Full Episode: Fiscal cliff fallout and the 113th Congress

Oct. 28, 2014 AT 4:48 p.m. EDT

We ring in 2013 with analysis of the last-minute bipartisan deal that averted a financial crisis and examine future battles between the White House and Congress over spending cuts and the deficit. Plus, will the partisan divide remain entrenched with the incoming 113thCongress? Joining Gwen: Susan Davis, USA Today; Peter Baker, New York Times; Eamon Javers, CNBC; and Michael Viqueira, NBC News.

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Notice: Transcripts are machine and human generated and lightly edited for accuracy. They may contain errors.

GWEN IFILL: We went over the cliff only to hit a trampoline that will send us into the next showdown. How Washington works, and doesn’t, tonight on “Washington Week.”

PRESIDENT BARACK OBAMA: (From tape.) Hopefully in the New Year we’ll focus on is seeing if we can put a package like this together with a little bit less drama, a little less brinksmanship, and not scare the heck out of folks quite as much.

MS. IFILL: Perhaps, but the signs aren’t so good. The liberals are unhappy.

SENATOR TOM HARKIN (D-IA): (From tape.) I am concerned about this constant drift, bit by bit, deal by deal, toward more deficits, less job creation, more unfairness, less economic justice.

MS. IFILL: The conservatives are annoyed.

REPRESENTATIVE DARRELL ISSA (R-CA): (From tape.) The Senate, the president, and the vice president failed to meet their obligation – their own stated obligation which was to bring us a balanced bill.

MS. IFILL: And the speaker of the House had to fight to keep his job.

SPEAKER OF THE HOUSE JOHN BOEHNER (R-OH) : (From tape.) The American dream is in peril so long as its namesake is weighed down by this anchor of debt.

MS. IFILL: As the 113th Congress takes its oath of office even more battles await.

SENATE CHAPLAIN BARRY BLACK: (From tape.) Look with favor on our nation and save us from self-inflicted wounds.

MS. IFILL: Covering a raucous week: Peter Baker of the New York Times, Susan Davis of USA Today, Eamon Javers of CNBC, and Mike Viqueira of NBC News.

ANNOUNCER: Award winning reporting and analysis, covering history as it happens, live from our nation’s capital this is “Washington Week with Gwen Ifill.”

(Station announcements.)

ANNOUNCER: Once again, live from Washington, moderator Gwen Ifill.

MS. IFILL: Good evening. Nothing says bipartisan cooperation like ringing in the new year by counting down to a midnight vote to raise taxes. By the time the fiscal cliff drama drew to its only temporary conclusion this week, Speaker Boehner was pledging not to negotiate with President Obama. President Obama was promising not to negotiate over the debt limit. And Vice President Biden seemed like the only one left in town who was in a good mood.

HOUSE SPEAKER JOHN BOEHNER (R-OH): (From tape.) Public service was never meant to be an easy living. Extraordinary challenges demand extraordinary leadership. So if you’ve come here to see your name in the lights or to pass off a political victory as some accomplishment, you’ve come to the wrong place. The door is right behind you.

REPRESENTATIVE NANCY PELOSI (D-CA): (From tape.) I think most of our members – and we are never unanimous, but we do have consensus – most of our members know that for the president to have leverage on the next hurdles that we face that we had to get over this hurdle.

MS. IFILL: The president signed the budget bills after resuming his holiday vacation in Hawaii and before Congress today officially certified the Electoral College vote that will return him to the White House. But things are by no means settled here in Washington because there’s almost certainly more to come. The folks around this table have covered this epic political and policy battle around the clock, literally, as Joe Biden would say. In the short-term, the outcome looked like a win for President Obama and a loss for Speaker Boehner. Far away, but did it look like close up as well?

SUSAN DAVIS : I think it did. I think – I think for the speaker, it was a very bad week. It’s been a bad couple of weeks, I think. It started before they even got to this deal. It started when he tried to lead his conference down a separate path a couple of weeks ago and said, hey, I think I have an idea on how we get around this, and he couldn’t get enough of his own members to support him. And that set him on a path where I think it started to open the question of whether he could deliver at all. I think it took him out of the equation. I think he even said, this is now up for Harry Reid and Mitch McConnell to decide. Ultimately, they couldn’t decide it either, so that’s when Joe Biden had to come in. He – and that happened to them.

