The Negotiator

by George Mitchell

  The struggle continued in various forms. The cherry blossoms came and went, as did the April showers. A year and a half had passed and the midterm congressional elections were just a few months away.

  To deal with the president’s approach we needed a strategy. But there were then 315 Democratic members of the Congress, House and Senate, each elected independently, each believing that he or she had the answer to our nation’s fiscal problems, each seeking an outlet for his or her views. So it would be an overstatement to describe our approach as a strategy. The president had to lead, especially on taxes. We had to exercise restraint, to wait for that to happen. It was, in effect, a default position, the only course for which we had any hope of garnering some degree of consensus from our Democratic colleagues. Though obvious and simple, it was extremely difficult to implement because it required patience, fortitude, and restraint, three qualities in short supply in our political process. Voters like their representatives to be independent, so most members, at least rhetorically, proclaim themselves to be independent-minded. It seemed to me that it would be impossible to get all of the Democratic representatives and senators to refrain from making budget proposals, especially those that included tax increases, at a time when they were bombarded by the press and public with demands to do so. Still difficult, but not impossible, would be getting the Democratic leadership in the House and Senate to do so. So Foley, Gephardt, and I led an effort to persuade our colleagues to let the president take the lead. Both were able, experienced leaders. I liked and respected both and worked closely with them. We had no differences on this issue, which was important because our approach was subject to intense criticism. We were reminded often that when it suited our purposes we had been quick to proclaim that we were elected independently of the president; why weren’t we acting independently now? Why weren’t we leading? The answer, of course, was clear, and later publicly confirmed by Sununu: the White House was using the well-worn and successful Republican playbook of portraying Democrats as tax-and-spend liberals while they were the guardians of fiscal sanity. No doubt they also believed that what they were proposing was best for the economy, but we strongly disagreed. We viewed our policies as best for the economy in the long run.

  It’s hard to get members of Congress to act; it’s even harder to get them to say nothing, especially when they are repeatedly asked to speak out. The lure of the camera and of the headline is great. But, somewhat to my surprise, we largely succeeded. It was imperfect; a few committee chairs occasionally didn’t comply with our request. But I knew our approach was working when I was visited by Dick Darman.

  He was highly intelligent, articulate, with a wry sense of humor and an occasionally sharp tongue. I liked him and we got along well. I sometimes wished he was on our side. There had been many press accounts, and even more private discussions, about Darman’s unhappiness with Bush’s no-tax pledge. He was reported to have tried to keep the pledge out of the president’s speech, describing it as “stupid and dangerous.”25 But Bush was in a tough election battle and already was suspect to conservatives, so to placate them he made the fateful pledge. Now, nearly two years later, Darman was trying to get him off the hook. We sat in my office in the Senate majority leader’s suite and chatted amicably about our predicament. Darman suggested a high-level meeting from which “an agreement on a tax increase would emerge.” “What do you mean, it will ‘emerge’?” I asked. He extended his arms, placed his hands palms-down on the table, and raised them slowly, making a fluttering motion. As he did so he said, “Well, it will just emerge.” I smiled at his ingenuity and replied, “Well, I’m sorry, but you know the politics of this very well.” I then repeated his fluttering gesture. “That’s just not going to work. The president has got to be clear on it. Then we’ll support it.” We parted amicably, still in disagreement.

  Inevitably the administration’s internal differences emerged publicly. At a meeting in early May Bush had suggested that we initiate talks on the budget “with no preconditions.” We would not and could not decline an invitation from the president, so we accepted. The press interpreted the invitation as a softening of his no-tax pledge, and dissension broke out among Republicans. But I took no chances. I told Darman that our position was unchanged. We were not going to walk into a trap. He assured me that was not the case. Almost immediately afterward Sununu told reporters that while Democrats could propose tax increases at the negotiations, the president would reject them. It was “Read my lips” all over again. Sununu’s comments uncorked the dissension that had been building among Republicans. The president’s spokesman, Marlin Fitzwater, emphasized that “no preconditions” meant just that, and some Republican members of Congress criticized Sununu; Vice President Quayle spoke out in Sununu’s defense.

  The White House had a problem familiar to everyone who has participated in controversial high-level political negotiations: it was trying to convey two different messages to two different audiences at the same time. To the president’s right were the many members of his party who thought he was not conservative enough; they were passionate about his no-tax increase pledge. To his left were others in his party, the business community, and independents; many of them regarded his pledge as purely political and economically unsound. Sununu was the point man to those who demanded fidelity to the pledge; Darman was trying to assure those who demanded flexibility. It ultimately became evident that it was impossible to please both sides.

