By Stephen Moore - WSJ
Leverage for the next clash: GOP willingness to let the spending sequester take effect..
What stunned House Speaker John Boehner more than anything else during his prolonged closed-door budget negotiations with Barack Obama was this revelation: At one point several weeks ago Mr. Boehner says the president said to me We dont have a spending problem.
I am talking to Mr. Boehner in his office on the second floor of the Capitol 72 hours after the historic House vote to take America off the so-called fiscal cliff by making permanent the Bush tax cuts on most Americans but also to raise taxes on high earners. In the interim Mr. Boehner had been elected to serve his second term as speaker of the House. Throughout our hourlong conversation as is his custom he takes long drags on one cigarette after another.
Mr. Boehner looks battle weary from five weeks of grappling with the White House. Hes frustrated that the final deal failed to make progress toward his primary goal of making a down payment on solving the debt crisis and setting a path to get real entitlement reform. At one point he grimly says: I need this job like I need a hole in the head.
The presidents insistence that Washington doesnt have a spending problem Mr. Boehner says is predicated on the belief that massive federal deficits stem from what Mr. Obama called a health-care problem. Mr. Boehner says that after he recovered from his astonishmentThey blame all of the fiscal woes on our health-care systemhe replied: Clearly we have a health-care problem which is about to get worse with ObamaCare. But Mr. President we have a very serious spending problem. He repeated this message so often he says that toward the end of the negotiations the president became irritated and said: Im getting tired of hearing you say that.
With the two sides so far from agreeing even on the nature of the countrys fiscal challenge making progress on how to address it was difficult. Mr. Boehner became so agitated with the lack of progress that he cursed at Senate Majority Leader Harry Reid. Those days after Christmas he explains I was in Ohio and Harrys on the Senate floor calling me a dictator and all kinds of nasty things. You know I dont lose my temper. I never do. But I was shocked at what Harry was saying about me. I came back to town. Saw Harry at the White House. And that was when that was said he says referring to a pointed go blank yourself addressed to Mr. Reid.
Mr. Boehner confirms that at one critical juncture he asked Mr. Obama after conceding on $800 billion in new taxes What am I getting? and the president replied: You dont get anything for it. Im taking that anyway.
Why has the president been such an immovable force when it comes to cutting spending? Two reasons Mr. Boehner says. Hes so ideological himself and hes unwilling to take on the left wing of his own party. That reluctance explains why Mr. Obama originally agreed with the Boehner proposal to raise the retirement age for Medicare the speaker says but then pulled back. He admitted in meetings that he couldnt sell things to his own members. But he didnt even want to try.
Mr. Boehner is frustrated that Republicans were portrayed by the press as dogmatic and unyielding in these talks. Im the guy who put revenues on the table the day after the election he says. And Im the guy who put the income threshold at a million dollars. Then we agreed to let the rates go up on dividends capital gains as a way of trying to move them into a deal. . . . But we could never get him to step up Mr. Boehner says with a shrug. Negotiations with the White House ended in stalemate when it became painfully obvious that the president wont cut spending.
Once the talks broke down the eventual scaled-back deal with no spending cuts was brokered by Vice President Joe Biden and Senate Minority Leader Mitch McConnell with Mr. Boehner on the sidelines. He says that after the tax package passed the Senate the House Republican caucus debated two alternatives. One was to amend the Senate bill by attaching spending cuts and the other was to vote up or down on the Senate bill.
We were already off the cliff he says of the rushed Jan. 1 vote and he feared that a no vote would do serious damage to the economy. He denies twisting arms to win passage. Even though a majority of Republicans voted no and he took flak from conservative groups as a sellout in the end most of our members wanted this to pass but they didnt want to vote for it.
In hindsight what does he think was his biggest strategic mistake? What I should have done the day after the election was to come out and say: The House has done its work. The House passed a bill that replaced the sequester with real spending cuts. The House passed a plan extending all of the current tax rates. We passed a budget. We call upon the Senate to do their work.
The left has been crowing that it walked away with the crown jewels and forced Republicans to cave on their no new taxes principle. Mr. Boehner sees things differently: The law of the land was that all of the rates were going up January 1 period. So the question was were we going to cut taxes by $3.7 trillion.
