Less Tension This Time for Obama, Boehner

 

When congressional leaders meet at the White House to open budget talks Friday, it will be a reunion of sorts for President Barack Obama and Republican House Speaker John Boehner, who spent weeks in mid-2011 pursuing in vain a grand budget bargain.

The problems are familiar, but much has changed in the intervening 16 months, and the atmosphere today seems somewhat more conducive to deal-making. The election is over. The fiscal concerns are more acute. And after the August 2011 downgrade of the U.S.'s credit rating, both men are painfully aware of the consequences of failure.

"The experience of two Augusts ago has to be not only eye-opening but searing," said former GOP Sen. Judd Gregg of New Hampshire.

 

What's more, the cost of inaction this time is pretty clear: The U.S. faces automatic year-end tax increases and spending cuts that experts predict would drive the country back into recession if Congress and the White House don't agree on an alternative plan.

Robert Bixby, executive director of the Concord Coalition, a nonpartisan budget watchdog group, said that alarm "gets both sides thinking it would be better to reach some sort of deal than to tumble over the cliff like Sherlock Holmes and Professor Moriarty."

Looking for a way to avert the "fiscal cliff," Mr. Obama has convened a Friday White House meeting with Mr. Boehner, Senate Majority Leader Harry Reid (D., Nev.), Senate Minority Leader Mitch McConnell (R., Ky.) and House Democratic Leader Nancy Pelosi (D., Calif.).

 

The key players will be Messrs. Obama and Boehner, leaders of their respective parties. They have not met one-on-one since July 2011, when they worked in secret on a deficit-reduction plan designed to clear the way for raising the debt ceiling that included tax increases and cuts to entitlement programs. Those talks collapsed.

Uncertainty and political tumult ensued, and even though the debt ceiling was eventually raised, the U.S. credit rating was downgraded.

The 2012 elections didn't change the balance of power in Washington directly, but it tilted the playing field in Democrats' direction with Mr. Obama's re-election and Republican losses in the House and Senate. The president now believes he has the upper hand to drive a hard bargain, one that includes tax increases on upper-income Americans.

"Because he's not running for re-election ever again, he has more opportunity, I think, to be more direct and not to worry at all about political consequences," said former Sen. Tom Daschle (D., S.D.), who is close to the White House.

After the 2010 midterm elections, when Democrats suffered historic losses in Congress, the debate was no longer whether to cut spending, but how much. Now, after last week's election, the White House believes it has similarly shifted the conversation on raising upper-income taxes.

The White House believes it has a stronger bargaining position than the Republicans, because going over the cliff is arguably more unacceptable for the GOP than for Democrats. Pentagon spending will be slashed along with domestic programs, and taxes will go up across the board.

"If Republicans play their traditional role of saying 'no' to everything, they get the worst of all worlds, their worst nightmare: The Clinton tax code," said John Podesta, who was President Bill Clinton's chief of staff.

Mr. Obama has learned lessons from his talks with Mr. Boehner about how to negotiate, his aides say. He is trying to shore up his negotiating position by selling his ideas on the road outside Washington and bringing others with a stake in the process into the White House for discussions.

Mr. Obama is aiming for a sweeping deal, which his aides believe makes it easier for both parties to compromise. And while he sees a change in tone among Republicans on taxes, he also believes his re-election gives him some clout with his own party in getting them to agree to entitlement changes.

In the election's wake, Mr. Boehner has publicly expressed uncharacteristic openness to compromise on the question of raising fresh tax revenue. Unlike the private 2011 talks, which were hobbled in part by opposition from fellow Republicans, Mr. Boehner has done more to consult with fellow GOP leaders and keep his lieutenants in synch.

Mr. Boehner also has gained more experience managing his fractious party, having passed major bipartisan budget bills in the past year over the objection of the GOP's most conservative members.

For now, they have given Mr. Boehner latitude to negotiate and heeded his request that they join him in not drawing lines in the sand.

They may not remain cooperative for long. "I have no reason to compromise," said Rep. Tim Huelskamp (R., Kan.), a freshman who ran unopposed.

Write to Janet Hook at [email protected] and Carol E. Lee at [email protected]

A version of this article appeared November 16, 2012, on page A5 in the U.S. edition of The Wall Street Journal, with the headline: Less Tension This Time for Obama, Boehner.