I think when they actually did vote on the New Years Eve, it undermined what has probably been the governing rule of the Republican majority for more than the past decade, which is nothing should pass without a majority of a majority support. And they did not have a majority on that vote. And then, he immediately turned around to a vote to reelect him speaker, which was never really in doubt. No one ever really thought John Boehner was not going to be speaker again. But I think having 12 votes, essentially 12 votes on the floor against his speakership, being reelected with only 225 – 220 votes does not send a message of strength going into these next rounds.

MS. IFILL: And Mike, when you – when all was said and done – there was a nice pen that dropped there – when all was said and done, the president still was able to wrangle his basics, which is he wanted to be able to raise taxes on the wealthy, however you define wealthy, and he got that.

MIKE VIQUEIRA: Well, and the White House and certainly other Democrats look at this and say, look, this is a watershed moment. We got the Democrats to break the cardinal visceral core value that they have, and that is raising taxes. There’s always one problem with that argument. They voted on New Year’s Day. Taxes were already high. They were actually voting to cut taxes.

MS. IFILL: Right.

MR. VIQUEIRA: If you think about it.

MS. IFILL: Yeah, yeah, yeah.

MR. VIQUEIRA : But I got to tell you, hell hath no fury like a speaker scorned. He is going to have to make up with his base, with conservatives, with his core, on this next go around in two months, this triple jeopardy with the debt ceiling vote, with the continuing resolution that funds the government running out, with the sequestration that they punted two months down the road without coming due, and Republicans are already making noises and threats even that the government is going to close. We had two Senators today go ahead and raise that possibility. Here we are, in January 4th –

MS. IFILL: Maybe a shutdown is a good idea.

MR. VIQUEIRA: Shutdown’s a good idea.

MS. IFILL: How toxic are things?

EAMON JAVERS: It’s pretty awful. I mean, you see these reports that these leaders behind closed doors are using epithets with each other. I mean, it’s pretty bad. And if you’re a Republican, you got to look at this thing and say, hey, wait a second. How do we get from the point where Barack Obama put an offer on the table, yes to raise tax rates for those over about $400,000 year in annual income, but that also included hundreds of thousands of dollars of spending – hundreds of billions of dollars of spending cuts, and all of the things that the Republicans wanted, or at least a lot of the things that Republicans wanted, and then they ended up ultimately getting a deal that didn’t include barely any spending cuts at all. They kind of negotiated themselves into this box canyon where they were just stuck. And they ended up with something that was really disastrous from a Republican perspective.

That’s why I think you’re right. Boehner’s going to have to demonstrate to his caucus that he can deliver on something in this next fight, and that’s why March is going to be – if this was disastrous, March is going to be apocalyptic. It’s going to be a big, big fight.

MS. IFILL: But if we know that, we know that wasn’t a good week for the speaker, no question, but the president didn’t necessarily – I mean, no one liked this deal in the end. So the president didn’t come out of this smelling like a rose, either, necessarily.

PETER BAKER: Now, it’s interesting, you see, at one point, there was on the homepage of the paper, you had a story saying Republicans in revolt. Then you had a story saying: left unhappy with Obama. You know, it was – Tom Harkin expressed what a lot of people on the liberal base of President Obama felt, which is that he caved in too easily. He had the mandate. He should have stuck to his guns, et cetera, et cetera.

You know, all of which the White House looks at it and says, yeah, you know, you guys are great armchair negotiators here. You try getting in a room with these Republicans and tell me how easy it is to do what you think. So at this point, you have the sort of uneasy ceasefire orb truce that had existed between President Obama and his liberal core, not necessarily voters, but activists and pundits and – you know, people who dominate the chattering class during the election when they had the mutual threat of a Mitt Romney presidency. And now that’s over. Now, we’re back to this sort of dynamic where he goes in and has to deal with a Republican House, which is difficult enough, and hears the sniping from the left that he’s not tough enough.

MS. IFILL: And tell me if I’m wrong, but we’ve all covered these kinds of showdowns before and what usually happens is that once it’s settled, it’s kind of settled. And everybody breaths easy and they say, OK, we got that done. Well, it’s not settled at all.

