Government Executive - Authors - Chris Frates

With Fiscal Fights Looming, Can Simpson-Bowles Group Get Congress to Move?

Chris Frates, National Journal — Tue, 27 Aug 2013 09:43:05 -0400

With its bipartisan branding, boldface names, and big money, the Campaign to Fix the Debt muscled its way into Washington power politics last summer. But as Congress preps for yet another fiscal showdown, Democrats and Republicans doubt the group has the swat to push either side far enough toward the center to secure its holy grail: a grand bargain that includes entitlement-spending reforms and new revenues that reduce the deficit.

Not even a $25 million war chest is enough to convince congressional insiders that the coalition has the juice to break the partisan impasse. By advocating for entitlement reforms, which Democrats dislike, and new revenues, which Republicans reject, the group may have only succeeded in convincing each party that they aren't pushing the other side hard enough.

"I don't think they advocate incredibly strongly or effectively," said a Senate Democratic aide. "For how much money they have, they should be more effective."

Another Democrat, a Senate leadership aide, put it this way, "They'd get farther if they would be willing to push Republicans on revenues as part of the debt discussion."

And then there's the Republican take: "For Fix the Debt to be successful they have to do a lot of work on the other side of the aisle," said a senior GOP Senate aide. "That's where Fix the Debt's challenges are going to be, on the left. Reform is hard."

The Senate Democratic aide, who is familiar with the group's workings, argued that the group's importance has lessened since the fiscal-cliff battles. As the country approached last year's deadline that would have raised taxes and triggered across-the-board spending cuts, lawmakers panicked. Fix the Debt, the aide said, swooped in and expertly played the role of bipartisan educators.

But this time around, the debates are familiar, as lawmakers discuss funding the government beyond Sept. 30 and raising the government's borrowing limit.

"People aren't really scared, certainly like they were leading up to the fiscal cliff," the aide said.

Not to mention that some Democrats view Fix the Debt warily because it's funded by big businesses including General Electric, which gave $1 million to its parent organization, and JP Morgan Chase, which gave the campaign $500,000. Some Democrats argue that the group tilts conservative.

Fix the Debt spokesman Jon Romano says the group is even better prepared for this fall's looming fiscal showdown than it was for last year's fiscal cliff. Since then, the group has increased its state network by 60 percent and is now active in 33 states and has 625 committee members, 120 former representatives and senators, and 2,500 small-business members.

"Anybody who thinks this campaign was going to go away after the inaction of the last year is just kidding themselves. We're more equipped now for this next phase than we were, frankly, during the fiscal cliff," Romano said. "Our message is going to be loud and clear: We need Congress and the president to put a debt deal in place."

The group plans to push Congress to reconsider the across-the-board spending cuts that went into place earlier this year, painting it as an issue that hurts everyday Americans.

"Fifty-seven thousand kids aren't going to have Head Start because Congress couldn't fix the debt," he said. "One hundred and thirty-six thousand families aren't going to have rental assistance because Congress couldn't fix the debt."

But perhaps more convincing than any rhetoric is the group's billfold. It has the resources to make a lot of noise but has yet to use them effectively. But that may be changing.

According to a source familiar with the campaign's strategy, Fix the Debt is considering using some of that cash to exert influence through campaign politics. "Twenty-five million dollars is a lot of money. Members don't want to go into their reeelection with another headache and there aren't many groups that have that kind of money."

Indeed, that cash buys a lot of organization. The group has sent 150,000 letters to lawmakers, placed 150 state op-eds, and held a July fly-in where 55 people from 19 states held 73 meetings that generated 40 media mentions in 19 markets. And the group plans to do print, TV, and online advertising in targeted districts, Romano said.

But Romano acknowledged there is only so much outside groups can do to push lawmakers toward a deal.

"There's not going to be a deal because of pressure from outside groups like this. There's going to be a deal because they want to lead on this," Romano said. "We're going to put as much pressure as possible on them to get a deal done."

(Image via Ryan Rodrick Beiler/Shutterstock.com)

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Senate Republicans Prepare for Coming Fiscal Showdown

Chris Frates, National Journal — Mon, 05 Aug 2013 09:17:29 -0400

Mitch McConnell will be at the center of negotiations during this fall's fiscal showdown. It's inevitable, his allies say, and while his campaign team might not love it, they're now preparing to defend his dealings with Democrats, both from anti-compromise tea partiers and negotiating partners looking to score a few political points along the way.

McConnell's stay-in-the-game strategy is an acknowledgment of the obvious -- his campaign can't run from a 30-years record in Washington so they might as well embrace it.

"From a political perspective it makes no sense having him sitting in the middle of a very contentious situation, but it doesn't change the fact that the problem's going to happen," said a source close to McConnell.

Indeed, people close to him say, McConnell largely compartmentalizes his roles as Senate Republican leader and candidate, often forcing his campaign team to sell his leadership moves back home.

And the Kentucky senator has made some major moves, emerging as a key dealmaker between congressional Republicans and the White House. In 2011, he helped craft a deal with Democrats to cut spending and raise the government's debt limit. Earlier this year, he cut a deal with Vice President Joe Biden to avoid the so-called fiscal cliff of automatic spending cuts and tax increases that threatened to send the fledgling economy into a tailspin.

With Congress facing fall deadlines to fund the government and raise the debt limit to pay the bills the country's already racked up, Washington is wondering if he'll reprise his role as The Closer. It's a question that has taken on renewed interest since millionaire tea party favorite Matt Bevin challenged the 71-year-old McConnell in the GOP primary by attacking his record out of the gate.

McConnell's allies argue that he's no stranger to tough votes. In 2008, he voted for the unpopular TARP program, which bailed out big banks. And in the 1990s he opposed a constitutional amendment to ban flag burning because he thought it violated freedom of speech, not a popular position in Kentucky.

"He's the Republican leader of the United States Senate because he's there to lead. He's not going to back down. He's not going to shy away from that," said his campaign manager Jesse Benton. "He's ready for all the attacks."

And they're already coming. In his first ad, Bevin hit McConnell for supporting TARP and the fiscal cliff deal. Bevin's spokeswoman told the Washington Post that McConnell should have been able to cut a better deal with the White House but "he caved to President Obama and cut a deal that threw Kentucky taxpayers under the bus because he didn't want to get his hands dirty and do the work the people of Kentucky elected him to do." (McConnell's aides fire back that the deal avoided an across-the-board tax increase, saving 99.7 percent of Kentuckians from higher taxes.)

And Democrats are almost daring McConnell to cut another deal. "We'll see if he has the guts," a Senate Democratic leadership aide said. "We would not use it again him. The tea party would."

It's a reality that's not lost on Republican insiders either, some who question whether McConnell, caught between the left and the right, now has the same leeway to maneuver.

"Does Uncle Mitch come in and save House Republicans from themselves again? Probably not. He can't take the heat at home," said one senior Republican operative.

McConnell did make himself some more space after the fiscal cliff deal saying he wouldn't negotiate another last-minute pact with the White House.

Still, Democrats are working to position McConnell for criticism no matter what he does. If he hangs in the background, they'll argue he's a weak leader. If he cuts a deal, they'll stand back and let the tea party attack. And if he uses his clout to block a deal, they'll label him an obstructionist.

The strategy was on display last week. After the Senate voted to confirm a new director of the Bureau of Alcohol, Tobacco, Firearms and explosives, who McConnell opposed, Democratic Senatorial Campaign Committee spokesman Matt Canter argued the vote illustrated McConnell's waning influence. When a reporter pointed out that McConnell had just successfully blocked a spending bill on the Senate floor, Canter responded, "Senator Gridlock."

McConnell's uncowed, telling National Journal in an e-mail that he plans to go into the fall swinging, "We'll fight hard against Democrats' efforts to increase spending and we'll hold them accountable for the bipartisan promise made to the American people on reducing spending just two years ago."

Democrats and their candidate, Kentucky Secretary of State Alison Lundergan Grimes, are arguing that McConnell's an ineffective leader and a partisan obstuctionist who's no longer getting it done for Kentuckians.

McConnell's camp embraces the obstruction label, "absolutely Mitch is up there blocking stuff. He's blocking a lot of real horrible stuff," Benton said. And aides say, in the last week or so, his leadership stymied a Democratic backed spending bill and forced Democrats to tie student loans to market rates. McConnell's style, aides say, is to empower his members to cut deals while keeping him in the loop.

But his high profile does not seem to be translating into high poll numbers at home. In a poll out Thursday by a Democratic firm, McConnell's approval rating was 40 percent and he was trailing Grimes by one point in the poll, within the margin of error. A recent Republican poll had McConnell up eight points over Grimes and 39 points over Bevin with a 53 percent favorability rating.

McConnell's been in tough spots before. Former chief of staff Billy Piper remembers the financial crisis of 2008 when Congress, faced with a collapsing Wall Street, passed TARP to bailout the banks -- a move unpopular in Kentucky.

"As the market would go down by hundreds of points a day, our overnight tracking polls would go down with them," Piper remembered. "It was awful."

