The Center Holds: Obama and His Enemies

by Jonathan Alter

  Boehner had run into trouble in his career, most conspicuously by passing out checks from the tobacco lobby on the House floor in 1995, for which he apologized. But he had also cut big deals with Democrats Ted Kennedy (on “No Child Left Behind”) and Max Baucus (on taxes) and knew his way around a hard-knuckled negotiation. Obama, on the other hand, had almost never truly negotiated with Republicans, not even in Springfield, where he wasn’t in the leadership of the Illinois State Senate. All the glowing profiles of his time as editor of the Harvard Law Review negotiating skillfully with conservatives there weren’t relevant to operating in Washington, where intellectuals had little influence on the process. He also had what Boehner considered an irritating habit of lecturing him on the merits of various proposals and how the country would react to them, as if his knowledge of substance and political logic would somehow change the speaker’s mind.

  Obama liked Boehner more than the speaker liked the president, or at least said he did. “Boehner reminds me of all the people I served with in Springfield. He’s like the head of the local Kiwanis Club that gets elected to the state legislature,” Obama told his aides, drawing a bit too heavily on clichés about country club Republicans. In Illinois, he said, he knew and respected such legislators, played poker and golf with some, and he believed Boehner was serious about getting something done along the median strip of American politics. This all struck Boehner as patronizing.

  Republicans snickered, but Obama genuinely saw himself as a centrist. He had long believed that government was too big and inefficient, that regulations could stifle innovation (which was why in 2009 he appointed his old friend Cass Sunstein to head the Office of Information and Regulatory Affairs at OMB, where he eliminated hundreds of them), and that always said the same thing: was unBhuge deficits were unsustainable—all core conservative positions that he felt pragmatic liberals should embrace. He strongly favored trimming discretionary spending, as long as the cuts didn’t bite until after the economy recovered. No one had to talk him into supporting a pay freeze on federal workers or auditing federal agencies to find programs to cut. Long after the passage of Obamacare, he complained privately that he had tried repeatedly to put something in the bill reforming the medical malpractice system—something real that would hurt the trial lawyers who bolstered Democrats. But Republicans, who had championed such reform for years, wouldn’t even talk about it. The president figured that it was a cynical play; if they solved the malpractice problem, the GOP would no longer be able to raise money from the doctors who suffered under onerous malpractice premiums.

  The same went for public pensions. Months before Scott Walker was elected governor of Wisconsin, Obama told aides that pensions had become “ridiculous—they’re bankrupting the states.” He knew this from personal experience in the 1990s in Springfield. Like other freshman state senators, he had been assigned to a boring committee, in his case, the one overseeing pensions. Some Illinois state employees could retire at age fifty with 90 percent pay, “magic money,” the president called it. He hoped to reform the federal pension system and reviewed federal sick day rules that gave federal employees twice or three times as many sick days (often taken as vacation) as in the private sector. With Virginia a swing state in 2012 (tens of thousands of federal employees lived in northern Virginia), pension reform struck his political team as a loser. But Obama wanted this big cost-driver on the table along with reforms in TRICARE, the health care system for the uniformed military and their families. He was a pragmatist, dammit, not a paleoliberal preserved in amber.

  Spring training for the big negotiations came in March and April over the CR, the continuing resolution, a jerry-rigged parliamentary mechanism by which Congress votes itself enough money to keep the government open. The CR related only to the executive branch’s day-to-day operating expenses, not Washington’s credit-worthiness or entitlement obligations. By April Congress was working on its seventh continuing resolution in six months, a sign of dysfunction under the House leadership of both Pelosi and Boehner. But Joe Biden wasn’t alone in thinking that all of the haggling over the CR—complete with threats of a government shutdown—was a good thing. “Let’s have a showdown now and get it out of our system,” Biden told his aides. He didn’t have to remind them that the last time the government briefly shut its doors, in 1995, President Clinton came out a big winner over Speaker Gingrich.

  This thinking would later be filed under “Be careful what you wish for.” The 2011 confrontation over the CR ended up being an eerie bit of foreshadowing of an important 2012 campaign theme and a harbinger of trouble between the White House and Capitol Hill.

