“It’s hijacking the presidency,” Obama repeated, “putting a gun to the head of the economy.”
He seemed to be fortifying himself.
• • •
In an interview, the president said, “The one thing I’m not going to do is a short-term deal.
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“The reason that’s so important is because, given how spooked the markets already are about this whole process—which is unprecedented
in modern American history—for us to repeat this in increments every quarter would be disastrous for our economy. And we will not do that.
“Now, they painted this as, well, he just wants to get past the election. And I kept on trying to remind them,” he said laughing, “I said, look, everybody in the world is paying attention. This is not just a U.S. issue. This is a global financial issue. We can’t do business by threatening to default every three months.”
• • •
“I’m comfortable that we’re up to about $1.7 trillion,” the president said at that afternoon’s meeting with the congressional leaders. “We need to talk about if there’s anything we can do to plus it up. Additional mandatory, if there was net additional new revenue. By Friday, we need to make decisions. Are we going big, small or Mitch’s proposal?”
“Moody’s has just put America on negative watch,” Geithner said. The credit rating agency said the U.S. government’s sterling Aaa bond rating was in jeopardy because of failure to reach a debt ceiling agreement. The Moody’s report stated, “There is a small but rising risk of a short-lived default.”
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“What is meaningful to them?” asked Boehner.
A “comprehensive” deal, said Geithner. If it was only a down payment, the agencies would look for “something substantive that is complemented with enforcement.”
Boehner again said their focus should be to cut more than the increase in the debt limit. “This is basically a turd sandwich with fries,” he said. “So let’s just do the right thing.”
“Default would be a cataclysmic event,” Cantor said. “I want to go back to Thursday. When we were discussing the Biden proposal, it was roughly $2 trillion. On Sunday, questions were raised about the Biden proposal. On Monday, Mr. President, you said it was $1.7 trillion.”
He wanted to know what amount of deficit reduction the president really believed was possible.
“We’ve never cut it this close before,” Obama said. “Some folks
in your caucus don’t want to vote for it at all. I imagined the situation back in February. I said the first time that you presented that we’re short of the full package. Maybe the number’s smaller than what I said. Maybe it’s $1.4 rather than $1.7. I find $1.7 achievable.” Answering Cantor, he added, “No one is walking back on anything.”
“Well,” Cantor replied, “then the problem must be other folks on your side.”
“The $1.7 doesn’t include anything you don’t like,” Obama insisted again.
Reid had a different number. From the Senate Appropriations Committee, he said, “I’m hearing, well, we can get $1.1 trillion” but $300 billion would be cuts in security spending.
“Can we just walk through the numbers?” Obama said in exasperation.
Cantor said there was “$1.1 to $1.2 trillion in discretionary” general spending cuts.
Jack Lew said that “stuff was not nailed down.” He thought they were at about the number from the Biden meetings but reminded them that “the last meeting never happened” when Cantor and Kyl had refused to meet again. But he threw the Republicans a bone: “We are open to a higher number on civilian retirement.” Simpson-Bowles had recommended $161 billion in savings over 10 years, more than five times the administration’s $29 billion.
Hoyer, whose district was home to tens of thousands of federal workers, balked, saying there had to be compatibility between federal civilian workers and the military.
“We want to do more on military retirement,” Lew said without giving a number, and dove even deeper into the weeds. “Nutrition assistance is below what Eric says. It’s $2 to $5 billion, and I think we have it at $20 billion.”
Obama noted the Republicans had not included unemployment insurance, “which is something we don’t agree on. If I look at this sheet, Eric and John, if you take out the nutrition and take out the education, which is two areas of disagreement, you’re at 282 and we’re at 279 on ours. So there’s a minimum area of agreement.”
Kyl objected that some of it had not been agreed upon, including agriculture subsidies and how they would get there.
Did they all agree on unemployment insurance? Biden asked.
“I thought the idea was to cut spending,” Boehner lamented. When you consider where we started from our end, it’s going to be difficult to accept starting at $1.048 trillion, referring to that year’s annual spending. “We’re in a different era now in the House. This is about cutting spending.”
