He didn’t get it. A day later, when congressional leaders met with Treasury Secretary Timothy Geithner and Rob Nabors, the White House’s congressional liaison, the administration took a hard line.
Geithner called for $1.6 trillion in new tax revenues and $50 billion in spending to stimulate the economy. A hike in the $16.4 trillion debt ceiling must be a part of any deal, the Treasury secretary said. The total package would trim the federal deficit by $4 trillion over a decade, but it included gimmicks on the spending side – like counting anticipated savings from the withdrawal of American forces from Iraq and Afghanistan.
“I was flabbergasted,” Boehner would recall.
“You can’t be serious,” he told Geithner.
The Republicans were particularly taken aback because nine days earlier, on Nov. 20, Nabors had told Republican staffers that he had a White House offer in hand but didn’t want to be laughed out of the room, said a GOP source. The Republicans took it as a good sign that Nabors had saved them the song and dance. So when Nabors came back more than a week later with Geithner to present the same plan, Republicans concluded that the White House was not negotiating in good faith.
Later, the speaker dismissed the White House proffer as a “la-la-land offer.” Obama was on the road the next day, ratcheting up the pressure with a widely covered speech in the Philadelphia suburbs.
Obama and his aides, it appeared, had learned from their experience in the debt-ceiling negotiations of 2011. “Republicans in Congress are not going to make these decisions because they are suddenly persuaded by the president. They are going to make these decisions because they’ve decided it’s in their political interest to do so,” a White House official said.
Obama’s staff believed they were helping Boehner corral Republican votes. “Gone are the days when you could … cut a deal with the leader and expect the rank and file to follow along. We learned that about 10 different times in 2011 with Boehner,” the official said.
If worse comes to worst, the aide said then, Boehner could drop the so-called Hastert Rule, named after former Republican Speaker Dennis Hastert, who decreed that a measure had to have the support of “a majority of the majority” or it would not reach the floor.
It would be difficult, but “that’s sort of the definition of leadership.” In a crunch, Boehner would have only to agree to put the deal on the floor and guarantee a few dozen Republican votes. Pelosi’s Democrats would do the rest.
“All we need is 40 votes. We don’t need 150 Republicans,” the aide said. (In the end, the mini-deal struck would gain 85.) The rest of the Republican members could satisfy their conservative constituents, and their principles, and be given a pass to vote no. Boehner could catch hell from tea party types and conservative commentators, but that was the cost of leadership. “This goes to the question about Boehner as a leader,” the aide argued.
On the first Monday in December, the House Republicans made a show of unity. With a letter signed by Rep. Eric Cantor of Virginia, the majority leader, Ryan, Camp, and other GOP leaders, the speaker countered the Geithner proposal. It was largely a restating of the Republican position, but it officially put $800 million in revenues on the table.
In Boehner’s two-front war, he needed to get the average Republican member acclimated to the notion of higher taxes and persuade them that their leaders were all in agreement. It was a matter of convincing the rank and file that they should not be “caught between the perfect and the good,” as the speaker liked to put it.
The letter helped acclimate his colleagues, and $800 billion in additional revenue was quietly accepted as a Republican baseline. So was a demand that the age of Medicare eligibility be raised from 65 to 67, and a call for saving $200 billion from entitlement programs by changing the way cost-of-living raises are calculated. There was no mention, in the GOP letter, of one of Obama’s leading priorities: removing the debt ceiling from the debate.
Nowhere to Go
The polls were moving Obama’s way. And an increasing number of House and Senate Republicans were publicly acknowledging that the deal would have to include higher tax rates for their wealthiest constituents. So Team Obama clung to its strategy.
“The president said there is no deal without rates going up,” said a White House official. “No deal means we go over the cliff.”
Inside the White House, aides grappled with the economic effects of doing just that. But it would take time for the new tax hikes and spending cuts to hit home and affect behavior. The markets might take a wait-and-watch approach to see how the new Congress acted. The cliff was more like a slope: a phrase that liberal-leaning think tanks close to the White House perpetuated. The administration had time.
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