  The climax came over federal support for Planned Parenthood, which provided health services far beyond contraception to millions of women who often could obtain such services nowhere else. In a one-on-one visit in the Oval Office just before the CR deadline on April 8, Boehner told Obama he must cut Planned Parenthood, which had become a punching bag for the right. Obama was adamant that funding for the program must stay in, and Boehner agreed. But after Obama and Boehner shook hands on the CR, Barry Jackson, Boehner’s top negotiator, tried to pull a fast one. At 3 a.m., three hours after the deadline for shutting the government, Jackson told partner, Russ Schriefer, speech earlyJack Lew, director of OMB and a White House negotiator, that Planned Parenthood funding was gone.

  Later that morning Lew went to the president and said he didn’t know what to do: The other side was acting as if the negotiations were still going on. Obama promptly called Boehner and said, “I don’t get it. The American people are depending on the idea that when we shake hands, it’s done.” Planned Parenthood funding stayed, and the threat of a government shutdown ended that day, at least for a while.

  In announcing the CR deal, Boehner bragged that he had cut $38.5 billion from the 2010 budget in exchange for keeping the government open. This seemed like a genuine shrinkage of government after two years of hundreds of billions in new spending. But a few weeks later, the Congressional Budget Office reported that after savings from winding down the wars in Iraq and Afghanistan were added to other previously scheduled reductions, the true cuts in discretionary spending amounted to less than $1 billion. (In typical Washington fashion, the size of the cuts depended entirely on which budget baseline was used.) This was shocking news inside the House majority caucus. It turned out that Jack Lew, who knew more about the budget than anyone in Washington, had taken Barry Jackson to the cleaners.

  When House Republicans found out that their speaker had been outfoxed—that the CR deal cut tens of billions less than they originally thought and preserved a bunch of social programs they despised—they were furious. Many freshmen had arrived in Washington early in the year with a demand that the budget be balanced right away, by $1 trillion in immediate cuts. They never acknowledged that this was not only logistically impossible but sure to thrust the economy into a depression. Now Tea Party activists were being forced to settle for less than 0.1 percent of the cuts they had rashly promised constituents. All of it was “a big nothingburger,” as one member of the GOP leadership admitted privately.

  With the CR deal behind him, the risk-taking president was looking ahead toward a historic Grand Bargain that might bring trouble with liberal Democrats but would secure his legacy for fiscal prudence and all but sew up his reelection. This was hubristic. After barely avoiding a government shutdown, Obama figured he had already had his 1995-style precarious moment. But he neglected a key historical fact: The Gingrich Republicans in 1995 owed their majority (and in many cases their specific seats) to Gingrich, who could whip them into line, even if it meant conceding to Clinton. This time it was the reverse: The Tea Party was whipping its own leadership. The freshmen and many more senior members not only didn’t owe Boehner their seats, but they only reluctantly accepted him as speaker. No one knew it yet, but that was a recipe for paralysis.

  IN APRIL 2011, shortly after the near-shutdown, Paul Ryan released his budget, the most radical policy b
lueprint to come out of official Washington in a generation. It simultaneously shredded the social safety net, swept away the country’s seed corn of investments in the future, and adopted discredited supply-side economics. Even Gingrich called it “radical right-wing social engineering.” More than any other document or speech, the Ryan budget represented the immense stakes of the 2012 election.

  In this first version, Ryan privatized Medicare entirely for those under fifty-five. (Later he offered an option to remain the twentieth century, month in the existing system.) He block-granted Medicaid to the states, which would effectively mean nearly a trillion dollars less in health care for the poor. And of course, he repealed Obamacare, which, combined with the Medicaid cuts, would have sent the number of uninsured Americans well north of 60 million and left hospital emergency rooms—the least cost-effective form of health care—swamped.

