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Obama Finds Path to Congress Deals Goes Through McConnell

Photographer: Douglas Graham/CQ Roll Call/Getty Images

Sen. Mitch McConnell walks to the Capitol on Dec. 4, 2012. Close

Sen. Mitch McConnell walks to the Capitol on Dec. 4, 2012.

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Photographer: Douglas Graham/CQ Roll Call/Getty Images

Sen. Mitch McConnell walks to the Capitol on Dec. 4, 2012.

Mitch McConnell never set out to be President Barack Obama’s go-to negotiating partner.

Yet the top Senate Republican cemented his role as the bridge between the Democratic president and an estranged Congress when he struck a New Year’s Eve agreement that averted most of more than $600 billion in automatic tax increases and spending cuts. That compromise marked the third time McConnell, 70, stepped in to end an exercise of political brinkmanship over fiscal issues.

“The Obama administration has been slow to recognize it, but even though they have a majority in the Senate, and even though it’s a Democratic presidency, they’re not going to get anything done unless the minority leader agrees with it,” said Senator Lamar Alexander, a Tennessee Republican and McConnell ally. “He is the grown-up, and he is the one they need to have an agreement with if they want to get a result.”

Although House Speaker John Boehner and his Republican majority control the U.S. House, McConnell, who leads the minority in the Senate, is emerging as the party’s most powerful leader in Washington by virtue of his ability to manage his own members while dealing with Democrats. As debates unfold next month over raising the government’s $16.4 trillion debt ceiling and in March over funding the government, the soft-spoken, bespectacled senator will be one of the most pivotal players in an era when partisan stalemate is the norm.

Primary Threat

McConnell’s success in working with the Obama administration is presenting the fifth-term Kentucky senator with a dilemma: how to maintain his increasingly influential position without further antagonizing anti-tax Tea Party groups back home that are threatening to recruit a primary challenger for his re-election race next year.

“I just want to get the problems fixed, and to do that, we have to talk to the other side,” McConnell said in a Jan. 9 interview in his Capitol office.

While he lamented the dysfunctional process that led to the New Year’s Day vote on the deal he struck with Vice President Joe Biden, McConnell won’t apologize for a bargain that prevented income tax rate increases for most U.S. workers. The agreement protected individuals with taxable income below $400,000 and married couples earning less than $450,000 from paying automatic higher rates. For others who exceed those income levels, the top marginal tax rate was set at 39.6 percent, up from 35 percent in 2012.

“As a practical matter, taxes went up two hours before we enacted permanent tax relief for 99 percent of the American people,” McConnell said. “I think that’s something to be proud of -- not something to feel apologetic about.”

Republican Principles

That defense rings hollow among some Republican activists who regard his horse-trading with Obama’s team as a betrayal of the party’s core principles and are concerned he may not hold out for big enough spending cuts before raising the debt ceiling in February. Congress has raised or revised the debt limit 79 times since 1960, including 49 times under Republican presidents.

McConnell voted to raise the limit seven times during the administration of former Republican President George W. Bush and opposed doing so the first three times the issue came up during Obama’s administration, crossing party lines to support more borrowing authority only once, as part of a August 2011 debt- reduction deal he helped craft.

Business leaders are applying pressure to avoid the first- ever U.S. default, an outcome the financial markets already are anticipating. U.S. Treasury bond investors -- who most directly bear the risk of any government default -- haven’t shown alarm over similar political fights ultimately resolved in Washington. Yields on 10-year U.S. Treasuries, a benchmark for everything from mortgages to corporate borrowing costs, are down from more than 5 percent in 2007, before the financial crisis of 2008.

Questioning Loyalty

At the same time, some Republican activists want to shake up those assumptions and are lobbying for a debt ceiling confrontation. ForAmerica, a group that advocates “dramatically” scaling back government and promoting Christian values, announced Jan. 9 it was running online ads against McConnell that picture him with Obama and Biden and ask “Whose Side Are You On?”

L. Brent Bozell, the group’s chairman, called McConnell “Obama’s bag man” in a statement released with the ad, and said it will be “open warfare” on the Senate minority leader if he isn’t able to secure steep spending cuts in upcoming negotiations on the debt ceiling and funding the government.

Seeking Atonement

“The kind of deal-making that’s going on right now is utterly contrary to the very conservative philosophy and campaign promises that brought Mitch McConnell to power, and if he’s going to be so out of touch with both those things, then maybe it’s time to consider another line of work,” Bozell said. The latest fiscal compromise is “one big old strike against him, but he could use the two other big battles looming to atone for that disastrous deal.”

When Tea Party leaders met Jan. 12 in a public library conference room in Elizabethtown, Kentucky, recruiting a challenger to McConnell in next year’s Republican primary was a top agenda item, said Sarah Durand, president of the Louisville Tea Party.

