Conspiracy of Two
For one of the world's most watched buildings, the White House is remarkably easy to sneak into. On the afternoon of Sunday, July 3, while reporters scribbled down the details of President Obama's early return from a family vacation at Camp David — short sleeves, smiles at a rope line — no one noticed the bronzed man with the nicotine-stained fingers slipping in the side door. According to his public schedule, House Speaker John Boehner was spending the holiday weekend with his family and friends. Instead, he huddled with the President on a small, secluded patio, built for Ronald Reagan, near the Oval Office, where the two men continued the most important conversation of the year.
Among Obama's senior staff, Boehner's arrival was treated as a "tight hold," a special status offered to the most politically sensitive guests: spooks, pollsters and candidates seeking Supreme Court nominations. No announcements. No lines of sight from the Ellipse. Boehner didn't even tell his top deputies, who had been busy drumming the partisan no-new-taxes war cries in their home districts. He was, after all, crossing into enemy territory. That would become a problem soon enough. (See pictures of the life and times of John Boehner.)
The tale of the secret talks between Barack Obama and John Boehner is the story of a political system that has largely ceased to function and yet may be the prelude to something even worse. Lawmakers must work out a package of spending cuts and revenue increases that will permit the Treasury to keep paying its bills through August and beyond. If they fail, the government will lose its ability to meet its obligations — including paying soldiers their salaries and seniors their pensions — ensuring an economic meltdown at home and a crippling loss of faith in the U.S. in financial markets overseas. That would be an unprecedented fiasco.
But it is also the story of two self-described dealmakers in a town where dealing is often a synonym for surrender, who ran up against the limits of their roles, their powers and their colleagues. Boehner and Obama have gotten credit for thinking big and working to overhaul outdated economic policies. But they waited too long to start, in part because they didn't take the time to get to know each other years ago. They also misjudged their armies: they rode out to rescue the country, only to watch many of their followers run for the hills. (See pictures of Republican memorabilia.)
The Courtship
It is a measure of just how dysfunctional American politics has become that on the night in 2010 when Republicans won control of the House, the White House did not have a good telephone number to reach the new Speaker-elect. Until that moment, Obama's aides had apparently never felt the need to talk to Boehner, and as a consequence, they never bothered to put him on speed dial or figure out how to find him in a hurry. It fell to a Democratic National Committee staffer to call a fishing buddy, who as it happened was Boehner's new media director. The fishing buddy, in turn, passed along how to reach Boehner so Obama could call with election-night congratulations.
From the start, the partnership was not exactly promising; the two men are like sausage and Sancerre. Boehner, one of 12 children, grew up tending his father's bar. He spent nine years putting himself through college by working full time as a janitor. Obama was born in Hawaii, barely knew his dad, went to two Ivy League schools and was teaching law before he was 32. Boehner made his money in plastics; for Obama, it was his best-selling memoirs. (See the top 10 political memoirs.)
In Washington, where every other politician can survive by scoring political points, Boehner and Obama did not have that luxury. In April the two men averted a government shutdown with just one hour to spare, crafting a $1 trillion stopgap spending bill for the rest of the year that included $38.5 billion in cuts. Boehner was a skilled and patient negotiator, holding up the White House day after day until he got closer to the deal he wanted. But when it turned out later that there were nearly as many bookkeeping gimmicks as real cuts in the deal, Boehner's freshman class lost some faith in his ability to deliver on their demands.
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As uncomfortable as that experience was, the two men kept at it. They had little choice: to do nothing was to risk another financial crisis, brought on by rising interest rates, a possible credit downgrade and a potential run on money-market funds. All along Pennsylvania Avenue there were whisperings about finally getting serious, showing the world that America could get her house in order.
On April 13, Obama called on Congress to cut $4 trillion from the budget over 12 years. Though this was smaller than a plan to cut $6.2 trillion over 10 years, offered by Wisconsin Representative Paul Ryan, it was nonetheless an astonishingly large number for a Democrat. Then Boehner went to Wall Street and gave a fiery speech, saying Congress would raise the debt ceiling through 2012 but only if the White House agreed to offset the increase — to the tune of $2.4 trillion in spending cuts. This was genuine hardball: Republicans would hold the full faith and credit of the U.S. hostage to deeper cuts in federal spending. But it held the kernel of a deal. Instead of knocking down this offer, the White House was noticeably quiet. (Read Joe Klein's essay on how Obama and Ryan fooled themselves.)
The official Let's Make a Deal competition moved to Blair House, where both parties sent delegations in May to work out a compromise. The goals of this group, run by Vice President Joe Biden, were not modest: they would work out areas of potential agreement, looking at all government spending and tax loopholes. It was easy to get to $1 trillion; $2 trillion was much harder, especially since neither side came to the meetings united. The Democrats were acting like classically disorganized Democrats, one observer remarked later, "and the Republicans were acting like Democrats too."
