Boehner’s decision means an opportunity lost

Dan Balz
Chief correspondent July 9, 2011

House Speaker John Boehner’s surprise announcement late Saturday that he was abandoning efforts to reach a comprehensive budget agreement brings a sudden end to what may have been the best opportunity in years to deal with the country’s looming fiscal crisis.

Boehner pulled the plug on talks with the White House on a package that would have called for cuts in major entitlements programs as well as new tax revenues. It was a stunning decision, coming a day before President Obama and congressional leaders were due to resume their negotiations.

Dan Balz is Chief Correspondent at The Washington Post. He has served as the paper’s National Editor, Political Editor, White House correspondent and Southwest correspondent. View Archive

But though the timing was a surprise, the decision also may have been utterly predictable. Facing a potential revolt in his caucus, one that was growing as more details about the components of the possible agreement were leaking out, Boehner apparently decided to cut his losses now rather than risk a major insurrection and possible rejection by his party.

What comes next, after what could be some rancorous talks, will be a far more limited agreement, one that will get the government through the deadline when its borrowing authority expires, but one that still leaves for the future what to do about Social Security, Medicare, Medicaid and revenues in ways that put the nation’s long-term fiscal house in order.

For weeks now, the president and the speaker were the two main advocates for a big deal as part of an agreement to hike the debt ceiling. Talks led by Vice President Biden had identified significant budget cuts but not major changes in entitlements or significant new revenues. Many in Congress were satisfied that such a package was more than enough to get through the current debt ceiling deadline.

But if others recommended a more limited agreement, the speaker and the president kept talking about something bigger. The president kept prodding both sides not to let this moment slip away. The speaker, more quietly, hung in, with his and Obama’s staffs exchanging ideas that would have brought political howls from both their parties.

Sunday’s meeting was to be the moment when it either began to come together or fell apart. It would have been a meeting that had less to do with what it would take to raise the debt ceiling and more a test of whether political leaders from both parties can come together for something that has eluded Washington politicians for many years.

What was being discussed would entail the kind of political pain that has always blocked such agreements in the past. But it also might just have put the country on a sustainable fiscal path, which has been the stated goal of both sides for some time.

A big deal would have reduced the deficit by $4 trillion or more over 10 years or so, with spending cuts in excess of $2 trillion and new revenues estimated at more than $1.3 trillion, although precise numbers were hard to come by, given the fluidity of the talks.

The politics were treacherous. For Democrats, it would have meant swallowing significant cuts in entitlements programs. The changes likely would have affected all the major entitlements programs — Social Security, Medicare and Medicaid — and not just by tinkering. An example of the kinds of ideas that had been discussed was a rise over the next decade in the Medicare eligibility age.

For Republicans, it would have meant an end to the George W. Bush tax cuts for the wealthiest Americans, with the prospect that those high-earner income tax rates might be brought back down through a major overhaul of the tax code sometime in the next two years. (The lower tax rates for all other Americans that were enacted under Bush would become permanent.)

Virtually every Republican who got elected last November campaigned on a pledge not to allow those tax rates to rise. Boehner would have had to try to argue to his colleagues that ending the Bush tax cuts for the wealthy, coupled with an overhaul of the tax code that could have flattened the overall rate structure, was more tax reform than tax increase.

His troops weren’t buying it. House Majority Leader Eric Cantor had said he would not support such a plan. On Saturday, the Wall Street Journal editorial page added to the pressure on the speaker: “Mr. Boehner shouldn’t bet his majority on Mr. Obama’s promises,” the editorial stated.

Through the weekend the pressure built. Rather than wait until Sunday night, Boehner decided to call it all off before anyone got to the White House. So much for grand hopes.

Boehner blamed the White House for being unwilling to strike a big deal that did not include tax increases. But could he ever have believed that Obama would go for such a deal? Obama gave in to Republicans late last year when he agreed to extend the Bush tax cuts for the wealthy in order to prevent a tax increase for all other taxpayers that could have damaged the shaky economy.

Obama has made clear since that he would not make the same deal when those tax cuts are due to expire after the 2012 election, and he was reportedly clear throughout the budget talks that new revenues had to be part of an overall agreement.

On that, he has support from outside analysts and politicians who have tried to design solutions to the fiscal problem. Virtually all, including the president’s debt and deficit commission, recommended a balanced package that would have included new revenues and entitlement reforms.

Even before Boehner’s Saturday decision, some Republicans said Obama had handled the negotiations in a way that, no matter the outcome, would help him politically. By putting cuts in entitlements into the discussion, Obama had moved himself closer to the center and demonstrated to political independents that, above all, he is trying to bring the two parties together to solve big problems.

Now that Boehner has walked away, say Democratic strategists, the president can argue that Republicans bowed to their tea party activists and let political orthodoxy about taxes stand in the way of a historic agreement. Republicans will argue the opposite, saying that it was the president’s commitment to more taxes, which they believe the public opposes, made a deal impossible.

White House Communications Director Dan Pfeiffer said in a statement Saturday night that the president would try again to make the case for continuing to try to strike a comprehensive agreement. But the discussion will most likely turn to what kind of deal can be reached to avoid the chaos that could come if the debt ceiling is not increased.

That package, if there is an agreement, will probably follow the outlines from talks headed by Biden, which would be about half the size of a big deal and include major spending cuts, the closing of some tax loopholes and, perhaps, an agreement to tackle tax reform.

But for now there will also be recriminations that will complicate the ongoing discussions. And there will be the reality that once again, the country’s political leadership has done what so many of them have vowed not to do, which is to kick the can down the road again.

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