MR. VIQUEIRA: It’s not settled and part of what Eamon is saying, it goes back to that. I mean, the fiscal cliff – if we had gone over the fiscal cliff, everybody’s taxes would have gone up a whole heck of a lot in May, if we stayed in it have caused another recession, but it’s something that was ultimately survivable. There’re adjustments to be made and even some forecast said that in four years, it would be a good thing. But debt limit is something you can’t mess around with. If the country’s full faith and credit is somehow abrogated, it’s somehow violated, then that has immediate and huge repercussions.

MR. JAVERS : Well, it was interesting for me, covering this from a sort of this quasi-Wall Street perspective and watching how Wall Street was watching this and how Washington was watching Wall Street, I talked to all of the members that I talked to were fully aware that the market was trading up and down on every speech throughout this entire crisis. And that’s going to be the same thing when we get to the debt ceiling as well. The markets are going to want to know whether Washington has the stomach to do what it needs to do to prevent another financial crisis in this country.

MR. BAKER: Well, and that comes back to the president. You said, rightly, that he is – he will not negotiate over the debt ceiling, as he had to do in 2011. Well, that’s a real open question, isn’t it? Because in fact he has said things like this before and this is why some of his liberal supporters are unhappy because they feel like, you know, if he draws a line in the sand, you know, does he stick to that enough. And Republicans have every reason to look at that and say, well, you know, he says that now, but we’re going to push and we’re going to push, we’re going to push right up till the end.

MS. IFILL: And Susan, there’s some risk there, because they’re so unhappy with the way the president, especially in the end, handled this by being kind of – you know – poking them in the eye whenever he could, that they are prepared to fight tooth and nail to get over this humiliation they’ve just suffered.

MS. DAVIS: I think there’s a bit of that. There was definitely –

MS. IFILL: Or might – just –

MS. DAVIS: Well, I also think all presidents do things that the opposing party says –

MS. IFILL: Of course.

MS. DAVIS: – campaign-style events and they don’t like the way they handle it. So part of that is just the usual politics of the moment. I do think that there is – we’d hear the term a lot – a trust deficit. I think that the – when you talk about using epithets between each other and sort of the anecdotes we’ve heard from the types of these negotiations, even between Reid and McConnell towards the end, where they just stopped speaking altogether. There’s not many – and the next fight is so close up that I don’t know if there’s enough time for the wounds to heal from the last battle. I think a lot of the anger is still there –

MS. IFILL: Next fight’s in March.

MS. DAVIS: Next fight starts now.

MS. IFILL: That’s true.

MR. VIQUEIRA: I think that the president really did, though, in a sense, from the beginning of this negotiation, go to school on some of these past confrontations. He’s had them every year as president.

MS. IFILL: Well, that’s true.

MR. VIQUEIRA: And they go right up to Christmas, as some of us know, who have traveled. (Laughter.) But you know, the day after the election, John Boehner has a press conference and he was really trying to jump out in front and steal the march on the president by conceding the idea that Republicans could go for a raise in revenue, $800 billion. Ironically, the package had less – ended up having less –

MR. JAVERS: Ended up being about $600.

MR. VIQUEIRA : Yeah. And – but he still had to draw the line on raising tax rates. And that’s ultimately where he had to cave and the president got to show some flexibility, knowing that John Boehner had no flexibility. He was ramrod stiff and any pressure was going to shatter his caucus. And that’s sort of what happened.

MR. JAVERS: But I think you were mentioning the fact that the president says he’s not going to negotiate here. But I think just the act of saying that is a negotiation in and of itself, and that means his first offer –

MS. IFILL: It’s the opening – it’s the opening bid.

MR. JAVERS: – his opening bid is now zero and he’s going to wait and see what the Republicans –

MR. VIQUEIRA: Congress has to vote. How do they get around that?

MR. JAVERS: They’re going to have to negotiate.

MS. DAVIS: He tried to get them get around.

MR. BAKER: And the other thing is, of course, what we’ve been discussing these last two months, frankly, is the easy part. It’s tax cuts. Who are we going to benefit? The vote they took penalized only the slightest sliver of Americans out there, because nobody’s talking about keeping the payroll tax cut. So on the income tax cut, they were giving things away. Now, we’re talking about spending cuts. We’re talking about taking things away from almost everybody if they do it the way they’re told they have to do it.

