That Time Joe Biden Was Banned From Negotiating With Republicans

Ryan Grim / The Intercept
That Time Joe Biden Was Banned From Negotiating With Republicans Former U.S. Sen. Harry Reid, D-NV, left, and U.S. Sen. Chuck Schumer, D-NY, right, leave the Senate chambers with U.S. Vice President Joe Biden on July 25, 2012, in Washington, D.C. (photo: T.J. Kirkpatrick/AFP)

Biden negotiating a debt ceiling with Kevin McCarthy was Harry Reid’s worst nightmare.

From the moment Joe Biden announced his candidacy, the biggest risk the country faced from a potential Biden presidency was that he would wind up in high-stakes negotiations with Republican congressional leaders and those Republicans would fleece him blind.

For months, Biden insisted that he wouldn’t ever be in that room, because he simply wasn’t going to negotiate with Republicans over lifting the debt ceiling. But he also poured cold water on invoking the 14th Amendment or minting a trillion-dollar platinum coin, which handed Republicans all the leverage. Biden also had the chance to lift the debt ceiling at any point from January 2021 until last December when Democrats still controlled both houses of Congress. Sen. Tim Kaine, D-Va., recently told Politico not doing so is one of his biggest regrets.

Instead, Biden went into negotiations with congressional Republicans without a serious offer of his own. He made a few half-hearted suggestions that a better way to cut the deficit is to target hedge fund managers and the superrich. But when Republican House Speaker Kevin McCarthy objected, he dropped it. Talks continued at the White House between McCarthy and Biden Monday evening. But with Biden now negotiating the size of the cut, Democrats’ only hope is that Republicans can’t agree and fail to seize the moment.

All of this is reminiscent of the last time Biden, as vice president, intervened in high-stakes Capitol Hill negotiations. Afterward, Senate Majority Leader Harry Reid ordered the White House to never send him down again. He did such a bad job that he got a worse deal out of Minority Leader Mitch McConnell than McConnell had already agreed to give Reid. I covered this moment in my last book, We’ve Got People: From Jesse Jackson to AOC, the End of Big Money and the Rise of a Movement,” which was excerpted in The Intercept.

It all came at the end of 2012, and the circumstances were similar. President Barack Obama had just stomped Republican Mitt Romney at the polls in a post-Occupy campaign that centered on economic inequality. Democrats picked up two seats in the Senate, expanding their majority to 53 and adding Elizabeth Warren to their ranks. Though Democrats won more House votes nationwide and picked up a net of eight seats, Republicans held onto the House narrowly.

The major tax cuts pushed through by President George W. Bush were set to expire at the end of 2012, creating what was called a fiscal cliff. If Congress did nothing, taxes would go up on everybody. Reid told me in an interview for “We’ve Got People” that going over the cliff was precisely his plan. Reid said, “I thought that would have been the best thing to do because the conversation would not have been about raising taxes, which it became, it would have been about lowering taxes.”

In other words, let all the rates go up and then bargain with Republicans to reduce taxes just for middle class and poor people. McConnell similarly knew the difficult position going over the cliff would put him in, and in talks with Reid, he agreed to let rates on people making more than $250,000 per year go back up.

Reid felt like he had successfully pushed McConnell to the brink; McConnell had a strong sense that Reid intended to go over the cliff and put Republicans up against a wall. It was now Sunday, December 30, 2012, and Democrats only had to hold out until Tuesday to find themselves in a dramatically improved political position, as the dawning of the new year would mean the tax cuts expired and automatically reverted to pre-Bush levels. At that point, it would be Republicans who would be left pleading for rate cuts.

In desperation, McConnell reached out directly to Vice President Biden, calling him on the phone and explaining that Reid was refusing to be reasonable. Over the course of the day, McConnell and Biden struck a deal. A senior Republican aide told me, “Biden gave Republicans everything they wanted in exchange for fixing the fiscal cliff problem.”

Just like today, the fiscal cliff was only a problem because Biden allowed it to be. Reid would have been happy to drive the car off the cliff and then fight it out amid the wreckage.

In the same way, Biden could have just ignored the debt ceiling, invoked the 14th Amendment, declaring the debt ceiling unconstitutional, and dared Chief Justice John Roberts to blow up the global economy. McCarthy himself would publicly complain but be privately relieved that he had gotten through this moment with his speakership intact. Future presidents would thank Biden. If future Congresses wanted to rein in spending, they could rein in spending. But they could not threaten the global economy to do it.

On the morning of New Year’s Eve back in 2012, Reid was still feeling good about his position, still ignorant of what Biden had given away. Then McConnell took to the Senate floor and announced that he’d been in talks with the vice president, they were progressing well, and he was hopeful that they’d have legislation to move by the end of the day.

As details of the deal began leaking out, progressive Democratic senators were floored. A large group of them — including Sens. Bernie Sanders of Vermont, Sherrod Brown of Ohio, Jeff Merkley of Oregon, Sheldon Whitehouse of Rhode Island, Al Franken of Minnesota, and Tom Harkin of Iowa — stormed over to Reid’s office.

The deal was awful, they told Reid, and it had to be stopped. Reid told them what had happened, that it was out of his hands and that McConnell had gone around him to Biden. He said he was working on improving it and would be in touch throughout the day.

None of the senators had any business scheduled — it was New Year’s Eve, after all — so Sanders invited them back to his office in the Dirksen building. The Hart building had a popcorn machine, so Harkin asked his staff to bring some by. The crew ended up spending several hours together in Sanders’s office, thinking through potential strategies of opposition and waiting to hear from Reid.

Instead, one senator’s phone rang, and it was Biden, calling to sell the deal he had cut. In classic Biden fashion, he offered a 10- to 15-minute soliloquy, a meandering argument that largely boiled down to, “You can trust me; I’m your friend; this is a good deal.” The senator could barely get a word in before the conversation ended.

Moments after he hung up, another cellphone rang, and it was Biden again. Unaware that the group was all together, Biden proceeded to call each of them, one after the other, delivering the same spiel.

Ultimately, it fell to Reid to drag the progressive senators into line. Once it was clear that the White House was on board with Biden’s deal and McConnell was all in, that meant that there would be at least 70 or 80 votes for it. The progressive bloc could vote no, but it would only send a message of discord and have no effect on the outcome, Reid told them, coaxing them to support the deal he himself loathed. In the end, all the progressive senators except Harkin voted for the deal. It passed 89-8.

Years later, Reid still regretted how it went down. He told me, “If we’d have gone over the cliff, we’d have had resources to do a lot of good things in the country — infrastructure development — but it didn’t work out that way.” Letting all the tax rates go back to pre-Bush levels would have yielded the Treasury around $3 trillion over 10 years. Without the deal, taxes on dividend payments to the rich would have been set at 39.6 percent. Under the terms of the deal, they would be set at 20 percent, meaning that the superwealthy would be paying lower tax rates on their passive dividend income than many working people would pay on their wages. It helped fuel the inequality that keeps getting worse and added trillions to the debt at the same time.

Now Biden has another chance to be in the room, and so far, he’s getting outmaneuvered by McCarthy.

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