Do Not Ask What Good We Do: Inside the U.S. House of Representatives (37 page)

The next morning, Thursday, June 23, Cantor informed Boehner and McCarthy that he was pulling out of the Biden talks. The reason he gave surprised both men—and would have surprised the Democrats, too, since it had no basis in fact: according to Cantor, Nancy Pelosi and Harry Reid intended to call a press conference announcing that the Democrats were walking away from the talks. Better to blow things up before Pelosi and Reid had a chance, Cantor argued. He then informed
Wall Street Journal
reporter Janet Hook of his intentions. That evening, Jim Clyburn emerged from a White House meeting with the president, during which Clyburn had told Obama that he remained “very encouraged” by the talks.

Then Clyburn saw the Hook story pop up on his BlackBerry and realized he had clearly been missing some signals.

“I want to let you know,”
Nancy Pelosi said to her caucus on the evening of July 6, “that we stand for Medicare, and we stand for Social Security. And tomorrow I’m going down to the White House to represent you to the president. And so I would just like to know.”

The minority leader offered a coy smile. “Do I have your permission,” she continued in a rising voice, “to go over there and say,
We’re not cutting Medicare, we’re not cutting Social Security?!
”

Those attending the caucus applauded wildly. Word had leaked of a meeting that day between Obama and Boehner during which the president indicated a willingness to include major entitlement reform as part of a “grand bargain.” And tomorrow the president was inviting all top congressional leaders—including Pelosi and Steny Hoyer—to the White House to continue the negotiations.

Pelosi was well aware that the central focus of DCCC chairman Steve Israel’s “Drive to 25” campaign to take back the House by capturing an additional twenty-five seats involved attacking Republicans for siding with Paul Ryan’s “Medicare voucherization” budget plan. She had no intention of letting Obama hand the Democrats’ winning formula over to Boehner as a sacrificial offering.

Twice during her brief remarks that evening, Pelosi said to her fellow Democrats:
Even if we make defensible changes in Medicare, such as cost containment, it’ll be interpreted as us doing the same thing the Ryan budget is doing. It’ll be interpreted as us cutting Medicare. We saw what happened in 2010. So we’re not going to go there again. No way. No cuts to Medicare of any kind!

Medicare was off the table, and so were revenue increases. That was the state of the debt ceiling negotiations with less than a month to go before August 2.

On the late afternoon of Wednesday, July 13, a group of two dozen senior House Republicans, including Kevin McCarthy and conference chairman Jeb Hensarling, met in the whip’s office with an economist in his late fifties named
Jay Powell
. A decade ago, Powell had served as undersecretary of the Treasury in charge of finance. Among his duties had been to manage the debt limit. In recent weeks, Powell had been making the rounds at the Capitol to advise members on the looming issue of the debt ceiling.

Now he showed the same PowerPoint presentation to McCarthy, Hensarling, and the others. Powell’s material was very cut-and-dried, free of editorializing. His slides showed the projected inflows and outflows in August and how that would impact the funding for federal programs. The picture he painted was unbelievably stark.

“This is a big deal,” Hensarling said to his colleagues in the room when Powell was finished. “No matter where you stand on the issue, I think the conference needs to see this as a neutral source of information.” When McCarthy and the others did not object, he turned to Powell and said, “I want to get this to them as soon as possible. When are you available?”

Powell said that he would make the time.

Hensarling warned him that the freshmen and other conservatives in the conference would react poorly if it appeared that Powell was trying to lead them to a conclusion. Even if Powell presented his data with utmost impartiality, as he was now doing, Hensarling prepared Powell for the likelihood that he would still encounter some hostility.

Hensarling sent out word to the House Republicans that Jay Powell would be giving a presentation at
a conference on Friday
the fifteenth at eight in the morning in HC-5. Staff would not be allowed to attend.