But with the market cratering, McConnell voted for TARP and Democrats slammed him for it. DSCC chair Chuck Schumer ran ads in Kentucky showing armored trucks hauling down the street with money flying out the back, Piper said.

"I have no doubt that he wondered if being involved in the middle of it he might be presiding over his own demise," he said. "We went into election day not sure if he'd win."

So to those wondering if McConnell will play in the debt dealings this fall, Piper points to 2008, "He was right there in the thick of it then and there was considerable political risk."

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Republicans, White House in Talks Toward Big Fiscal Deal

Chris Frates, National Journal — Thu, 18 Jul 2013 10:09:29 -0400

At least a dozen Republican senators are regularly meeting with President Obama’s top aides in an attempt to plot a way forward on the looming fiscal challenges facing leaders this fall, senators involved in the meetings tell National Journal.

The meetings, which began after Obama hosted GOP senators for dinner earlier this year, are the first sign that Democrats and Republicans are in talks to strike a deal that would reduce the deficit and reform entitlements and taxes.

“Everybody's trying to assess whether we can accomplish something that would be big,” said Republican Sen. Richard Burr of North Carolina, who has attended the meetings. “Big is reforming entitlements and it’s impossible to see a path where you get additional revenue without tax reform being part of it.”

This fall, the country will hit its debt limit and be unable to pay its bills unless Congress authorizes additional borrowing. Republicans plan to use the debate over raising the debt limit to force Democrats to cut spending—a negotiation Obama has said he won’t engage in. But these meetings demonstrate that the president is in fact engaging Republicans in a broader discussion about debt and spending.

White House Chief of Staff Denis McDonough runs point and has included Office of Management and Budget Director Sylvia Mathews Burwell in the discussions. The Republicans in the group include Sens. Kelly Ayotte of New Hampshire, Saxby Chambliss and Johnny Isakson of Georgia, Bob Corker of Tennessee, Lindsey Graham of South Carolina, John Hoeven of North Dakota, and Burr, said John McCain of Arizona, who also sits in.

The group has met four or five times in the last six weeks. The talks are, as McCain put it, still in the “embryonic stage” and so far have consisted of identifying the dividing lines between the two sides.

“My hopes are that we could agree on what the deficit is and then begin formal negotiations with the White House. There are already a lot of informal conversations going on,” McCain said.

The differences between the two sides, which helped kill a grand bargain between Obama and GOP House Speaker John Boehner last year, remain vast. Namely, Republicans want to see tax and entitlement reform while Democrats want more revenue.

“We clearly defined what the differences are. That was probably the easy part. Trying to figure out how to bridge those is a tougher part but it’s really not dissimilar to the conversations that the speaker had with the president,” Burr said.

An administration official said White House aides have made clear to Republicans that the president’s offer from December—including $600 billion in new tax revenue for $400 billion in Medicare and other health care cuts—still stands.

Republicans are open to $600 billion in revenue, Burr said, but want to see it come from a mix of entitlement and tax reform. And the GOP opposes Obama’s $400 billion in Medicare cuts, arguing they want more structural reforms.

And while they have a way to go, Burr said both sides recognize that it gets tougher to cut a grand bargain as time passes.

Senate Minority Leader Mitch McConnell is encouraging the conversations, a GOP aide said.

Even if Republican senators were able to come to an agreement with the president, it would have to work its way through the legislative process and could still die in the House.

Republicans noted that the president elevated the issue to his chief of staff, who, Burr said, “has a lot of credibility with Republicans as a straight shooter. That’s important.”

“You can’t accomplish big things in Washington without a level of trust between both parties. That’s in the process of trying to be rebuilt,” Burr said. “It doesn’t exist right now. And I think this is the best formula to try to rebuild it. The jury’s still out as to whether we can accomplish it."

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Nuclear Crisis Averted, Senate Begins Clearing Obama Nominees

Michael Catalini and Chris Frates, National Journal — Wed, 17 Jul 2013 09:33:58 -0400

After reaching a deal to move beyond a fight over filibusters Tuesday, the Senate is poised to take the rest of the week to clear a handful of long-delayed executive-branch nominations, including Thomas Perez as Labor secretary and Gina McCarthy as Environmental Protection Agency administrator.

On a day that had a conciliatory tone, Senate leaders in both parties came to an agreement that extinguished—for now—a heated debate over whether Democrats would change the chamber’s rules to allow executive nominations to move on a simple-majority vote.

The deal permitted Richard Cordray to be approved as head of the Consumer Financial Protection Bureau in a 66-34 vote, after clearing a 71-29 cloture vote earlier in the day. Fred Hochberg, the president’s pick to lead the Export-Import Bank, is scheduled for a cloture vote Wednesday morning and could clear the Senate later in the day. Perez and McCarthy are also expected to clear the Senate this week, according to Democratic and Republican leadership aides.

The agreement also provided that the White House withdraw the names of Sharon Block and Richard Griffin as nominees for the National Labor Relations Board. In exchange, Republicans agreed not to block two new NLRB nominees. President Obama is expected to nominate AFL-CIO counsel Nancy Schiffer and NLRB counsel Kent Hirozawa.

In the end, the compromise over the “nuclear option” came down to Sens. Chuck Schumer, D-N.Y., and John McCain, R-Ariz. The veteran deal-makers spent the past five days negotiating a truce to end a showdown that took Senate tradition to the brink of radical change.

It was hard work. The pair brought proposed deals to their fellow lawmakers at least 10 times before getting one that would stick, McCain said.

That final agreement, forged Tuesday morning, assured seven of Obama’s executive nominees up-or-down votes—and keeps Majority Leader Harry Reid from exercising the nuclear option to force nominees through the Senate.

The key to the deal was that Schumer and McCain were able to convince the White House to withdraw the two NLRB nominees—whom Obama appointed during a Senate recess in a move that two courts have ruled unconstitutional—and put forward two new nominees. In exchange, the GOP stepped out of the way, and the Senate sent Cordray to the Consumer Financial Protection Bureau.

“The turning point was last night’s caucus, where everybody saw that we weren’t that far apart,” Schumer said, referring to a rare, closed-door meeting that involved 98 senators on Monday night.

But in the shadow of the post-deal glow, defeat lurked for Republicans. Senate Minority Leader Mitch McConnell and 42 other Republicans had pledged in a letter to Obama to block Cordray’s nomination until Democrats agreed to restructure the bureau he was picked to lead. On Tuesday, 17 Republicans—13 of whom had signed that letter—voted with Democrats to advance Cordray’s nomination, stripping the GOP of its leverage over the CFPB.

Twelve Republicans voted to confirm Cordray, whose nomination had been pending since 2011. He had been serving as de facto head of the agency since 2012 when Obama gave him a recess appointment.

Republicans said that in conversations with Reid, the White House, and Cordray himself, they were able to extract concessions. “Mr. Cordray said he would be willing to brief the Appropriations Committee. He said he would agree to an inspector general, and he agreed on a couple of other things too,” McCain said.

The deal came after dozens of phone calls among lawmakers, led by Schumer and McCain, who talked throughout the weekend. Schumer even continued negotiating while bike riding on Martha’s Vineyard. After Monday night’s marathon meeting, the two continued the calls, with Schumer even stepping out of a leadership meeting with Reid and Sens. Dick Durbin, D-Ill., and Patty Murray, D-Wash., to talk.

Sens. Bob Corker, R-Tenn., and John Hoeven, R-N.D., who helped earn conservative support for the immigration-reform bill with an amendment at the last minute, were also involved in working out the deal, McConnell said.

“Senators actually had to listen to each other,” McConnell told reporters. “I think the arguments that were made by my members obviously swayed at least some on the other side that maybe there was a solution to this, short of pulling the nuclear trigger.”

The GOP did score one victory in forcing the president to pick new NLRB nominees.

“Republicans aren’t going to allow any president to thumb its nose at the Senate with such a blatant, unconstitutional appointment, so we have to have a way to express our opposition to that,” said Sen. Lamar Alexander, R-Tenn. “We understand that the Democrats won the election and should be able to appoint members of the National Labor Relations Board. Send us two new members, and we’ll confirm them.”

Democrats had to trade in Obama’s NLRB nominees, whom they have spent months defending, for another set of Democratic nominees. And both sides retained leverage for the next fight. Republicans can still block nominees and Democrats can, once again, threaten to unleash the nuclear option, making a future showdown possible, if not likely.

McCain joked that his conversations with Schumer seemed “ad nauseam. You know, I can’t stand the guy, and so here I have to talk to him all the time. We went to the ‘Gang of Eight,’ there’s months of meetings. You know, he’s really an unpleasant person.”

But the end result was pleasant enough, for both sides.

Reid said, “I don’t know how I could be happier.”

This article appears in the July 17, 2013, edition of National Journal Daily as Nuclear Crisis Averted; Here’s What’s Next.

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Senate Agrees to Up-or-Down Votes for Obama Nominees, Avoids 'Nuclear Option'

Michael Catalini and Chris Frates, National Journal — Tue, 16 Jul 2013 11:44:50 -0400

Senate Democrats and Republicans have reached an agreement on a process that would avert the "nuclear option" by allowing up or down votes on President Obama's executive nominees, according to Senate Democratic and Republican leadership aides.