“Yeah,” Obama replied, “in the abstract everyone wants to cut, but not when they get to these particulars.” He said that tax cuts were effectively spending because they increased the deficit.
“Tax cuts aren’t spending,” said Boehner. He believed they spurred the economy that would then yield more tax revenue.
“I’m not proposing any tax cut,” said Kyl.
“This is Bizarro World,” said the president.
“Let’s take Doc Fix and unemployment insurance off the table, since those are spending,” Boehner said.
“What matters to the market is the long-term trend,” Geithner interjected, noting that the financial markets wanted a demonstration of serious engagement over the long haul.
“We need to deliver credibility to the American people,” Boehner said. “We won’t be able to do this in later years.”
“Okay,” Obama said, “maybe we need additional negotiations. At a minimum, we’re at $1 trillion or so in discretionary, $230 to $240 [billion] in other mandatories.”
“Let’s talk about $1.5 trillion,” Boehner said. “Does anyone believe that is possible?”
“Can we add to it?” Obama asked. “Where can we plus it up? Those are questions for tomorrow.” Getting to 1.5 would be hard, he said, “without some health mandatory and some revenue and some targets for enforcement.”
“Nancy made a good point,” Boehner said. “We’re nicking everybody and we don’t have much to show for it.”
Kyl mentioned the firewall.
“The firewall shouldn’t be controversial,” Obama said. “Defense
spending went up 84 percent in the last decade. Defense without firewalls would not be subject to constraints.”
“There have been four straight years of cuts to Defense,” Kyl said.
Lew said any Defense cuts over the next two years would only be at the margins, and any freeze would not impact real strategic capabilities.
“The Pentagon is happy to spend,” the president said.
Hoyer said it would be easier to get money from Defense.
Kyl started talking about caps on spending again.
The president rubbed his eyes and looked at his watch.
“Having a firewall makes it difficult for both of us,” said Boehner, noting that with no firewall, the Democrats could say the cuts were coming from Defense, and they, the Republicans, could emphasize the cuts from elsewhere. They could then work out the details later.
Obama knew the Senate and House better than that. “Well, then the appropriators just add the money back later,” he said. The powerful congressional appropriations committees had the final say on how spending bills were handled in both houses of Congress, giving them tremendous power within their areas of authority.
“We didn’t pay for the wars,” Durbin noted. The regular appropriations process had been circumvented with giant supplemental funding bills for Afghanistan and Iraq.
“You’ve got to constrain the appropriators,” Obama repeated.
“If we don’t have a firewall,” Biden said, “and Congress wants to go over on Defense, then they wipe out agencies,” like the Energy Department.
Durbin raised the issue of all the contractors who worked for the Defense Department, and the president raised the issue of enforcement. Without enforcement, Congress would just spend.
“I just met with a person today who’s just out of college,” said Pelosi for no clear reason. “They were optimistic and hopeful and we need to get this deal.”
The president put his chin in his hand and started playing with his name card.
Pelosi went on with a long anecdote, finally lamenting their apparent
failure at negotiations. “I don’t know who is going to tell the children,” she said.
Cantor and Hoyer, who were sitting next to each other, began a private conversation while Pelosi told her story.
“We listened to Cantor day in and day out,” Pelosi said, “but he’s not listening right now.”
The president burst out laughing.
“The problem with the automatic enforcements,” Kyl said, “is there’s no exceptions except for military pay.”
Sperling noted that such an exception had been introduced by Republicans. “So that’s you all who did that.”
“Okay,” said Obama, clearly near the end of his patience. “We’re going to have to layer this cake,” he attempted to explain. “I said we’re going to get to $1.7 and then add additional layers. Add a sequestration mechanism, health mandatory and net neutral revenue. Mitch’s proposal is the safety card for Friday if we can’t reach agreement on how to get to $2 trillion. The spirit that we have right now is why we can’t do this thing.” They did not have the right attitude. “We need to make a decision.”
