Matt Bai's Excellent Piece...Shows 2011 Was Pointless

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THE STUMP MARCH 28, 2012

Matt Bai's Excellent Piece...Shows 2011 Was Pointless

Matt Bai’s long-awaited, 10,000-word opus on the rise and fall of last summer’s deficit grand-bargain is finally out and very much worth a read. Bai adds a lot of new detail affirming what we thought we knew—which is that Obama was ready to do a deal and Boehner wasn’t—but which got much hazier in recent weeks amid Team Boehner’s furious spin. 

Still, for my money, Bai puts too little emphasis on the much deeper problem looming over the whole exercise, which is that it didn’t actually matter whether Boehner was willing to strike a deal. Even if he had been willing, the House rank-and-file would have opposed the deal because they objected to the faintest whiff of a tax increase, and Obama needed a tax increase to secure Democratic support. Or, put differently, the implicit premise of Bai’s piece is that a deal was actually possible when in fact it never was, something I drive home in my recent book

In fairness, there are several points when Bai either directly or indirectly (by transmitting the anxieties of White House officials) questions whether an Obama-Boehner deal could have passed the House. But he presents this sticking point as a mere possibility—a nagging concern that would eventually have to be addressed—rather than the hopelessly insurmountable obstacle it actually was. 

Only late in the piece does Bai let on that the fix may have been in from the beginning. His retelling of the dramatic endgame, in which Boehner walks away from the negotiation once and for all, goes roughly as follows:

On Tuesday, July 19, Obama tells Boehner he can’t do a $4 trillion deal involving only $800 billion in revenue, which the two men had kinda-sorta agreed to in principle. Obama says he’s going to need more revenue to make those kinds of cuts, at which point the two sides keep negotiating. Then, late in the day on Thursday, July 21, Obama tells Boehner they can either do a $4 trillion deal involving $1.2 trillion in revenue, or a smaller (presumably $2-$3 trillion deal) involving $800 billion in revenue. It’s at this point that Boehner bolts and is never heard from again. 

The reason Boehner walked, as Bai explains, is twofold. First, Boehner had had a conversation with the number two House official, Eric Cantor, a few hours earlier, in which Cantor told him any deal that raised more than $800 billion in revenue was a nonstarter among Republicans. 

Second, upon reflection (a reflection likely induced by the same conversation with Cantor), Boehner realized that even the $800 billion in revenue he and the president had already agreed to in principle probably wouldn’t pass the House. Which is to say, even the original Boehner offer Obama was countering was doomed thanks to Republican opposition. As Bai tells it, Boehner didn’t even call Obama back to turn down the president’s counter-offers for fear that Obama might then retreat to the original deal, which Boehner couldn’t accept either:

Boehner didn’t want to talk with Obama because he feared … that Obama would respond by offering him the original terms from the previous Sunday, and that Boehner would then find himself trapped. … It was safer for Boehner to walk away and accuse Obama of having sabotaged the deal than to risk that Obama would retreat to the earlier terms on which they had agreed, forcing the speaker to backtrack himself.

Bai treats this is a kind startling revelation that only became clear in the final hours of the negotiation. Prior to that, in his telling, it seemed distinctly possible that there was a deal to be had. But it was crystal clear at least a week-and-a-half earlier that Boehner would have zero success getting even $800 billion in revenue through the House. In fact, this was pretty clear a month or two beforehand had anyone sized up the situation realistically. The relevant data points were as follows: 

1. Back in March and April, months before the longer-term grand-bargain came into view, the administration had to negotiate with Boehner over the 2011 budget, which Congress had failed to pass the previous fall. It became obvious several times during this negotiation that Boehner couldn’t control the House Republicans. At one point in March, he lost a key vote over a temporary budget extension that conservatives deemed mealy-mouthed. Then, in April, the White House struck a deal with Boehner only to watch him renege under pressure from House conservatives. Suffice it to say, this was not a man who was going to be leading his troops anywhere, much less into territory they considered utterly anathema (i.e., revenue increases).

2. In May and June, the White House sent a delegation of top economic officials, led by Vice President Joe Biden, to start negotiating with Cantor and Jon Kyl, the number two Republican in the Senate, over the long-term deficit deal. As I report in my book, the talks repeatedly stalled and eventually broke down over the absolute refusal of Cantor and Kyl to even consider revenue increases. 

3. There was no sign at any point after this that either the House GOP or Cantor in particular (who really was just a reflection of the House rank-and-file) had moved a millimeter closer to accepting revenue increases. There were several instances in which this became apparent, but my favorite came on Saturday, July 9. That was a day when the White House and Boehner were in the middle of trading serious, detailed proposals, all of which came to a halt when the Wall Street Journal published an editorial dumping all over the contours of the emerging plan and inciting conservatives to oppose it. Aside from the fact that a scathing Journal editorial is never helpful when you’re trying to round up conservative support, it clearly indicated that someone on the inside of the House leadership (almost certainly Cantor) was leaking details in an attempt to kill the negotiation, and that Boehner had better think twice about going forward. No surprise, then, that the speaker promptly withdrew from the talks, though he later returned with Cantor at his side. 

Suffice it to say, it should not have come a shock to anyone in the White House when Boehner walked away from the negotiating table for good in late July. Nor, for that matter, should Boehner have been surprised to find himself facing total resistance within his own ranks.  

Which brings us to the strangest part of Bai’s piece. After persuasively showing that Boehner gave up negotiating because he realized there was no deal his House colleagues would agree to, Bai writes:

And yet the failed attempt at a grand bargain wasn’t necessarily an unmitigated disaster. … They didn’t get the sprawling deal they were after, but they did produce a serious blueprint for bipartisan reform, a series of confidential memos that left them just a few hundred billion dollars apart. 

But, again, that misses the point. Yes, we learned that the two parties’ leaders can get within a few hundred billion dollars of a $4 trillion deficit deal. But we also learned that, even if one of those leaders (Obama) were to concede the entire amount of that difference (i.e., rolling back his revenue demands back from $1.2 trillion to $800 billion), the other leader (Boehner) still couldn’t sell it to his own team. Which means we didn’t actually end up within a few hundred billion dollars of a deal. We ended up pretty much where we started: With one side absolutely refusing to raise even a miniscule amount of revenue and the other side willing to do trillions in cuts as long as it got some new revenue in return, but never getting it. Unlike Bai, I see little grounds for optimism here. In fact, it just affirms my view that the entire exercise was a waste of time. 

Update: Credit where due: The Washington Post ran a long account of the run-up to last summer's failed negotiations in August, co-written by my now-colleague Alec MacGillis, that did show how they were essentially doomed from the start. 

Follow me on twitter: @noamscheiber

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posted in: the stump, politics, economy, boehner, eric cantor, matt bai, white house

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