How McConnell and Biden pulled Congress away from the fiscal cliff

With just 35 hours left, there was a phone message for Vice President Biden.

About an hour later, after talking to President Obama, Biden called back. He heard a familiar drawl: “Does anyone down there know how to make a deal?” Mitch McConnell of Kentucky, the Senate’s top Republican, wanted to know.

That phone call — the first of at least 13 between the two longtime statesmen — set in motion what became the ugly, unsatisfying last-minute conclusion of the “fiscal cliff” crisis.

It also ended a self-inflicted, nationally televised psychological experiment on Congress.

Two summers ago, politicians tried to concoct a deadline so terrible that even they — mistrustful, divided, weakly led — would be scared into doing something big to solve the nation’s tax-and-spending problems.

The impact of tax increases on taxpayers

They misjudged themselves.

In the months leading up to the cliff, and especially in the grueling final two weeks, their mega-deadline only produced more division, not cooperation. There were the usual feuds between the parties, followed by a round of new and bitter battles within them.

An in-depth look at the final four tense days shows that McConnell and Biden resolved the crisis through old-fashioned backroom bargaining. With each call and each new offer, they pared away a little more of the grand ambitions each side had once held so dear, until all that was left was a modest measure that raised some new tax revenue and left most of the deficit problem intact.

Left largely to the sidelines was almost everyone else in Washington — the president, the speaker of the House, the majority leader of the Senate and hundreds of rank-and-file lawmakers anxiously wondering what they might be asked to vote for and how much each of their leaders was giving away.

Congress’s experiment became a parable about the dangers of the way Washington works now — careering from deadline to deadline, panic to panic, no one really happy in the end.

And it concluded in typical fashion — lawmakers set themselves up for another deadline and another panic, this one just two months away.

On Friday, four days before the year-end deadline, President Obama and the congressional leaders from each party gathered in the Oval Office. It was not a happy group.

The Democrats were wary. Two weeks earlier, Obama stunned them by offering to give ground on long-held Democratic positions. The president offered to apply a less generous measure of inflation to Social Security benefits, which would save money by reducing their rate of growth. Obama also backed off a demand that he had championed for five years that George W. Bush-era tax cuts be allowed to expire for people making more than $250,000 per year.

Instead, Obama gave a higher, more Republican-friendly number: $400,000.

“In the blink of an eye, they crossed the Rubicon,” said a Senate Democratic aide.

But, there in the Oval Office, the top Republican in the room was in an even worse mood.

Before the meeting even began, House Speaker John A. Boehner of Ohio had offered a vulgar insult to Senate Majority Leader Harry M. Reid (D-Nev.).

Boehner’s anger began with a recent, debilitating defeat in his own chamber, when he asked fellow Republicans to cast a vote supporting one of his bargaining positions. They declined, somewhat spectacularly, leaving Boehner to declare that he had done all he could do. It was up to the Senate to avert the cliff.

Reid decided to pile on, calling Boehner a “dictator” on the Senate floor — a so-wrong-it’s-funny insult that provoked snickers in the Capitol.

So when Boehner saw Reid at the White House, the normally amiable speaker was steaming.

“Go f--- yourself,” he said, pointing a finger at Reid, according to both Democratic and Republican aides who were there.

“Excuse me?” Reid responded.

Boehner repeated himself. Reid just stared.

The meeting went ahead. Democrats talked tax rates and trade-offs with McConnell. But Boehner refused to engage, sitting stone-faced on a deep couch.

Reid pestered him with questions. House Minority Leader Nancy Pelosi (D-Calif.) tried to play good cop.

“John,” she said, “Are you going to try to be a little bit constructive?”

Boehner would not.

“The House has acted,” he said. “It’s up to the Senate.”

On Saturday, McConnell and his staff hunkered down in the senator’s office. Reid did not come in, but his staff got to work in his office.

Only 60 steps separated them, but they were hundreds of thousands of dollars apart on the threshold for raising income tax rates.

McConnell made an offer: The Bush-era tax hikes could expire for people making more than $500,000, or couples making more than $750,000.

Democrats countered with a lower number. On it went, and the numbers got closer together. Republicans went down as far as $450,000 for individuals, $550,000 for couples.

That’s when the bargaining stopped.

Saturday turned to Sunday, and Republicans had still not heard a response to their last offer. Nothing at 11. Nothing at 12. McConnell decided something was wrong. “We couldn’t get the majority leader to counter,” the GOP leader said later. There were now less than 36 hours until the deadline. “The clock was ticking and we were not moving.”

They weren’t moving because Democrats had decided that they had gone as far as they could. Reid and Obama had disagreed privately about what their next offer should be. At one point, Reid was unhappy with an idea that Senate aides said came from Obama — to put the change in Social Security benefits back on the table in exchange for a delay in spending cuts and a rise in the debt limit.

