A rough 24 hours for the White House

December 18, 2012

Here's how the last 24 hours have gone for the White House.

On Monday, they delivered an offer to House Speaker John Boehner that included genuine concessions. They brought their revenue request down from $1.6 trillion to $1.3 trillion. They dropped their demand that the Bush tax rates expire for all income over $250,000 a year, offering a new threshold of $400,000 a year. They brought their debt-ceiling demand down from no more debt ceiling crises ever to no debt ceiling crises for two years. They agreed to some form of chained CPI as a way to cut Social Security benefits.


I don't know how we'd cover the fiscal cliff negotiations without this photograph. (Jewel Samad / AFP/Getty Images)

On Monday night, Boehner rejected their offer, and on Tuesday, Boehner unveiled "Plan B" -- a proposal to walk away from the talks, vote on a plan to make the Bush tax rates permanent for all households with income under $1 million, and then go home for the holidays. 

Between Monday night and Tuesday morning, Boehner apparently got an earful from his leadership team. They were angry, I'm told, over three main elements of the emerging deal. First, they don't think there should be even a two-year lift in the debt ceiling, as that removes their leverage to bargain for spending cuts in 2013 and 2014. Second, they worry that the tax revenues will be locked in but that there's no guarantee that Congress will get the entitlement cuts done. Third, they think that the spending cuts should be counted without interest and after subtracting the cost of extended unemployment insurance and infrastructure spending.

The question inside the White House now is what's behind Boehner's "Plan B"? Is he trying to show nervous conservatives that he's playing hardball? Or is Boehner signaling that he can't go any further and is now preparing to bolt the talks if the White House doesn't make further concessions? 

There are also some who think that Boehner -- and, more to the point, Boehner's House members -- increasingly see weakness in the White House's negotiating position.

A few weeks ago, the Obama administration was firm that they wouldn't budge on tax rates for income above $250,000 and that they wouldn't budge on the debt ceiling. They've since budged on both. Republicans increasingly think the White House will concede more now, and that if they don't concede more now they'll definitely give Republicans a better deal if threatened with debt default. Whether or not that's true, it pulls Republicans -- and Boehner -- to the right, as it makes it harder for Boehner to argue for a compromise now.

Meanwhile, the White House has problems within their coalition, too. Their allies are disappointed to see an old dynamic reasserting itself: The president makes concessions, thinking he's close to a deal, and then the Republicans pocket those concessions, offering nothing but renewed threats to blow up the talks in return. 

"This fight is not going to be won by the president taking a step towards Boehner, Boehner taking a step toward the president, the president taking a step toward Boehner, Boehner taking a step toward the president and so forth until they meet in the middle," says Damon Silvers, policy director at the AFL-CIO. "That hasn’t worked before. Boehner doesn't take the steps. It will be won by the president clearly siding with the American people on tax fairness and preserving the safety net from benefit cuts."

They also feel that the White House is weakening their hand if the negotiations fall apart and the president needs to win a battle for public support. "They ought to be in a position where they say to Boehner, 'You're the guy demanding benefit cuts and you're using them to fund tax cuts on the rich,'" Silvers says. Cutting Social Security's cost-of-living adjustment by chaining CPI, he says, "muddies that position. It shouldn't be muddied. It should be clear."

Worse, the pushback from congressional Democrats over chained CPI is stronger than the administration expected -- note the outspoken opposition from Sen. Dick Durbin, an Obama ally who's often considered a barometer for pragmatic liberals. 

The talks haven't blown up.Optimists note that the two sides remain fairly close to each other: In principle, Obama and Boehner seem to have agreed on a roughly 1:1 ratio of tax increases to spending cuts. Now, they're mainly arguing over what counts in that ratio.

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Suzy Khimm · December 18, 2012