“That’s not bipartisanship,” McCain declared with the definitive air of an official arbiter. “That’s just picking off a couple of Republican senators.”
“I am so happy bipartisanship is important to the Republicans again!” Pelosi sneered.240 “For eight years, they didn’t seem to care about reaching across the aisle. But now it’s ‘Boo, hoo, what about us?’ After they treated us like sewer rats for eight years, we were worried that bipartisanship didn’t matter to them.”
Okay, that wasn’t really Pelosi. It was a Saturday Night Live actress playing Pelosi in all her crazy-eyed, ultra-partisan glory, bragging about how she didn’t pander to Republicans, chastising Reid for agreeing to cut education spending in the stimulus. “Let’s try to remember something,” the fake Pelosi said. “We won!”
The real Pelosi’s reaction to the Senate deal was not that different. She said the Senate’s cuts would “do violence to what we are trying to do for the future.” And she fumed about Washington’s obsession with bipartisanship, the Beltway habit of judging legislation according to how many Republicans supported it rather than what was in it. The real Pelosi understood why Reid made concessions, but the House and Senate still had to reconcile their versions of the stimulus, and she did not feel bound by the demands of Presidents Specter, Collins, and Snowe.
“She was pissed,” says one senior Pelosi aide. “Look: She’s a whip at heart. She understands realpolitik, and she knows the Senate needs sixty votes. But she didn’t want the House taken for granted.”
In The Audacity of Hope, Obama had written about the pathologies of modern Washington: politics as an endless war between potbellied gladiators from the red and blue teams, split-the-difference centrists who assume they’re in the right as long as they’re in the center, Republicans who don’t traffic in facts and can’t take yes for an answer.241 It still seemed surreal from his new vantage point.
The economy had shed nearly four million jobs, half of them in the last three months, yet he was stuck in a head-of-a-pin debate about how many Republicans it took to make a bipartisan deal bipartisan. Congress was on the verge of passing a sweeping bill to bandage a bleeding economy, cut taxes for working families, help victims of the slump, and attack intractable social problems, and the cable chatter was about “ACORN-eligible block grants” (McConnell’s creative rebranding of community development assistance to cities) and aid to small shipyards. Meanwhile, purity-test progressives were whining about the most progressive piece of social and economic legislation in decades. And Republicans who had praised his call for $300 billion in tax cuts were bashing a bill with over $300 billion in tax cuts.
At his first press conference, Obama mused that he probably should have pretended he didn’t want tax cuts, then let Republicans take credit for adding them.242
“I get the sense that there’s some ideological blockage there that needs to be cleared up,” Obama said. “But I am the eternal optimist. I think that over time people respond to civility and rational argument.”
— ELEVEN —
Done Deal
The Senate passed its version of the stimulus on Tuesday, February 10. Now House and Senate leaders had to negotiate a deal in time for both chambers to pass a final version by Friday. There was no longer time for polite suggestions and hints. That night, Rahm delivered a White House list of funding directives to Pelosi and Reid, who immediately instructed staff to convert them into legislative language.243 The critics who mock Obama for punting the stimulus to Congress have never seen this list, which designated specific dollar amounts for over 150 specific programs. It looks an awful lot like the final bill.
The one shocker on the list was high-speed rail. With school construction in danger, Rahm believed the stimulus badly needed a new marquee project. Initiatives like the smart grid and education reform would be transformative, but virtually invisible. High-speed rail would put men in hard hats to work on a visionary mission that Americans could see and appreciate. Obama loved the idea, and while his economists didn’t, Rahm told them a massive investment in fast trains would persuade moderate House Republicans to support the stimulus.
“They’re horny for high-speed rail!” he said.
Normally, high-speed rail would have ended up somewhere between the House mark of $300 million and the Senate’s proposal of $2 billion. But the White House list pegged it for $10 billion.
“Whoa, where did this come from?” one Senate staffer asked.
It came from a four-letter word that starts with R and rhymes with bomb.
“This is the way it’s going to be,” Reid told the staff. “Just get it done.”