The deal, reached Tuesday morning by Republican Sen. John McCain and Democratic Sen. Chuck Schumer, would allow a vote today on Richard Cordray, the nominee to head the Consumer Financial Protection Bureau. It would also clear the way for votes on Labor secretary nominee Thomas Perez, EPA nominee Gina McCarthy and Export-Import Bank nominee Fred Hochberg.

The deal calls for the two controversial National Labor Relations Board nominees, Richard Griffin and Sharon Block, to be withdrawn and two new nominees to be named. Republicans will not block the two new nominees. Democrats have not agreed to take future nuclear option threats off the table.

The White House has not responded to a request for comment.

By agreeing to end debate on Cordray, Republicans relented on their demand that Democrats restructure the bureau before they would allow Cordray to head it.

The deal represents a way forward after Republicans and Democrats in the chamber had a standoff over nominations, causing Reid to threaten a change to filibuster rules, widely known as the "nuclear option." Senators gathered for a rare full-chamber meeting behind closed doors on Monday, but little progress was reported.

On the floor Tuesday morning, Democratic Senate Majority Leader had signaled that a compromise was in the works saying, "I think we see a way forward that will be good for everybody. … This is not a time to flex muscles." Reid also gave a shout out to McCain, crediting him for bringing the two sides together.

But there are still more talks ahead. Reid said he plans to talk to Vice President Biden and Sens. Patty Murray and Schumer. "We're going to have caucuses today. We'll explain in more detail the direction we're headed. I think everyone will be happy," Reid said.

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GOP Not Backing Down on Border Security in Immigration Bill

Chris Frates — Fri, 14 Jun 2013 09:22:00 -0400

Despite publicly rallying around an aggressive plan from Sen. John Cornyn, R-Texas, to secure the border, Republicans are privately conceding that staunch Democratic opposition means it likely doesn’t have the votes to pass.

But that doesn’t mean the issue goes down too.

Conservatives still want border-security improvements and are warning Democrats that not getting them could jeopardize the immigration-reform bill. At the very least, they argue, it means Democrats won’t come near the 70 votes some Democrats are both predicting and banking on to force the House into action on immigration.

GOP Sen. Marco Rubio of Florida, a supporter of Cornyn’s amendment and key architect of the immigration bill, articulated the Republican position best. Asked Wednesday by Sean Hannity if he would oppose the bill if it did not completely secure the border, Rubio hedged, saying, “The thing I’m trying to avoid is all that ultimatum language because I think that undermines what we’re trying to do.”

“If the border-security elements of this bill are not in place, we’re wasting our time. This bill’s not going to pass,” he said. “If that doesn’t get in the bill I’m going to keep working to get it in.”

Already Rubio is working on his own border-security proposal that could sate some of the conservative appetite for tougher border controls. And other Republican senators are huddling behind closed doors to discuss how to tighten up the border.

Even Democrats acknowledge something will likely be added to the bill. “But it won’t be from Cornyn,” a senior Democratic leadership aide said.

Democrats went after Cornyn’s proposal—the first border-security amendment to surface during the debate—fast and hard. Democratic Senate Majority Leader Harry Reid called it a “poison pill,” and Sen. Chuck Schumer’s camp essentially called Cornyn a liar for saying that he and the New York Democrat had discussed his amendment.

Simply put, Democrats think Cornyn’s amendment is a pretext to oppose the bill, not an attempt to improve it.

And they aren’t altogether wrong.

If Cornyn’s amendment dies, “that’s all the cover conservatives in border states need to vote against the bill,” said a senior GOP Senate aide.

For his part, Cornyn told his colleagues in a closed-door meeting earlier this week that he’d vote for the immigration bill if his changes were approved.

Republicans are also playing a bit of longball in the face of Democratic reluctance to move the Senate legislation too far to the right—something Cornyn hinted at Wednesday. “My hope would be that we can improve the bill before it goes over to the House, because as you know, ultimately the endgame here is going to be a House-Senate conference committee that will produce the final outcome.”

Indeed, some Republicans see the Senate debate over Cornyn’s measure more as a chance to put down a marker with the aim of getting the amendment picked back up if there are negotiations to reconcile the House and Senate bills.

“Many realize this bill is not going anywhere in the House and are looking to what might work in the conference committee. Something along the lines of the Cornyn amendment could work well,” a Senate GOP aide said.

And while Cornyn’s amendment will likely fail, Republicans are closely watching how many votes it wins among Democrats. The more support they get, the more leverage they think they might have down the road.

In the meantime, the challenge of dealing with border security still looms over the Senate bill.

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The Republicans' Plan to Take Down the Consumer Protection Agency Chief

Chris Frates, National Journal — Thu, 06 Jun 2013 09:50:50 -0400

If Harry Reid goes nuclear, Senate Republicans plan to make the fight personal—and their first target will be the man sitting atop the still-controversial Consumer Financial Protection Bureau.

Democrats are eyeing the so-called nuclear option to blow up Senate rules that allow Republicans to block the confirmation of President Obama’s nominees. And should Reid try to neuter the opposition, Republicans plan to make life miserable for the nominees, starting with Richard Cordray, the man installed at CFPB.

That means an argument that has been about the structure and power of the new regulatory bureau would quickly morph into one about whether the recess-appointed Cordray should be the guy running the place—with Republicans shining a spotlight on his “personal defects.”

"If you’re going to try to destroy the Senate, we’re going to go down swinging,” said a senior GOP Senate aide familiar with the planned Republican strategy.

The threat to personally attack any nominee pushed through by changing the Senate rules extends to all of Obama’s picks. But Cordray is a special case for Republicans, who until now have held his nomination hostage in their effort to force changes to the consumer bureau’s structure. Instead of a leader nominated by the president, Republicans want the regulator to be run by a bipartisan panel.

This time, Republicans are picking on Cordray because Reid pulled a vote on his nomination last month and rescheduled it for July, signaling that he planned a broader showdown with Republicans over the president’s other stalled nominations.

Plus, it might be easier to attack the Ohio Democrat, thanks to a trove of opposition research from his days as a statewide elected official.

“If you’re going to nuke the Senate, then you should nuke the Senate over someone who has impeccable qualifications. And we would make the argument that this person does not meet that high standard, and that would require us to start digging around in some of the Ohio files to unearth some of which we know and some of which we’ll find,” the senior aide said.

That digging is already underway.

In a taste of things that might come his way, Republicans pointed to an October 2008 Dayton Daily News report that two weeks after Cordray was sworn in as the state’s treasurer, the 25-year-old stepdaughter of an Ohio-based Wachovia Securities official donated $10,000 to his campaign. Soon after that donation, Wachovia increased its share of the state’s bond-trading businesses from less than 1 percent to 37.5 percent. Cordray told the paper there was no connection between the contribution and the contract and said his campaign would return the money.

So far, it looks to be old news. But another Republican aide said the GOP would use Cordray’s background to ask if the Consumer Financial Protection Bureau, “an organization that’s totally unaccountable to Congress, being run by a partisan Democrat, is that appropriate in the context of the IRS scandal?”

Democrats dismiss the threat as weak sauce. A Democratic leadership aide noted that many Republicans are already on record arguing that their beef isn’t with Cordray as an individual, but rather with the consumer bureau as an institution. “We would use their own words against them,” the aide said.

By waiting until July to deal with nominations all at once, Democrats hope to show that Republicans aren’t blocking them on the merits, but over ideology or simply to stymie the president. The Republican strategy to make the fight personal isn’t going to work, the aide said.

GOP aides counter that if Democrats would take their finger off the nuclear trigger and negotiate some changes to the bureau, they can avoid an ugly fight.

Otherwise, they’ll start shooting at the hostage.

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Don't Expect Any Backroom Deals on Sequester -- For Now

Chris Frates — Fri, 01 Mar 2013 08:24:59 -0500

There’s been so much talk about relationships in Washington recently that opening a newspaper can feel a bit like reading Cosmo.

House Speaker John Boehner and President Obama don’t get along, what with the speaker saying the president doesn’t have “the guts” to cut spending. Senate Republican Leader Mitch McConnell isn't planning on calling up Vice President Joe Biden to cut a last-minute deal anytime soon.

And while Boehner and Senate Majority Leader Harry Reid have a fine working relationship—despite Boehner telling Reid recently to do something to himself that is anatomically impossible—neither man thinks the other is much good at running his respective chamber, aides to both men say.

It’s no surprise, then, that nobody expects much to come from Friday’s White House powwow between congressional leaders and Obama on how to avoid the across-the-board spending cuts set to begin taking effect the same day.

Republicans view the meeting as little more than a photo op for the president, arguing that if it were really intended to produce results, it would have been scheduled long ago. “It’s more about [White House photographer] Pete Souza than it is the sequester,” a senior GOP aide said.

So can leaders with dysfunctional relationships create a functional solution to avoid the cuts?

