His plan backed away from earlier positions on taxes in a number of ways, including pushing the top rate below 35 percent. But there was a deal-breaker for the Republicans — a demand for additional tax increases to match proposed cuts to Medicare and Medicaid. To keep the health-care cuts, a critical component of the deal for the GOP, Republicans would have to swallow about $400 billion more in tax hikes — a 50 percent jump from the figure that had been under discussion.
Inside the White House, the offer reflected the new political reality shaped by the Gang of Six. In light of that farther-reaching proposal, White House officials worried that the deal under discussion with Boehner would meet resistance, particularly among Obama’s Democratic supporters. Higher taxes explicitly targeted toward the wealthy offered an element of fairness, in the White House view, and a way to sweeten any deal for the Democratic base.
Obama aides said the new offer also reflected their frustration at what they described as an unrelenting effort by the GOP to cut safety-net programs. “They say: ‘You moved the goal posts. You derailed this entire thing,’ ” said a senior administration official. “But it was simply a recognition of what they were demanding.”
The official said the Republicans wanted “game changers” on Medicare and Social Security; they said they needed an “Obama scalp.”
“We said, ‘Look, guys, in a world in which the Gang of Six just came out today, if you’re doing all those things, a fair and balanced approach involves more revenue,’ ” the official said. “At the time, nobody in the room, neither us nor them, thought that anybody was moving the goal posts.”
The Republicans describe it differently. The news from the White House, they say, was a “tough blow” to Boehner, who saw the push for additional taxes as tantamount to Obama violating a “gentleman’s agreement” on the broad outlines of a plan for which the speaker was already taking heat from some in his ranks.
By Wednesday morning, as the Obama and Boehner sides gathered again in the Oval Office, the optimism of Sunday had disintegrated. Vice President Biden, a skeptic of restarting talks with Boehner after the first round collapsed, was there. There appeared to be a very different president in attendance, as well.
Excited and upbeat three days earlier, Obama now was stern and lecturing. According to notes taken by GOP aides, he opened by complaining about Boehner’s demand for $200 billion in Medicaid cuts, a persistent point of contention. Then he began to talk about taxes, saying the Gang of Six “makes things more complicated.” The White House would need more tax revenue or smaller health-care cuts.
Boehner opened by expressing continued support for a big deal. But he told Obama that Republicans could not sign off on $1.2 trillion in new taxes. “I cannot go there,” he said. Nor could he sell $800 billion in tax increases without cuts to federal health programs, the biggest drivers of future borrowing.
Annoyed, Obama invoked Boehner’s personal friendship with Chambliss, a member of the Gang of Six, warning that Democrats would never support the package under discussion when “your friend Saxby” and other Republicans were willing to stomach as much as $2 trillion in new taxes. Negotiations deteriorated from there.
Boehner said Republicans could accept automatic repeal of the top-end Bush tax cuts as an enforcement trigger only if that were balanced by automatic repeal of a key piece of Obama’s signature health-care law, the individual mandate. Here in the president’s own office, Boehner used the most derisive terminology of conservative critics, calling it “Obamacare.”
Obama laughed. Then he joked that maybe the trigger should be his own removal from office. Biden deadpanned: Republicans might just go for that.
On Thursday morning, aides to Boehner and Cantor gathered again at the White House. During a two-hour meeting, the two sides hashed over minute details of a deal, never actually killing the president’s request for additional tax revenue.
Later that day, Obama called Boehner. The two spoke as if an agreement was still possible.
“We’re close,” Obama said. “Call me back.”
That night, Obama prepared his party’s congressional leaders. He warned Senate Majority Leader Harry M. Reid (D-Nev.) and House Minority Leader Nancy Pelosi (D-Calif.) that he might return to the position under discussion the previous Sunday — that is, cuts to Social Security, Medicare and Medicaid in exchange for just $800 billion in tax increases.
Would they support him?
The Democratic leaders “kind of gulped” when they heard the details, Daley recalled.
By this time, Obama had become the face of the bitter debt-ceiling talks and his poll numbers were dropping. His allies on Capitol Hill cringed at his predicament but also at what he was asking them to do.