“And It Wasn’t My Money!”
The delivery of the White House list kicked off twenty-four hours of chaotic shuttle diplomacy. Rahm and Peter Orszag—who was thrown into the talks because of his strong relationships with the Senate moderates as well as his budget chops—met Tuesday night with Democratic leaders in the speaker’s office to discuss tweaks. After the meeting broke up around 11:30 P.M., staffers worked all night drafting, before their bosses started negotiating again in the morning.
Aside from the abrupt expansion of high-speed rail, the talks were about subtraction. The Congressional Budget Office had priced the Senate bill at $838 billion, even after the cuts demanded by the moderates; the House version was $819 billion without the Alternative Minimum Tax patch.244 So there would have to be further shrinkage to keep the moderates on board. “We were backed down by Specter and the twin princesses of Maine,” Obey grouses.
The obvious place to start cutting was the AMT fix. Initially, the White House hadn’t objected to its inclusion in the stimulus, even though it wasn’t really stimulus. Everyone knew Congress would get around to passing it sooner or later, and many Democrats—including Pelosi—were happy to deal with it now, to avoid a messy fight over how to pay for it later. But once the overall size of the package was capped, $70 billion for the AMT meant $70 billion less stimulus, a stiff price to pay to help Congress with its housekeeping. Obama’s economists were clamoring to get rid of it, but the Senate moderates said no, the AMT had to stay, even though averting a tax hike no one expected wouldn’t create jobs.245 Snowe was particularly insistent; she had promised her friend Chuck Grassley she would protect the patch.
“She wants to make Grassley happy, even though he’s not voting for the bill,” Rahm says. “It was the weirdest $70 billion I ever spent, and it wasn’t my money!”
Rahm was tired of sucking up to Republicans and getting nothing in return, which is why his next target was the carryback tax credit for banks, builders, and other businesses with severe losses. Boehner had told Rahm it was the GOP’s top stimulus priority, so initially Rahm had lobbied hard to get skeptical Democrats to include a $15 billion carry-back, hoping it would entice Republicans to support the overall bill. “The way Rahm was screaming, you would’ve thought it was the thing he cared about most in the world,” one staffer recalls. But his here-kitty-kitty strategy hadn’t attracted GOP votes, so now Rahm lobbied just as hard to kill the carryback. The final deal limited the credit to small businesses, which slashed its cost below $1 billion. Rahm warned his Monocle pal Steve LaTourette that the disappearing carryback should be a lesson to Republicans about the consequences of intransigence.
“He basically said: ‘Fuck Boehner, it’s coming out,’” LaTourette recalls. “‘We’re not putting anything in for you if you guys aren’t going to help us.’”
Senator Isakson’s tax credit for homebuyers was another juicy target, partly because the CBO priced it at an astronomical $35 billion, partly because a program that would pay you $15,000 to buy your brother’s house seemed sketchy, partly because Isakson voted against the stimulus, too. “I don’t understand the Senate,” Rahm kept saying. “If you get your stuff in the bill, don’t you have to vote for the bill?” No? Well, then screw Senator Isakson. The final deal only included an $8,000 credit limited to first-time homebuyers, cutting its cost over 80 percent.
But Rahm thought the White House needed to put some skin in the game, too. After insisting that the Making Work Pay tax credit was non-negotiable, he now agreed to scale it back from $1,000 to $800 per year per family, trimming over $20 billion from the price tag to try to get the deal done. The White House also reluctantly accepted only $5 billion for education reform, which had been in line for $15 billion a week earlier. At the last minute, even high-speed rail got trimmed to $8 billion.
“We had to show we were willing to shave our goodies, too,” one aide says.
“Nancy, this ain’t gonna work.”
