Bloomberg News

Obama in Background as Congress Negotiates Fiscal Deal

October 16, 2013

U.S. President Barack Obama

U.S. President Barack Obama speaks while visiting furloughed federal workers volunteering at Martha's Table in Washington. Photographer: T.J. Kirkpatrick/Bloomberg

President Barack Obama is choosing his words carefully, when he says anything at all, while Democratic and Republican lawmakers hash out how to end the government shutdown and stave off a U.S. default.

The president’s only public event so far this week was mingling with furloughed federal workers who volunteer at a local Washington charity rather than huddling with lawmakers. Yesterday, amid a rush of Capitol Hill negotiations in the House and Senate, media access to a White House session between Obama and House Democratic leaders was limited to a few moments for photographs and video -- no statements.

Obama’s decision to mostly remove himself from the public side of the deal-making in Congress marks a shift in how he’s treating Republicans trying to thwart his agenda.

“He’s taking a different tack,” said James Thurber, a political science professor at American University in Washington who studies relations between the president and Congress. “His negotiating style this time is to stand back from the fray and have surrogates do it.”

One sign that the administration is intent on keeping Congress as the focus was a meeting that didn’t happen: a scheduled session with the four top congressional leaders that was postponed Oct. 14 after talks between Senate Democratic leader Harry Reid of Nevada and Republican leader Mitch McConnell of Kentucky on a fiscal deal showed promise.

Vice President Joe Biden, who negotiated with McConnell late last year to avert spending cuts and tax increases known as the fiscal cliff, also has stayed on the sidelines.

Break Precedent

Obama’s avoidance of public talks with Congress reinforces an administration goal of seeking to break the precedent he set in the 2011 debt-limit talks and to show he won’t give concessions under the threat of default.

Former top administration officials and Obama advisers have said that the president and his aides concluded his high-profile negotiation with House Speaker John Boehner two years ago, which was followed by the first downgrade of U.S. government debt, was a mistake that damaged the president’s ability to advance his agenda.

Obama’s aides also questioned whether Boehner can deliver on any deal struck. For the second time within the past year, the Ohio Republican couldn’t bring an alternative proposal to the House floor last night because he wasn’t able to round up enough votes in the Republican caucus.

Senate Deal

That threw the action back to the Senate, where Reid today said he and McConnell have an agreement to fund government operations and lift the debt ceiling.

With recent polls showing that the public blames Republicans more than the president for the stalemate, Obama faced little political pressure to make concessions.

“I’m pretty sure they’re not going to run this play again,” Obama said of Republicans in an interview yesterday with WABC television in New York, one of three local stations that were granted interviews with the president.

In an interview with Univision KMEX, a Los Angeles station, Obama said he looked forward to putting the budget fights behind him and resuming work toward passage of a new immigration law.

Once the fiscal bills are passed, “the day after, I’m going to be pushing to, say, call a vote on immigration reform,” he said. “It’s really important for the country. And now is the time to do it.”

Managing Debt

Behind the scenes, the White House has remained active in the current negotiations. Obama detailed his concerns about Republican efforts to limit the Treasury Department’s flexibility in managing the debt ceiling during an Oct. 14 phone call with McConnell. Chief of Staff Denis McDonough and Deputy Chief of Staff Rob Nabors have channeled the administration position through Senate Democratic leaders, making Reid the public face of the party in the talks.

Obama’s spokesman, Jay Carney, dismissed questions yesterday about the president’s engagement and repeated his refusal to negotiate over debt ceiling or funding the government.

“The president has been having conversations with lawmakers,” Carney said. The president won’t “give the Tea Party its ideological agenda wish list in exchange for Congress opening the government or Congress raising the debt ceiling.”

Debt Ceiling

Without an agreement, the U.S. government will run out of borrowing authority tomorrow and start missing payments sometime between Oct. 22 and Oct. 31, according to the Congressional Budget Office. The Treasury has $120 billion of short-term bonds coming due on Oct. 17, according to data compiled by Bloomberg. An additional $93 billion of bills are due on Oct. 24.

The halting nature of the talks hasn’t so far roiled markets. U.S. stocks declined yesterday after a four-day rally on word the Senate talks were on hold. On statements today from Reid and McConnell that deal was reached, markets surged.

The Standard & Poor’s 500 Index (SPX) climbed 1.4 percent to 1,721.07 at 11:19 p.m. in New York, erasing yesterday’s drop and rising to within five points of its last closing record. The Stoxx Europe 600 Index added 0.2 percent after earlier losing 0.6 percent. Rates on Oct. 24 Treasury bills lost 16 basis points to 0.31 percent. The 10-year note yield was little changed at 2.72 percent

Playing the waiting game with Congress carries its own risk, according to a veteran of the budget shutdowns that partially halted government operations in 1995 and 1996.

‘Tricky Thing’

“Time is a tricky thing. Running out the clock puts pressure on everybody,” said Patrick Griffin, who worked as a congressional lobbyist for President Bill Clinton. “If the other side doesn’t blink, then you drive off the cliff.”

So far there’s little political incentive for Obama to change tactics. A Washington Post/ABC News poll released Oct. 14 found that the portion of the American public who disapprove of the way congressional Republicans are handling budget talks has climbed to 74 percent Oct. 9-13 from 70 percent Oct. 2-6 and 63 percent Sept. 25-29.

Public perceptions of Obama have been both more positive and steady, with disapproval of the president on budget negotiations at 53 percent Oct. 9-13, up from 50 percent two weeks earlier.

“We’ve lost the fight,” Arizona Republican Senator John McCain said in an interview yesterday. “We’ve got to come to an agreement as soon as possible.”

To contact the reporters on this story: Lisa Lerer in Washington at llerer@bloomberg.net; Mike Dorning in Washington at mdorning@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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