Oct. 17 (Bloomberg) -- Days before the U.S. risked a debt default, Senate Majority Leader Harry Reid had the chance to pocket a deal. Instead, he went for the kill.
Reid, a Nevada Democrat and a former competitive boxer, called Senator Joe Manchin on Oct. 13 and insisted the West Virginia Democrat deny reports of an agreement among a bipartisan group of senators to re-open the government and raise the debt ceiling.
Reid was in one-on-one talks with Senate Minority Leader Mitch McConnell that he wanted to end in a better deal from Republicans, who were in retreat as they took greater blame for the impasse in public polls. The White House, for its part, was warning Democratic leaders off of what it viewed as an unfavorable compromise emerging from the bipartisan group.
In response, Manchin and other Democrats issued a statement announcing there was no agreement to end the standoff, which became the final in a series of instances in which Reid, 73, maneuvered to ensure that Democrats blunted Republican demands in the fiscal fight that shut the government down for 16 days and risked a U.S. default on its debts.
Reid’s hardline stance yielded results last night when Congress passed legislation that omitted every Republican goal.
“This is far less than many of us had hoped for,” McConnell, a Kentucky Republican, said in the hours before the measure passed the Senate by a bipartisan 81-18 vote. It later passed the Republican-controlled House, 285-114.
As Reid’s firm hand helped keep Senate Democrats united, his Republican counterpart across the Capitol was left to pick up the pieces from a debate his rank-and-file pushed for that ultimately left them splintered and with little other accomplishments than declining poll numbers.
House Speaker John Boehner of Ohio warned his fellow Republicans in an Oct. 14 meeting that Reid was launching a “hand grenade” at them. Yet with Tea Party-backed Republicans refusing to yield in the fight to dismantle the three-year-old Affordable Care Act, Boehner, 63, had no choice but to catch it.
In order to pass a measure shortly before midnight last night that re-opened the government with enough funding to last through Jan. 15, 2014 and raised the debt ceiling with enough borrowing authority to last until Feb. 7, Boehner needed help from at least 130 of the chamber’s 200 Democrats. He got all 198 of those who voted. Republicans cast all of the votes against the legislation.
President Barack Obama, who refused to accept Republican-imposed conditions on raising the nation’s borrowing authority, said members of both parties should put the episode behind them. Still, after weeks of partisan acrimony and days during which his deputy chief of staff, Rob Nabors, a former top House aide, set up shop in Reid’s Capitol Hill office to plot an endgame strategy, Obama’s frustration came through.
“Hopefully, next time it won’t be in the 11th hour,” Obama said in a statement from the White House. “We’ve got to get out of the habit of governing by crisis, and my hope and expectation is everybody has learned” from the fight.
The showdown between House Republicans and the White House sets the stage for broader negotiations in coming weeks on trimming the costs of Medicare and Social Security and revamping the tax code. Obama also is seeking to use his new political advantage to insist the House move legislation early next year that revises the nation’s immigration laws.
The fiscal confrontation was driven by Republicans backed by small-government Tea Party activists, who were determined to leverage their party’s House majority to force changes to the health-care law. None of it worked out as they wanted.
This story is based on interviews with dozens of Democratic and Republican officials involved in the meetings and discussions that surrounded the battle, many of whom spoke on condition of anonymity to give candid descriptions of internal matters.
The showdown was set in motion in early September when House Republicans rejected a plan by Boehner to decouple a government funding bill from legislation to choke off funding for the Patient Protection and Affordable Care Act. Instead, they insisted the speaker advance a measure that conditioned continued federal spending beyond the end of the month on defunding or delaying the health-care law.
Reid called the effort “a waste of time,” and told Boehner: “Let’s stop these really juvenile political games.”
Meanwhile, he was urging Obama to scrap a White House meeting with congressional leaders aimed at heading off a government shutdown, saying it would suggest Democrats were willing to negotiate over placing conditions on continued government funding when they weren’t. Obama took the advice; the meeting was canceled.
Nor was Boehner’s Republican caucus in the mood to curtail its demands. Over Obama’s threatened veto, the House passed legislation Sept. 20 to fund the government while halting spending on the health-care law.
The following week, Senator Ted Cruz, a Texas Republican elected in 2012 with Tea Party support, held a 21-hour talk-a-thon on the Senate floor that began Sept. 24 to call attention to the demand to defund Obamacare. In the ensuing days, it became clear Washington was heading toward a shutdown beginning on Oct. 1.
Neither side budged for the first several days of the nation’s first partial government shutdown in 17 years, even as markets became uneasy and public frustration rose.
The Standard & Poor’s Index fell 1 percent from Oct. 1-7 and an NBC News poll conducted October 7-9 found that 53 percent were blaming Republicans in Congress for the shutdown impasse, while 31 percent blamed Obama.
The Republican brand had been tarnished -- only 24 percent had a positive view of it -- and respondents said they’d prefer a Democratic-controlled Congress to a Republican one by 8 percentage points.
Republicans sought to shift blame for the situation to Democrats, pushing measures through the House to fund politically popular pieces of the government, such as the Veterans Administration, while Obama took his case to Americans.
“You don’t pay a ransom -- you don’t provide concessions for Congress doing its job and America paying its bills,” he said at an Oct. 8 news conference. “You don’t get a chance to call your bank and say, ‘I’m not going to pay my mortgage this month unless you throw in a new car and an Xbox.’”
