Tougher Negotiations Ahead For Obama | NBC New York

Tougher Negotiations Ahead For Obama

    processing...

    NEWSLETTERS

    AP
    President Barack Obama's political fights will be tougher than those he has waged so far.

    President Barack Obama prevailed in negotiations with automakers, banks and bondholders in recent weeks — but don't chalk that up solely to superior haggling. In those cases, the president's team sat across the table from executives whose companies he owned or controlled.

    They couldn't really say no.

    Because some of the most urgent issues, like the auto bailout, had to be addressed immediately, the administration has been able to take on easier fights first, and tout those wins as proof that a new day has arrived in Washington, and models for the deals other groups should accept.

    Monday's expected announcement of GM's bankruptcy, though, marks the end of that first round of fights, where the terms favored the White House. But for the rest of the year, the legislative agenda shifts to health care, climate change and a fight over rules that make it easier to form unions — meaning Obama's team will be negotiating with outside parties who don't depend so directly on federal largesse.

    They can say no. In many cases, they feel they have to.

    The White House insists the deals it's made so far came together because they were in the interests of all the parties, not because those parties were beholden to Obama.

    To get a sense of how Obama will handle the tougher negotiations to come, here's a look at how he's negotiated so far:

    1. Paint each move as a win-win and proof of "change" in Washington

    At the White House last Tuesday, Obama announced new fuel-emission standards, as the heads of the big auto companies lined up with the head of the auto-workers unions and environmentalists behind him.

    Obama presented the new fuel standards as a victory for all: "The fact is, everyone wins," he said. "Consumers pay less for fuel. The economy as a whole runs more efficiently by using less oil and producing less pollution. And companies like those here today have new incentives to create the technologies and the jobs that will provide smarter ways to power our vehicles."

    Perhaps, but it's a move the auto companies had until recently long lobbied hard to oppose — and it's not clear what they would have gained by fighting against a decision that was finally Obama's alone to make.

    The president, though, deemed the group standing behind him an "extraordinary" gathering that "represents not only a change in policy in Washington but the harbinger of a change in the way business is done in Washington."

    It was left to California Gov. Arnold Schwarzenegger to explain what was really going on. "Agreements like that, it's all about timing," he said.

    "Sometimes you hit the wall, you can't get anywhere. And at other times when there's a crisis like we have right now, all of the sudden the car manufacturers need money, needed the taxpayers money, they needed the federal government to help them. So in order to get that help, I'm sure that President Obama said, 'OK we're going to give you the help — but here's what you need to do.' So I think that certainly things changed very quickly because of that."

    2. Get your message out first; set the terms of debate

    One hint of the tougher fights ahead came last Monday, when the president convened a meeting at the White House with health-care stakeholders an hour before they lined up behind him as he announced a deal to keep costs down that, Obama said, would save $2 trillion over 10 years.

    But the administration had already announced the deal — and the eye-popping savings number — in a fact sheet issued the night before the meeting and announcement. In it, the White House again boasted of getting groups with competing interests to cut a win-win deal, saying that "if groups as disparate as [these] can come together around the cause of cost-cutting and greater affordability, the possibility for fundamental reform in the weeks ahead is great."

    At the unveiling of the deal, the president — again with the groups' leaders standing behind him — proclaimed it a "watershed event."

    But no sooner were their leaders off the stage than several of the groups began objecting to the $2 trillion number. American Hospital Association President Richard Umbdenstock spoke of "political spin" and "confusion" — and stressed they had agreed only to voluntarily try to ramp up the rate of savings over several years, and hadn't bound themselves to deliver any particulars, let alone the immediate savings the president had promised.

    By then, though, evening news stories and morning paper headlines had already touted the groups' $2 trillion pledge.

    While both sides have since publicly downplayed the dispute, Obama and others in the administration have continued using the number — putting the groups in the difficult spot of either accepting it, or risking a public fight with the popular president.

    3. Put the bully back in the bully pulpit

    As some Chrysler bond holders learned, standing up to one of Obama's win-win deals can be a dangerous proposition.

    The fast bankruptcy the administration was pushing demanded their support, but the White House told Chrysler to offer just a fraction of what the bondholders were expecting.

    As negotiations stretched on, the debtholders opposing the Obama administration's proposal began to fracture. One financial executive involved in the process said the first to take the Obama-Chrysler deal were banks that received bailout funds under the TARP program. "It felt to us like the TARP banks were turned, given the leverage the government has over them," this executive said.

    Still, a critical mass of firms held on through the final week of negotiations, until Obama went before television cameras to denounce the holdouts. "I do not stand with them," the president said, calling them "speculators" and implying that they were standing in the way of saving Chrysler.

    "The president spoke at noon, I think, and our phones started ringing off the hook at 12:30," the financial executive said.

    The holdout firms came under a barrage of criticism — and most eventually caved, signing onto Obama's deal. "We were getting four to five hundred calls a day. For the firms in the group, it was shocking and terrifying."

    A person familiar with the hedge fund industry said, "We were really surprised by the comments from the administration. If you're a bank and you're taking TARP money, you're not in a position to say 'we don't like this deal.'"

    4. Create a sense of inevitability

    Many executives have moved beforehand to heed the message to get on board, or get out the way of a president with a 65 percent approval rating and a sizable majority in Congress.

    When an enraged shareholder demanded to know of ConocoPhillips' CEO James Mulva why the energy company had decided to join the US Climate Action Partnership, a lobbying group pushing for legislation that could reduce greenhouse gasses and the company's profits, Mulva defended the company's stance.

    He said, in essence, that the company sees cap-and-trade legislation as inevitable. Better to be inside the process designing the program than outside the program fighting a losing battle.

    "If we don't participate," said Mulva, "we may end up with rules or legislation that is less favorable to our company and our industry."

    From the White House's perspective, Mulva's perspective is indeed a win-win, realigning businesses to again run parallel, rather than perpendicular, with the public interest.

    "Health care providers can see that we've reached a tipping point on cost, which has produced an unprecedented coalition of business, labor and consumer groups for change. That's why they're at the table," spokeswoman Jen Psaki e-mailed POLITICO, in response to a question about whether the administration had been playing with "home-court advantage" so far in negotiations with companies that have received bailout funds.

    "Energy companies and businesses understand that we are facing certain change when it comes to carbon emissions and how they are treated," she continued. "So they want to be a part of the solution."