Jim Clyburn was not a happy camper. Democrats had just won a historic election, and now they had to shave their goodies and weaken their bill to make sure Republicans didn’t filibuster in the Senate? Clyburn wanted to see them actually filibuster, Mr. Smith–style. Let them haul in cots and explain to the public why they were so eager to block a recovery bill. But Pelosi said no, this is no time to play chicken. So the House plan to revamp the Farm Service Agency computers that seemed to freeze every harvest season was cut 79 percent to appease three Republicans from nonagricultural states. The House plan to aid struggling cities was cut 67 percent, because God forbid some money might go to ACORN. Senator Collins even killed a House provision that would have protected government whistle-blowers from retaliation if they raised alarms about waste or fraud. Clyburn decided it was time to draw a line in the sand, and he drew it at rural broadband.
Clyburn’s beef wasn’t even about how much money to spend, but which bureaucracy would spend it. The House had split its broadband cash between Commerce and Agriculture, while the Senate had given it all to Commerce. The White House sided with the Senate for policy reasons; Obama’s advisers wanted to promote “middle-mile” projects that could extend high-speed Internet to institutions like schools and hospitals, while Agriculture tended to favor “last-mile” projects serving individual homes at more modest speeds. And an independent watchdog had concluded that Agriculture’s program was an ineffectual mess.246 But Clyburn was sure his rural constituents would never get wired if Commerce got all the money. (An Agriculture Department lobbyist was making that very case to lawmakers behind the new president’s back.) While Pelosi was negotiating with Obama, Clyburn insisted he’d oppose the stimulus if Agriculture didn’t get its share. She threw up her hands and handed Clyburn her cell phone.
“Mr. President,” Clyburn repeated, “this ain’t gonna work.”
In the end, Clyburn managed to steer about a third of the Recovery Act’s $7.2 billion in broadband grants to Agriculture. “Oh, Obama got it,” Clyburn says with a laugh.
At the time, many House Democrats felt like they were getting rolled on just about everything else. “It always felt like an unequal partnership,” Becerra says. “The president would say: You’ve got to jump, because otherwise the Senate will filibuster. And the House would say: How high?” Actually, House Democrats scored several victories over the Senate. For example, they secured $15 billion to expand the child tax credit, providing extra help to thirteen million low-income children. They killed the Senate’s risky plan for new nuclear loans, and most of its tax incentives for car buyers. Pelosi, who liked to say her top three priorities were science, science, and science, also protected the House’s line items for labs and basic research.
“Nancy said: Maybe we’ll have to compromise somewhere else, but we’re not compromising on science,” says Bart Gordon of Tennessee, the House Science Committee chairman.
But the most intense negotiations were about education, where the House really was getting rolled. “Oh, that was way beyond frustration,” Charlie Rangel says. “Whichever senator wants to be wooed, we’re just supposed to accept it.” Obey was scrambling to restore some of the Senate cuts, but that required trims to other items lawmakers liked: veterans hospitals, public housing repairs, construction at the Centers for Disease Control. Meanwhile, Rahm and Orszag seemed to be competing for a job as Susan Collins’s personal valet.
“I was getting vilified in the House,” Rahm recalls. “How could I be so disloyal? How could I be locked in a room with three Republican senators?”
Pelosi didn’t mind Rahm talking to the Republicans; she minded him caving to their threats. She had a hard time believing that anyone would vote against a jobs bill just because it included money to fix schools, and she repeatedly screamed at Rahm and Phil Schiliro to drive a harder bargain. I asked Rahm if it was true that Pelosi was yelling at him daily. “Hourly,” he replied.
“There was a lot of frustration about the Senate Republicans driving the train,” says one Pelosi aide. “She wanted to see the administration pushing back.”
Rahm did try to steer $10 billion back into school construction, but the moderates said no. Orszag proposed limiting the money to repairs of existing schools. Still no. Could states at least use their general education aid to fix schools? That was at least something to talk about. But it raised other arcane questions: How much of the aid would be eligible? Would governors control the money? During one technical dispute over how some language would affect Maine’s school construction agency, Orszag begged Collins to give ground.
“Please,” he said. “Do this for me.”
Collins just laughed.
“That’s funny,” she said. “You still want people to like you.”