The Capitol basement conference room was nonetheless packed with more than two hundred members that morning. “I don’t give political or tactical advice,” Powell told his audience. “But I do understand how
this statute works and several years ago had the job of managing it.” He then showed a series of slides depicting how actual cash flows would, by August 2, dissolve into actual shortage. Powell also addressed the two “silver bullet” options: for the Democrats, having President Obama invoke the Fourteenth Amendment (“The validity of the public debt of the United States . . . shall not be questioned”) as his executive authority for raising the debt unilaterally; and for the Republicans, selling off American assets as a means of settling debts. Powell dismissed both options, saying, “There’s no bag of tricks.”

Then the economist turned to the most sobering part of the presentation—“going from the thirty-thousand-foot level of rhetoric to parachuting down into the jungle,” as he put it. Powell showed what the month of August would look like. The Treasury would be taking in $172 billion. Its obligations that month would be $306 billion, a shortfall of $134 billion. After first paying the interest, enough money would be left over to pay approximately half the bills. It would be left to the Obama administration to determine winners and losers. As a factual matter, Powell pointed out, it would be impossible to pay the troops in the field and all Social Security, Medicare, and Medicaid benefits at the same time. Institutions such as federal prisons would simply have to be shut down. The average American’s home mortgage rate would skyrocket.

The first person to the microphone at the conclusion of Powell’s talk was freshman Steve Pearce of New Mexico. “This was completely biased,” he barked. “I’m outraged that you would be doing a presentation without once mentioning our long-term fiscal problems!”

Hensarling hastened to the front microphone. “I asked Mr. Powell to just talk about the debt ceiling,” the chairman explained. “Paul [Ryan] is going to talk about long-run fiscal issues later.”

“That’s not an answer!” the freshman persisted. “Why didn’t you address this, sir?”

Right behind Steve Pearce was Georgia Congressman Phil Gingrey, who began by saying that until yesterday he had never heard of Powell’s Bipartisan Policy Center. “You did a nice job with your presentation,” he said. “But we heard from Karl Rove yesterday—and frankly,” he grinned, “I like him better.” (Rove had met with Gingrey and about thirty other conservatives for breakfast the morning before, as part of a
weekly “Theme Team” gathering hosted by Congressman Jack Kingston. Rove’s column “Obama Owns the Debt Ceiling Fiasco” had just been published that same morning in the
Wall Street Journal.
)

Then Gingrey proceeded to read an email off his BlackBerry, forwarded to him by a friend who was an investment broker, quoting various bankers and other sources casting doubts about the validity of the August 2 deadline. With evident satisfaction, Gingrey concluded, “I have made my point and I will take my seat.”

Republican Policy Committee chairman Tom Price interjected, “This is not the period for member statements. Unless you have a question for the gentleman, please hold your comments until the end.”

They did so, and although a number of attendees asked thoughtful questions, Louie Gohmert of Texas and Californian Tom McClintock took turns disparaging Powell near the end. Renee Ellmers was among those who were thoroughly embarrassed by her colleagues’ rudeness. A number of the members approached Powell after the conference, thanking him for his insights and apologizing for the misbehavior of their fellow Republicans.

And yet Pearce, Gingrey, Gohmert, and McClintock were far from Republican outliers. They represented a point of view—embraced by many freshmen and senior conservatives, but also by millions of Americans—that the nation was on the brink of something every bit as perilous as default. As they saw it, and as they believed any rational person would see it, the country couldn’t go on this way, spending unfathomable sums of money that it did not have, becoming ever deeper in debt to the Chinese and thereby consigning America’s children and grandchildren to a second-rate future. As the senior members well knew, excuses could always be found in Washington to ignore reality. But to the freshmen, and the movement that had elected them, excuses were no longer acceptable.

Boehner himself had said it over and over: “This is the moment.” But a number of freshmen continued to wonder: did the Speaker really believe that? And for Boehner, did “the moment” mean another backroom compromise with Obama?

After Cantor and Kyl had departed the Biden talks, Boehner had indeed resumed discussions with the president, along with other
congressional leaders, to try to formulate a “grand bargain” that might encompass not only significant spending reductions but also entitlement and tax reform. At the first White House meeting, Cantor produced a chart of all the entitlement reform options the Democrats at the Biden talks had suggested they might consider—a violation of the nothing-is-agreed-to-until-everything-is-agreed-to pact that infuriated the Democrats.