Increasingly, that seems to be the wrong question. The cuts will almost certainly go into effect and Democratic and Republican aides in the House and the Senate expect that Congress will try to address them through the regular legislative process—an approach both Reid and Boehner have endorsed.

In other words, no backroom deals, for now.

“I don’t know that everybody comes back into the room. The only way that something moves forward is that it moves forward through regular order,” said a senior GOP Senate aide, an assessment echoed by a Democratic Senate leadership staffer.

Senate Budget Committee Chairwoman Patty Murray, D-Wash., said her spending plan will replace the sequester with a mix of spending cuts and tax increases. But she said it’s “impossible to predict right now” whether sequestration is addressed through the legislative process or by leadership.

But a Democratic Senate leadership aide pointed out that deals are usually cut by congressional leaders on deadline and, with no pressure mounting ahead of Friday’s implementation, there’s no deal-making happening.

Both sides say that running legislation through committees and floor debates means that more members are involved in crafting the solution, which makes it easier to sell. It also often prods GOP House and Democratic Senate committee chairs to work with some coordination.

Though the Boehner-Obama relationship is much discussed, it became largely irrelevant after the fiscal-cliff negotiations, when both men agreed that talking with the other was pointless. In turn, a return to regular legislative order would throw the Reid-Boehner relationship into the spotlight. And it’s no mutual admiration society.

“The speaker and the majority leader still have a good, businesslike working relationship, but institutionally the Senate Democratic leadership is going to have to act on the president’s agenda if the president wants to make progress on that agenda,” a senior House GOP leadership aide said.

A senior Senate Democratic leadership aide put it this way: “Reid respects people who can deliver, and even when he doesn't like somebody, he respects them if they can deliver. He likes Boehner, but doesn’t think he can deliver.”

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Once unthinkable, severe spending cuts now seem plausible

Stacy Kaper and Chris Frates, National Journal — Thu, 24 Jan 2013 08:07:17 -0500

Republicans and Democrats in the Senate appear to be coming to the same conclusion on spending, namely that once unthinkable, draconian cuts designed to force a more reasonable compromise may be much harder to undo than anyone ever imagined.

For Republicans, the automatic, across-the-board spending cuts are an increasingly palatable option among deficit hounds, even if it means opposing their party's defense hawks, who staunchly oppose the deep cuts to military spending.

Democrats, on the other hand, would prefer to replace some of the spending cuts with new revenues -- an approach that is a nonstarter with Republicans. And Democrats refuse to entertain the Republican preference of replacing the military decreases with cuts to other programs.

In just another sign of how deeply divided Washington is, the so-called sequester, which was designed to be so bad that neither side would let it take effect, could very well end up becoming the law of the land.

The fiscal-cliff deal that passed earlier this month delayed the cuts until March 1. Democrats say it's likely the sequester will be delayed again to give the House and Senate time to write their budgets. But given how far apart House Republicans and Senate Democrats are on spending priorities, it's far from certain that they will agree on a package to replace the sequester.

And Democrats argue that they never wanted the sequester to begin with, but were forced to pass it in 2011 as part of the package to raise the debt limit. The cuts are split in half between military and discretionary domestic spending. The all-cuts, no-revenue package is the best deal Democrats expect to get, and they aren't reopening negotiations unless they include new revenue.

"Sequester is kind of a one-sided, cuts-only approach. Every time we talk about ... balanced budgets, reducing deficits, there have to be revenues and cuts in equal proportion or some in a reasonable proportion," said Democratic Sen. Mary Landrieu of Louisiana. "You just can’t get from where we are to where we need to go with cuts only.”

Meanwhile, Republicans showed no signs of moving off their call to replace the sequester cuts with entitlement reforms. Republican Sen. Mike Crapo of Idaho said he thinks there's a growing sense among his colleagues that the mandatory spending cuts will go into effect.

Sen. Jeff Flake, R-Ariz., put it this way: "The only thing worse than the sequester is no sequester. We have got to hit those budget targets.... If we can do it another way, fine, but if not, we’ve got to have that hammer.”

Indeed, a buzzword gaining traction among Republicans is "flexibility," as in departments will need it to minimize fallout from the budget ax.

“I certainly do not want the sequester to go away. Or at least, let me put it this way, the amount of reductions that are in sequester I do not want to go away,” said Sen. Bob Corker, R-Tenn. "But I do think giving some flexibility as to how they take place could be a very positive step."

Not everyone is a sequester fan. Sen. John McCain, R-Ariz., a staunch defense hawk, cautioned lawmakers against slashing the nation's defense spending, saying, “We have to listen to our secretary of Defense and our uniformed service chiefs. I think that would be important.”

Of course, it is still too early to say with certainty whether Senate Republicans would choose the deep sequester cuts over a plan that replaces some of the military cuts with tax increases.

That, according to a Senate GOP leadership aide, would be a tough choice indeed.

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Senate likely to pass 'No Budget No Pay' debt limit fix

Chris Frates, National Journal — Wed, 23 Jan 2013 08:52:09 -0500

Senate Democrats are likely to pass a House Republican bill to suspend the debt ceiling until May, ensuring that the government can pay its bills while lawmakers attempt to solve yet another raft of tricky fiscal issues this spring, Democratic aides said Tuesday.

The House is expected to vote on a bill Wednesday that would suspend the debt limit until May 18 and force lawmakers to pass a budget by April 15 or see their pay frozen until their chamber passes a spending plan. The White House said Tuesday that it would not oppose the bill.

And while the Senate may tweak the legislation, the short-term extension and pay freeze are likely to remain intact, according to senior Democratic aides.

Senate Democrats are looking to deal with looming March deadlines for across-the-board spending cuts and extending a resolution to fund the government through the budget writing process, a senior Democratic leadership aide said.

Forcing Senate Democrats to accept a short-term debt limit fix and write a spending plan, after years of refusing to pass a budget, would be a political victory for Republicans. But, if the bill passes, the House GOP will have also made a major concession in dropping its demand that debt limit legislation be tied to spending cuts.

And Democrats believe that by opting to suspend the debt limit, instead of increasing it, Republicans lose leverage in the next fight. Passing legislation to waive the country’s credit limit only undercuts the debt limit’s importance, Dems argue.

“If this is something that can just be ignored, why is it worth tanking the economy over,” a Senate Democratic leadership aide said.

Writing a budget also gives Democrats a vehicle for crafting tax reforms that bring in more revenues.

Republicans are betting that by passing a short-term debt limit fix, they can use the looming across-the-board spending cuts that kick in March 1 as leverage. The pending cuts are split 50-50 between military and discretionary domestic spending and Republicans are betting that Democrats don’t want to see domestic spending cuts any more than the GOP fancies military spending reductions.

But Senate Democrats are signaling that they’ll only consider replacing the cuts with increased tax revenue, a non-starter for Republicans. So right now, there is a real threat that the spending cuts could go ahead as planned.

Senate Democratic lawmakers signaled openness to the Republican plan on Tuesday, but were cagey about revealing their legislative strategy, which aides said was still being developed.

Asked about the GOP bill, Democratic Senate Majority Leader Harry Reid would only say, “I’m very glad that … they’re going to send us a clean debt ceiling bill.”

Senate Finance Committee Chairman Max Baucus, Reid’s point man on the debt ceiling, said, “My sense of it is that the House action is helpful.”

Democratic Sen. Claire McCaskill said Democratic fiscal strategy “would be, let’s quit playing political games, try to compromise and get something done.”

“We need to all quit trying to position ourselves politically for a ‘win’ and we need to start working to get this done,” she said. “I would like us to see, in a bipartisan way over here in the Senate, us put together -- a budget would be great -- but more importantly a long-term relief for the debt-ceiling along with long-term spending cuts that look at our long term debt without hurting our short-term economic recovery.”

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House GOP seeing sequester, not debt ceiling, as fight to pick

Billy House and Chris Frates, National Journal — Fri, 18 Jan 2013 10:37:58 -0500

WILLIAMSBURG, Va. – Republicans appear to be willing to avoid a showdown over the debt limit and instead use the sequester as their main negotiating lever in upcoming fiscal fights with the White House and Senate Democrats.

House Budget Committee Chairman Paul Ryan, R-Wis., said Republicans at a closed-door retreat in Williamsburg were weighing a short-term increase in the country’s borrowing limit, giving all sides time to work on a broader fiscal plan in March that would include substantial spending cuts.

“Sometimes you’ve got to lay down a sacrifice bunt,” said Rep. Dennis Ross of Florida about the debt ceiling increase. He said there was a realization among his House GOP colleagues that they had to be ready to deal when negotiations began.

That strategy would represent an about-face for a Republican conference that has now repeatedly denied Speaker John Boehner the support he needed to strike compromises with Democrats.

But a debt-limit fight is one many leading Republicans – including former Speaker Newt Gingrich – were loudly warning against. Gingrich and others have argued that Republicans should reserve what capital they have for negotiations they stand a greater chance of winning, including on legislation that funds the government, reduces spending, and unwinds the coming across-the-board cut known as sequestration.

And it appears clear that even some of the more conservative House Republicans are starting to agree.

