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What comes next in a universe where the government works

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On Feb. 5, 2011, the president signed the Economic Growth and Deficit Reduction Act of 2011 into law. The legislation lifted the employer-portion of the payroll tax for a year, approved more than $50 billion in infrastructure investments, and cut the deficit. The markets cheered the move, and employers, realizing that consumers were about to have more money in their pockets and that hiring new employees had suddenly become a bargain, quickly moved to expand their labor forces. It was a coup not just for the president, but for the new speaker of the House.

Six days after the 2010 election, John Boehner and Mitch McConnell were invited to the White House to meet with President Obama. When they got there, they found Obama and Pete Rouse sitting at a table with a single piece of paper in front of them. It was a clipping of Gov. Mitch Daniels's September op-ed proposing a conservative stimulus plan. "Congratulations on your win last week," said the president. "You really thumped us. What do you think of this?"

McConnell didn't think much of it. He wanted to talk about the Bush tax cuts. But Boehner was more intrigued. The House was about be his responsibility, after all. If he could begin by passing a massive payroll tax cut that also froze salaries for federal employees and maybe even made some progress on the deficit? It would be quite a way to introduce himself to the American people. And he'd been struck by a column he'd read a few weeks back quoting Bernanke's advice to Japan in the early Aughts: Bernanke had told them to pair quantitative easing with a big tax cut to make sure the money got into the economy. Boehner had always liked the Fed chairman, and figured if it made sense to Bernanke, it probably made some sense.

A few hours after the meeting, Boehner directed an aide to quietly come up with some numbers. There were two conditions, Boehner said. First, the deficit has to come down. Second, it has to come down in at least a couple of ways Democrats really don't like.

The second condition was easier than the first. They needed about $400 billion, and it all needed to come from spending cuts. On the bright side, they could take 10 years to get the money. It seemed possible. You could freeze discretionary spending, take back some TARP and stimulus funds, make a one-time cut to federal-employee pay, and try a couple of other small things. Boehner liked it, particularly the cut on federal-employee pay. He confidentially sent the proposal up to the president, knowing he'd veto some of the spending cuts.

But that wasn't the deal the president wanted. He was willing to buckle on most of them. In return, he wanted more infrastructure spending. Boehner agreed; he had plenty of Republican governors and even congressmen asking him to get some infrastructure-funding moving. But he wanted Davis-Bacon suspended. Privately, the president told him that he'd do it if he could, but there was no way to get Democrats on board with it. He had a counter-offer, though: He'd set up an accelerated process for getting projects past environmental regulations, such that many of them could be certified after-the-fact, rather than waiting around for the paperwork to clear before workers could break ground. Boehner mulled it over for a day, and called the White House back. If they could get Harry Reid to agree, he'd do it.

By Ezra Klein  | November 3, 2010; 9:47 AM ET
Categories:  2010 Midterms  
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Next: Democrats lost big because young voters stayed home

Comments

I like it! If wishing made it so . . .

More than a few Republican moderates are in the next Congress, like Mark Kirk of Illinois. It'll be interesting to see how much pressure gets put on the Minority Leader to compromise now that the Republicans have had their wave election (in opposition, of course, the the pressure Jim DeMint will be putting on McConnell to say "no" to everything).

Posted by: OSheaman | November 3, 2010 9:57 AM | Report abuse

you didn't include insights interjected into the discussions by Eric Cantor, which were based on a thoughtful column by Annie Lowrey that he saw online.

Posted by: bdballard | November 3, 2010 10:02 AM | Report abuse

"He'd set up an accelerated process for getting projects past environmental regulations, such that many of them could be certified after-the-fact, rather than waiting around for the paperwork to clear before workers could break ground."

Huh? And what if the "paperwork" found that steps should be taken to protect the environment before workers "break ground"? Barn door, horse, gone.

Posted by: ostap666 | November 3, 2010 10:15 AM | Report abuse

That was pretty funny, the way you fantasized about John Boehner doing anything to make the President look good.

Posted by: mattslavick | November 3, 2010 10:27 AM | Report abuse

Wishful thinking. I doubt republicans will actually get constructive all of the sudden. Don't know if it's possible for them.

They have much more to gain by shooting everything down on the grounds of "conservatism" and "increase in federal spending" and will literally drag the government down while pointing the finger at democrats.

It's what they've been doing for the past 2 years, only now they actually have more power to exercise the strategy.

Posted by: JERiv | November 3, 2010 10:28 AM | Report abuse

intresting to see CNN last night where Republican strategists contend that manily rolling back government to 2008 levels would balance the budget by 2015. Is that really true? I'm guessing we'd need to have fairly robust growth for that to happen and it won't so if it happens by 2020 how bad would that be?

I especially loved Lawrence O'Donnell in his best "I'm made my team didn't win" tantrum in speaking to Eric Cantor. In defense of Cantor if private employees have had to deal with rollbacks in pay during the Great Recession then why haven't government employees had to do the same at least until the economy picks back up?

