Boehner’s Week On the Brink
What to do? Youre the leader of House Republicans, a financial crisis hits and you know urgent action is needed. But signing on to a deal could cost you your job.
Minority Leader John Boehner (R-Ohio) hunkered down, enlisted his rivals and looked for political cover for his Members.
Boehner knows financial markets he was a part of the bipartisan 1999 negotiations on the financial market overhaul and quarterbacked a bipartisan pension reform bill. And he was convinced that a quick response would be needed after the credit markets seized up on Sept. 18.
He put his leadership post on the line by appearing with Speaker Nancy Pelosi (D-Calif.), Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and Senate leaders that night as they agreed to work on a rescue package to stabilize the markets.
Conservative Republican Study Committee Chairman Jeb Hensarling (Texas) had denounced the bailouts just hours before Boehners appearance. In the quick-moving political dynamic, Boehner also had to weigh potential challenges after the November elections from Chief Deputy Minority Whip Eric Cantor (R-Va.) and Minority Whip Roy Blunt (R-Mo.), whom he barely beat out for the job two years ago.
The stakes soared when Paulson announced his $700 billion, three-page opus that weekend stunning in its request for unchecked power.
Boehner went on television Sunday to call for swift passage of a plan with a minimum of add-ons.
The American economy depends on this, the American people are depending upon us and I think theyre looking to us to give the secretary these powers as quickly as possible, Boehner said on ABC. There are a lot of well-meaning and well-intentioned ideas out there, but they dont need to be a part of this package.
But a wave of revulsion for the bailout coursed through House Republican ranks.
Members said they were getting more than 1,000 calls a day each nearly all saying no bailout for Wall Street. The very idea was anathema to their free-market, small-government ideology. And Members feared that a November election that already figured to be difficult for Republicans could turn into a bloodbath.
Boehner was left trying to contain the damage.
In conference meetings, Boehner told his flock that urgent action was needed, but he didnt tell them that they had to back the Paulson plan. He gave the Bush administration opportunities to try to sell it Vice President Cheney addressed House Republicans one day, Paulson and Bernanke the next. They warned of looming catastrophe unless the plan was approved by the end of the week.
Almost nobody was buying.
Publicly, Boehner said little, other than expressing a need for action. Privately, Members say, he was pressing them to come up with something that could help reach consensus.
He sent out a joint statement with Pelosi on Wednesday night reporting progress in negotiations, but behind the scenes, House Republicans were a mess. They knew they didnt have the votes for the Paulson package, and they effectively didnt have a position of their own.
Boehner had tasked Cantor, Hensarling, Budget ranking member Paul Ryan (R-Wis.) and a diverse cross-section of some of the smartest Members from his Conference to form a working group ensuring that his chief rival, Cantor, would own a piece of the final deal.
A prime-time speech by President Bush warning of disaster Wednesday night fell flat, while presidential nominee Sen. John McCain (R-Ariz.) announced he would return to Washington to help cut a deal.
Members were wary of what role McCain would play he supported action but only vaguely, and Republicans could not move forward unless they knew McCain wouldnt bail out and undercut them. They also worried he might simply sign on to something House Republicans could not support, and try to steamroll Boehner.
He did neither, and a high-stakes White House meeting devolved into acrimony as Boehner told the assembled power brokers that he didnt have the votes for the Paulson plan but couldnt say what his Members needed.
After the fateful White House meltdown, Boehner struck back the next day, calling it a gang up on Boehner.
They thought they were rolling me. They were kidding themselves, Boehner said.
House Republicans lacked a negotiator other than Boehner. Rep. Spencer Bachus (Ala.), the ranking member on Financial Services and the presumed lead Republican on the issue, ended up on the sidelines. Bachus frequently expressed confidence that a package could be hammered out, but he lacked the confidence of House leaders, let alone the rank and file.
Bachus lost any influence with the Conference by appearing at a press conference Thursday morning where House and Senate negotiators declared they had an agreement on principles undercutting McCains trip back to Washington to presumably jump-start stalled negotiations.
Boehners staff forwarded to reporters a humiliating statement from Bachus saying he had no authority to negotiate and had said so to other negotiators.
Democrats pounced, arguing that Republicans were in disarray.
Boehners got a tough job, said Rep. Lee Terry (R-Neb.), who described the week as a meat grinder.
The only thing is he put himself in the position where he was the odd man out, Terry said. We need to be at the table. They used him as the fall guy. But part of being a leader means you have to take the arrows.
On Friday, Bachus was replaced by Blunt, who Boehner ensured would also own a big piece of whatever deal emerged.
By the time negotiations were under way on Saturday, Bachus was cut out, left to send out a press release arguing that lawmakers should get 24-hours notice before voting on a package. This gives us all an opportunity to read and understand the legislation, Bachus said, only emphasizing his now-marginalized role.
Boehners language also evolved. By Friday, House Republicans were uniting behind the working groups proposal and its most tantalizing feature: a mortgage insurance plan that wouldnt cost taxpayers a dime and force Wall Street to pay for its own messes.
House leaders won an ovation from their Members behind closed doors.
As negotiations began for a final push Saturday afternoon, Boehner had perfected his message and given it a populist hook. Getting something done was important to Main Street, not just Wall Street, but Wall Street should pay.
We should not be bailing out Wall Street at the expense of the American taxpayers, Boehner said.
In the end, the deal included only some Republican principles, and the centerpiece idea of forcing Wall Street to pay for its bailout under an insurance plan will be included, but mainly as an option. The bailout still spends up to $700 billion from taxpayers to buy up troubled assets with no guarantee they will be paid back. Nonetheless, Republican aides sought to claim a victory anyway, pointing out that they were able to strip Democratic priorities and that the final deal includes more oversight, restrictions on chief executive officer golden parachutes and other provisions than Paulson originally proposed.
Now they have to see whether they have the votes for it and hope they can sell it to a skeptical public.