“We have no interest in shutting down government. We don’t have to,” said Republican Rep. John Fleming. “The sequestration goes into effect by law and I don’t think the president is going to want the kind of cuts … any more than we do. So we’re on equal footing now.”

Ryan, offering reporters a general rundown on the private talks on spending and budget issues that Speaker John Boehner and rank-and-file House Republicans were holding in a nearby building here, provided no details about the debt-limit offer they were considering. He said it was one of a number of options for proceeding on the various fiscal issues ahead that were being discussed.

The country hit the legal limit on its borrowing on Dec. 31, and Treasury is using “extraordinary measures” to manage the government’s payments. But the United States is expected to exhaust its ability to use those accounting steps as early as Feb. 15 or as late as March 1. A default could lead to a downgrade of the country’s credit rating and throw financial markets worldwide into chaos.

While some Republicans have wanted to use the debt-limit fight to force spending cuts, Obama is taking a tough line, accusing the GOP of putting the full faith and credit of the United States on the line and saying he will not negotiate over the issue.

Congress also must deal with the sequestration cuts in March and another measure to keep government funded when the current stopgap spending bill expires March 27.

“Our goal is to make sure our members understand all the deadlines that are coming, all the consequences of those deadlines that are coming, in order so that we can make a better informed decision on how to move and how to proceed,” Ryan said.

And as part of that, he said, “We also have to recognize the realities of the divided government we have … the divided government moment we have.”

For House Republicans, the spending and budget issue is the most important fight to have, Ryan said. “We think that the worst thing for the economy is for this Congress and this administration to do nothing to get debt and deficits under control.”

(Image via Orhan Cam /Shutterstock.com)

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Here's what's in the fiscal cliff deal

Catherine Hollander and Chris Frates, National Journal — Tue, 01 Jan 2013 09:19:58 -0500

At around 2 a.m. on New Year's Day, the Senate passed a measure aimed at pulling the country back from the "fiscal cliff" of automatic tax hikes and spending cuts. The measure, hammered out by Vice President Joe Biden and Republican Senate Minority Leader Mitch McConnell, still needs approval by the House. Here's what's in it:

Higher taxes on individuals earning $400,000 or more and families making $450,000 or more. Under that threshold, the Bush-era tax cuts would be permanent for all but the wealthiests households. The $450,000 threshold for families is a significant increase from Democrats’ initial proposal to raise taxes on Americans making $250,000 or more but it is lower than Republicans’ earlier proposal to raise taxes on households making $1 million or more.
Tax rates on capital gains and dividends would rise for wealthier households. Taxes on capital gains and dividends would be held at their current levels of 15 percent for individuals making less than $400,000 and households with income of less than $450,000. They would rise to 20 taxpayers and households above those thresholds.
Automatic spending cuts delayed for two months. The sequester, which would impose steep, across-the-board cuts to domestic and defense programs, would be delayed for two months.
One-year extension to unemployment insurance. Emergency unemployment benefits would be extended for a year. The extension was a priority for President Obama and congressional Democrats.
One-year "doc fix." The measure would put off scheduled cuts in physician payments under Medicare.
Personal exemptions phased out for households making over $250,000. Personal exemptions would be phased out and itemized deductions would be limited for taxpayers making over $200,000 and families earning more than $250,000.
40 percent estate tax. The estate tax is set to rise permanently to 40 percent from its current 35 percent level, with the first $5 million in assets exempted. Democrats had earlier sought a higher increase to 45 percent and a lower exemption of $3.5 million.
Permanent fix to the Alternative Minimum Tax. The alternative minimum tax was levied to ensure the wealthiest Americans paid a fair share of taxes. It was not indexed for inflation but is usually “patched” annually to prevent an increasingly large swath of middle-class Americans from being caught in its net. As part of the fiscal deal, the AMT would be permanently indexed for inflation.
Tax breaks for working families. The deal includes extensions of the American Opportunity Tax Credit, which can be claimed for college-related expenses; the Child Tax Credit; and the Earned Income Tax Credit, which is a refundable federal income tax credit for low-to-moderate income working Americans.
Business tax breaks. The Senate Finance Committee passed a package in August that tackled a variety of routinely expiring tax provisions known as extenders. These include popular tax breaks including those for research and development. That package might now pass as part of the broader cliff deal.

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Cliff deal would extend tax cuts for households up to $450,000

Chris Frates, National Journal — Mon, 31 Dec 2012 14:46:08 -0500

Talks between Senate Republican Leader Mitch McConnell and Vice President Joe Biden have resulted in key tax provisions as the two worked to finish a compromise that would avert the fiscal cliff of tax hikes and drastic spending cuts poised to hit economy starting Jan. 1:

Income tax rates would go up to Clinton-era rates on individuals making more than $400,000 and families making more than $450,000. The Bush-era tax cuts would be made permanent for everyone under that threshold. Those below the threshold would see a permanent 15 percent capital gains and dividends rate, and those above the rate would pay 20 percent.
The estate tax would be exempted on the first $5 million, and assets over that amount would be taxed at 40 percent. Current law exempts the first $5 million and taxes the rest at 35 percent, but that expires today and reverts to 55 percent tax rates on assets more than $1 million on Jan. 1.
A permanent "patch" for the Alternative Minimum Tax, which was meant to make sure millionaires paid their fair share of taxes, but which has increasingly ensnared the middle class.
A five-year extension on the American Opportunity Tax Credit, Child Tax Credit, and Earned Income Tax Credit.

Democrats and Republicans are still working on how to prevent across-the-board spending cuts that begin next year.

(Image via alexskopje/Shutterstock.com)

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COLA calculation is at the center of latest fiscal cliff standoff

Chris Frates, National Journal — Sun, 30 Dec 2012 17:41:06 -0500

With fiscal cliff negotiations stalled, Senate Republican Leader Mitch McConnell has called his old dance partner Vice President Joe Biden in from the sidelines.

"I have also placed a call to the vice president to see if he could help jump start the negotiations on his side," McConnell said on the floor Sunday afternoon. "The vice president and I have worked together on solutions before and I believe we can again."

Biden steps in as talks between Reid and McConnell stalled overnight over Republicans' insistence that a deal include a reform known as "chained CPI," which affects how federal retirees' cost-of-living-adjustments are calculated, as well as larger government entitlement programs.

Democrats have rejected the proposal, arguing that their willingness to discuss chained CPI was only in the context of a grand bargain that included entitlement and tax reform, not the scaled-back package Senate leaders are now attempting to craft.

Chained CPI calculations would reduce the benefits Medicare, Medicaid and Social Security beneficiaries would receive, a reform many Democrats oppose. On the Senate floor Sunday afternoon, Reid reiterated that opposition saying "we're not going to have any Social Security cuts."

And, in a move that has mystified Republicans, Reid added that "at this stage, we're not able to make a counteroffer."

Republicans don't understand why Reid won't keep the negotiations moving by making a formal counteroffer that doesn't include chained CPI. McConnell said Republicans made their last offer at 7 p.m. Saturday night and have not heard back from Democrats since.

After a meeting of Republican senators Sunday afternoon, Sens. Olympia Snowe, Bob Corker and Dean Heller all said the GOP had taken the proposal off the table.

Reid emerged from a meeting of his Democratic colleagues and said the GOP was right to take chained CPI off the table, but told reporters, "We're still left with a proposal they've given us that protects the wealthy and not the middle class."

Reid said he made a counteroffer, but did not discuss the details.

"I'm concerned about the lack of urgency here," McConnell said.

Republican aides would not say what was in their most recent offer. But privately some suggest that Reid may have been stalling for time until he could address his colleagues during a closed door meeting this afternoon.

A Senate Democratic leadership aide called the GOP's decision to inject chained CPI into the talks last night "a major setback."

But in his remarks on the floor, Reid still held out hope for a deal saying, "I'm not overly optimistic but I am cautiously optimistic that we can get something done."

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Fiscal cliff negotiations: A slow-motion car wreck?

Chris Frates, National Journal — Fri, 28 Dec 2012 09:59:04 -0500

Washington’s fiscal cliff negotiations have taken on the feel of a slow-motion car wreck that could be avoided if only someone would take the wheel.

But instead, President Obama and congressional leaders in both parties spent Thursday engaged in what amounted to a staring contest where neither side blinked.

House Republicans said it was Senate Democrats turn to try to pass a solution. Nuh-uh, answered Senate Dems, insisting that the House GOP either cut a deal with the president or take up their Senate bill. And the president? Well, he didn’t say much of anything today.

So as it becomes increasingly likely that the nation will lurch off the fiscal cliff, congressional leaders played the blame game, seeking a PR advantage ahead of the hundreds of billions of dollars in automatic tax increases and across-the-board spending cuts that commence in less than a week.

Democratic Senate Majority Leader Harry Reid took to the floor to say it looks like the country’s headed over the fiscal cliff, pointing the finger at Republican House Speaker John Boehner, who allowed his members to stay home instead of returning to Washington to work on a solution. He called on Boehner to hold a vote on a Senate-passed bill that would extend the Bush-era tax cuts for everyone making under $250,000 a year.