“Everybody was very, very angry” about McConnell’s role in the New Year’s agreement, she said. “They’re ready to pretty much throw up the first person who is willing to run. So, I would say there’s a 99 percent chance that Senator McConnell will have a challenger, especially if he doesn’t do well in the debt-ceiling debate.”

Political Defense

That’s easier threatened than accomplished, particularly since McConnell -- as adept at protecting his political flank in Kentucky as he is effective at closing deals with adversaries on Capitol Hill -- has worked methodically to insulate himself against such a bid.

McConnell, who didn’t support Tea Party-backed Senator Rand Paul in Kentucky’s 2010 Republican primary, has since forged an alliance with Paul, even attending a Tea Party rally with him last August. He has kept tabs on the movement, sending a representative to listen and take notes at Tea Party meetings around the state. And in September, McConnell hired Jesse Benton, who ran Texas Representative Ron Paul’s 2012 presidential primary campaign and is married to the retiring congressman’s granddaughter, to manage his re-election.

“In terms of the politics of getting around and touching base with people, he’s certainly making a lot of right moves,” said David Adams, head of the Republican Liberty Caucus and a former campaign manager to Rand Paul.

Fundraising Prowess

The strength of McConnell’s political and fundraising operation is also discouraging challengers. He held a donor event the day after the November election and already has $6.8 million in his campaign account, according to the Federal Election Commission.

Adams said McConnell is known in Kentucky as “the wood- chipper” -- as in, don’t get too close or you will get pulverized. “You’re kind of targeting yourself,” he said, “and most people are pretty reticent to take the plunge.”

Still, the threat of a political challenge highlights the precarious position McConnell occupies as the one Republican who has a track record of doing business with Obama.

“I’m not sure he always wants to be the point-man, but sometimes you have no other choice but to do it,” says former Senate Majority Leader Trent Lott, a Mississippi Republican. McConnell’s power stems in large part from his taciturn style and willingness to wait others out. “He will sit and say nothing for an interminable length of time until a magic moment. At that point, he knows the rules and he knows how to count votes, and he’s at the peak of his ability to get something done,” Lott said.

Cloakroom Senator

Richard A. Baker, who served as Senate historian from 1975 to 2009, said McConnell is “a cloakroom senator rather than a committee senator,” meaning his strength is in the room just off the Senate floor where members congregate before and after votes. “He can get into the cloakroom and wheel-and-deal and figure out where the basis for some consensus might be within his conference,” Baker said in an interview.

McConnell has long balanced his party’s impulse to stymie Obama’s agenda with his pragmatic streak. In an October 2010 interview, he famously said of Republicans that “the single most important thing we want to achieve is for President Obama to be a one-term president.” He quickly added, in a less- noticed caveat: “If he’s willing to meet us halfway on some of the biggest issues, it’s not inappropriate for us to do business with him.”

Three Deals

While he has a 90 percent lifetime rating from the American Conservative Union, McConnell has been the linchpin in virtually every tax-and-spending compromise struck during Obama’s term since Republicans won control of the House.

He teamed with Biden for a December 2010 agreement that gave Obama the temporary payroll tax cut and unemployment benefits extension he was seeking in return for a Republican priority, a two-year extension of Bush’s tax cuts.

In July 2011, he brokered a deal that raised the debt ceiling and put in place the automatic tax increases and spending cuts that Congress was confronted with last month.

With about 24 hours left before the automated action took effect and Boehner again unable to bring his caucus behind a compromise, McConnell phoned Biden to see if they could deal again. The final product blocked most of the tax increases, while still raising $630 billion in revenue over the next decade, according to the White House. It put off the issue of spending cuts, which is the debate that now looms in Washington.

Estate Tax

Although Andy Roth, vice president of the anti-tax Club for Growth, dubbed the agreement “the McConnell tax increase,” the senator exacted some concessions. Tucked in the deal was a $100 million cut from food stamps to pay for provisions to prevent a spike in milk prices and make permanent a more than $5 million tax exemption for estates.

“Not a bad day’s work,” McConnell said, reflecting on the deal.

His role “reflects the reality of the Senate: We need Republican votes, and McConnell can bargain those votes,” Senator Dick Durbin, the chamber’s second highest ranking Democrat, said in an interview.

Seated in an armchair near a marble fireplace and gold- framed mirror in his Capitol office, McConnell said he isn’t stepping back from his role as a deal-closer. He chuckled quietly when asked about the prospect of a primary challenge.

“My job is to do the best I can for the country, and the elections take care of themselves,” McConnell said. Obama and Biden each telephoned him after the Jan. 1 compromise, McConnell added, and “I expect we’ll be having a lot of conversations the next three months.”

To contact the reporter on this story: Julie Hirschfeld Davis in Washington at   or Jdavis159@bloomberg.net.

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net

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