Kent Conrad’s last stand on debt

Sen. Kent Conrad has been the Democrats’ balanced-budget guy for more than a decade, and the job takes a toll. His wife paints the North Dakotan as a lonely Cassandra with Power Point slides, warning of a debt-ridden future liberals and conservatives alike would rather ignore.

The past two years have been especially stressful. Conrad almost single-handedly forced President Obama to create the commission known as Bowles-Simpson, which produced a debt-reduction plan now hailed as a model of bipartisan compromise on taxes and government spending. Conrad then spent months working with like-minded senators to build support for the plan and bring it to a vote.

His efforts failed — and annoyed party leaders. White House officials say Conrad inadvertently muddied their own budding budget deal with House Speaker John Boehner (R-Ohio). Senate Majority Leader Harry Reid (D-Nev.) — worried, Democrats said, that Conrad was too eager for an agreement with Republicans — excluded him from last-ditch talks undertaken by a specially-created “supercommittee” last fall.

Now, with his retirement looming in January, Conrad is laying the groundwork for one last hurrah.

He believes the stars may finally align after the November elections for a compromise to dig the nation out from under its $15.4 trillion debt. He is again meeting with the Senate’s bipartisan “Gang of Six” and consulting with Republicans and Democrats in the House. Their goal is to draft far-reaching legislation to tame the debt and present it for a vote after Election Day, when lawmakers will be under intense pressure to reach an agreement to avert huge tax increases and deep spending cuts set to hit Jan. 1.

If that too fails, Conrad says he’ll walk away with no regrets.

“I’d like nothing better than to be part of reaching conclusion,” he said during a recent interview in his sunny corner office in the Hart Senate Office Building with his dog, Dakota, lolling on his lap. “But, you know, I really do feel I’ve done my level best.”

Conrad announced last year that he would not seek re-election, ending his career after 26 years in the Senate, and 11 as the top Democrat on the Senate Budget Committee, which he now chairs. His wife, Lucy Calautti, a lobbyist for Major League Baseball who managed Conrad’s first Senate campaign and then served as a top aide to his best friend, former senator Byron Dorgan (D-N.D.), said she did not try to dissuade him.

“This is hard. This has become very hard,” said Calautti, who dropped by Conrad’s office to deliver the dog and stayed to talk about the challenges of pursuing bipartisan solutions in a increasingly polarized world.

“I watched his predecessors [on the Budget Committee]. It was always the same thing. After so many years of doing this, they found themselves walking to a vote, and those on the left are mad at them and those on the right are mad at them. And you just have to keep plugging along,” she said. “But there aren’t that many people who say this is the more moderate, shall I say, middle-of-the-road way to get the job done. And at some point, you look at that and say, ‘I don’t know. I’m not sure I’m convincing enough people anymore.’ ”

Conrad’s critics say that’s true. With Democratic leaders determined to shore up the social safety net with higher taxes and Republicans just as determined to shrink government and cut taxes, they say Conrad’s quest to quietly assemble a bipartisan accord on the budget has been both fruitless and a distraction from the direct clash of ideas necessary to help voters choose a path forward.

“There’s no Democrat who knows the budget like he does. When he and I talk, we wind up agreeing with each other. But I have been frustrated that he’s not been willing to put a plan out there and fight for it,” said House Budget Committee Chairman Paul Ryan (R-Wisc.). “We shouldn’t be insulating this from the American public, trying to cut backroom deals on commissions or whatever. I think the process is moved forward if we put plans out for the public to see and defend our ideas.”

Liberal critics are equally tough. In November, Reid dismissed Conrad’s efforts to strike a deal with anti-tax Republicans as “just happy talk.” At the White House, Conrad and his elusive Gang of Six agreement became a standing joke.

“He wasn’t made for these times, in a lot of ways,” said one senior Democratic aide, speaking on condition of anonymity to candidly discuss a sitting senator. “It’s going to take an election to reset the terms of this debate.”

Building consensus

Conrad’s defenders argue that Washington has rarely done big things without bipartisan consensus. While Ryan relishes confrontation, his austere, no-new-taxes budget last year was savaged by Democrats and rejected by several members of his own party in the Senate. Ryan is headed for another clash this spring, as he prepares this week to unveil a budget blueprint that bows to demands from House conservatives to slash $19 billion from 2013 agency budgets — deeper cuts than GOP leaders agreed to last summer.

Conrad, by contrast, has worked with Republicans behind closed doors to inch the public debate toward a middle ground embodied in the Simpson-Bowles recommendations. The commission — which takes its name from its presidentially appointed co-chairmen, Democrat Erskine Bowles and former Republican senator Alan Simpson — embraced both higher taxes and measured changes to the popular health and retirement programs that threaten to swamp the budget as the baby-boom generation retires.

Since its release in December 2010, the Simpson-Bowles plan has become the standard against which all other debt-reduction proposals are measured, by Republicans and Democrats alike. Many independent budget analysts believe it offers the best hope for saving the nation from economic disaster.

Conrad “almost alone forced the appointment of that commission by the White House,” said Dorgan, who retired from his North Dakota Senate seat last year. “He will probably leave before there is some sort of grand solution to the fiscal policy mess we’re in. But whenever that solution comes, it will come in large part because of Kent Conrad.”

Expert in the rules

It’s hard to imagine the Senate without Conrad, who turned 64 last week. His encyclopedic knowledge of the federal budget and its arcane rules have made him indispensable to his party in almost every major legislative battle of the past few years, including the fight to pass Obama’s health care initiative in 2010. Unlike some other senior Democrats, he also has established a deep reservoir of trust with many Republicans.

