Obama’s role in debt-ceiling talks scrutinized

August 5, 2011

The White House was knee-deep in budget negotiations with Republican lawmakers one May afternoon when Senate Democrats boarded buses for a short ride down Pennsylvania Avenue for a face-to-face session with President Obama.

Seated in an auditorium, the senators pressed Obama on their key concern as talks heated up over raising the nation’s debt ceiling: How would he stand up to tea party Republicans?

To the dismay of many in the audience, Obama conceded that he probably couldn’t — and probably wouldn’t — push too hard because he was unwilling to risk a U.S. government default.

“I have no choice,” the president said, according to one participant.

Citing a faction of House conservatives dead-set on opposing any compromise, Obama said he was not “going to stand here and pretend to you that I can just look the other way” if hardball negotiations lead to an economic crisis, according to another person in the room.

Obama is a relative newcomer to the kind of tough negotiating with Republicans that will define the remainder of his term. It’s not a role he faced as a legislator, and during his first two years in office, he scored victories in a Democratic-controlled Congress. In the past nine months, though, Obama has found himself engineering three major budget deals with Republicans.

Obama surprised some of the senators in the room that May day with the answer he gave at the outset of the latest of those negotiations. They suddenly realized that their bottom line, at least in this case, was much different from the one being laid out by the president leading their charge.

For many, it was also an early and revealing glimpse of what they think was an overly cautious negotiating style that they would watch unfold — at times with horror — over the next several weeks. Some thought that Obama, who had already embraced some of the cuts Republicans demanded, had given up too much too soon.

“One side is enormously aggressive in pushing an agenda, and the other is saying, ‘Let’s all get along,’” said Sen. Bernard Sanders, a Vermont independent who caucuses with Democrats and was one of the lawmakers questioning Obama in May. “So who do you think is going to win?”

As the two parties turn to the next battles in the grand ideological war over taxes and spending, how Obama operates in those face-to-face negotiations with Republicans will have enormous consequences for his political future, his party and the country.

White House officials believe the president’s approach will pay off politically. They think the image of him as a reasonable compromiser fits with what most voters are looking for, especially the centrist independents who are turning their backs on the Democratic Party. But many Democrats fear that Obama is giving too much ground on the party’s core values at a time when Republicans are unified in their quest to shrink the size and scope of government.

For the country, how the president negotiates will go a long way toward setting the terms for what lawmakers in both parties consider the defining questions of their time: What will Medicare and Social Security look like? How big will the military be? How much will the wealthy pay in taxes? How will the country care for its poor, sick and vulnerable?

Disappointed liberals

In the debt-ceiling talks, many liberal activists were angry that Obama didn’t push Republicans to the limit to try to force them to take the blame for a potential default and accept some tax increases along with spending cuts. Some House Democrats called on Obama to invoke the 14th Amendment to the Constitution, which they said gave him the authority to lift the debt limit on his own.

Instead, the president often operated more as a mediator, accepting the need to cut spending, including entitlements, while limiting his priorities to avoid default and any more debt-ceiling votes until after his reelection campaign.

“You look for what the other side needs. You look for what you need,” said White House budget director Jacob J. Lew, describing Obama’s negotiation philosophy. “And you look for a solution where both can have honorable outcomes. You can’t vanquish each other.”

By that measure, Obama got what he wanted. White House officials say the president’s strategy in the recent debt deal, in negotiations during last year’s lame-duck session and in this year’s budget talks has been effective, yielding policy victories that many couldn’t have foreseen after the tea party’s 2010 rise.

They note that Obama secured a payroll tax cut to help middle-class workers and an unemployment compensation extension in December. And in April, many conservatives were angry that House Speaker John A. Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.) did not win more cuts.

The debt-ceiling result, the White House believes, puts Democrats in a strong political position and strengthens their bargaining power. The party can present itself as the guardian of Medicare, and possible Pentagon cuts could damage the GOP with its politically hawkish base.

Getting to that point required a realistic — and delicate — approach, White House officials said. Lew, a key player in negotiations, said the GOP enjoyed “lopsided leverage.” The White House believed that as many as 100 members of Congress were prepared to block a deal even if it meant a certain default.

From the beginning, Obama had to strike a balance in his rhetoric and actions, between pushing back in negotiations against GOP demands and reassuring the markets and the world that there would be no U.S. default.

“He was juggling between his two roles,” Lew said.

Obama left much of the early negotiating to Vice President Biden and senior aides. The president occasionally spoke by phone to congressional leaders, and he hosted them for White House meetings on an increasingly frequent basis. In one session in the Cabinet room, lawmakers witnessed something they had not expected — a bit of presidential snark. When Majority Leader Eric Cantor (R-Va.) handed Obama a packet containing Republican proposals, the president thumbed through the papers, then looked at Cantor and said: “I must be missing a page. There’s no revenues here.”

That and other exchanges, in which the typically calm president showed flashes of anger, gave Democrats some hope that Obama was trying to strengthen his leverage.

In a widely publicized Cabinet room encounter with Cantor, who was pressing for the debt ceiling to be raised with two separate congressional votes, Obama left after telling Cantor: “Eric, don’t call my bluff. I’ll take this to the American people.”

Cantor later recalled that he was “a little startled by the directness of his comment.”

“When the president was faced with a policy difference, he just didn’t like it,” Cantor added.

No ‘grand bargain’
By mid-July, it was Obama, more than Democratic lawmakers, who was pursuing a “grand bargain,” holding intensive talks via phone and in person with Boehner.

The idea, which would have included tax increases and cuts to entitlements, carried risks for both men as they struggled to retain the support of their respective bases. The two spoke on a Thursday night, July 21, and pressed each other to give more ground. “We’re close,” Obama said. “Call me back.”

The next morning, no call came. Finally, after 5 p.m., Boehner called — and, for most of the 11-minute conversation, the president let him have it.

The president was “hot,” according to a person familiar with the call. Obama chided the speaker, asking sternly, “I can’t get a return call for 18 hours?”

As the action turned back to Capitol Hill, the White House made a strategic decision not to have the president do what some predecessors — including Bill Clinton and Ronald Reagan — did and phone rank-and-file lawmakers in the opposing party. They felt that Obama’s outreach to tea party conservatives could well backfire.

By the final weekend of talks, as an agreement came into view, Obama held firm to his initial bottom line. No default, no second debt-limit vote.

The question still nagging some Democrats is whether Obama might have done better had he waited to reveal that endgame.

House Minority Leader Nancy Pelosi (D-Calif.) was a reluctant supporter of the debt-ceiling deal, yet she later described Obama as a “champion at the table.”

“Anyone who thinks the president was naive is naive,” she said. But Pelosi, a veteran partisan warrior, added: “He’s respectful of their point of view, very respectful, much more patience than I’ve ever had, much more patience.”

Republicans said they saw Obama from the start as potentially soft on taxes, despite his heated rhetoric.

“What I saw throughout was that ultimately what he wanted was just to get through the election on the debt-limit increase,” Cantor said. “It wasn’t about cuts. He had said very early on to many of us that the issues of revenues and health care will remain into the election of ’12. So if that’s the case, I’m not sure what he really wanted other than to get through the election.”

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