropped severely, he didn’t know what the president would have done.

Bruce Reed, Biden’s chief of staff, thought it felt like a modernday
Cuban Missile Crisis. But instead of the fate of the planet being at stake, it was the fate of the economy. It was harrowing. Reed, a Rhodes Scholar, former chief domestic adviser to President Clinton, and executive director of the Simpson-Bowles fiscal commission, was soft-spoken and known for his calmness. But he wasn’t calm this day. They didn’t dare tell anyone on the outside how bad it looked, he concluded, but it looked pretty bad. He felt they were staring into the abyss with no idea what the outcome might be.

But worse, he had received word from McConnell’s inner circle that the Senate minority leader thought it might be to his and the Republicans’ long-term advantage to rattle the financial markets. That was why they only wanted a short-term debt limit extension. A shock to the markets, according to this reasoning, would strengthen their hand in the second debt limit negotiation.

Again, it fell to the vice president to speak with McConnell.

The Defense firewall was critical to Pelosi, Biden told McConnell and Rohit Kumar in a call from the West Wing.

“There’s got to be some way to resolve the firewall,” Kumar said.

“We can’t yield,” Biden said. “It’s like you and revenue.”

In a second call, McConnell told the vice president, “I didn’t realize this firewall issue was there, frankly.”

“Look,” Biden said, “we’ve given up on revenues, we’ve given on dollar for dollar. All the major things we’re interested in we’ve given up. So basically you’ve pushed us to the limit.”

Biden had gone into the negotiations assuming that the smarter, wiser, cooler heads among the Republicans would not want to do this twice. Now, however, he had to consider that he was being manipulated for just that purpose.

• • •

Boehner was facing his own rebellion. The deal would mean real Defense cuts for the next two years. There were no abstractions. People cared about what was going to happen that year. They were not going to live with a specific number coming out of Defense only.

Buck McKeon, California Republican and chairman of the House Armed Services Committee, was raising hell. “You can’t do this to Defense,” McKeon was saying, and he threatened to bring dozens with him to vote against the deal.

In the afternoon, Boehner finally called the president.

I’m not going to sign off on new lower Defense numbers for 2012 and 2013, he said. I need my Defense guys to vote for this, and I’m going to lose their votes.

Plouffe, who was in the room, was stunned.

“So, we’re going to default essentially because a bunch of members of Congress wanted to look after the Defense lobby?” he said. “That is not a defensible place for them to be. God love them, we’ll go to town over this.”

Plouffe was thinking about how they could frame this in the message wars, but at the same time, he was apprehensive. “So it’s all going to fall apart over this?”

“This is insanity!” Geithner could be heard saying as he went out into the hallway outside the Oval Office. These guys are willing to burn the house down over this? He was appalled.

Obama told the others that he had run out of road. The Republicans really wanted to have this argument? No, he said. This was principle. Defense had to play its role, in both the sequester, which had been agreed upon, and the proposed Pentagon cuts for the next two years.

The president called Dan Pfeiffer to the Oval Office. “We think Boehner is not going to take the deal,” the president told his communications director. “We’re going to need a statement about their rejection.”

Pfeiffer went back to his office and pounded out a draft saying that Boehner had walked away again. It was very harsh. He went over the draft with Daley, Plouffe, Lew and Nabors, who all offered suggestions and edits. Everyone was worked up—angry, disbelieving, stunned.

It felt more and more like the Cuban Missile Crisis, only this time, the bombs were going to go off.

The president told Biden to call Boehner.

“The firewall to the Democrats is religion,” Biden said to the speaker in a call at about 5:22 p.m. “You can’t pass a deal without it.”

“On the firewall my Defense guys take a huge hit,” Boehner said.

This is absolute political reality, Biden said. “The president and I are being as flexible as we can be without being broken.”

“Oh, come on, Joe,” Boehner said. “It’s all going to come down to plus or minus 2 percent? The president is getting his money” to raise the debt ceiling.

Biden called McConnell.

“There is absolutely no chance of changing a word in the firewall,” the vice president said.

McConnell wanted to discuss it further.

No, Biden said.

The vice president then spoke with the president and gave his recommendation. He thought the Republicans could be bluffing. “I’d take it to the brink,” he said.

“We can’t move on the firewall,” the president said. “Now we just wait.”

• • •

Boehner was still insisting on smaller Defense cuts.

“We can’t give there,” Biden finally shouted at Boehner. Then he pulled out his trump card. He said he had authority from the president to call off the deal and go to default if the Republicans did not agree on the Defense proposal. The president was now inflexible, Biden claimed. “This has to be the deal.”

No, Boehner said. He had decided. His voice came through the speakerphone in a high-pitched whine. To Biden’s staff he sounded trapped and unsure.

