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John and Barack have drinks in the clubhouse

John and Barack have drinks in the clubhouse

by digby

Time is featuring an insider “narrative” of the negotiating relationship between Boehner and Obama over deficits. Who knows who is the source here and who it’s serving, but it’s an interesting story if only for the way it evokes cherished Village nostalgia for the day of Tip ‘n Ronnie.(If this keeps up I’m dying my hair blue and getting out the old GoGos LPs. If somebody offers up some Peruvian marching powder, I’m in, even if it gives me a heart attack.)

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.

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.

Actually they certainly could have done nothing — or rather just raised the debt ceiling as they’ve done every other time, but it’s pretty clear that they both felt this was an opportunity to get significant spending cuts passed under pressure.

But I digress.

This timeline is instructive:

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.

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.”

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.

Both parties would have to swallow hard? Closing “loopholes” and agreeing to raise taxes on millionaires later vs cutting the hell out of programs for the poor and the middle class? Wow. That’s quite “painful” compromise. For average Americans anyway.
I had been predicting that JohnNBarack had a meeting of the minds on all this. Seemed pretty obvious. And apparently they did, in a big way.

According to this telling the freshmen Teapartiers balked and insisted on all spending cuts and the liberals balked at cutting Social Security. And so the Grand Bargain unraveled. I’m not so sure. I would think that both Boehner and Obama are a little bit more savvy than that and understood that the rank and file were going to have to have some play. A four trillion dollar backroom deal — forced to pass under the gun — is a bit of a reach even for these egos.

Of course it’s possible that these two “statesmen” really believed they could go to their respective caucuses with a deal to slash spending on entitlements and raise taxes and they’d go along because they all wanted to do something “big.” But let’s just say this narrative is a little self-serving. If I had to guess, they’ve always expected around 2 trillion in cuts and were just hoping for some band-aid they can call revenue to paper over the one-sided nature of the deal. And that’s the sticking point.

One more time, here’s Cantor last January:

“Majority Leader Eric Cantor (R-Va.) delivered a stern message that the debt ceiling will eventually have to be raised to keep the government from defaulting. But he also promised that Republicans will ‘use the leverage’ they have to enact at least some of their spending-reduction goals. ‘It’s a leverage moment for Republicans,’ Cantor said in an interview Friday. ‘The president needs us. There are things we were elected to do. Let’s accomplish those if the president needs us to clean up the old mess.'”

Maybe he’s gone completely nuts since then. But maybe not.

The President has been very, very obvious that he wants these cuts and it’s clear that he wants them even more than they do. (That’s such a disorienting thing to write…) But it means they have even more leverage than they had when they were just threatening to default — they are in a position to deny what he sees as a big policy victory. Why wouldn’t they hold out until the very last minute for whatever they can get?

I still think Boehner can provide 75 votes or so for the Democrats to pass these huge cuts in the 1.5 to 2 trillion range. Where the Republicans really screwed up is in failing to take that 4 trillion dollar deal when it was offered. I think Obama and the Dem leadership probably STILL would have been able to strong arm enough Democrats into passing it — it’s not like they’ve ever held tough before. And the GOP would have had the first substantial bipartisan cuts in the safety net ever. Fools. (But hey, maybe they can still pull it off. It ain’t over til it’s over.)

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