Posted by: visionbrkr | November 3, 2010 10:32 AM | Report abuse

If this actually happened, the Tea Party would go nuts and Boehner would be facing a major insurrection.

Posted by: mschol17 | November 3, 2010 10:38 AM | Report abuse

They could start looking for federal employees who are "shovel ready" to be tossed out the door. Whether Boehner/Cantor actually want to stumble toward agreement of any sort depends on how they find being suddenly in a situation of meaningful responsibility -- I don't know that it's a foregone conclusion which way that would go

Posted by: bdballard | November 3, 2010 10:41 AM | Report abuse

Well... if we believe Senator Harry Reid, the next thing are some "tweaks" to the PPACA. This morning, Reuters reports that Democrat Reid is calling for a reexamination of the health care bill (see http://news.yahoo.com/s/nm/20101103/pl_nm/us_usa_elections_healthcare_reid)

See -- government works and elections have consequences.

Posted by: rmgregory | November 3, 2010 10:45 AM | Report abuse

Last night was a extraordinary examply why all of the book-learning, IQ fetishists don't understand politics.

What did we hear last night? We are told that NOW when it doesn't matter AT ALL a deal is going to be made on extending the tax cuts. How stupid can any Dem leader be, regardless of degreed pedigree? If the Dems had gotten this deal done 6 months ago, it would have made at least some difference. Doing the deal now, not only means the Dems DON'T get any credit at all, BUT the Reps get credit for having some kind of mandate to do this!!!!!!

Posted by: 54465446 | November 3, 2010 10:57 AM | Report abuse

Ezra, you're assuming a lot more good will than is actually present. If Republicans have demonstrated anything at all in the last ten years, it is their conviction that either everything goes there way or nothing goes at all. That was true when they were in power and also when they were not. There has been no serious attempt by the Republican party to compromise on any serious public issue since the Clinton administration. Why should that change now? They won. Only two years after losing. Clearly anything is possible, including the complete destruction of the Obama administration, and also, clearly, the successful way forward is complete and total rejectionism.

I don't know how on Earth you glean from this election the lesson that Republicans are about to execute a major swing toward moderation and responsibility.

Posted by: pj_camp | November 3, 2010 12:36 PM | Report abuse

What part of "no compromise" do you not get, Ezra? The repubs will only do something that benefits them. The House will pass bills that will die in the Senate and so on and so on. Nothing will get done. I bet that they won't be able to compromise on the extending the Bush tax cuts. Next on the agenda is the Deficit Commission's farcical report and the spending cuts will start. Those cuts will go nowhere. And they won't be able to agree on raising the Debt Ceiling, so Default, here we come. It'll be the repub way or nothing and Obama will get the blame. Democrats have shown that they can't defend themselves and this is the result.

Posted by: kassim1 | November 3, 2010 1:04 PM | Report abuse

"The second condition was easier than the first. They needed about $400 billion, and it all needed to come from spending cuts. On the bright side, they could take 10 years to get the money."

$400 billion? That's not even 10% of the deficits projected over the next decade.

This is the 'government works' scenario?

Posted by: justin84 | November 3, 2010 1:56 PM | Report abuse

Too bad we don't live in that kind of universe. Everything would be be so much better.

But Ezra, if that is a universe where government works, why would Boehner be speaker of House anyway, wouldn't that violate some governing law in the universe where government works?

Posted by: clarenceflanders | November 3, 2010 2:17 PM | Report abuse

You people bashing Ezra for being "unrealistic" need to get a grip -- or read with a bit more dexterity. The title of his post pretty clearly implies he is aware that we live in a universe where the government does NOT work (at least not very well).

It's a description of an alternate universe.

Sheesh!

Posted by: Jasper999 | November 3, 2010 3:57 PM | Report abuse

An interesting approach and good article. If not gridlock, then what kind of deal would the House Republicans agree to? Here is the problem: what is in the deal for Obama and the Democrats? $40 billion a year in cuts to social programs. A hit on every major section of the Democratic base? BTW: these are huge hits on social programs. Which is certainly appealing to Republicans. But what is in the deal for the Democratic base? One of the real developments that is happening is that much of the Democratic base is fed-up with being taken for granted. There is much discontent with Obama on the Left. Its not so much that they won't end up holding their nose and voting for Obama in 2012 because the alternative is worse from their perspective. But the willingness to commit to working for the party and its candidates will not be there. What is proposed here, the grand bargain is essentially a surrender. Obama caves in and gets some infrastructure and tax cut stimulus that may not have that much of an effect on employment. As a progressive I would not vote for Obama or any Democratic candidate who agreed to a $40 billion a year cut in social spending for the next ten years. Even if the alternative was Sarah Palin in the White House with Rick Perry as VP. And I mean that seriously. Now this would be a great deal for the Republicans and if I were conservative, I would take that deal in a minute. But it would mean a permanent break for the Obama and the Democratic Party with much of its liberal/progressive base. For a deal to work there has got to be something in it for both sides.

Posted by: mrchangeorder | November 4, 2010 2:53 AM | Report abuse

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