  The discussions that began in mid-May 1990 were fatally handicapped in three respects: the Democrats were extremely apprehensive and suspicious; the Republicans were increasingly in disarray; and the president, the House speaker, and I did not participate personally. We designated representatives to attend, in my case two trusted and very able senators, Jim Sasser of Tennessee, the chairman of the Budget Committee, and Wyche Fowler of Georgia, a member of the Appropriations Committee. The talks proceeded off and on for several weeks.

  On June 20 Darman presented to the negotiators what he termed a new proposal. But when we examined it we found that the only thing new in it was the insertion of the word new in the description. Our expectations declined even further. Darman, clearly alarmed, initiated a flurry of activity to try to breathe life into the talks. He met with the chairman of the Senate Finance Committee, Senator Lloyd Bentsen of Texas, and the chairman of the House Ways and Means Committee, Representative Dan Rostenkowski of Illinois. Bentsen spoke by phone with the president, then met over that weekend with Nick Brady, the secretary of the Treasury, an ally of Darman and a close friend of the president. Bentsen briefed me on his discussions. He said he had been clear and consistent, that the president had to take the first step on taxes, and he thought they had gotten the message. Early in the following week I met again with Darman and Brady. Foley, Gephardt, and I remained in close contact. We sensed that the internal tensions so evident in the White House would soon be resolved. We were determined to maintain our position and our discipline. Then came Sununu’s early morning call.

  I immediately called Foley, who confirmed that he and Gephardt would attend the breakfast meeting. We decided to meet at the Capitol in forty-five minutes and ride to the White House together. On the way we agreed on our approach: Foley would speak first and in detail, then Gephardt and I would follow with brief comments. There was no difference in our positions and we would be careful not to let any emerge in the discussion. Sununu had been clear about his expectations. We had to be equally clear about ours.

  Over a breakfast of scrambled eggs, toast, and coffee, the discussion was civil, even low key. The president was accompanied by Sununu, Darman, and Brady. Bush spoke first. He calmly stressed the importance of dealing with the growing budget deficit, the threat that high interest rates posed to the economy. He had described the problem before, in public, and there was nothing with which we disagreed. We all knew that we had a problem; we had to work together to solve it. Darman followed with a fact-filled presentation that supported and amplified the p
resident’s. Foley responded. Speaking as calmly and persuasively as had the president, he set forth our position on the scope and significance of the problem. He also broke no new ground. He concluded by repeating what we had said many times: we were prepared to strongly support the president once he took the lead in making clear that a balanced approach, which included taxes, was needed to address the problem. I and then Gephardt spoke very briefly, supporting Foley. There was a short pause. Then the president said, “Okay, let’s go ahead.” That was it. There had been no loud voices, no banging on the table, no threats or ultimatums. It was as though we had ratified a prior decision, not reached one during our meeting. The president then turned to Sununu and Darman and asked them to go into the next room and draft a statement. For the few minutes they were gone the rest of us engaged in pleasant, social conversation, as though nothing of significance had happened or was about to happen.

  Sununu and Darman returned so quickly with a typewritten statement that I assumed they had prepared it in advance. They handed out copies. I read mine quickly. It was just four sentences long:

  STATEMENT BY THE PRESIDENT

  I met this morning with the Bipartisan leadership—the Speaker, the Senate Majority Leader, the Senate Republican Leader, the House Majority Leader, and the House Republican Leader—to review the status of the deficit-reduction negotiations.

  It is clear that both the size of the deficit problem and the need for a package that can be enacted require all of the following: entitlement and mandatory program reform; tax revenue increases; growth incentives; discretionary spending reductions; orderly reductions in defense expenditures; and budget process reform—to assure that any Bipartisan agreement is enforceable and that the deficit problem is brought under responsible control. The Bipartisan leadership agree with me on these points.

  We have further agreed that the budget negotiations should reconvene promptly with a view toward reaching substantive agreement as quickly as possible.

  Before anyone else spoke I said, “Mr. President, this is very positive. But before we respond I’d like the opportunity to meet for a few minutes privately with my colleagues.” The president agreed and Foley, Gephardt, and I went into an adjoining room, where we had a general discussion. We each had a positive reaction, but we also had some concerns. In the second paragraph, the only substantive part of the statement, I thought the words to me should be added after “It is clear,” so there could be no doubt that it was the president himself who believed that tax revenue increases were required. The second was the phrase itself: tax revenue increases. Our preference would have been to delete the word revenue. “But,” I said, “I think they believe this will get them off the hook with their right wing. So they’ll probably insist on it. We should let them have it because it won’t save them. They won’t get anywhere trying to explain it away by the use of the word revenue.” Foley and Gephardt agreed. We also suggested a minor change in the last paragraph. After a further brief discussion we reached full agreement; I took out my pen and wrote the changes on the typewritten draft.26

  We returned to the breakfast table and I read our proposed changes aloud. I told the president that if he agreed to make that statement public we would return to the Capitol building and within five minutes of its release we would hold a joint press conference at which we would express our agreement with and support for his statement. I then handed him my copy so he could see the changes on paper. He read it, looked up, and repeated what he had said earlier: “Okay, let’s go ahead.”