“His word is his bond. He never surprised me,” said former senator Judd Gregg of New Hampshire, who for years served as Conrad’s GOP counterpart on the budget committee. Conrad and his wife are both “straight shooters with strong opinions who defend their beliefs. Everything is up front with them.”

Born in Bismarck to a family with statewide political connections, Conrad was orphaned at age 5 when his parents were killed in a head-on collision. He and his brothers survived the crash, and Conrad was raised by his grandparents. He said he came to understand the danger of debt from his grandfather, a politically active newspaper publisher who faced financial ruin during the Depression, when there was a run on a community bank where he was an investor. As his grandfather told the story, Conrad said, it took nine years to dig his way out.

Conrad later attended Stanford University and earned an MBA at George Washington University, even as he plunged into the small world of North Dakota politics. He was elected state tax commissioner in 1980, at the start of a vicious agricultural downturn.

“Debt can be your friend, because it can help you acquire assets you could not otherwise do. But it can also crush you,” Conrad said, recalling a farmer who had run up $125,000 on credit cards trying to keep his farm alive. “I think I get how debt works, and I’m very concerned about the trajectory this country is on.”

Campaign pledge

Debt drove Conrad to run for the Senate in the 1986, when alarms first erupted over deficits in the Reagan era. Debt nearly drove him from office six years later, when he announced his intention to retire after a single term because he had failed to make good on a campaign pledge to sharply reduce budget deficits, then running more than $200 billion a year. The untimely death of Quentin Burdick, North Dakota’s other senator, allowed Conrad to stay on in Washington without breaking that pledge.

By 1996, Conrad was part of a revolt of moderate senators that helped push President Bill Clinton and a Republican Congress to erase the deficit, put the budget back in the black and begin paying down the debt for the first time in a generation. Conrad calls it his proudest moment.

Since then, he has watched with dismay as the nation has sunk back into the red, frequently warning his colleagues against irresponsible actions. In 2001, Conrad voted against President George W. Bush’s push to return the Clinton-era budget surpluses to the taxpayers in the form of tax cuts, arguing that Washington should instead focus on paying down its debt and preparing for the day when the baby-boom generation would swell the ranks of retirees receiving Social Security and Medicare. He voted against another round of tax cuts in 2003, and against starting an expensive war with Iraq in 2002.

After the Great Recession hit in 2007, tax revenues plummeted and the deficit soared. Conrad nonetheless backed expensive measures proposed by Bush and later Obama to boost economic activity, calling them necessary to prevent economic collapse. But he also began pushing party leaders to map a strategy for cleaning up the mess.

His big chance came in late 2009. With annual deficits topping $1 trillion, Obama needed Congress to raise the legal limit on government borrowing. Conrad seized the opportunity to press the White House to create a commission dedicated to debt reduction, an idea he and Gregg had championed for years.

The White House opposed the move, so Conrad organized 10 moderate Democrats to withhold their votes from the debt-limit increase. After legislation to establish the commission failed, Conrad secured a commitment from the White House to create the panel by executive order.

White House officials now say they were glad to do it. Obama was “consistently intrigued” by the idea of a debt-reduction commission, officials said, and almost certainly would have appointed one without pressure from the Senate.

“The main focus of our deliberations was how to launch a fiscal commission with the highest chance of success,” said White House economic adviser Jason Furman, who drafted a memo on the subject for Obama in fall 2009. “So there was a lot of interest in a commission. The only question was what the best timing was.”

But Conrad and others involved in the fight say the administration’s interest was not apparent. Until 10 Democrats threatened to block the debt-limit increase, Conrad said, “there did not appear to be momentum.”

“The commission would not have happened without Conrad,” said a former Democratic House aide who was involved in the negotiations. “That really was Conrad at his best because he was doing two things simultaneously: Pushing his own policy interest of getting the commission established and looking out for moderate Democrats” who were uncomfortable voting to increase the debt limit without some plan to rein in spending.

Relentless pursuit

Conrad “has been relentless on this issue,” said Sen. Mark Warner (D-Va.), a founding member of the Gang of Six. “He can recite a dozen times in the last decade when this issue has been tee’d up and we’ve whiffed. I give him credit for continuing to be in the fight when a lot of guys here just kind of sink into — just going along.”

The commission has proven surprisingly influential. Polls show voters care intensely about the debt; these days, Obama often finds himself under fire for failing to adopt the panel’s recommendations. Conrad said he still regrets the administration’s refusal to take a seat on the panel, a design flaw Conrad believes diminished its impact. But he is not among those who fault Obama for declining to endorse the final plan.

During a meeting of commission members at the White House, “the president asked me what I thought he should do,” Conrad recalled. “And I told him: ‘You know, the thing I worry about is if you wholeheartedly embrace it, it will drive House Republicans the other way.’ ”

In the end, pieces of the plan found their way into last summer’s debt-limit negotiations, though talks fell apart between Obama and Boehner to forge a grand bargain. Since then, party leaders have retreated to their separate corners, girding for an election-year smackdown. Democrats want to raise taxes on millionaires; Republicans want to privatize Medicare. For now, both parties are eager to avoid talk of the more painful choices that lie ahead.

Conrad, meanwhile, is forging ahead quietly, in the hope that compromise may once again look attractive when the campaign ends.

“I still think it has life,” he said of the Bowles-Simpson plan — and, by extension, bipartisanship in general. “I still think it has life.”

Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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