MS. IFILL: Let’s stop for a moment and take a look at what – some of what the president and Mitch McConnell in particular had to say this week, which shows you a little bit about where the state of this negotiation we’ve been discussing is.

PRESIDENT OBAMA: (From tape.) One last point I want to make. While I will negotiate over many things, I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed.

SENATOR MITCH MCCONNELL (R-KY): (From tape.) The president claims to want a balanced approach. Now, that he has the tax rates he wants, his calls for balance means he needs to join us in the effort to achieve meaningful spending reform. The president may not want to have this debate, but it’s the one he’s going to have because the country needs it.

MS. IFILL: So who has – so who has the leverage here at this point?

MS. DAVIS : It’s a great question. I think – it depends on which way you look at it. I think Democrats coming off of fiscal cliff feel that they have a position of strength because they saw what happened in the House and that John Boehner, in the end, could not get enough members behind what was essentially a conservative plan and he couldn’t have the support. So any time he’s going to come to the table and say, this is where I need to be, it opens the question, well, can you even deliver on that?

I think that Republicans feel that they have leverage, because I do think there’s a certain amount of public opinion on their side. If you look at public opinion polling and people do say we need to rein in spending. We need to cut spending. We need to rein – and debt and deficit or issues where rhetorically at least they have a lot of public support.

MS. IFILL: Is John Boehner out of this conversation now? Is he considered to be the guy who’s liked, but not necessarily feared?

MS. DAVIS: That’s a great question. I think it’s possible. I think it depends on how he plays this. But he needs a moment where he can seem on top of the situation again, and it doesn’t seem like – if any Republican is the influential one in this situation at this moment in time, Mitch McConnell seems like a much more influential Republican, and someone who has a proven track record of negotiating with the White House in this deal and in previous deals over the Bush tax cuts.

MR. VIQUEIRA: I mean, on the politics, I was really surprised that Mitch McConnell, who has a reelection battle coming up in two years in Kentucky, who could conceivably face a challenge from his right, went out on that limb and made that deal with Joe Biden that essentially raised taxes or cut taxes after the first. And then durng all the drama on New Year’s Day, when the House was balking, I was thinking 89 people in the Senate, you know 40-some Republicans – or I guess it was about exactly 40 – were out on this limb, having – mix metaphors – pull the rug out from –

MS. IFILL: Let’s just mix them up, why not?

MR. VIQUEIRA: And so very vulnerable – but I think John Boehner, I think there’s an assumption around Republican circles that this is his last Congress as speaker. I think that –

MS. DAVIS: The fact that we’re even talking about that shows that he’s a weakened speaker.
: I think he’s a weakened speaker and I think he’s got this next fight coming up to demonstrate –

MS. IFILL: Well, and part of what we saw as his weakness was this little mini rebellion which could never quite happened when he was running for speaker and a few conservative backbenchers tried to get, in a kind of a Keystone Cops way, some folks to vote against him and at least force it to a second ballot. But – but more important than that, to me, was the self-inflicted wounds, as we heard the chaplain talking about, and one of them was over Hurricane Sandy funding. And Chris Christie, the governor of New Jersey, was very helpful on this.

GOVERNOR CHRIS CHRISTIE (R-NJ): (From tape.) On a political chessboard of internal palace-intrigue politics, our people were played last night as a pawn. And that’s why people hate Washington, D.C. That’s why they hate this politics. Last night, it was my party responsible. Both parties could take plenty of responsibility over time, but last night my party was responsible for this.

MS. IFILL: I know you all don’t hate Washington, D.C. You just hate what Washington can do. We understand that. How it can do. Well, so how much is that sort of distraction add to the problem?

MR. JAVERS: Oh, it was a huge problem for John Boehner.

MS. IFILL: Yeah.

MR. JAVERS : You know, as he was trying to gavel down the 112th Congress and let it die, a lot of New Jersey and New York Republicans and Democrats expected that they were going to get a vote on this Hurricane Sandy aid. And they were shouting and hollering, as he was gaveling it down, to – wait, wait, wait, we need our vote. We need our vote. That fight continued throughout the week. Chris Christie – he didn’t play it there, but he name checked John Boehner and said that it was Boehner’s fault that they didn’t get it.