The final spat on the Senate side did not pit the moderates against the leadership, but Specter against Ben Nelson, who wanted to tweak the Recovery Act’s formula for distributing Medicaid funds to get rural states extra cash.247 Specter said: No way. Orszag did some calculations in his head, and informed Rahm that Nelson was hijacking the entire stimulus over $25 million. Rahm pulled Nelson aside and told him: Don’t fuck this up. We’ll get you $25 million some other way. This wouldn’t be the last time Nelson held up major legislation to extort some extra swag for Nebraska; his “Cornhusker Kickback” would become the most notorious provision in Obama’s health care bill.
It was perhaps fitting that on Wednesday afternoon, after Reid announced that the House and the Senate had reached a final agreement that would spend less money and create more jobs, Pelosi denied that the deal was done, and angry House Democrats blew off a public meeting with their Senate counterparts. By evening, the two sides had finalized a $787 billion deal, but House Democrats were still carping. Reid understood their frustration with the Senate’s get-to-sixty culture, and the way it turned random backbenchers into power brokers. But this wasn’t his first game of Senate poker, and he knew Collins and her fellow moderates held all the cards.
“They give me three aces, Susan pulls out a full house,” said Reid, who got his start in politics on the Nevada Gaming Commission.248 “No matter what I was dealt, she had a better hand.”
Progressives like Becerra wanted to call the Republican bluff. He didn’t think this was the time to establish a precedent that Republicans could water down the Obama agenda whenever they wanted. When were Democrats ever going to have a better hand than they had when the president was at 70 percent, the Republican brand was radioactive, and the economy was teetering on the brink?
“My argument was: The public just hired us to produce,” Becerra says. “If we don’t produce, nobody’s going to care that the stimulus morphed into something less stimulative because we needed a few Republican votes. They’re going to remember that they gave us the reins.”
For Obama, it was time to escape the Washington bubble.
Somehow, the narrative had shifted from economic suffering and change to horse-trading and catfish subsidies. So while Rahm was haggling on the Hill, Obama took his first road trips, to try to remind Americans what the fight was about. His first stop was the recreational vehicle capital of Elkhart, Indiana, a hard-scrabble industrial town with the nation’s fastest-growing unemployment rate. He then visited the seaside foreclosure mecca of Fort Myers, Florida, where Governor Crist hugged him, warmly endorsed the Recovery Act, and reinforced his bipartisan message
. But even back in campaign mode, the White House struggled to get its point across. The Elkhart trip was overshadowed by Obama’s first press conference. The Fort Myers trip was overshadowed by Treasury Secretary Geithner’s speech outlining his plans to address the real estate bust—and by the market’s brutal reaction to his inability to articulate those plans.
Obama’s third trip of the week, to the bellwether city of Peoria, Illinois, was another messaging mess. The president visited a Caterpillar plant that had just announced mass layoffs, and declared the heavy-equipment company would start hiring again once Congress passed the stimulus.249 But after the event, the company’s CEO told reporters he might let even more workers go regardless of the stimulus.250 That did not play well in Peoria or anywhere else. “You had the story that whole day: The president said this, Cat said that,” recalls Aaron Schock, the area’s Republican congressman. In his speech, Obama called out the twenty-seven-year-old Schock, who had hitched a ride to the event on Air Force One, and urged him to follow the bipartisan example of his predecessor from Peoria, Transportation Secretary Ray LaHood. But afterward, Schock told reporters that not a single Caterpillar employee had asked him to support the stimulus—and that he still intended to vote no, because it didn’t include enough infrastructure spending that would put Caterpillar’s earthmovers to work.
As if Caterpillar and Schock weren’t doing enough to drown out Obama’s message of jobs and bipartisanship, news broke while he was on the factory floor that Senator Gregg was withdrawing from consideration for Commerce. Gregg let it be known that the main reason for his bait-and-switch was his discomfort with the stimulus he had called “extraordinarily bold and aggressive, effective and comprehensive.” Gregg publicly apologized for changing his mind, but his sudden withdrawal made it sound like the Recovery Act must be egregiously partisan to provoke such an act of conscience.
The New New Deal Page 25