From my after-the-fact discussions with Democratic aides in the House and Senate leadership, its clear that Reid had a plan for resolving the cliff and considered the breakdown of his talks with McConnell very much a part of it. By involving Biden, Obama undercut Reid and signaled that he wanted a deal so badly he was unwilling to leave anything to chance, even when the odds overwhelmingly favored him. It suggested that even if Obama plays his cards exceedingly well in the run-up to the debt-limit showdown, he could still come away with a worse deal than he deserves because of his willingness to make concessions in the closing moments.
Heres what happened near the end of the cliff talks, as I understand it. On Friday, December 28, Obama handed off the negotiations to Reid and McConnell, with the caveat that he wanted a vote on a fallback plan to raise taxes on income above $250,000 for couples (and $200,000 for individuals) if they couldnt strike a deal by Monday the 31st. The two Senate leaders made some progress but hit a wall Saturday afternoon. Reid had offered to move the threshold up to $450,000 for couples and $360,000 for individuals in exchange for a one-year extension of federal unemployment benefits and delaying the automatic spending cuts known as the sequester for a year. McConnell was unwilling to go so low on the income-tax threshold or so long on the sequester delay. He was also asking for a change to Social Securitys cost of living adjustmenta fairly significant benefit cut. After huddling with his staff late Sunday morning, Reid told McConnell he had no more concessions to give.
Not long after, McConnell went to the Senate floor saying he had placed a call to Biden but hadnt heard back. Sunday night, Reids staff went to bed aware that Biden had returned McConnells call but assuming nothing would come of it. There was no indication [Biden] would engage, says a Senate Democratic leadership aide close to the talks. Alas, it didnt work out that way. Reids staff woke up Monday morning to discover that Biden had opened up his own negotiation with McConnell. The Republican leader had accepted a $450,000 income-tax threshold ($400,000 for individuals) and Biden was offering him a three-month delay of the sequester. (The eventual deal was a two-month delay.)
Reid was furious. In a call, he told the president that he or Biden would have to come to the Senate and pitch the deal to Democrats themselves--Reid wanted no part of it himself. But while other accounts have portrayed Reids frustration as stemming from the substance of the deal, Reid was just as frustrated over the fact that he'd been in the middle of executing his own plan, which was now moot.
According to the Senate aide, Reid believed that one of two things would happen if the negotiations were allowed to play out his way: Either McConnell, who obviously wanted a deal, would have come slinking back to him and basically accepted Reids last offer. It would have been great if he called Biden and no one called him back, says the leadership aide. He would be so desperate for a deal that he took whatever he could get. Or, less likely, McConnell would have thrown in the towel, allowing Reid to hold a vote on the Democratic fallback bill, which would have moved the income threshold back to $250,000 while extending unemployment insurance and a series of tax credits for the poor and middle class.
The latter might well have passed the SenateReid believed there were close to 60 votes for itbut would have been unlikely to pass the House, sending us over the cliff. In that case, Reid assumed the House GOP would have taken the blame, and that Republicans would rapidly soften up. Reids plan was to then work out another deal with McConnell that would have provided a small fig leafperhaps a slight rise in the income threshold above $250,000, but not close to $400,000 or $450,000which would have likely passed on Saturday, January 5 (basically the soonest possible date). The aim was to pass this new bill with a large bipartisan majority (just as the eventual compromise did), thereby isolating the House GOP and forcing them to pass it too.
This may seem a bit far-fetchedhow could Reid be so confident, after all? Obama, for one, worried that missing the cliff deadline could mean waiting for weeks if not months to resolve the situation. According to a senior White House official, the embarrassing failure of John Boehners Plan B meant the House might never be able to act
and this would bleed into debt ceiling. The official added: Our hand is weakened on the debt ceiling if the economy is spiraling out of control and everyones taxes were up.
But there were good reasons to believe the endgame would play out the way Reid envisioned. Reids model was the payroll tax cut fight of late 2011, when he and McConnell struck a deal to renew the tax cut for two months because they couldnt agree on how to pay for a year-long extension. The deal passed the Senate overwhelmingly, at which point conservatives in the House revolted. For a day or two, the outcome looked uncertainpolls showed the public favored the tax cut, but the House had dug in. At that point, Obama suggested to Reid that they reopen the negotiations, but Reid, according to the Senate aide, told him, Dont you dare. Democrats held the line, and the House GOP abruptly folded. When all was said and done, Democrats got an even better deal than theyd hoped for. The Republicans were so eager to put the episode behind them they dropped their insistence that the tax-cut extension be offset with spending cuts.
Long story short: Reids strategy would have at worst produced a slightly better deal than Biden negotiated had McConnell accepted his final offer before the cliff (a slightly lower threshold for the new top income tax rate and a one-year suspension of the sequester rather than a two-month suspension). At best it could have produced significantly more revenue (closer to a $300,000 threshold) had we briefly gone over. But Reid never got the chance to execute it. Their guys were running around asking to be forced to vote for this so they could move on, says the Senate aide of the GOP. Everything Republicans were doing signaled weakness and desperation for a deal. Unfortunately, everything out of the White House did, too.
– https://twitter.com/Ripclawe/status/266014872607813633
