Ryan told the newcomers that he learned to work within the system without sacrificing his principles, and he tried to persuade them that they could do the same. He counseled them to be patient, to accept partial victory.
“You have to get a mandate from the country that’s big enough” — control of House, Senate, White House — “to do what we want to do,” he recalled telling them. “We don’t have that kind of mandate right now.”
Chapter 10: Burning down the house
In mid-July, Boehner tried again for a big deal. On Friday, July 15, as Capitol Hill began emptying out for the coming weekend, he invited White House chief of staff William Daley and Treasury Secretary Timothy F. Geithner to his office. With Cantor in the room, Boehner laid out an ambitious plan to tame the debt that would include a rewrite of the tax code that would raise an additional $800 billion over 10 years — the equivalent of letting the Bush tax cuts expire for the nation’s top earners, a key Democratic demand.
If White House officials had any skepticism that Boehner could deliver, they felt they had little choice but to engage him. The deal was big and bold, and White House officials believed it was worth going the extra mile to see whether it would work.
On Thursday, July 21, Obama’s senior advisers met at the White House with top aides to Boehner and Cantor. For two hours, they went line by line through the emerging agreement. It felt like they were “very close” to the promised land, a senior administration official said.
That afternoon, Obama called Boehner and gave him a choice: If you want aggressive entitlement cuts, I need more revenue. But if you can’t stomach extra revenue, we can dial back the entitlement cuts and still do something important.
The call went well, according to Democrats in the room. That evening, Obama met with Democratic leaders and told them to prepare for tough cuts to Medicare and Medicaid.
Twenty-four hours later, the deal was dead. Once again, Boehner walked away. Worse, from the administration’s point of view, Boehner’s rhetoric was growing harsher, at times echoing the most uncompromising voices in his new majority.
Administration officials now faced what they saw as a frightening possibility: That the controlling party in the House might be willing to “let the house burn down,” in the phrase bandied about at the White House — unless its demands were met.
Obama’s top advisers, surveying their options, decided to open some doors to compromising on their tax demands. In their view, with flames licking the rafters, House Republicans were not just slamming doors shut. They were locking them.
In the end, the White House backed off its demand for new tax revenue and agreed to a multi-phase deal that may produce only spending cuts. In return, Congress gave the Treasury sufficient borrowing power to pay the government’s bills through the 2012 election.
On the Hill, leaders congratulated themselves for averting disaster. Republicans considered it a win-win: deep spending cuts to come and no new taxes. But the markets were less impressed with the turn toward austerity. After slumping for days, they swooned Thursday amid mounting fears of a new global slowdown. On Friday, the rating agency Standard & Poor’s issued the first-ever downgrade of the nation’s credit rating, saying the “political brinkmanship of recent months” had shown evidence of “America’s governance and policymaking becoming less stable, less effective, and less predictable.”
The public shared the markets’ unhappiness. In a New York Times poll released Thursday, 82 percent of those surveyed said they disapproved of how Congress was doing its job, a record number. Republicans earned more criticism than Democrats.
For Democrats, the deal’s lack of new tax revenue was hard to swallow. But some believed they would be able to regain leverage this fall, when a new committee begins working to tame the debt, and late next year, when the Bush-era tax cuts are set once again to expire.
For Republican leaders, there was pride in a hand well played. “I think some of our members may have thought the default issue was a hostage you might take a chance at shooting,” Senate Minority Leader Mitch McConnell (R-Ky.) said. “Most of us didn’t think that. What we did learn is this — it’s a hostage that’s worth ransoming.”
McCarthy was more plain-spoken.
“Would Democrats have ever agreed if they thought the new freshman class was going to roll over? No. The freshmen made our hand so much stronger,” he said in an interview. “You had a fear of how far they would go. I’m sure the president looks back, too, and was fearful. But in negotiations, isn’t that the best thing?”