“Mr. President,” Cantor mildly taunted, “we are still a long way from $2.4 trillion, which is where you need us to be” to reach equivalency with a new debt extension. “Mr. President, we are moving in opposite directions. Why don’t we take the wins where we can?” He proposed doing agreed-upon cuts with just a short-term debt extension.
“I will explain and defend,” the president said, adding, “I am not trying to cast blame,” as he cast blame. “I will take it to the American people. You want cuts well above what is needed.”
Everyone knew what he meant: The gap should be closed with more revenue.
“If you send me something that doesn’t go all the way through the election,” he said, “I am not going to sign a short-term debt limit increase.” The White House staff had rarely seen him so combative in front of the Republicans. This was, to some, the Obama of the 2008 presidential campaign.
“I will veto it. At least Mitch, to his credit, gets rid of default. He says, ‘I’m going to make Obama wear this jacket.’ ”
The president wasn’t finished. “But that’s something almost just as bad, because the people don’t trust that we can do anything. I’m not proposing tax increases on every single American. I’ll take this on tour. I want to be clear, Eric,” he continued, looking at his real adversary for the moment. “My responsibility is to the American people. I’ve shown myself as willing to compromise. Do you think Ronald Reagan sat here like this? There comes a point where I say enough is enough. That point has been reached.
“Get on board the dollar for dollar or the big deal,” he concluded. “I promise you, Eric, don’t call my bluff on this. It may bring my presidency down, but I will not yield on this.”
The president then stood up, pushed his chair back, and strode from his Cabinet Room.
• • •
On the way back to the Capitol, Cantor called his communications director, Brad Dayspring, a two-year veteran of the White House press office under George W. Bush.
“Fyi,” Cantor said, “there was a little bit of a blowup in the meeting. Obama really got stern with me at the end, so if you start getting calls, I wanted you to know, okay?”
In a matter of seconds, Dayspring’s phone began ringing from reporters who covered the White House.
“I heard Cantor pissed off Obama,” one said. “What did Cantor do?”
By the time Cantor was back at the Capitol, Dayspring had fielded half a dozen calls, and more were coming in. He recommended that the majority leader give his side to the press. Cantor agreed and a press conference was quickly called in the Speaker’s Lobby.
Cantor described Obama as “abruptly walking out.”
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“He got very agitated, seemingly, and said that he had sat here long enough and that no other president—Ronald Reagan wouldn’t
sit here like this, and he’s reached the point where something’s got to give,” Cantor said.
“I was somewhat taken aback, because, look, I was compromising. We are very far apart right now. The progress we made seems to have been erased now.”
• • •
In the speaker’s office, Barry Jackson, who had attended the White House meeting, was thinking, “Huh, this certainly doesn’t bode well.” The president had overdone it by losing his cool. He’d let the Republicans see they were getting to him. Politics meant sitting across the table from people you might not like or who were annoying. Keeping cool was essential. In his eight years in the Bush White House and during a decade on the Hill, he said, “I’d never seen anything like it. Never heard of anything like it.”
But Boehner let Cantor twist alone. He said nothing to him immediately afterward.
• • •
The president later recalled the confrontation with Cantor as a clarifying moment.
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“What was clear to me was they kept on thinking that somehow sooner or later we were going to cave on this. And I think it was maybe the third or fourth time when Cantor comes back to, why don’t we just do a short-term deal, Mr. President? Essentially what he wanted to do was pocket the discretionary cuts that we had already agreed to.
“And that would then buy us three or four months,” Obama said with a laugh, “and then we’d go back at this thing again. So after the fourth or fifth time that he’s repeated this, I say, Eric, I’m serious. Don’t call my bluff on this. I’ve told you I’m not signing something like that. We’re not going to put the country through an ordeal like this every three or four months. That’s not how the greatest country on earth operates. And we should be embarrassed if it gets to the point where our government is running on three-or four-month patchwork agreements.”
And then you walked out?
“I think people say I pushed my way off the desk, or something. It wasn’t that dramatic. I just said, you know what? So when we get serious, and when you guys understand that that’s the case, we’re going to have another conversation. But you probably need to talk about this among yourselves. And I walk out of the room.”