The critical conversation between the offices of Harry Reid and Mitch McConnell came early Sunday afternoon, about 36 hours before Congress was set to teeter over the fiscal cliff.
Reid, the majority leader, had been negotiating and trading ideas with McConnell, his minority counterpart, since Friday evening. But the soft-spoken Nevada Democrat drew a bold line in the sand midday Sunday: He had no more counteroffers to give.
Suddenly and irreversibly, the talks veered into a new direction. Within minutes, the Kentucky Republican was dialing up Vice President Joe Biden, elevating his old colleague to the Democrats' new negotiator-in-chief. It was the fateful decision that put the Senate and White House on the pathway to the deal eventually approved by the Senate and the House, ending weeks of drama over the fiscal cliff. It also left Reid standing on the sideline stewing.
“We know that when McConnell has hit a wall with Reid, he calls Joe Biden to get some more candy,” said a senior Senate Democratic aide, who requested anonymity to speak candidly about the vice president.
It was a good-cop, bad-cop routine that Reid wanted no part of. “We thought it was unnecessary,” the aide said of Biden’s involvement. “We had a lot of leverage.”
Reid and McConnell had been bargaining about how to avert the cliff ever since a White House summit on Friday, when they agreed to take charge of negotiating an accord. Talks between President Obama and House Speaker John Boehner had collapsed by then. The president and congressional leaders had agreed that a last-minute compromise, if there was to be one, had to be forged in the Senate.
The opening Senate GOP offer from McConnell to Reid came at 9:30 p.m. on Friday night, only hours after the White House meeting, according to congressional officials with knowledge of the negotiations.
Reid’s team sent back its first counteroffer at around 3 p.m. on Saturday. A flurry of activity followed as McConnell was cloistered in his office on Capitol Hill. Aides shuttled between the leaders’ offices, as a GOP counterproposal was drafted by 4 p.m. A Democratic reply to that arrived only an hour and a half later, according to the sources. At 7:10 p.m. on Saturday, McConnell said he sent yet another offer to Reid and the Democrats.
Then, radio silence.
Reid’s office had suggested that another counteroffer would come in the morning, but the clock ticked to afternoon without one. Instead, Reid’s office told McConnell’s at about 1 p.m. that the majority leader was done with the back and forth. “At this stage, we are not able to make a counteroffer,” Reid announced soon after on the Senate floor.
Reid was playing hardball. With polls showing that the public was far more likely to blame congressional Republicans than the president if the nation jumped off the fiscal cliff – and billions in automatic tax hikes and spending cuts went into effect – Reid rightfully knew that McConnell wanted a deal – and badly.
Reid felt that he’d compromised enough, according to a senior Senate Democratic aide with knowledge of the discussions and the senator’s thinking. Besides, if no accord was reached, Obama and Reid had said they would push the president’s plan to stop tax hikes for those earning below $250,000 and extend unemployment insurance to the floor. Republicans could block that and be responsible for everyone’s taxes spiking at their own peril.
About the same time on Sunday, a story popped about a “major setback” in talks – that McConnell had demanded that a reduction in the Social Security benefits formula, known as “chained CPI,” be included in a deal. True, that had been part of the 7 p.m. Saturday GOP offer. But Reid was now using it as political cover to withdraw from talks. “We are not going to have any Social Security cuts. At this stage, that just doesn't seem appropriate,” the Democratic leader announced later Sunday on the floor.
McConnell’s negotiating options with Reid had narrowed. He could either let Congress veer off the cliff, take Reid’s latest offer, or accept the president’s tax-hike package for those earning more than $250,000. Instead, McConnell sought a familiar and friendlier face across the negotiating table – his old colleague Joe Biden. He called and left a message to open talks with the vice president.
“We have yet to receive a response to our good-faith offer. I am concerned about the lack of urgency here. I think we all know we are running out of time,” McConnell said on Sunday of his talks with Reid. Then he revealed on the floor that he’d called Biden “to see if he could help jump-start the negotiations on his side.”
“I need a dance partner,” McConnell said.
Those words appeared to be a swipe at Reid, echoing Reid’s comments the day after the election when he had said, “It's better to dance than to fight. It's better to work together.” McConnell was saying that Reid wasn’t willing to dance, after all.
In his negotiating two-step, McConnell had found a willing partner in Biden. The call to Biden set off a fresh round of offers, counteroffers, and concessions. They spoke as late as 12:45 a.m. on Monday, retreated for a few hours of sleep, before another call that began before 7 a.m. Within about 24 hours, Biden and McConnell had settled on what amounted to the framework for an agreement – although they never engaged face to face.
At 9:15 p.m. on New Year’s Eve, Biden trekked to the Hill to huddle with Senate Democrats to pitch the compromise he had reached with McConnell. The plan would make permanent the Bush tax cuts for those earning less than $450,000, expand certain tax credits for low-income Americans, set the estate tax at 40 percent, and revise the Alternative Minimum Tax.
Reid didn’t plan to do the heavy lifting of selling the deal that he didn’t cut. That job was left to Biden. “I suspect he’s doing most of the talking,” Reid spokesman Adam Jentleson said of the vice president as the meeting was underway.
The final package, which cleared the Senate in the early hours of 2013, also included concessions that Reid had refused, including a delay of the automatic cuts, known as the sequester, for only two months instead of at least a year.
“We gave too much away,” the Senate Democratic aide said of the accord. It passed in an 89-8 landslide, including Reid’s aye vote, anyway.
For Biden, it was a triumphant moment. It was his latest major compromise crafted with McConnell, following the two-year extension of the Bush tax cuts in 2010 and the debt-limit deal in the summer of 2011. Biden has earned the nickname the “McConnell whisperer” across Washington.
“McConnell is far more comfortable cutting deals with the vice president than he is with Senator Reid,” said Jim Manley, a former top Reid adviser.
Biden is considered a possible 2016 presidential candidate, and the episode amounted to a presidential moment: He was called to swoop in at the last minute to save taxes from rising on nearly all Americans, and he succeeded. “No doubt about it, this could be very helpful to him if he decides to run in 2016,” Manley said.
But just beneath the surface, there is some quiet grumbling among some Senate Democrats and the Left that Biden was as interested in striking a deal as its details.
Sen. Tom Harkin, D-Iowa, one of the eight no votes, has been one of the few to speak out publicly against the concessions that Democrats made to strike a compromise. He complained that the administration traded permanent GOP-friendly tax policy– the extension of tax rates for those below $450,000 – for temporary Democratic priorities. “In essence, this agreement locks in a tax structure that is grossly unfair to middle-class Americans,” Harkin said in a statement after the vote.
But with Obama’s and Biden’s imprimatur, it passed the Senate with ease. Asked on New Year’s Eve what he was telling Democratic senators to win their support, Biden told reporters, “I said, ‘This is Joe Biden, and I’m your buddy.’ ” He was back the next morning doing the same with House Democrats.