So – and Boehner is caught between New Jersey Republicans, who want this spending, and the conservative base that does not want to see anymore spending. They want to see it offset if it happens with other cuts elsewhere in the budget. And Boehner was trying to give those anti-spending folks something to hang their hat on here in a deal, when he had the fiscal cliff deal, he didn’t have any spending cuts in it. Very, very tough political situation.

MS. IFILL: Well, certainly on disaster aid, yeah.

MR. JAVERS: Yeah, absolutely.

MR. VIQUEIRA : And it is a perfect illustration of what Boehner’s up against. He couldn’t put that bill with $60 billion in not – paid for offset funding for emergency aid, no matter how popular New York, no matter how angry Peter King or Chris Christie got –

MS. IFILL : And they did get something passed today, some portion of it.

MR. JAVERS : They passed $9.7 billion of flood insurance and they’re going to do a bizarre two-step process on January 15th, where they’re going to have a $17 billion Sandy aid bill that has an amendment to it that’s worth, oh, by the way, $33 billion, which is even bigger than the bill itself, and they’re going to try to pass both or one of those, and then send it to the Senate, where it’s entirely unclear what’s going to happen there.

MS. IFILL: Let’s go back to the White House for a moment, Peter, because one of the people who was the deal closer in this and it’s happened before, was Joe Biden.

MR. BAKER: Yeah, it’s interesting. He was on the sidelines to some extent for a while. And he was in every meeting. He was, you know, part of the discussion at the White House, but he wasn’t out front the way he had been. And part of that’s because, of course, this was seen as being a House deal. It was a Boehner deal. And then Biden is a Senate guy.

Come the end of Boehner and it goes to the Senate, McConnell spends about three or four minutes deciding he can’t talk with Harry Reid, picks up the phone and says, Joe, is there anybody there who can cut a deal? And there’s remarkable series of phone calls happened. Thirteen, 14, 15 phone calls over 24 hours in which these two sort of lions, these two, you know, longstanding members of the Washington establishment cut through all the sturm und drang and come up with this deal. So it suddenly – Joe Biden is at the center of the action again. He’s also the head of the president’s gun control – not really task force, but sort of –

MS. IFILL: Whatever it is, yeah –

MR. BAKER: – quick review and so as you’ve said in your thing, there’s nobody happier today than Joe Biden, who’s right –

MS. IFILL: And nobody who knows how to show it off more. But I’m – I also wonder as I watch all of this unfold, maybe the White House isn’t as fractured as Congress is. But the Senate has its fault lines as well. We saw this week that Mitch McConnell, not for the first the time, made clear in the middle of this how unhappy he was with the idea of filibuster reform, which is something that Harry Reid has been pushing. So is that yet one more explosion waiting to happen?

MS. DAVIS: Potentially. I think that it depends on what Harry Reid does with changing the rules of the Senate and whether he decides to upend the way the chamber’s been operating, so in order to make it easier to bring bills to the floor. On the one hand, that sounds like a great idea. I think a lot of people recognize that the Senate has been sort of mired down in so much politics that a lot of legislation has been backed up in there.

But it also – the Senate is sort of this chamber that relies on such decorum and rules and behavior. And for senators like Mitch McConnell, who I think have devoted their lives to the institution and a lot of Democrats are not happy with this, too, upending these rules could make already difficult negotiations that much harder. And I think that’s the threat that Mitch McConnell’s saying. If you go here and do this, any chance of working together for the foreseeable future is going to be challenged.

MS. IFILL: Well and that – I guess this comes to an interpretation of what we’ve seen in the last couple of weeks. Here’s, you know, call me, you know, Pollyanna here, but for a moment assume that you can take away from what we saw this week a grand bipartisan compromise, ugly, sausage making, but a compromise. Could that set the groundwork for grand bipartisan compromises to come?

MR. JAVERS: It was sort of a breathtaking compromise. You know, that moment where you got done with the McConnell-Biden phone calls, and Mitch McConnell goes to the Senate floor and says, you know what, we should just have a deal where we just do the tax piece of this and forget about the spending cuts. I about fell over when I saw him say that, because the Republicans have been saying all along that the spending cuts were the key to the deal. They wanted at least one-to-one ration if not greater. And then, here comes McConnell, emerging from these talks with Biden, saying, forget the spending cuts.