For his part, Boehner held a conference call with GOP lawmakers Thursday and his private message echoed his public one -- he called on Reid to pass House legislation to extend the tax cuts and avoid the spending cuts. And GOP leaders told their members to return to the Capitol on Sunday, a tacit acknowledgement that an empty House chamber did not help their public image.

“The House will take this action on whatever the Senate can pass – but the Senate must act,” Boehner told Republicans, according to a source on the call.

He also told members that his most recent call with Obama was brief and unsubstantial, a GOP aide familiar with the call said.

After Boehner failed last week to pass his plan to extend tax cuts for everyone but millionaires, Republicans have punted to the Senate in an effort to deflect some of the blame for the stalled out negotiations.

But so far Senate Democrats have failed to act. With the wind of public opinion at their back (most polls show the majority of Americans will blame Republicans if the country goes off the fiscal cliff), Democrats aren’t budging until they have a plan that has Republican backing.

And that prospect isn’t looking particularly sunny since Reid didn’t talk with Boehner or McConnell over the holiday, according to a Senate Democratic aide. And a late Thursday afternoon meeting between the two men was not about the fiscal cliff, another aide said.

Democrats are hesitant to put up a plan on the Senate floor without GOP support because they worry Republicans would sink the last, best hope for a deal in order to score political points on a Democratic failure.

The best chance for a cliff-averting deal seems to lay with Reid and McConnell. If the two leaders can agree to bring a plan to the floor, that legislation just might make it to the president’s desk.

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Why a fiscal cliff deal is still possible

Chris Frates, National Journal — Fri, 21 Dec 2012 08:09:09 -0500

Gloom has settled over the prospect of reaching a deal to keep the country from diving off a fiscal cliff in 11 days when automatic tax increases and spending cuts start to kick in, increasing the chances of another recession.

And why shouldn't pessimism reign? Negotiations between President Obama and Republican House Speaker John Boehner have broken down almost completely; the two men have not talked in days.

Meanwhile, Boehner failed tonight to pass a fallback solution that the president threatened to veto and Senate Democrats rejected. Without enough Republican support to pass his Plan B bill, Boehner scuttled the vote and sent his members home for the Christmas holiday.

This week has been all dueling and no compromise. As one Hill rag proclaimed last night, “Fiscal cliff: The lowest point.”

So yeah, it’s not looking good as the country careens toward the cliff.

But if politics is part theater -- and God knows there’s been plenty of choreographed drama this week -- then the House vote tonight marks the end of Act II with the all-important third act climax to come. There is still plenty of time, and opportunity, for Boehner and Obama to strike a deal.

Here’s why.

At first blush, Boehner’s decision to step away from the negotiating table to pass his own fiscal cliff solution seemed to give the White House talks short shrift. Frustrated with the maneuver, Democrats have scolded the speaker for wasting a week of negotiating time.

But behind the rhetoric there was a strategy at play. The plan appeared designed to move Obama toward the speaker’s position of smaller tax increases and larger spending cuts while helping conservatives wrap their heads around the idea of voting for a tax hike.

The speaker struggled to round up GOP votes for a package that only would have raised taxes on millionaires. If Boehner had trouble selling his own package, it sends a message to Obama that his position, raising taxes on people who make over $400,000, is going to be even tougher to pass.

Amid rank-and-file House Republicans, there was growing opposition to the Boehner-Obama talks. If that feeling was allowed to fester, Boehner feared he would not be able to muster enough support for an eventual deal with Obama. Thursday’s vote was supposed to ensure that conservatives would have their fingerprints on any final result by bringing them into the deal-making process.

Though Boehner couldn't get his caucus on record supporting a tax hike, his voter counters now have a much better idea of how many Republicans could get behind that approach.

That's important because if Obama and Boehner strike a deal, he won't need to deliver all the votes himself. An Obama-blessed package will win support from House Democrats, who opposed Plan B. Most Republican insiders believe Boehner only has to deliver about half his members to keep his speakership.

And even before Thursday's scuttled vote, Republican House Rules Committee Chairman David Dreier signaled that GOP leadership understood that Boehner's talks with the president were far from over.

“The president’s in the midst of negotiations,” he said. “There is clear recognition this is not going to be the final package that we’re going have. I don’t think anyone has come to that conclusion.”

Obama echoed Dreier in a statement it released Thursday night vowing to "work with Congress to get this done and we are hopeful that we will be able to find a bipartisan solution quickly that protects the middle class and our economy."

The failed vote creates space for Boehner and Obama to restart negotiations. Both the House and Senate aren't expected to take any more action on the cliff until after Christmas.

With lawmakers back home and the nation tuned out for the holidays, Obama and Boehner could resume talks in a much less frenzied environment. In fact, some of the biggest breakthroughs in the negotiations so far have come after lawmakers have left town. Just last Friday, for example, Boehner offered to raise tax rates on millionaires.

As then-Republican Senate Majority Leader Trent Lott used to say, the best time to cut a deal is when the Capitol is empty.

Despite all the overheated rhetoric, Obama and Boehner aren’t that far apart on the actual numbers. On the question of how much new revenue the government should bring in through higher taxes, the two are separated by $200 billion in a multi-trillion dollar deal. On spending cuts, the two are again only $200 billion apart, not an unbridgeable gulf.

The path to a deal remains. The only question is whether the speaker and the president can walk down it together.

Billy House and Elahe Izadi contributed.]]>

Democrats dodge questions on spending cuts

Chris Frates, National Journal — Wed, 19 Dec 2012 08:16:26 -0500

President Obama’s latest fiscal cliff offer to support deeper spending cuts to popular government programs puts his Democratic allies on Capitol Hill in a tough spot on Tuesday, driving them to dodge questions about whether they could support it.

Obama’s plan calls for $1.2 trillion in spending cuts that include changes like slowing the cost-of-living increases for Social Security beneficiaries -- a reform Senate Democrats declared off the table weeks ago.

So now, Obama’s proposal puts Democrats in a bit of a political pickle.

Democrats can’t embrace Obama’s plan for fear of getting hammered by liberal interest groups and giving Republican House Speaker John Boehner room to push for further entitlement cuts.

Conversely, Democrats can’t threaten to scuttle a deal if the cuts are included because it could undermine Obama’s negotiating position. And while Democrats are likely to support the cuts as part of a larger fiscal cliff package, they can’t say so now.

So, they’re not saying much of anything.

Senate Finance Committee Chairman Max Baucus refused to comment on Obama’s latest offer because it wasn’t a done deal.
“I want to see what the deal is and I don’t want be negotiating, undermining the president by commenting on all of these different proposals that come out. They’re doing it, the speaker and the president. Godspeed, and hope they make it because it’s really important.”

The late Monday night leak of the White House plan left Senate Democrats scrambling on Tuesday morning to explain how the new spending cuts affected a deal’s chance of passage. And even after a lunchtime briefing by White House negotiator Rob Nabors, Democratic leaders were still dodging reporters’ question.

“I haven’t seen their proposal,” said Sen. Dick Durbin, the No. 2 Senate Democrat.

But hadn’t he just been briefed by Nabors?

“He didn’t get into specifics,” Durbin said, quickening his pace as he walked away from reporters.

Sen. Patty Murray, the No. 4 Democrat in the Senate, fell back on old talking points.

“We have been consistent from day one. Unless there is significant revenue on the table that was fairly balanced, we are nowhere. And to this point we haven’t gotten there so there is no plan,” she said before waiving off further questions and bolting for the senators-only elevator.

Sen. Claire McCaskill, a moderate Democrat and close Obama ally, said she plans to wait until a deal is struck before weighing in. "I am not going to comment on any of the parts until it appears something's moving," she said.

White House spokesman Jay Carney defended the proposal to slow the cost-of-living increases for Social Security beneficiaries, calling the chained CPI provision a “technical adjustment” that would protect the most vulnerable.

And even liberal senators who don’t like chained CPI stopped short of criticizing Obama for including it.

Asked about chained CPI, Democratic Sen. Maria Cantwell said, “no, no, no.” But she was less definitive about its ability to be a deal killer. “I don’t know about that,” she said.

Republicans and Boehner were close to a deal on the White House offer Monday night, but Boehner balked in part because it didn’t include enough cuts and raised tax rates on those making more than $400,000, down from his position that the tax hikes should only hit income of $1 million or more, a Democratic Senate leadership aide said.

Boehner called to tell the White House Monday night that he was unveiling a backup plan Tuesday morning and the White House then leaked the details of its latest offer, the aide said.

Boehner’s backup, the so-called Plan B, is to run legislation that would extend the expiring Bush-era tax cuts for everybody but those making over $1 million. Democrats blasted the plan as a gimmick. On MSNBC, House Democratic Leader Nancy Pelosi called it “plan befuddled” and said Democrats would not vote for it.

Democrats reason that if Boehner can get 218 votes for a bill that would raise taxes on millionaires, he could also get the needed votes to pass a bill that raises taxes on the wealthy in exchange for more spending cuts.