Aides said Reid actually tore up the proposal and threw it into the blazing fire in his ornate green marble fireplace. The paper burned. Reid said he didn’t want evidence that the idea had ever been considered.

Administration officials, for their part, deny that Obama ever considered including the Social Security change in the deal.

Finally, an aide to Reid called an aide to McConnell to make it explicit. There would be no new offer. Take it or leave it.

“It felt like they had chosen the cliff,” a Republican aide said.

McConnell, frustrated, asked an aide to call Biden. The two of them had brokered the deal that set up this mess, during the debt-ceiling crisis of 2011. Now, they would broker the deal that ended it.

When Biden called back, aides in McConnell’s office listening to his side of the conversation could tell that Biden was interested. In fact, Biden had already walked from his office to Obama’s. He got the go-ahead to negotiate.

“Why don’t you get up to speed on this and call me back,” McConnell said, according to the notes of someone in the room.

Deadline day. Over the course of 13 phone calls between Biden and McConnell, and others between lower-level staffers, the deal was getting done.

As the two men talked, they began to kill off the grandest ambitions that both parties had brought into the fiscal-cliff debate. Obama, for instance, had said since 2007 that taxes should go up on people making more than $250,000.

That was gone, now. Biden and McConnell agreed on $400,000, and $450,000 for couples filing jointly.

The men talked about two other key demands the White House had made. One was that the huge budget cuts called the “sequester” would be delayed to avoid hurting the fledgling economic recovery. Obama had also insisted that any cliff deal raise the national debt ceiling. He did not want a repeat of the crisis that nearly pitched the country into default in the summer of 2011.

Gone, and gone. When Reid got news Monday morning that the terms called for a delay of mere months for the sequester, he called the president. What are you going to do in two months, Reid asked Obama, when the sequester is about kick in along with a new deadline on the federal debt limit?

Reid worried that Republicans would demand trillions of dollars in new spending cuts.

I’m not going to negotiate with them, Obama replied. Reid felt it wouldn’t be so easy.

“Mr. President,” he said, according to aides, “We’re setting ourselves up.”

Republican goals, too, were sacrificed. A party that defined itself by its opposition to taxes would now be asked to raise them. Their ambition to save money by changing Social Security benefits was also cut.

The last piece of the puzzle: How, exactly, should they delay the sequester? The cost of paying for it would be $12 billion a month.

They settled on a two-month delay. “If we can’t find $24 billion here to cut, we ought to find another line of work,” McConnell told Biden in one call.

In the end, they made their small deal and then set out to sell it.

McConnell made his pitch to Senate Republicans about 5 p.m. “You could argue persuasively, that — in a government controlled two-thirds by the Democrats — we got permanency for 99 percent of the Bush tax cuts,” McConnell said.

Most of his colleagues were joyous. “Deal, deal, deal,” Sen. John McCain (R-Ariz.) chanted to reporters as he exited the room.

Biden made his pitch around 9 p.m. By then, Reid was on board. As he introduced Biden, he told Democrats that he didn’t want anyone to try to block a vote on procedural grounds.

If you don’t like the package, Reid said, you can vote no.

The scaled-down bill passed in the Senate, with just three Democrats and five Republicans voting no.

After a day of hemming and hawing, the House followed suit Tuesday night. The final count was 257 to 167, with most of the support coming from Democrats.

Boehner voted yes. But two of his top deputies, House Majority Leader Eric Cantor (Va.) and Majority Whip Kevin McCarthy (Calif.), voted no.

In the end, it seemed, the lawmakers who had set up this grand experiment had not lost faith in themselves. Instead, they seemed to believe the answer was to hold another experiment, not three months away. Already, politicians from both sides were promising that the next deadline would produce the victories that this one did not.

Obama promised that he would not negotiate over the debt ceiling: “We can’t go down that path again,” he said in a televised address.

Some Republicans seemed certain that they could make him do just that. “Our opportunity here is on the debt ceiling. The president’s made it very clear – he doesn’t even want to have a discussion about it, because he knows this is where we have leverage,” Sen. Pat Toomey (R-Pa.) said Wednesday on MSNBC’s “Morning Joe.” “We Republicans need to be willing to tolerate a temporary partial government shutdown, which is what that could mean.”

fahrenthold@washpost.com

Scott Wilson and Ed O’Keefe contributed to this report.

David A. Fahrenthold covers Congress for the Washington Post. He has been at the Post since 2000, and previously covered (in order) the D.C. police, New England, and the environment.
Paul Kane covers Congress and politics for the Washington Post.
Lori Montgomery covers U.S. economic policy and the federal budget, focusing on efforts to tame the national debt.
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