  The proposed Ryan cuts in discretionary spending were devastating, with everything from medical and scientific research to college loans and food stamps facing cuts of 30, 40, even 50 percent. In total, nearly two-thirds of the Ryan cuts came from programs directed at the poor. How to find $80 billion by cutting federal pensions, $29 billion by eliminating government supports for home mortgages, $47 billion from transportation projects? If all of the pain was in the service of fiscal responsibility, the reaction of policy experts might have been different. But unlike Simpson-Bowles, this was not a deficit hawk budget. It contained $2 trillion in new high-end tax cuts, which, even with Ryan’s own optimistic assumptions of economic growth, meant the budget would not be balanced for several decades.

  Ryan had charmed editorial writers into praising his honesty in grappling with entitlements, which had been known for years as the “third rail” of American politics. And it was true that many Democrats were cowardly in failing to acknowledge that the growth in Medicare was unsustainable. Having been burned by his strong support for George W. Bush’s privatization plan, Ryan left the largest entitlement program, Social Security, untouched. Even so, his budget was worthy of the woman Ryan had described in 2005 as his biggest inspiration in public life: Ayn Rand, author of libertarian novels like Atlas Shrugged.

  Ryan’s budget caught the White House by surprise. In his State of the Union in January, Obama had proposed what his aides liked to call “an Ike budget.” Responding to the midterms, he had offered to join with Republicans in tackling entitlements. As usual, the president hadn’t offered specifics, but he believed it was in his political interest to get some kind of long-term deficit reduction deal. “Then Paul Ryan gave us the finger,” recalled Austan Goolsbee, chairman of the Council of Economic Advisers.

  So Obama, in his own way, gave it back. In a speech at George Washington University, the president said Ryan’s proposed budget wasn’t “serious” and “would lead to a fundamentally different America than the one we’ve known.” These were strong words at the time. The White House knew that elites would give Ryan credit for bravery, but average Americans wouldn’t approve of what Obama called “changing the basic social compact in America.” The White House wasn’t aware that Ryan would be in the audience at GW, which gave the news of his presence—and his anger over the president’s criticism—extra coverage. Many Democrats feared that Obama had erred in elevating a rival as smart as Ryan, and Obama himself later regretted embarrassing him. But at the time, the president felt that calling Ryan out sharpened the historic choice facing the country.

  FOR THE PRESIDENT, a Grand Bargain on the deficit was about more than reelection. He felt at the time that it was critical to a successful second term. He told his senior staff that without a debt reduction blueprint he wouldn’t have the “credibility” to push infrastructure and other “_ was unBprogressive stuff” in 2013 and 2014. If he could get a long-term deficit deal that “protects our priorities”—that didn’t “savage investments” in education and research or shred the social safety net—he could then move forward after the election “from a position of strength.”

  When Obama and Boehner finally played golf in mid-June, they agreed that a big, historic deal was actually easier than a small deal—that if they settled on $2.5 trillion, critics would say they weren’t doing enough. But if they went for $4 trillion or $5 trillion, the size would give the deal historical stature and hush at least some of the skeptics.

  Grover Norquist emphatically disagreed. His expectation of complete victory drove his strategy and his instructions to GOP lawmakers. He was contemptuous of fellow conservatives who wanted to talk to Democrats. When conservative lawmakers called him for his thoughts, as they did almost every day, he asked them all the same question: “Why would you cut a deal between now and the election when you’re going to get a Republican president and a Republican Senate in 2013?”

  Republicans felt they had reason to be distrustful of deals that contained both tax increases and spending cuts. Invariably, they said, the final deal featured a lot more of the former than the latter. They were right about that. Spending cuts were often dropped altogether in such deals when the Democrats held power, and efforts to reform the tax code in the House Ways and Means Committee or Senate Finance Committee were always doomed. Norquist considered closing loopholes just a backdoor form of tax hikes.

  This was why Boehner didn’t have a lot of time for Norquist. He had to live in the real world, where a promise of tax reform—lower, flatter rates that raised revenues by cutting deductions—was the only way forward for Republicans. The speaker’s problem was that his caucus was living in Groverland.

