By Alexander Bolton - 07/21/11 11:12 PM EDT
Senate Majority Leader Harry Reid (D-Nev.) confronted White House budget director Jack Lew during a Thursday afternoon meeting about secret talks on a deficit-reduction deal between the president and Speaker John Boehner (R-Ohio).
“I’m the Senate majority leader — why don’t I know about this deal?” Reid demanded as soon as the budget director walked into the historic Mansfield Room for a meeting with Senate Democrats, according to a lawmaker who witnessed the exchange.
Lew shot back: “If there’s a deal, then the president doesn’t know about it, the vice president doesn’t know about it and I don’t know about it.”
Democrats were outraged about reports that Obama was willing to accept major spending cuts in exchange for reforming the tax code at some point in the future as part of a deal to raise the $14.3 trillion debt ceiling.
Reid and other Democrats warned the administration officials in the meeting that they might not support a deal between Obama and Boehner if kept out of the loop.
“It was a heated session,” said a senior Democratic senator who attended the lunch. “There’s a basic lack of trust with the president.”
The lawmaker said the lack of trust stems from what they suspect are secret negotiations taking place between Obama and Boehner, without the input of Reid and House Democratic Leader Nancy Pelosi (Calif.).
“Harry’s not being included!” exclaimed the second senator.
Reid has told Democrats and Democratic allies that he did not have any of the details of a reported $3 trillion deficit-reduction deal coming together between Obama and Boehner.
The lawmaker said Senate Democrats “can’t be assumed to go along with whatever deal.”
Senate Democrats grilled Lew about whether the president was holding side talks with Boehner, according to a source who attended Thursday’s meeting.
Lew was somewhat evasive in his answer, leading some Democrats to conclude that Obama is conducting backchannel talks with Boehner.
Lew explained that Obama has to be able to negotiate one on one with Boehner if they are to come up with an agreement to raise the debt limit that can pass the House of Representatives.
“Obama and Boehner can’t put together anything that can pass the House if there are too many people in the room,” said a lawmaker who listened to Lew’s explanation.
Boehner complained in a television interview last week that the group of negotiators had grown too big.
“The room’s too big,” Boehner told Fox News. “There are too many people in there trying to negotiate what is a very difficult — could be and will be a very difficult agreement. There are just too many people in there pouring cold water on virtually every idea that gets thrown on the table.” Democratic aides said congressional leaders were told Wednesday night that Obama is prepared to cut a deal with Boehner that would include spending cuts and entitlement reform and only a promise from Republicans of taking up tax reform next year.
Reid appeared to be as surprised by the reports as any of his rank-and-file colleagues during Thursday’s lunch.
Senate Democrats told Lew and White House legislative affairs director Rob Nabors, who also attended the meeting, that they would not support a deficit-reduction deal that cut spending and entitlement programs and deferred the elimination of special corporate tax breaks to a later date.
“It would be very hard to take Republicans at their word that they would do anything later on,” said Sen. Sheldon Whitehouse (D-R.I.), speaking of a potential deficit-reduction deal that would postpone tax reform.
Sen. John Kerry (D-Mass.) said “a year is way too long” for Democrats to wait for tax reforms if they agree to trillions of dollars in spending cuts this summer.
“If you take key parts of the deal off the table, then how do you come up with a fair-minded approach to what’s on the table?” Kerry said.
Kerry and other Democrats, such as Sens. Dianne Feinstein (Calif.) and Michael Bennet (Colo.) are optimistic about a framework from the Senate’s Gang of Six that would reduce the deficit by $3.7 trillion over 10 years.
Feinstein said a deal that would implement trillions in spending cuts immediately and postpone until next year tax reforms to raise new revenues is “a nonstarter.”
Bennet is circulating a letter among Democratic and Republican colleagues to build support for the Gang of Six’s plan and already has more than 33 signatures.
The organizers are not likely to release the letter, however, until after the Senate votes on the Cut, Cap and Balance legislation.
Labor unions, a powerful ally of Democratic leaders in Congress, are mobilizing to kill the gang’s proposed entitlement cuts.
“Our organizations oppose cutes in Social Security benefits, period,” AFSCME, the AFL-CIO, the SEIU and the National Education Association said in a letter to Senate and House Democrats on Thursday.
“Nobody should pretend that reducing Social Security [cost-of-living adjustments] by 0.3 percentage points per year is anything other than a benefit cut,” the unions wrote.
The labor groups expressed alarm over the “proposed cuts in $383 billion to $500 billion in healthcare” and tax reform that would lower the income tax rate for the nation’s wealthiest earners.
“The Gang of Six’s proposed top individual rate of 23-29 percent is historically low,” they wrote.
The unions plan to take out full-page ads in Capitol Hill publications Friday proclaiming that the plan is “no deal for working families.”