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TICK TOCK: How Negotiations Broke Down TICK TOCK: How Negotiations Broke Down

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DEBT CEILING

TICK TOCK: How Negotiations Broke Down

It is a close call whether White House officials involved in the debt talks with Republicans were more surprised or angry when Speaker John Boehner shocked them on Friday evening by pulling out of those talks just as the White House believed final agreement was within reach.

Senior White House officials, who briefed reporters on Friday night but asked not to be identified, said that they had been greatly encouraged by staff talks on Thursday and thought they had narrowed to only three issues those areas of disagreement that would have to be resolved by the president and the speaker. Everything else, they thought, could be resolved by staff.

 

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Those three areas were the level of Medicaid cuts, the final revenue targets, and the design of the “trigger” that would lead to either deeper entitlement cuts or tax increases. The White House officials were particularly miffed that the Republicans had introduced at the last minute a highly contentious—and, to Democrats, completely extraneous—issue as part of the trigger. They said that Republicans on Thursday suddenly insisted that the president agree to give up the provision in his health care reform mandating people to have coverage.

“That has nothing to do with the deficit-reduction package,” said one official, calling it “political.”

 

Despite this, a lengthy negotiating session on Thursday went well, or so the White House thought. The meeting included the chiefs of staff and senior policy advisers to Boehner and House Majority Leader Eric Cantor, as well as Office of Management and Budget Director Jack Lew, National Economic Council Director Gene Sperling, legislative adviser Rob Nabors, and Bruce Reed from the vice president’s office. It was a “very productive, constructive session,” said an aide, who said he left it believing a final deal was “very close.”

The revenue differences had been narrowed to $400 billion, he said, noting there had been “fluidity” in the revenue numbers because the president insisted on a balance. If cuts to entitlements or spending increased, there had to be some corresponding adjustment to the revenue numbers.

The first indication that a deal was not within reach came when Boehner started ducking calls from the president. On Thursday, the two men talked in the afternoon and Obama “told the speaker to think about what he had raised and they would talk about it last night.”

But Boehner would not take the president’s call later in the evening. Then he tried again on Friday afternoon. Finally, at about 3:30, the speaker’s office told the White House that Boehner would call at 5:30 and informed him that—once again—he was pulling out of the talks.  

 

The White House said the two sides are identical on the level of discretionary spending cuts—$1.2 trillion over 10 years in budget authority. Also, they agreed on a $1 trillion cut in overseas contingency spending.

They agreed to present a list to Congress of possible ways to cut $250 billion out of Medicare. They also agreed that the package would be implemented in two stages—the first would be discretionary caps. The second would be a reconciliation bill to be written by Congress with the enforcement trigger. An official described that as the “sword of Damocles” hanging over both sides, threatening further entitlement cuts for Democrats and, for Republicans, a separation of the middle class Bush tax cuts from the tax cuts for the wealthy.

Though the president’s anger was clear, aides sidestepped acknowledging that. They preferred, instead, to say, “We’re all tired.”

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