A similar message also came, in a quieter way, from the trade groups for the nation’s hedge funds and private equity firms. Their members had billions at stake, thanks to a White House proposal that would raise some tax revenue at their expense. As the July home stretch arrived, they had already spent $4.2 million on lobbying expenses for the year.
Chapter 8: Behind closed doors
At the White House, uncertainty colored the administration’s negotiating strategy. In private, Boehner acted as the same old negotiator he’d always been. But once he left the room to sell something to the firebrands in his party, he couldn’t seal the deal.
Twice during the battle over the 2011 budget, White House officials believed both sides had settled on a figure for spending cuts. Twice, they said, Boehner backed away after consulting with his caucus.
Still, Obama and his advisers believed Boehner and his troops might prove more flexible in talks aimed at meeting their demand for spending cuts to accompany the debt limit increase. Dramatic changes to Medicare proposed in the Ryan budget had sparked a public outcry. Democrats believed that Republicans would be eager to hide that stain by striking an agreement with Democrats to cut the program less sharply. The political downside: It would leave Democrats unable to use Medicare as an issue against Republicans in the 2012 campaign.
Obama, Vice President Biden and other White House officials firmly believed that it would be easier to sell a big deal, if it actually stabilized the debt, than trying to persuade lawmakers to vote for cuts that were both politically painful and too modest to solve the problem. “Don’t die on a small cross,” Biden was fond of saying.
By the time Obama teamed up with Boehner for a round of golf in mid-June, many in the administration believed that a bipartisan grand bargain that raised tax revenue and took a swing at Medicare costs could happen.
But when talk turned to new tax revenue, the Republicans kept shutting down.
In June, Cantor walked away from talks led by Biden after Democrats pressed him to accept a plan that limited some tax breaks for corporations and wealthier Americans in exchange for cuts to federal health programs. Cantor said it was up to Boehner to make such decisions. Boehner, meanwhile, engaged Obama in secret talks over a grand bargain. But he, too, walked away as Cantor argued that they couldn’t get the caucus to accept any tax hike.
“There was always a sense that Cantor had his finger on the pulse of the tea party crowd,” a Democratic official involved in the talks said. Cantor and Boehner both emphasized that the new hard-liners were a “different breed,” an “extreme force that could not be controlled.”
The official added: “I, for one, was never sure whether they were using this as a negotiating tactic or expressing genuine frustration.”
Boehner’s office acknowledged the newcomers’ effect on the negotiations. Asked about the leader’s tactics after the deal was made, spokesman Michael Steel said the early focus on the debt limit was dictated by the attitudes of the new majority. The leadership drove a hard bargain out of necessity, he said, knowing that anything less wouldn’t stand a chance of passing the House.
“We could see this fight was coming, because we had a new group of people who weren’t interested in the way Washington has always done business,” Steel said. “If they were going to vote for a debt-limit increase, they were going to need serious spending cuts and real reforms.”
Chapter 9: Doubts and suspicions
As the Aug. 2 default date drew closer with no deal in sight, GOP leaders intensified their campaign to convince the holdouts that the “adult moment” Boehner warned of last fall had arrived.
The leadership arranged for numerous experts from rating agencies and think tanks to brief the caucus on the likely consequences of default. One presentation, a slide show by a former Treasury official who served under President George H.W. Bush, soberly detailed the daunting choices that the government would face if it ran short of cash.
Some members were convinced. Others, including South Carolina’s Scott, were unmoved. Scott said he understood that breaching the deadline could inflict short-term pain. But without serious cuts, he said, “there won’t be a long term.”
The leadership, having made the debt limit into a rallying cry, was trying to make sure that the newcomers didn’t push too far. “Leaders like me would try to tell them: Look, no, really, we think it could be bad,” Ryan said. “They’d look at it with suspicion . . . If there was any semi-credible source saying default wouldn’t be so bad, they clung to that.”
Still, Ryan sympathized with their ardor and desire for change. “I was like that when I first got to Congress,” he said, recalling his time as an angry back-bencher, throwing procedural monkey wrenches into the gears of the House.