  The storm broke quickly. Some Republican leaders tried to hold back the tide by arguing that the statement was not a change in policy. But, as we anticipated, their words were drowned out by the protests of disbelief and dismay that reverberated across the country. For all the attention the statement received, Americans would have been justified in thinking that the budget crisis had been resolved. But in fact the struggle continued and even intensified. The president’s statement had acknowledged that “tax revenue increases” were necessary, but he had not been specific about which taxes. This led to a long and intense disagreement. The president was stung by the strong reaction to his reneging on his “Read my lips” pledge. This increased his determination to exclude any increase in income taxes from the negotiations and from any agreement. He might agree to other tax increases, but at this point he was adamant on income taxes. He obviously was well aware, as we all were, of how Reagan had handled the issue.

  In 1981, his first year in office, Reagan had proposed and gained early enactment of a substantial reduction in federal personal income tax rates. Then, in the summer of 1982, with interest rates and the deficit rising, he supported legislation that cut federal spending and increased taxes. But it was personal income tax rates that were crucial to Reagan, and those were not included in the 1982 bill. On the day the House passed the bill, Reagan said, “I want to thank the Members of both parties . . . who made today’s victory possible. . . . A bipartisan majority bit the bullet and voted for the revenue increases and spending cuts we so urgently needed to get deficits and interest rates down, and Americans back to work.” He was questioned by reporters who referred to the bill as a tax increase and asked if he was concerned about losing conservative support. In response Reagan said, “To even have referred to this as a tax increase, I think, was wrong, because it was an adjustment of the tax cut that was passed last year.”27

  Describing the tax increase as “revenue increases” and “an adjustment” of the previous year’s tax cuts enabled Reagan to maintain that he had never raised taxes. Bush now had a similar problem, but in much more difficult circumstances.

  Our negotiations continued for several more months. There would be many more controversies and many headaches before an agreement was reached. Through the summer and into autumn frustration rose, as did the deficit projections. When we began, the deficit in the next fiscal year was projected to be less than $150 billion; now it was over $200 billion and climbing. In mid-September I joined about two dozen of the other negotiators—congressional leaders and White House aides—at nearby Andrews Air Force Base in what proved to be a vain hope that isolation would induce compromise. But the differences were narrowed only slightly, and after ten days we returned to the Capitol, where the process ground on.

  From the time I entered the Senate I returned to Maine almost every weekend, to be with my family and to meet constituents. The disagreement with the president over taxes and the budget was widely reported, of course, and my weekend meetings with constituents grew increasingly contentious. At one such meeting a large crowd, disproportionately elderly, gathered. As was my practice I made no opening speech; I wanted to hear from them, I said, as I invited statements and questions. The first person to speak was an elderly man, well-dressed and articulate, who thanked me for coming and said he wanted to make a statement and then to ask a question. His statement was a sharp denunciation of me for what he described as “excessive partisanship” and an unwillingness to compromise. “The people of this country want you to work with the president,” he said to growing applause. “Stop bickering, get together and compromise, settle this like gentlemen.” When he completed his statement many in the crowd stood and applauded vigorously. Then he said, “That’s my statement. Here’s my question: All we get from the TV and newspapers is politics. What are you people arguing about? What are the issues?”

  I briefly explained, as best I could, the major issues: taxes and spending cuts, including Medicare. When I finished he jumped to his feet, pointed his finger at me, and said, with much more emotion than before, “Senator, this is a democracy. You represent us. And we’re telling you now, loud and clear, you go back there and don’t give an inch on Medicare. We’ve earned it. Neither you, the president, or anyone else can take it away from us.” With that the entire crowd stood and gave him an ovation that far exceeded in length and intensity their previous applause. So I went back to Washington with two clear messages from that group of constitue
nts. The problem, of course, was that the messages were somewhat contradictory.

  Finally, after a few more weeks of contentious wrangling, we reached agreement in early October on a package that would have reduced the deficit by $500 billion over five years. It included some painful and politically difficult provisions. Federal excise taxes were raised on beer, cigarettes, gasoline, and a host of so-called luxury goods. The cap on income subject to the Medicare portion of the payroll tax was increased, so those with higher incomes had to pay more. At the same time the Medicare premium paid by all of the elderly was increased. Bush had prevailed on personal income tax rates. Try as we might we could not get him to agree to an increase in the top marginal rate above 28 percent. However, from the president’s perspective the package was still disappointing because it did not include a reduction in the tax rate on capital gains, which also remained at 28 percent. Spending was cut on a range of programs, including defense, farm support, student loans, and civil service pensions.