I emailed a Republican congressman I know and I said, is there any way you guys are going to take this deal? And he emailed me back and said, I think we’re going to have to take this. I think we’re going to take it. And that’s when I knew that something had changed in this dynamic and it was sort of this astonishing weird bipartisan compromise.

MR. BAKER: The other thing to think about too, we love to bash Washington and Washington deserves being bashed, but the truth is this is actually the end of a 10-year debate, right? President Bush passed these tax cuts, but couldn’t get enough support in the Senate to make them permanent. They had a sell-by date. And we’ve had this debate repeatedly now over the last four years under President Obama without a resolution. We’re now done with it. We know what the income tax rates are going to be. There’re going to be other tax fights, but we know now that the vast majority of the Bush tax cuts will live on in a permanent way and we don’t have to go through that part of it again. That’s not a small thing.

MS. IFILL: And now they’re hearing members hearing from folks at home who say what, what are you doing up there? Is public opinion playing any role in the desire to get passed any of this? Or are they in such a bubble that they’re not really aware of how this is going over?

MR. VIQUEIRA: I think part of what happened on New Year’s Day, when, you know, this 89 to eight vote comes across the rotunda from the Senate and it’s up to the House to vote on this thing, so everybody can just put this to bed and go home. I think that after that Eric Cantor’s very dramatically announces that he’s not going to support it and suddenly the world explodes and everything’s called into question, whether or not everybody is going to be paying much higher taxes this year, I think that the Republican conference sort of stared into the abyss and it took a few hours for it really to take hold.

I mean, there are some people who saw it right away, as Eamon’s source illustrates – but I think the rank and file, the hard core Republicans – and look, look at the final vote. They got a third of them voting for it, right? And still two thirds voting against it. Just for them to allow to go along with the idea that this was going to be put on the floor to begin with, I think that public opinion did play a big role in that.

MS. IFILL: You see any glimmer of that, Sue?

MS. DAVIS: I think a couple of things. One, I feel like the only way – we’ve created a culture now where the only way that Washington ever really moves is on a brinksmanship disaster. It has to be a default or a shutdown or a fiscal cliff where economic consequences –

MR. JAVERS: The very last second of that.

MS. DAVIS: There’re so many problems that they can’t solve and we’ve created a place now that they won’t – I mean, even Newtown was what it took to start talking about gun legislation. It has to be the reactionary or crisis piece.

MS. IFILL: Well, and Newtown actually was what got Boehner back to the table after everything had fallen apart before.

MS. DAVIS: But we come out of two years of Congress that were some of the least productive since World War II. It’s now – we’re now at a place where it’s difficult for Congress to pass things like transportation bills, which used to be exceedingly easy to pass because everybody had a piece of that fight.

MS. IFILL: Farm bills –

MS. DAVIS: Farm bill, which is a great example of something that didn’t – so and this deal, while it’s the closest thing we can point to as sort of a grand bargain, a lot of it was extensions of current laws or – they didn’t really reinvent the wheel in this. A lot of it was extending – basically keeping everything the same. So this – there’s not a lot of –

MS. IFILL: You don’t sound optimistic here. (Laughter.)

MS. DAVIS: I’m not optimistic. I don’t think this – this was a very discouraging fight. I also think that this was the easy one. I mean, the fiscal cliff – we could have gone over and stayed over it and kept the fight going. If we default on our debt, we are in a bad way both economically and sort of what it says about the state of our government.

MR. VIQUEIRA: I think the irony is is that we’ve just sworn in a new Congress, the most diverse Congress, broadest spectrum of society reflected in Congress, but the middle – the ideological middle is shrinking as the spectrum grows –

MS. IFILL: On that cheerful note –

MR. VIQUEIRA: Sorry. (Laughter.)

MS. IFILL: It’s OK. There was a lot to be cheerful about. Thanks, everybody. We’ve got to go for now, but the conversation will continue online on the “Washington Week” Webcast Extra. You’ll be able to find us still talking at pbs.org/washingtonweek. While you’re there, you can read about my five – count them, five – resolutions for the New Year.

Keep up with daily developments over at PBS “NewsHour.” And we’ll see you again right here, next week, on “Washington Week.” Good night.

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