But the leaders, meanwhile, were acting like leaders. Only a President, elected to serve all the people, can do certain things — including reach out and lift up a friend or rival into the heady temple of Executive power. "I'm the President of the United States," Obama told Boehner. "You're the Speaker of the House. We're the two most responsible leaders right now." And so they began to talk about the truly epic possibility of using the threat, the genuine danger of default, to freeze out their respective extremists and make the kind of historic deal that no one really thought possible anymore — bigger than when Reagan and Tip O'Neill overhauled the tax code in 1986 or when Bill Clinton and Newt Gingrich passed welfare reform a decade later. It would include deeper cuts in spending, the elimination of all kinds of tax loopholes and lower income tax rates for all. "Come on, you and I," Boehner admitted telling Obama. "Let's lock arms, and we'll jump out of the boat together." (See the top 10 debate flubs.)
After a round of golf at Andrews Air Force Base in mid-June, they retired to the clubhouse for drinks. Obama asked Boehner how they should get the deal done. They agreed to begin meeting together at the White House, alone, without aides. They would keep the talks private.
The first meeting came four days later, when Obama hosted Boehner on the Truman Balcony. They met again on July 3 on the President's Patio. The next day, as thousands of military families gathered on the South Lawn to watch the fireworks, Obama slipped away to call Boehner. They were now talking once a day or once every two days. When they spoke again on July 6, they were aiming for a $4.5 trillion down payment on the debt — much bigger than either side was discussing in public. Democrats would have to accept hundreds of billions of dollars in cuts to cherished entitlement programs like Medicare; Republicans would agree to close gaping holes in the tax code; both sides would work together to pass a separate measure to flatten tax rates by the end of the year (a plan that meant that taxes on the wealthiest Americans would go up). Obama was willing to consider slowing the rate of cost-of-living increases for Social Security as well. Both parties would have to swallow hard, but it was the grand compromise that had eluded Washington for two decades.
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When Obama and Boehner presented their scheme to their colleagues at the White House — "almost like co-conspirators unveiling their master plan," one observer said — the initial response was good. Only House majority leader Eric Cantor and one other leader of the group of 10 expressed reservations. When that session ended, Obama called the Speaker and said he believed they were at a moment when they could reach across the divide and do something great. But in fact their grand bargain was already unraveling. Boehner no sooner got back to his office than he learned he was facing an insurrection on his right flank. He bet that the bill would be too big to fail, that it delivered the true change the freshmen so craved.
Turns out, he underestimated the purity of their ideology. Sure, they wanted the cuts, but with no pain or concessions from their side. The freshmen opposed anything that brought in even a dime more in taxes. Cantor, an ambitious majority leader who covets the speakership, told Boehner he believed such a plan could not pass the House. Meanwhile, Democrats weren't wildly enthusiastic about the deal either. Liberals were horrified that Obama had offered cuts in Medicare and changes to Social Security. House minority leader Nancy Pelosi, who had been shut out of the secret talks, drew a hard line. "I want to have full clarity about where House Democrats stand. We do not support cuts in benefits to Social Security and Medicare," she told reporters. (See pictures of Nancy Pelosi's career.)
Behind the scenes, Boehner and Obama tried to salvage their vision. The Speaker called the President the next day to see if the Bush tax cuts could come off the table to keep his freshmen happy. Obama said they couldn't — that Republicans needed to give some significant skin in the game or the deal wouldn't fly with liberal Democrats. Late in the afternoon of July 9, Boehner told the President the deal was off. The votes just weren't there.
The Collapse
When compromise fails, the first reaction of both parties is to harden their positions. Boehner let it be known that the debt ceiling was Obama's problem, "and I think it's time for him to lead by putting his plan on the table — something Congress can pass," he told reporters on Capitol Hill. Other Republicans fell back to an ultimatum: Never mind, they said, no tax increases at all. Many, including 2012 presidential hopefuls Tim Pawlenty and Michele Bachmann, even argued that Republicans were elected to stop the debt ceiling from being raised, to force the government, however painfully, to live within its means. It served Obama's largest interest, as he strides forcefully back toward the center in advance of 2012, to continue to be the Reasonable Man. But then he tried to turn up the heat on Republicans by threatening to withhold Social Security checks in the event the debt ceiling was not raised by Aug. 2. The window of compromise had opened and then just as quickly closed.
The Republican refusal to consider any new revenues, including making easy fixes to the tax code to close loopholes for businesses and other groups that don't need public subsidies, is as recklessly absolutist as Democrats' insistence that bloated entitlement programs are untouchable. Both sides may be able to agree on a more modest package of nearly $2 trillion in cuts over 10 years in the coming days. One Democrat involved in the negotiations said both Boehner and Obama still see the advantages of going big. "Neither has changed his mind," he said. But as another veteran of backroom negotiations put it, neither side will give an inch until the last minute. (See pictures of the Republicans taking over New Hampshire.)
Washington works much more slowly now than it did 20 years ago — when it works at all. Its factions are more deeply divided; its muscle memory for give-and-take atrophied long ago. In the past, political leaders found the sensible center by knowing exactly what their rank and file would accept. That didn't happen here.
Boehner has warned his fellow Republicans that they would lose leverage as the Aug. 2 deadline for raising the debt limit approached. Already, 470 prominent business leaders have sent a letter to members of Congress calling a timely deal "vitally important."
"There are still a lot of people who want to just play this down to the wire," says one senior Administration official. "Our message is, Get this done. We're aiming to do as big a deal as possible, but we can't run the risk, any risk, that people think that there's any benefit in taking it right up to the wire."
But we're already at the wire. With just days to go, the stakes in this race have never been higher.