Two days later, with a Gallup Poll showing Republicans’ approval ratings at record lows, Boehner told a closed-door meeting of House Republicans that he would propose at a White House meeting later that day to raise the debt ceiling for six weeks in return for opening budget negotiations and starting talks on re-opening the government.
His caucus was split over the proposal, yet they united over their collective opposition to Obama, said a lawmaker present. Representative Tim Walberg of Michigan, a former pastor, rose to thank Boehner for not asking him to come along to the White House meeting, saying he was afraid it might inspire “un-Christian feelings” in him. The room erupted in laughter and applause.
That night, an NBC News poll showing their party taking the lion’s share of the blame for the shutdown made the rounds among chiefs of staff for Republican lawmakers, sparking dejection and in some cases panic about how to find a way out of the impasse.
A spate of talks between Boehner’s senior staff and Obama’s followed. The next day, after markets closed, the White House made it clear it was no longer interested in dealing with the House and was instead turning its attention to the Senate.
Many Senate Republicans had lost patience with Cruz, who continued to insist a fight to defund the health-care law must be a condition of funding the government. At a closed meeting Oct. 11, he suggested that Republicans call up one of the House-passed measures to re-open pieces of the government, then amend it with health-care law revisions and dare Democrats to vote it down.
A colleague had to remind Cruz that Senate Republicans, as the chamber’s minority, didn’t have the power to put legislation on the agenda.
Across the Capitol, Boehner was confiding to Republican Senators Saxby Chambliss of Georgia and Lindsey Graham of South Carolina, two friends from their days serving in the House, that he believed it was up to McConnell to cut whatever deal was possible.
“I got the sense from him that, ‘Look, we’ve done all that we can do, and my guys say they’re not going to vote for anything that is being talked about by the White House or by the Senate Democrats, and we think it’s just best to give it to you guys and let y’all do it,’” Chambliss said of Boehner on Oct. 14.
McConnell “wasn’t looking forward to it, but good leaders lead, and he grabbed it, and he’s going to negotiate the best deal he can get,” said Chambliss. “He’s doing that with no leverage whatsoever.”
McConnell engaged in negotiations with Reid, even as Republican Senator Susan Collins of Maine spearheaded separate talks with the lawmakers that included Manchin on a potential deal. The White House was urging Democratic leaders to stay unified against that group’s emerging proposal, which would have locked in lower spending levels for much of next year, and Reid made sure that they did.
With Reid short-circuiting the Collins-Manchin discussions, Boehner told his troops he was ready to try one final gambit. On a sun-drenched morning on Oct. 15, House Republicans huddled in the basement of the Capitol to hear his latest plan.
The mood was somber as the meeting opened with Representative Steve Southerland of Florida, a former funeral home director, leading the group in the spiritual “Amazing Grace.”
When Boehner rose to speak, he started with the “Serenity Prayer” made famous by Alcoholics Anonymous -- which includes the plea to “accept the things I cannot change” -- and described his proposal as “our only play.”
It would re-open the government with enough funding to last through Jan. 14, 2014, raise the debt ceiling with borrowing authority to last until Feb. 7, scrap lawmakers’ and the president’s federally funded health-insurance premiums under Obamacare, tighten income verification for insurance enrollees seeking federal subsidies, and repeal an excise tax on medical devices.
Tea Party Republicans were irate, arguing the proposal didn’t fundamentally change the health-care law or promise future spending reductions to reduce the deficit. Others rallied to the idea, saying they’d had enough of the fight that was taking a political toll.
“It’s not like it’s Day One or Day Two here, we’re figuring out that our options are limited in a split government, and maybe some of the optimistic views from the Senate couldn’t or wouldn’t come to pass,” said Republican Representative Bill Huizenga of Michigan. “You start looking around and going, ‘Ok, let’s figure out a way off the island here’ -- that’s where we are.”
Republicans, including those from politically competitive districts who had been pressing for an end to the shutdown, called for a resolution. “This is it,” Representative Devin Nunes of California said on his way out of the meeting. “End of the ‘Star Wars’ convention today.”
It wasn’t that simple. As word spread to the Senate that the emerging bipartisan deal Reid was brokering was at risk because of Boehner’s new proposal, House leaders found they didn’t have the votes for it. In a frenzied afternoon of meetings and phone calls, they tried without success to modify the plan in ways that might corral the 217 votes necessary to push through a measure they knew Democrats would oppose.
The death knell came just before dinner time. Heritage Action for America, an advocacy group whose parent organization, the Heritage Foundation, is headed by former Senator Jim DeMint of South Carolina, announced it was opposing Boehner’s measure. It also warned lawmakers that a vote in favor would be a black mark on its legislative scorecard -- and invite a primary challenge. As night fell, the House leadership team put out word that there would be no vote.
The Senate was back in the driver’s seat, and by midday yesterday -- hours before the debt ceiling deadline -- a deal had been struck. Cruz, the last potential stumbling block to action, announced he wouldn’t try to delay the agreement, and by mid-afternoon, Boehner let it be known he wouldn’t stall action in the House either.
“We stuck together, we lost, and we’ll regroup,” Boehner told Republicans behind closed doors, said Representatives Richard Hudson of North Carolina and Mick Mulvaney of South Carolina, who were present.
“It’s never easy for two sides to reach a consensus,” Reid said on the Senate floor. “This time was really hard.”
To contact the editor responsible for this story: Jeanne Cummings at email@example.com