Boehner, for his part, was upset that the White House continually leaked the framework of each discussion before it had actually taken place. That was not the Speaker’s way, and definitely not the way of his secretive chief of staff, Barry Jackson—and in a way, their way was part of the problem.

At a conference in late July, Boehner had led off by describing how his talks with Obama indicated that the president was willing to make big concessions on spending and entitlement reform. Raul Labrador immediately went to the mike and said, “
I have to tell you
, I feel a whole lot better than I did thirty minutes ago. Thank you for sharing the information with us. And I urge you to keep doing that in the future so that we don’t have to learn about it in the newspaper.”

After the conference, a number of senior members thanked the frequently contrarian Idaho freshman for his show of appreciation. But they were missing the point—which was that Boehner’s reticence was an ongoing matter of concern to the Tea Party mavericks like Labrador who had come to Washington innately distrusting both its customs and the leaders who practiced them. One monologue by Boehner had hardly quelled all suspicions.

Around the time of Labrador’s remarks, four of Boehner’s closest pals in the House—Mike Simpson of Idaho, Tom Latham of Iowa, and Steve LaTourette and Pat Tiberi from Boehner’s state of Ohio, constituting the core of the “Friends of Boehner” group that convinced him to run for majority leader in 2006—contacted Barry Jackson and told the chief of staff that they needed to have a meeting with the Speaker right away. The four members first sat down with Jackson.

“John may not see what’s going on, but we do,” they told Jackson. “Cantor’s staff is running around telling people that Boehner actually told Cantor to walk out of the Biden talks because Boehner was mad that Cantor was getting all the ink. Bullshit like that.”

“That’s what Cantor and Ryan want,” Jackson smirked. “They see a world where it’s Mitch McConnell [as Senate majority leader], Speaker Cantor, a Republican president, and then Paul Ryan can do whatever he wants to do. It’s not about this year. It’s about getting us to 2012, defeating the president, and Boehner being disgraced.” That, said the chief of staff, was Cantor and Ryan’s “Young Guns” vision of a better world.

Boehner’s four friends
repeated their concerns in their meeting with the Speaker. They were aware, as one of them would later say, that “when John was meeting with the president and put revenues on the table, some of the members had started to scream.” They knew that Boehner was not by nature a worrier—but, they warned him, in this instance he needed to be. “You’re more between a rock and a hard place than any Speaker I’ve ever seen,” one of them said. It wasn’t just the freshmen, either. Latham and LaTourette along with Boehner had been present for the overthrow of Speaker Newt Gingrich. It only took a small handful of disgruntled members to start the brushfire. And Cantor would leave no fingerprints.

“What you cannot do,” they told Boehner, “is come back from the White House with some kind of deal that’s only going to get fifty votes in our conference. It’s going to be like Son of TARP—some of the freshmen don’t have a grasp of what the facts are, and they’re going to rebel. You’d be finished.”

The Speaker became contemplative. “Okay,” he finally said. “I’ve got to think about this. I appreciate you guys coming.”

Boehner had never thought that a balanced budget amendment to the Constitution was particularly necessary. At a Club for Growth event during the spring, he told his Republican colleagues that such an initiative was little more than a “gimmick.” A number of senior members did not share that opinion but had come to the conclusion over the years that passage of a constitutional amendment was simply too heavy a lift.

The freshmen, unsurprisingly, did not see things this way. During Kevin McCarthy’s listening sessions, the concept grew in desirability until it emerged as the singular predominating solution—one that was structural and history-making. The whip advised Boehner, “You’ve got to have some tie to a balanced budget amendment to get the bill through.”

Boehner relented. He often summed up his practical (and to some, passive) view of leadership by saying, “If you say, ‘Follow me,’ and no one does, you’re not leading—you’re just taking a walk.” Having heard the warnings from his four Republican friends, Boehner had no interest in taking a lone walk, particularly if it amounted to walking the plank.

Instead, on July 14, he held a press conference with Cantor conspicuously by his side, and announced, “
I can’t think
of anything that would do more to ensure such spending restraints are set in stone than implementing a balanced budget amendment to the Constitution . . . Frankly, it’s just common sense.”