“You’re going to bring the world economy to its knees over this?” Biden shouted.

Boehner said again that he had decided, and that was it.

They hung up.

Was this a bluff? Boehner and his staff immediately wondered. How could the president allow default?

Boehner did not want default under any circumstances. If it happened, the administration would try to blame the Republicans, and they might succeed.

Biden sounded sincere when he claimed that the president had been pushed to his limit. What was Biden up to? And what about the president? Had he really been pushed to the end of the road?

• • •

In Boehner’s office, they knew they had to find a way out of the Defense spending impasse. The agreement was at a pretty high level of abstraction and it had to be reduced to specifics in writing. Brett Loper, the policy technician, said there was a different way to divide up the spending pie. They could define Defense spending more broadly as “security” so it included money for the State Department, Veterans Affairs and the Department of Homeland Security. If they arranged it right, he figured, they could end up having the other departments absorb most or all of the belt-tightening. Defense itself might even get a little bump in spending.

Loper wanted Boehner’s office to stay one step removed from the process, so in a meeting with Boehner, McConnell and their key staff, he suggested that McConnell should recommend to Biden that instead of placing the firewall between Defense and non-Defense spending, it be placed between security and nonsecurity spending.

McConnell had Rohit Kumar call Bruce Reed.

We need to figure out a way to get out of this stalemate, Kumar said. What if instead of considering Defense alone they used a broader “security” category that included State, Veterans Affairs and Homeland Security?

Reed liked the idea. The administration had used the “security/nonsecurity” definition in its own budget.

McConnell signed off quickly. The question was Boehner.

“I can’t get it done,” McConnell told Biden. “You’ve got to talk to Boehner directly.”

• • •

Meanwhile, House and Senate Democrats met. Though there were some who were satisfied, many were intensely chagrined at being forced into another high-stakes game of chicken. They were operating with partial knowledge while the United States sat on the edge of default. They were the lawmakers and they were going to be partners in the final breakdown, igniting God knew what kind of reaction in the national and global financial markets.

Reid, ever suspicious of the minority leader, said he thought McConnell was getting Boehner to stall for time so they could make new demands. The president should give McConnell and Boehner a firm deadline, demand a final answer on deal/no deal.

A sense of alarm engulfed them. It was possible this was getting away from them. Reid and Pelosi called the president.

Was McConnell stalling? they asked. What about a deadline?

No, the president said, he didn’t want to do that. “Let the Republicans work it out.”

The meeting at the Capitol finally broke up with this lingering question: If the Democrats voted a new agreement down, would they be better off, or worse?

It was going to be a tough sell to the House Democrats, Pelosi knew, and she wanted Lew to meet with them on Monday if there was a deal. Jack was going to have to be out front.

• • •

McConnell then spoke with Boehner, who was in his office watching the Greenbrier Classic golf tournament on television. It was time to approach the president.

In the early evening, Boehner called the president.

Would you agree to redefining the firewall as security/nonsecurity? the speaker wanted to know, presenting it as his own idea. Obama said he would get back to him.

Jack Lew examined the security/nonsecurity proposal. Since it was in the administration’s own budget, it was a progressive concept. It had come out of the international development community seeking more funding for poor people and for AIDS programs in Africa.
The thinking was that they would get more if it was labeled part of the security operations of the U.S. government. Now the question was whether the State Department foreign assistance programs would be more vulnerable to cuts competing with Defense or other federal domestic education and health programs. Foreign assistance was important to Secretary of State Clinton, Lew’s former boss. He went to the Oval Office.

“Mr. President,” he said, “before we commit to this, I just want to make sure that the numbers that I’ve done on the back of an envelope have some relationship to the real numbers.” It was a clever idea, but he wasn’t sure if they should be for it or against it. Just because someone offered you your own idea didn’t mean you should immediately and uncritically accept it.

“We’re not going to dick around with this?” Geithner asked impatiently. “It’ll be okay. We can manage this.”

But the president agreed with Lew. “Step back,” he said. “Let’s think about it.” He wanted skepticism. Defense cuts were taking the place of revenue in some perverse way. It was what the Republicans were giving, and the president wanted to make sure they couldn’t wiggle out. Making Defense pay its share was critical for the Democrats. No last-minute tricks.

The State Department foreign assistance programs could be eviscerated, Lew worried. It took him more than an hour to check on what precisely had been in the administration’s previous proposal, but he finally told the president it looked okay.

The president then phoned Pelosi to say that the Republicans wanted to change the Defense firewall to security/nonsecurity. Reid had signed off, he said, and Boehner was about to start briefing his House Republicans. It was the last thing holding up a deal.

Pelosi checked. No one liked it, but the House Democrats could live with it.