At a meeting last year with congressional leaders, President Obama and then-Minority Leader John Boehner got into a testy exchange. When Boehner suggested that Obama's policies were making the business community nervous, the usually cool Obama lost it a little. "The president didn't like it," Boehner recounted in a speech last year. "He looked at me, he slapped the table, and said, 'Boehner, it's not my policies that are paralyzing the employers. It's you Republicans who are scaring them.' "
Boehner and Obama held another meeting Thursday, along with congressional leaders of both parties. Boehner is now the speaker of the House, and the relationship between the two men has warmed. Like men of a bygone era, Obama and Boehner are now holding secret meetings in the White House. On Sunday the two met as a part of a mini-breakthrough in talks over raising the debt ceiling. In private the president says that Boehner reminds him of the Republicans he worked with in Springfield as a state legislator, the kind of Republicans he played poker with on Wednesday nights.
There's a long way to go before a deal on the debt limit. But if it happens, the story of how Obama and Boehner learned to deal with each other will be at the heart of it. In the Saturday-serial narrative of this drama, the stage of gloom and doom has lifted momentarily to suggest that a deal even larger than imagined might be possible. Instead of $2 trillion in spending reductions over 10 years the White House is now suggesting that as much as $3 trillion to $4 trillion in reductions might be possible.
Of course, the clouds will come and go a few more times in this story. And as in previous negotiations, what's said outside the negotiating room may have little to do with what's going on inside. Each side is trying to shape the public story in order to put pressure on their opponent at the negotiating table. Each is also playing to its base to establish toughness in advance of a deal that might leave it open to charges of capitulation. Finally, there's the elephant-and-the-blind-man problem: There are so many moving and interconnected parts to this grand bargain that fierce disagreements over the description of one area do not give a clear description of the larger animal.
That brings us to tax increases. As previously discussed, in the end if there is a deal it may hinge on the definition of the phrase "tax increase." A deal of the size the president is talking about would require significant revenue from an increase in tax rates on those who make more than $250,000. This is not likely to happen. Even if Boehner buckled, it would be hard for Republicans to find 218 votes for it in the House. The president knows this. But by talking about a big deal, he can say he was willing to make big spending cuts even in popular Democratic programs like Social Security and Medicare, but Republicans were just too committed to tax breaks for the rich.
This is theater for 2012. The president needs to show independents and moderates that he's serious about spending reductions. Republicans are happy to let him act this out, just as he's happy to let them play to their political needs (in this case, proving to their conservative base how hard they are fighting anything that might plausibly be called a "tax increase"). It's possible for there to be theater and progress at the same time.
The second, and more likely, option would allow the government to raise some revenue from loophole closures as part of a deal that would reduce the deficit by about $2.5 trillion over a decade. The president would be able to say that he reduced spending and spared some programs, while Republicans would be able to say that they prevented any increase in the tax rate. Both sides would agree to disagree on how much was really raised from "tax increases," or even whether to call them that.
Adding to the complexity is recent talk from House Majority Leader Eric Cantor, who has said he would accept closing loopholes if taxes went down somewhere else—so that in the end, there would be no net tax increase. This would require some accounting creativity, both on its own terms and in order to make this deal contribute to the larger goal of deficit reduction. It would work like this: Tax cuts, like the annual reduction in the alternative minimum tax, would be counted toward the total deficit reduction target of between $2.5 trillion and $4 trillion—which is to say, they would add to it. To pay for those tax cuts that add to the deficit, tax "increases"—which is to say, the closing of some loopholes—would be allowed somewhere else. The net effect would be no new taxes, but deal makers would be able to say that future tax cuts were paid for and thereby reduced the deficit.
According to one Republican source, in his meeting Thursday the president polled the room on which option each preferred. (He also included the so-called "mini-deal" of smaller spending reductions.) The president said he would not sign a deal that did not cover the 2012 election. Another meeting is scheduled for Sunday.
There is a long way to go before a deal gets done. But both sides seem to be cautiously optimistic that it will happen in the next 10 days. Work is actually getting done. Even as they were publicly denouncing the White House for not being serious about deficit reduction, GOP leaders were privately saying that Vice President Joe Biden was working in good faith to come to an agreement. After today's meeting at the White House, it was notable that—for at least one news cycle— Republicans had even dropped their public charge that the president wasn't being serious.
There will be many more meetings between the president and the speaker. And then each man will have to try to sell the deal to his side. Obama has the easier task—Democrats in the end can't undermine their leader. Boehner, according to one Hill source, is faced with a caucus split in thirds. One third won't ever vote for a debt limit increase; another will follow him wherever he leads; and the final third will need to be persuaded. That's the group both Boehner and Obama are working toward pleasing to get to 218 votes necessary in the House. If they can work this one out, they'll deserve their next golf outing together. The chain smoker and the ex-smoker may even deserve to celebrate the achievement with a Rose Garden cigarette.
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