Hes no cheerleader for the final dealhe derides the special-interest corporate-tax provisions as containing an awful lot of garbage and grouses about extending unemployment without further reformsbut he defends it as the best bad outcome that could have been expected: Who would have ever guessed that we could make 99 of the Bush tax cuts permanent? When we had a Republican House and Senate and a Republican in the White House we couldnt get that. And so not bad.
Where does the fiscal debate go from here? The speaker is adamant on two points: First Republicans wont be agreeing to any more tax increases during the next two years. The tax issue is resolved he says and it will be discussed only in the context of a broader debate about tax reformspecifically lower rates. He dismisses the presidents declaration that any future budget cuts will have to be balanced with more tax hikes.
Second Mr. Boehner says he wont engage in any more closed-door budget negotiations with the White House which are futile. He adds: Sure I will meet with the president if he wants to but House Republicans will from now on proceed with establishing a budget for the year following what is known as regular order and they will insist that Harry Reid and Senate Democrats pass a budgetsomething they havent done in nearly four yearsbefore proceeding.
The real showdown will be on the debt ceiling and the spending sequester in March. I ask Mr. Boehner if he will take the debt-ceiling talks to the brinkrisking a government shutdown and debt downgrade from the credit agenciesgiven that it didnt work in 2011 and President Obama has said he wont bargain on the matter.
The debt bill is one point of leverage Mr. Boehner says but he also hedges noting that it is not the ultimate leverage. He says that Republicans wont back down from the so-called Boehner rule: that every dollar of raising the debt ceiling will require one dollar of spending cuts over the next 10 years. Rather than forcing a deal the insistence may result in a series of monthly debt-ceiling increases.
The Republicans stronger card Mr. Boehner believes will be the automatic spending sequester trigger that trims all discretionary programsdefense and domestic. It now appears that the president made a severe political miscalculation when he came up with the sequester idea in 2011.
As Mr. Boehner tells the story: Mr. Obama was sure Republicans would call for ending the sequesterthe other cliffbecause it included deep defense cuts. But Republicans never raised the issue. It wasnt until literally last week that the White House brought up replacing the sequester Mr. Boehner says. They said We cant have the sequester. They were always counting on us to bring this to the table.
Mr. Boehner says he has significant Republican support including GOP defense hawks on his side for letting the sequester do its work. I got that in my back pocket the speaker says. He is counting on the presidents liberal base putting pressure on him when cherished domestic programs face the sequesters sharp knife. Republican willingness to support the sequester Mr. Boehner says is as much leverage as were going to get.
That leverage he reasons is what will force Democrats to the table on entitlements. Think of it this way. We already have an agreement capping discretionary spending for 10 years. And were already in our second year of it. This whole discussion on the budget over the next several months is going to be about these entitlements.
Given the bruising of the past several weeks Mr. Boehner is surprisingly optimistic about getting a deal done on corporate and personal income-tax reform. The president understands the need for tax reform he says. The president admitted . . . in the first meeting that we needed to do tax reform and he was for a tax reform process that would lower rates.
Mr. Boehner sees Republicans with two goals: lowering tax rates and closing loopholes as happened in 1986 and equalizing tax rates between small businesses and large corporations. His optimism that Democrats will agree to that framework seems Pollyannish since they are now advocating closing loopholes to raise revenueswithout lowering rates.
The driving passion for Mr. Boehner in these fiscal debates is his conviction that trillion-dollar deficits are sapping the country of its energy and prosperity. When I ask him when the impact of this debt will start to be felt he says: Its already here today. Its killing our economy. Its causing investors to sit on their cash. Theyre afraid to invest. Its a wet blanket on top of our economy.
He sees debt as almost a moral failing noting that when he grew up in a little middle-class blue-collar neighborhood outside of Cincinnati nobody had debt. It was unheard of. I just dont do debt.
Mr. Boehner says that the only way to build long-term economic growth is to reduce the nations debt through entitlement and tax reform. But can such a deal be achieved with a president who doesnt even think that Washington has a spending problem? He believes in the power of government Mr. Boehner answers. I believe in the power of the American people. It is really that simple. And really that difficult.
Mr. Moore is a member of the Journals editorial board.