And by leaking details of its plan last night, the White House hoped to upstage Boehner’s Plan B announcement, said a Democratic Senate leadership aide.

“The details of the president’s plan basically one upped Boehner by showing an even bigger move to the middle on entitlements than Boehner has showed on taxes,” the aide said.

Michael Catalini, Nancy Cook and Jim O’Sullivan contributed to this report.

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Can Boehner sell the GOP on Obama's new fiscal cliff offer?

Nancy Cook and Chris Frates, National Journal — Tue, 18 Dec 2012 09:02:22 -0500

President Obama has made a key concession in talks over how to avoid the fiscal cliff, offering to accept a critical Republican demand for deeper spending cuts in exchange for raising tax rates on Americans making more than $400,000 a year. Now, it’s up to House Speaker John Boehner to sell his GOP conference on the idea of cutting a deal at a make-or-break meeting on Tuesday.

Boehner will face his members for the first time since a Friday White House meeting where he first floated the idea of allowing tax rates for millionaires to go up.

The speaker’s position is a risky one. Boehner is betting that Republicans will see that it’s better to cut a deal and trade tax hikes for spending cuts than to pass a Senate-like bill that cuts taxes for everybody but the rich and gets no entitlement cuts in return.

At Tuesday's meeting, Boehner will present the new White House offer, and update the members on the status of the cliff talks. The reaction of rank-and-file lawmakers to Boehner’s pitch will go a long way toward determining whether the speaker has the leeway to cut a deal with the president or whether he’ll be forced to scrap the deal-making in favor of a more scaled-back plan that prevents the expiration of the Bush tax cuts from raising taxes on most Americans.

Asked if he would give a a preview of what he would say in the meeting, Boehner told National Journal, “No, I don’t think so.”

The increasing flurry of offers and counter offers flying up and down Pennsylvania Avenue indicates that the two parties are hard at work on a compromise, though both sides were saying on Monday that the wheeling and dealing is far from over.

On Monday night, a source familiar with Obama’s counter offer described it as a good, but by no means, a final offer.

In his latest offer, Obama suggested raising taxes to Clinton-era rates on people making more than $400,000 a year, a concession from the president’s previous position of $250,000 and down from Boehner’s most recent offer to raise tax rates on those making north of $1 million.

Obama is asking for $1.2 trillion in new revenue and coupling it with an equal amount in spending cuts, according to a source familiar with the negotiations.

The major concession on entitlements would be a slower cost-of-living increase for Social Security benefits, a tweak Republicans have long sought.

The White House offer would also permanently extend the alternative minimum tax patch; the so-called doc-fix that stabilizes Medicare reimbursement rates; and tax extenders that give businesses breaks for things like research and development and renewable energy production.

The White House also countered Boehner's offer to extend the debt ceiling for a year by asking for a two-year extension. And Obama's offer includes promises to fast-track comprehensive tax reform.

Boehner argued that Obama’s offer was still seeking more in revenue than in spending cuts.

"Any movement away from the unrealistic offers the president has made previously is a step in the right direction, but a proposal that includes $1.3 trillion in revenue for only $930 billion in spending cuts cannot be considered balanced,” Boehner spokesman Michael Steel said in an email. “We hope to continue discussions with the president so we can reach an agreement that is truly balanced and begins to solve our spending problem.”

Boehner’s offer did force Obama to move off his insistence of defining the wealthy as those making more than $250,000 and increase spending cuts. But it remains unclear how much that concession will help Boehner sell the idea to his members Tuesday morning.

On Monday, Boehner’s offer met with skepticism from Republican lawmakers and aides, who privately questioned whether Boehner could convince his colleagues to trade tax hikes for spending cuts. One senior GOP aide said Boehner needs to present a plan that is “saleable” in the House and it’s still unclear whether this is it.

In public, lawmakers were more circumspect, but still signaled that they're anxious to hear the speaker’s explanation.

“I’ve read in the paper, various papers, what the offers have been and looking forward to tomorrow to hear the full details,” Republican Rep. Cory Gardner told National Journal on Monday.

And, no matter what happens, it’s increasingly unlikely that a deal to avert the fiscal cliff will pass before Christmas.

On Monday, Democratic Senate Majority Leader Harry Reid said, if nothing changes, the Senate will have to come back Dec. 26.

Billy House contributed to this article.

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Majority leader expects Senate back Dec. 26

Chris Frates, National Journal — Mon, 17 Dec 2012 15:16:51 -0500

"It appears at this stage, we'll see if anything changes, but it appears that we're going to be coming back the day after Christmas to complete work on the fiscal cliff and a few other leftover items," Reid said on the floor, according to a transcript.

Of course, legislative leaders often use the threat of holiday week sessions to force action before the Christmas holiday -- the Christmas Eve morning Senate vote on health care reform a few years ago, for example -- so it's far from a gurantee that Congress will be back the week between Christmas and New Year's.

That said, with each passing day, it gets more and more likely.
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Boehner back at the White House talking fiscal cliff

Chris Frates, National Journal — Mon, 17 Dec 2012 12:40:50 -0500

After a weekend of movement in the fiscal cliff negotiations, House Speaker John Boehner was back at the White House for a 45 minute meeting Monday morning.

“The president and the speaker are meeting at the White House to continue their discussions about the fiscal cliff and balanced deficit reduction,” Boehner spokesman Michael Steel wrote in an email, providing no further details.

The meeting indicates that the men are still talking, though both sides say an agreement is not imminent.

Shortly before noon, Steel emailed to say that the 45-minute meeting had concluded.

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Democrats declare checkmate in fiscal cliff debate

Chris Frates, National Journal — Fri, 14 Dec 2012 09:22:41 -0500

In the ongoing fiscal cliff chess match playing out on Capitol Hill, Democrats have a message for Republicans: checkmate.

Democrats look at the political landscape and see a win whether a deal gets cut now or after the country goes over the cliff. Worst-case scenario, they say, the House will approve legislation the Senate passed in July extending Bush-era tax cuts for everyone but the rich, an idea that Republican House Speaker John Boehner has flatly rejected.

If Boehner refuses to pass the Senate bill before the end of the year, Democrats say their hand only gets stronger in the new year when the Senate will have 55 Democrats and at least five Republicans who have signaled they could vote to extend the middle-class tax cuts.

“We have the political high ground -- there is no question about it. The sooner they realize it, the better it will be for them,” Democratic Sen. Chuck Schumer said of the Republicans. “In 2010 it was the opposite. They had the political high ground and we had to do just about all cuts and no revenues. Now, the election was fought on revenues; we won it on revenues; the public is with us on revenues.”

Indeed, polls show that a majority of Americans favor raising taxes on the wealthy and will blame the GOP if the country goes over the cliff. And Democrats don’t believe that Republicans have the time, the megaphone or the leverage to force Democrats into making significant entitlement cuts right now. Congress just spent the last year making more than $1 trillion in cuts and Democrats say they are well-insulated from charges that they’re unwilling to slash spending.

“If we go over the cliff, it doesn’t last long. That’s why these guys are fundamentally checkmated,” said a senior Democratic leadership aide.

But if Democrats are to be believed when they say that they don’t want the country to go over the cliff, then President Obama and his Democratic allies may be overplaying their hand -- their hardline on raising taxes and minimizing spending cuts could contribute to a cliff dive.

Still, Democrats are convinced that the public support is so solidly behind them that there’s little risk to this particular game of chicken.

Democrats argue that the Senate bill would pass the House if Boehner brought it to the floor, evidenced by the fact that he hasn’t allowed a vote on it. (Boehner spokesman Michael Steel said the speaker hasn’t brought up the bill because the House has already passed legislation to extend all the tax rates.)

What Boehner probably doesn’t have, Democrats reason, is a majority of his caucus behind the bill, which is essential to preserving his speakership -- a dynamic, the Democratic aide said, that is “not our f---ing problem.”

“We should pass the Senate bill. That’s the step that needs to be taken. The speaker needs to say to his caucus, ‘Look the election is over and we need to pass the Senate bill,” said Rep. Sandy Levin, the top ranking Democrat on the House Ways and Means Committee. “We’re not overplaying our hand. The public spoke.”

Democratic Caucus Chairman John Larson said that while Democrats don’t want to go over the cliff, “Some Dems are saying, you can see it in their eyes, they’re saying, ‘Well, Republicans think they’re going to play chicken? They’re playing with the wrong people.”

For their part, Republicans rejected as fantasy the idea that Democrats have them boxed in, arguing that going over the cliff will mean billions of dollars in automatic spending cuts to defense and other programs as well as another fight over whether to raise the country’s debt limit.

“We’re not in a box. The question is, ‘Are Democrats going to drive us over a cliff for politics?’ If the answer is yes, then we’ll just have to see what happens,” said Republican Rep. Aaron Schock, who sits on the Ways and Means Committee.

Some Republicans believe that Obama’s drive to raise rates is a political calculation to divide Republicans and pave the way for a Democratic takeover of the House in two years.

“No doubt he’s still campaigning to have his last two years be like his first two years and get everything he wants,” said Republican Rep. James Lankford, adding that Republicans are frustrated because raising taxes won’t solve the nation’s deficit problems.