  For years the powerful Wall Street Journal editorial page set the tone on taxes for the GOP, and now it trashed the Grand Bargain talks. “A tax increase now for the promise of tax reform later won’t fly,” the paper thundered, arguing that the Tea Party was right to be suspicious that Obama’s promises of spending cuts would ever materialize. “We’ll see unicorns first.” The editorial gave Eric Cantor ammunition against Boehner’s argument that Obama’s big concessions on entitlement reform were meaningful. Boehner realized this and immediately called the president at Camp David to say, “I’m going to have to walk away from this right now.”

  Had Obama been less wishful in his thinking, that would have been the end of it. “When Boehner walked away the first time, we should have called it a day and gone to some sort of Plan B [on avoiding default],” Axelrod said later. “But the president wanted to give it a try.” Obama, with backing from Jack Lew, figured Boehner’s move was a negotiating ploy. The talks moved forward, and on Sunday, July 17, the parties, assembled at the White House, came closest to a deal, though discussions continued over complex budget baselines and how to structure the $800 billion in revenue increases without raising tax rates.

  The week of July 18 was when it all unraveled. For months a bipartisan group of six senators, dubbed “the Gang of Six,” had been meeting periodically in Senator Mark Warner’s office. In July the Gang, which consisted of the five senators on the Simpson-Bowles Commission plus Warner, still didn’t have a partner, Russ Schriefer, . s small plan, only a framework, but they wanted badly to insert themselves into the debate. Now, with exquisitely poor timing, they went public. On Tuesday morning the Gang of Six held a press conference announcing a plan that included $1.2 trillion in revenue increases, which was $400 billion more than was being secretly discussed by Obama and Boehner. Dick Durbin stressed that the Gang’s work was not done, but few heard the caveats. Rob Nabors, a key White House negotiator, called Barry Jackson and said, “Have you seen this? Tom Coburn signed off on bigger tax hikes than we did. This changes things for us.”

  Obama being to the right of the Tom Coburns and Saxby Chamblisses and Alan Simpsons of the world wasn’t going over well in the Democratic Party, to put it mildly. When Lew visited the Senate Democratic caucus, liberal senators ripped into him. Barbara Mikulski of Maryland noted that week that if the United States had had a parliamentary system, Barack Obama would have been voted out of office.

  The Gang of Six plan
may not have killed the Grand Bargain, but it sure didn’t help. Obama’s inexperience as a negotiator was showing. “He is the most naïve and inexperienced negotiator to ever set foot in the Oval Office,” a top aide to the House leadership said later. On Wednesday Obama told Boehner in the Oval Office that, per the Gang, he needed $400 billion more in revenue on top of the $800 billion they had tentatively agreed to. Boehner didn’t threaten to blow up the deal at this point, and the White House thought negotiations were continuing. In truth, Boehner, under pressure from Cantor, Ryan, and other Republicans, was getting cold feet. Boehner’s office later tried valiantly to deny he had bowed to his caucus, as the president and his team had concluded, but several members admitted privately that this was what happened. Ryan’s argument to the speaker was the same as Norquist’s: Why negotiate a long-term budget deal before the election? He and the rest of the leadership were so sure they would get “the whole enchilada”—House, Senate, the presidency—in 2012 that they now felt concessions on taxes were pointless.

  On Friday, July 22, Obama suffered one of the most severe setbacks of his presidency. For eighteen hours Boehner wouldn’t call the president back, a sign of disrespect for the office for which Boehner paid little price in the press. When he finally did, he said the whole thing was off. “You can’t put Humpty Dumpty back together again,” he told the president. Obama, caught off-guard, offered to return to the $800 billion in revenue increases they had agreed on before the Gang of Six intruded. Boehner said it was too late. Obama was furious. After an uncomfortable twelve-minute call, Boehner hung up and told his staff, “Ooh, he was hot. He’s really upset.” At 6:30 p.m. the president went to the White House press room with the bark ripped off. He blasted Boehner in strikingly personal terms. “I couldn’t get a phone call returned,” he said. “I’ve been left at the altar now a couple of times.” Less than an hour later Boehner coolly told the world what he thought happened. “The White House moved the goal posts,” he said. “Dealing with the White House is like dealing with a bowl of Jello.”