Boehner Flinches and Abandons Risky Budget Deal
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The Fiscal Times
July 10, 2011

For a fleeting moment, it looked as if House Speaker John Boehner, R-Ohio, might try a daredevil political act of historic proportions by joining forces with President Obama to draft a major deficit reduction plan. But the plan was certain to infuriate Democrats by cutting Social Security, Medicare and other entitlements  and enrage Republicans over raising taxes.  Maybe it was his golf match with President Obama last month, or perhaps it was their secret meeting at the White House a week ago, but something had transformed Boehner from Obama critic-in-chief to principal ally in forging a $4 trillion, ten-year plan which would have eclipsed all previous debt reduction efforts.

But on Friday, the chain-smoking Republican began back-peddling, cautioning reporters that "It's not like there's some imminent deal." He said, "This is a Rubik's cube that we have not worked out yet." Then Saturday night, on the eve of a major bargaining session at the White House, Boehner pulled the plug on any "grand bargain" with the Democratic president. He issued a statement telling Obama that a midsize package was the only politically possible alternative to avoid a first-ever default on the nation’s mounting national debt.

 

“Despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes," Boehner said. "I believe the best approach may be to focus on producing a smaller measure, based on the cuts identified in the Biden-led negotiations, that still meets our call for spending reforms and cuts greater than the amount of any debt limit increase.” Boehner’s  statement was released less than 24 hours before the meeting with Obama.

That Boehner would pull back at this critical juncture is hardly a surprise, in the wake of the negative reaction to the plan from both sides of the aisle after details began to leak out on Thursday. The Speaker has demonstrated a willingness throughout his career to buck his party or seek common ground with the Democrats to further important legislation -- as he did years ago in passing the "No Child Left Behind" legislation during the Bush administration. But this time he was playing with fire within the Republican ranks by flirting with a plan that could raise as much as $1 trilliion of new revenue in the coming decade.

Thanks to the tireless efforts of anti-tax lobbyist Grover Norquist, practically every Republican member of Congress has signed a pledge to oppose any tax increase -- or even the elimination of wasteful tax deductions and loopholes that would have the effect of raising revenues. Had he gone along with Obama, Boehner could easily have touched off a rebellion among his members – particularly freshmen Tea Party conservatives who rocketed him to the speakership with their election victories in the 2010 mid-term elections..  Moreover, House Majority Leader Eric Cantor, R-Va., a more youthful conservative who has differed with Boehner on policy and strategy, is waiting in the wings in case the speaker stumbles Ron Bonjean, a Washington political strategist and former House GOP leadership spokesman, told The Fiscal Times, "The majority of Republicans were sent to Washington to cut spending and lower taxes. To do otherwise would guarantee that many of them would be sent home either during primaries or the election in November."

"It's disappointing that the Republican fixation with protecting tax breaks for corporate special interests and the very wealthy prevented them from agreeing to a balanced and broad deficit reduction plan to help our economy and our country," Rep. Chris Van Hollen of Maryland, the ranking Democrat on the House Budget Committee, said Saturday night.

White House Communications Director Dan Pfeiffer said late Saturday that Obama believes that solving the country's fiscal problems is an economic imperative, but that "we cannot ask the middle-class and seniors to bear all the burden of higher costs and budget cuts [and] we need a balanced approach that asks the very wealthiest and special interests to pay their fair share as well. Both parties have made real progress thus far, and to back off now will not only fail to solve our fiscal challenge, it will confirm the cynicism people have about politics in Washington," Pfeiffer added.
      
The budget talks are fraught with political risk for the president as well. Obama may further alienating the Democratic liberal wing by pushing for cuts in Medicare and possibly Social Security. Sen. Sheldon Whitehouse, D-R.I., said that the Obama administration was "making a grievous mistake" if it thinks it can "present anything to us and assume that because we're Democrats, we'll go along with what the president has capitulated to."

What Obama and the speaker had tried to pull off -- to avert a  default on U.S. debt -- would have matched or eclipsed the achievement of  Thomas  (Tip) O’Neill of  Massachusetts,  the storied Democratic House Speaker who forged an historic deal with President Ronald Reagan in 1983 to preserve Social Security.

The approach until Saturday night was vintage Boehner, according to Jack Howard, a lobbyist for Wexler & Walker, who has worked for Republican leaders and Republican presidents for years. “He’s the guy who walks into a revolving door behind you and somehow comes out ahead of you, and you wonder how that happened,” Howard said. “He has the most astute grip of what is going on.”

Boehner, 61, the son of a Cincinnati bar owner, takes a long view of politics. 

But in April, Boehner showed that he could work with Obama in a crisis atmosphere when the two men sat down late on a Friday evening and negotiated a final spending deal for the remainder of the fiscal year that prevented a government shutdown.

Washington policymakers gave a collective sigh of relief when the spending agreement was announced, and then prepared for the next challenge, which was to find a consensus for raising the debt ceiling. Republicans were demanding huge government cost savings as the price for their support for raising the debt ceiling, and Boehner showed he meant business with a tough speech  May 9 to the Economic Club of New York.  For the first time he declared that Republicans would demand “trillions of dollars” in spending cuts as the price for voting to raise the debt ceiling, and that tax increases were out of the question.

“It’s true that allowing America to default [on its debt] would be irresponsible,” Boehner told the Wall Street financiers in midtown Manhattan. “But it would be more irresponsible to raise the debt ceiling without simultaneously taking dramatic steps to reduce spending and reform the budget process.”

Suddenly, Boehner was thrust into the position of negotiator in chief with the commander-in-chief. While the Biden- group had tentatively agreed on spending cuts that seemed substantial on their face,  Obama and Boehner met secretly last Sunday and began talking about something much bigger and bolder. The two men decided to try to double the scope of  the long term deficit reduction, from $2 trillion to $4 trillion over ten years – along the lines of the deficit reduction plan recommended  by the president’s fiscal commission late last year.

Media reports late last week outlining the scope of the plan caught many Republicans and Democrats by surprise. While few Democrats or Republicans were willing to embrace the approach until they saw the details, House Minority Leader Nancy Pelosi, D-Calif, nonetheless signaled a willingness to support a massive deficit reduction package. And Republicans for the first time were entertaining discussion about tax reform and closing loopholes, even as they insisted they would not support a net increase in tax revenues.

“I have a lot of faith in John Boehner,” said Rep. Peter King, R-N.Y. “He’s a true conservative. I have a lot of faith in his ability to get things done.”

King gave credit to Cantor for making “a lot of progress” before he left the talks, but now, he said, Boehner is “trying to close the deal.”

Indeed, Boehner is still trying to close the deal. But now, under enormous pressure from his caucus, he will have to settle for half a loaf.


Read more about John Boehner
Boehner Puts on Game Face Ahead of Sunday Talks
The Dubious Threat of a US Debt Default
Social Security Cuts: Tax Hikes Linked or No Deal