“That’s the big issue. It’s as if the president wants a messaging piece – ‘Look, I raised taxes. I poked the wealthy people in the eye,’” he said. “And we look at that and say, ‘What did that just accomplish other than you got a good talking point for your base?’”

Another Republican lawmaker was more blunt.

“We’re going over the cliff because he believes it’s to his benefit,” the lawmaker said. “Obama better hope he’s right.”

(Image via Paperboat/Shutterstock.com)

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Boehner, Obama no closer to cliff deal after latest offers

Nancy Cook and Chris Frates, National Journal — Wed, 12 Dec 2012 07:41:31 -0500

After swapping more offers and counter offers early this week, President Obama and House Speaker John Boehner remain hundreds of billions of dollars apart in talks to avert the recession-threatening fiscal cliff, as both frustration and deadline pressure grow.

On Monday, Obama gave Boehner a revised offer that lowered the amount of tax revenue he was seeking from $1.6 trillion to $1.4 trillion and upped the revenue cuts from about $400 billion to about $600 billion.

The next day, Boehner responded in kind. Since the White House didn't move much from its original offer, Boehner didn't move much from his, according to a House GOP leadership aide. Boehner's latest offer included $800 billion in revenue and over $1 trillion in cuts.

Republicans are frustrated that the president refuses to offer up spending cuts that are equal to his revenue demands, the aide said.

Adding to Republicans' frustration are Senate Democrats, who continue to insist that last year's $1 trillion in cuts should be counted in this round of negotiations and Obama himself, who predicted that Republicans will cave on taxes in a Tuesday interview with ABC News.

And despite Obama and Boehner talking by phone on Tuesday, there were more signals from Capitol Hill that things are not going well. House Ways and Means staff told members to be prepared to come back the week between Christmas and New Year's, a senior GOP aide said.

Indeed, time is running short for Washington to avert $500 billion in year-end tax increases and spending cuts. And while much of Washington had thought the heated public rhetoric was masking more serious and deliberate negotiations, the numbers don't lie. Obama and Boehner are still miles apart.

On the other end of Pennsylvania Avenue, the White House tried to sweeten its latest offer to House Republicans by including an overhaul of the corporate tax code, according to sources familiar with the fiscal cliff talks.

While a Boehner spokesman quickly downplayed the revised offer, saying what’s needed is comprehensive tax reform that includes the individual side of the code, the Obama administration’s inclusion of corporate tax reform could win allies in the business community that the GOP might find hard to ignore.

The sources would not share details of the corporate reform plan Obama sent Boehner.

This latest offer arrived during a week when business had already ramped up its calls for a big tax and budget deal. The influential lobbying group, Business Roundtable, urged Republicans in a letter to agree to an increase in tax rates if that’s what it took to reach a compromise while also calling on Obama and Democrats to commit to entitlement and spending cuts.

Other prominent business leaders and groups from Goldman Sachs CEO Lloyd Blankfein to the Fix the Debt coalition have supported revenue increases alongside spending cuts as part of a grand compromise—public proclamations that only add to the pressure on the House Republicans.

Any overhaul of the corporate tax code is bound to appeal to the corporate community, which Obama has assiduously courted in the past few weeks. It’s part of his strategy to boost support outside the beltway and put pressure on Congress.

Still, Boehner’s spokesman, Michael Steel, called the White House’s inclusion of the corporate tax code piece “a red herring.”

“We've always said you need to do both, given the way they interact,” he wrote in an email. “The issue is the individual rates because of the small business jobs impact.”

This isn’t the first time the president has proposed an overhaul of the corporate tax system. In February 2011, he released a framework that proposed lowering the corporate tax rate to 28 percent. It also gave manufacturers an even lower tax rate of 25 percent and gave breaks to companies that brought jobs back to the United States.

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Gephardt: Fiscal Cliff Deal Will Cost Some Lawmakers Their Jobs

Chris Frates, National Journal — Fri, 07 Dec 2012 15:25:00 -0500

Getting a deal to avoid the fiscal cliff is going to cost some lawmakers their jobs.

“There are people who are going to have to vote for this and they’re going to lose their next election. I can swear to you that’s going to happen,” former Democratic House Majority Leader Dick Gephardt told the Alley today.

And the difficulty in getting a deal is why Gephardt joined with former congressional leaders including former Republican House Speaker Dennis Hastert and former Senate majority leaders Tom Daschle, a Democrat, and Trent Lott, a Republican, to pen a letter to the editor in The Washington Post calling on the public to support President Obama and congressional leaders as they work to cut a deal.

“The men and women you elected and reelected will need your support in making difficult decisions and asking for the sacrifices we will all have to make. We ask that you join us in adding your voice to this national conversation,” the former congressional leaders wrote.

The country’s leaders don’t need more input on what they should do; rather, they need to know the public supports a deal, Gephardt said.

“When you’ve been in a leadership position, and we all have in that group, you know how hard this is. And you know you don’t need more ideas, you need support,” Gephardt said.

Gephardt, a veteran of several epic spending and entitlement reform battles, is bullish about the chances that Obama and congressional leaders can work something out. But he expects any deal will be an interim down payment, mostly because there’s not enough time to sell a bigger pact to the members.

“Getting the leaders to agree, that gets you four votes. You need a lot more,” he said. “And you get them one by one and they’re hard to get.”

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Boehner's fiscal cliff counter offer doesn't satisfy White House

Chris Frates, National Journal — Tue, 04 Dec 2012 08:16:57 -0500

House Speaker John Boehner’s fiscal-cliff counter offer on Monday boots the ball squarely back into President Obama’s court, buying the Republican leader time as Democrats work the clock to force Republicans to cave in on their opposition to tax hikes for the wealthy.

Boehner’s offer of $800 billion in new revenue -- quickly panned by the White House as still too easy on the rich -- was a bid to move the tax debate back to where it was during last year’s negotiations over the debt ceiling. Democrats are pushing for more, as evidenced by Obama’s proposal for $1.6 trillion in new tax revenue.

Obama’s opening position last week infuriated congressional Republicans, who mocked the proposal. Boehner on Monday called it a “la-la land offer.” Still Democrats used the president’s plan to hammer Republicans for failing to offer an alternative.

Boehner’s counter, based on a proposal that former Clinton administration official Erskine Bowles made before the super committee last year, attempts to use a top Democrat’s framework to yank the negotiations rightward and take the rhetorical high ground. Unlike Obama's offer, Boehner said, the House Republicans’ counter isn’t a gussied up version of their budget blueprint but a plan that includes real concessions on the part of the GOP.

“We could have responded in kind but decided not to do that. And what we’re putting forward is a credible plan that deserves serious consideration by the White House,” Boehner told reporters. “I hope they will respond in a timely and responsible way.”

But, short of completely folding on tax increases for top earners, there is likely little Obama could say this early in the negotiations that Boehner would label “responsible.” And the same goes for the president, who has shown no willingness to back off his demand for tax-rate hikes on the rich.

“The Republican letter released today does not meet the test of balance,” White House communications director Dan Pfeiffer said on Monday. “Their plan includes nothing new and provides no details on which deductions they would eliminate, which loopholes they will close, or which Medicare savings they would achieve."

And while the White House moved to quickly pan the offer, more telling will be how long it takes them to counter Boehner’s counter. If the president slow-walks his response, it’s a good signal that Democrats are working to push Republicans to the edge of the cliff in hopes they will relent.

And that may, in fact, be the strategy. A Democratic Senate aide said on Monday that it could be two weeks before the posturing ends and the real negotiations begin.

Sen. Dick Durbin, D-Ill., told National Journal on Monday that Boehner should allow a vote on a Senate-passed bill that extends the Bush-era tax cuts for everyone but the wealthy -- a move that would both force House Republicans to go on record in support of lower tax rates for the wealthy and help Democrats take more time off the clock.

“It is a dramatic down payment and it moves us forward in this conversation,” Durbin said in calling for the House vote on the Senate plan. “The rate has to go up.”

In addition to the $800 billion in revenue, Boehner’s counteroffer calls for $1.4 trillion in savings, including $600 billion in changes to health programs like Medicare and Medicaid; $300 billion in cuts to mandatory programs; $200 billion in revisions to the way the consumer price index is used by the federal government to set salaries and benefits; and $300 billion in further discretionary spending cuts. And, if measured by the same standards as Obama’s plan, Boehner’s counter would provide $4.6 trillion in deficit reduction, more than the $4 trillion offered by Obama, Republican aides say.

It does not, however, outline how to deal with a country fast approaching its debt limit or sequestration’s across-the-board spending cuts.

Jim O'Sullivan and Nancy Cook contributed to this report.

(Image via Orhan Cam/Shutterstock.com)

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McCain calls Kerry 'Mr. Secretary'

Chris Frates, National Journal — Mon, 03 Dec 2012 14:19:16 -0500

When he took back the mic, Kerry returned the favor saying, "Thank you very much, Mr. President. This is what happens when you get two losers" together, Kerry joked of the two men's failed presidential campaigns.
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