WASHINGTON – They had 80 hours to finish or fail.
Stuck in a “fiscal cliff” stalemate, trust nearing tatters, President Barack Obama and Senate Republicans changed the game after Christmas. It took the rekindling of an old friendship between Vice President Joe Biden and GOP Sen. Mitch McConnell, an extraordinary flurry of secret offers, a pre-dawn Senate vote on New Year’s Day, and the legislative muscling that defines Washington on deadline.
The House, despite Republican resistance, passed the Senate bill late Tuesday, sending the measure to Obama for his signature.
How the final days of private negotiations pulled the country – maybe only temporarily – back from the precipice of the fiscal cliff marked a rare moment of bipartisanship for a divided government. Several officials familiar with talks requested anonymity to discuss them because they were not authorized to discuss the private details publicly.
Obama, having cut short his Christmas vacation in Hawaii, huddled with congressional leaders Friday afternoon at the White House. Talks between the president and House Speaker John Boehner had failed, so Obama put the fate of the fiscal cliff in the hands of McConnell and Senate Majority Leader Harry Reid.
McConnell made the first move. The Kentucky Republican proposed a plan late Friday night that would extend tax cuts expiring Jan. 1 on family income up to $750,000 a year, according to officials. He also wanted to keep tax rates on wealthy estates at 35 percent, slow the growth of Social Security cost-of-living increases, and pay for an offset of the sequester – Congress’ term for across-the-board spending cuts – by means-testing Medicare. His offer did not include the extension of unemployment benefits Obama had demanded.
Democrats balked and began preparing a counteroffer. It called for extending tax cuts for family income up to $350,000, a concession from Obama’s campaign pledge to cap the threshold at $250,000. The Democratic leader also insisted that any deal include a way to deal with the sequester, plus an extension of the jobless benefits for 2 million Americans.
The negotiating teams traded ideas back and forth on a wintry Saturday. Shortly before 7 p.m., McConnell presented another offer. He dropped the tax cut threshold to $550,000, put the sequester on the table, and offered a one-year extension of the jobless benefits as long as they were paid for through Social Security savings.
Rather than make a counteroffer, the Senate Democratic negotiating team said it was going home for the night. They reconvened Sunday morning – less than two days before the combination of tax hikes and spending cuts were due to kick in – but still had nothing new to present to McConnell.
A frustrated McConnell felt he had one last option. He called Biden, his longtime Senate colleague and frequent negotiating partner, and implored him to step in. Seeking to up the pressure on the White House, McConnell publicly announced that he was reaching out to Biden during remarks from the Senate floor during the rare Sunday session.
Until this late stage, Biden had played a secondary role in the talks. He spent Saturday at his home in Wilmington, Del.
Obama and Reid both agreed that Biden, a 36-year veteran of the Senate, should take the lead. And once he did, negotiations with McConnell rapidly accelerated.
Around 8 p.m. Sunday, Obama, Biden and staffers met in the Oval Office to discuss what the vice president would deliver to McConnell as the administration’s final offer.
The president set the upper limit for the tax cut extension at family income of $450,000. The sequester must be dealt with, he said, and any delay must be offset through a combination of spending cuts and revenue increases. And Obama demanded that the jobless benefits be extended for one year without a way to make up the $30 billion cost.
Shortly after midnight, Biden had McConnell’s consent on nearly all of the outstanding issues. Only the sequester was unresolved, although both men were open to a plan that called for a separate vote on the sequester, pending Reid’s consent.
The White House had spoken to Reid, who rejected the notion of holding a separate sequester vote. Biden broke the news to McConnell in a pre-dawn phone call.
The sequester remained the sticking point throughout Monday, with Biden trading proposals with McConnell’s office for much of the day.
Shortly before 9 p.m., with three hours until the deadline, Biden and McConnell agreed to the final deal. After Obama called Reid and Nancy Pelosi to get their sign-off, the vice president headed up to Capitol Hill to sell the bill to Senate Democrats.
The Senate overwhelmingly approved the Biden-McConnell deal in the early hours of Tuesday morning and sent the bill to the House for final approval.