Phone tag and wrong numbers: The collapse of the debt talks

Politico

As he had done often during their weeks of budget talks, President Barack Obama tried to get House Speaker John Boehner on the phone late Thursday, but never heard back.

The silence continued into Friday, and White House aides began to wonder. It never took this long for the president to get his phone calls returned, particularly from Boehner. After all, the two chatted regularly, forging a working relationship over the many weeks of debt-ceiling negotiations — two men who were each trying to lead their parties someplace they didn’t really want to go.

Obama finally heard from Boehner’s office at 3:30 p.m. Friday: Expect a call in two hours.

No, the president responded, how about right now?

Not possible, Obama was told, the speaker isn’t available.

It was then that the White House knew the president wouldn’t be announcing a grand bargain on the debt and deficit anytime soon. Maybe never.

The speed with which the the latest round of negotiations collapsed — from signs Thursday morning that Obama and Boehner were nearing a deal to a complete breakdown late Friday — was a stunning reversal in the long effort to reach a compromise between the Democratic president and congressional Republicans. It left the country’s credit rating in jeopardy and the president more than a little peeved.

“I couldn’t get a phone call returned,” Obama said Friday, as if still not quite believing it himself. “I’ve been left at the altar now a couple of times.”

Boehner’s aides say the reason he didn’t call back was simple: They didn’t have anything more to discuss. Obama had pressed for more revenue in the package, and Republicans just weren’t going to go for it, Boehner said Friday.

“Sometimes it’s good to back away from the tree and take a look at the forest,” Boehner said. “And yesterday afternoon, after the president demanded more revenue in this package, I came back … away from the tree to take a look at the forest.”

If there’s any short-term political gain, it might go to Obama, who sounded fed up Friday night recounting his half of the story, painting Republicans as ideological purists bent on cutting popular entitlement programs to protect the wealthy. And Obama made clear who was boss — summoning Boehner and other congressional leaders to the White House Saturday morning.

“We have run out of time,” Obama said. “And they are going to have to explain to me how it is that we are going to avoid default.”

His hasty appearance Friday night in the White House briefing room capped a 24-hour period in which Obama went from believing he was on the cusp of an agreement to literally waiting by the phone and ultimately losing the opportunity to seal an historic deficit-reduction deal worth more than $3 trillion.

“I think that one of the questions that the Republican Party is going to have to ask itself is can they say yes to anything? Can they say yes to anything?” Obama said. “I mean, keep in mind it’s the Republican Party that has said that the single most important thing facing our country is deficits and debts. We’ve now put forward a package that would significantly cut deficits and debt. It would be the biggest debt reduction package that we’ve seen in a very long time.”

The negotiations broke down over the same issue that has stalled bipartisan cooperation for months, and tied American politics in knots for the last three decades: taxes.

From the White House’s perspective, Obama and Boehner were on track for a deal Thursday morning. And even though they were furious at the prospect, Democratic congressional leaders thought the same. They were put on notice late Thursday night to expect an announcement as early as Friday morning that Obama and Boehner had agreed to a framework, with plans to release details Monday and hold a House vote by Wednesday.

By that point, Obama had made nearly-unthinkable concessions for a Democratic president.

He agreed to $1.2 trillion cuts in discretionary spending, and almost $250 billion in cuts to Medicare, including changing the eligibility age, eliminating certain supplemental insurance policies and cutting back on some health provider payments. He agreed to a new inflation calculator that would affect Social Security recipients. And he committed to changes to Social Security in order to make the program solvent.

There were just a few outstanding issues, senior administration officials said.

Republicans had proposed rolling back portions of Obama’s prized health care law if Congress failed next year to enact the entitlement and tax changes. Obama, however, wasn’t going for it.

They needed to come to terms on depth of the cuts to Medicaid.

And Obama had wanted an additional $400 billion raised through tax reform, arguing that Boehner was bleeding Republican support and would need to bring more House Democrats on board.

The president spoke with Boehner by phone from the White House Thursday afternoon about the increased revenues, saying if the speaker objected, there were probably other options.

Just get back to me, Obama told Boehner before they hung up.

“He was very open with the speaker, (saying) ‘I understand you may not be able to come up on the revenue and if you can’t, I’m open to doing something else,’” a senior White House official said Friday.

The White House always viewed the details as in flux: as the amount of cuts rose, Obama sought to balance that politically with more revenues. White House aides say the push for $400 billion in additional revenues was never intended to be a make-or-break demand, but more along the lines of hoping for some give on Boehner’s part.

Boehner, however, considered the pitch as an attempt to move the goalposts late in the game.

Boehner was willing to accept a revenue baseline of about $800 billion above what taxes would be if all the current Bush-era tax breaks were extended, a real concession on his part. At a White House meeting last Sunday, Treasury Secretary Timothy Geithner signed off, Republicans said, on the Boehner proposal — which was a concession in turn by the administration since it had shot for a higher target.

With that potential compromise in place, Boehner felt encouraged to proceed with the talks. But circumstances changed, Republicans said, after the bipartisan Senate “Gang of Six” announced its proposal Tuesday which assumes substantially more new revenue for deficit reduction than the president had sought.

Boehner and Cantor already told the president when he first raised it that they wouldn’t move the revenue target, Republican officials said.

“I do trust him as a negotiator, but you have to understand, every step of this process was difficult,” Boehner said after he ended negotiations. “Dealing with the White House is like dealing with a bowl of Jell-O.”

The speaker spent Thursday night and Friday talking with staff, other Republican leaders and the rank-and-file about the next steps, which is why the president didn’t hear from him, aides said.

Back at the White House, senior administration aides, unaware that the negotiations were in their final hours, spent much of Friday working through technical details with top House Republican staff.

“We expected they were going to work through it,” a senior administration official said. “They were meeting on the Hill all morning.”

But by the time Obama and Boehner connected at 5:30 p.m., House Republican aides were already briefing Hill reporters on why the talks had collapsed.

David Rogers contributed to this story.

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