Until two months ago, Andrew Stern and David Cote seemed to embody the Beltway wisdom that President Obama’s bipartisan deficit commission was doomed to failure.
Stern was the firebrand labor leader who had channeled millions of dollars into Democratic election campaigns. Cote was a Fortune 500 chief executive, and a Republican, who earned more than $12 million last year.
But today, the two are teaming up in the hope of breaking through the partisan warfare over tax hikes and spending to design a long-term plan for reducing the deficit, which last year totaled $1.4 trillion. They talk and e-mail at least once a week, swapping ideas and information. They sit together at commission meetings and even arranged their own field trip to talk with business executives about the tax code. Cote tries to soften up his peers on the Business Roundtable. Stern is probing union officials about ways to tinker with Social Security.
Bridging the Partisan Divide
Both men know the odds are stacked against success, given the pitched power struggles in Congress. Twelve of the panel’s 18 members are current lawmakers, six from each party, and both parties are fixated on the upcoming midterm elections. But Stern and Cote insist that they have a chance, and both have a history of political bridge-building.
"What I keep saying to the progressive community is that when the crisis hits, it’s students, workers and poor people who pay the price," said Stern, who recently stepped down as president of the Service Employees International Union, the nation’s fastest-growing labor union.
Cote, chairman and chief executive of Honeywell International, expressed impatience with his own corporate fellow travelers. "Even in the business community, there is little understanding of the magnitude of the looming [deficit] problem," he says.
In a bid to promote more trust among members, Cote and Stern jointly invited the other members to an informal dinner this week at Honeywell’s Washington office. Erskine Bowles, the commission co-chairman, said it was hard to exaggerate the importance of bridge builders like Stern and Cote.
"When you spend time with people, they can no longer be caricatures," Bowles said Wednesday. "You talk about your personal lives, family stuff, and you build trust. When you form a bond like that, you seem to find ways of bridging differences, and I think that’s what those two guys have done."
The panel itself was originally proposed by a bipartisan odd couple: Sen. Kent Conrad, a North Dakota Democrat, and Sen. Judd Gregg, a Republican from New Hampshire. Both are members of the commission. Gregg recently teamed up with a prominent Democrat, Sen. Ron Wyden of Oregon, on a proposal to overhaul the tax code.
The panel’s co-chairmen, meanwhile, are both battle-scarred veterans of previous bipartisan budget deals. Alan K. Simpson, the former Republican senator from Wyoming, voted for the 1990 budget agreement between Democrats in Congress and President George H.W. Bush. Bowles, a former chief of staff under President Clinton, was a key negotiator on the 1997 budget agreement with Newt Gingrich, then the Republican House Speaker.
Unlikely Bedfellows, Face to Face
Sitting down recently with Fiscal Times reporters for their first-ever joint interview – Stern and Cote insisted on being interviewed together — it would have been easy to mix up who was who.
Both men wore blue, pinstriped suits and bantered about their common experience running big organizations. Stern, with his coifed white hair and his pink silk tie, could have passed for a business mogul and often sounded like one as he talked about the need for "targets" and "reaching the numbers." Cote, the real CEO, was, if anything, the more rumpled of the two, and spoke in plainer terms about the sheer magnitude of a trillion-dollar deficit.
It was Stern who reached out first, sending Cote an e-mail and inviting him for a one-on-one visit just before the panel’s first public meeting in late April. Cote said he had initially been nervous about Stern, given his reputation as a combative and powerful labor leader, but he showed up at the union’s headquarters on April 28 and immediately felt at ease with Stern.
"Andy reached out," Cote recalled. "I thought, okay, this guy’s got more guts than I do."
Though he had almost always voted Republican, Cote considered himself a pragmatist and supported Obama for president. Within days of Obama’s inauguration, Cote led a team of top corporate executives to the White House and spoke out strongly in support of the president’s economic stimulus plan. Stern, for his part, had a long history of teaming up with unlikely bedfellows.
In 2007, he and his union created a furor by partnering with Wal-Mart — a bitter enemy of organized labor for years — in support of health care reform. The collaboration, which followed secret negotiations, sparked complaints from other unions that Stern was grandstanding. "Why is he so cozy with corporations?" asked The Nation, a liberal weekly magazine. But Wal-Mart went on to support Obama’s specific health care plan last year, which some analysts say helped it become law.
Stern was also an architect of "Divided We Fail," a collaboration between his union, the Business Roundtable, the National Federation of Business and AARP, the senior-citizens’ lobbying group. The four groups disagreed about the particulars of health care reform, but they financed a heavy television and newspaper ad campaign about the urgent need to pass an ambitious reform of some kind.
"We were probably the most odd-fellows group you could put together," recalled John Castellani, president of the Business Roundtable, a highly influential advocacy group of the nation’s top CEOs. "The premise was, we may disagree on what health care should look like in its final form, but we all agree it needs to be addressed."
Forging a Dialogue
On the fiscal commission, Stern is already looking for ways to break through the ideological camps on deficit reduction. He has met privately with all six Republican lawmakers on the panel, and he has publicly praised ideas from conservatives like Sen. Tom Coburn, R-Okla. He has yet to meet one-on-one with any of the commission’s Democrats, suggesting it would be like preaching to the choir.
"This isn’t a question of whether Jan Schakowsky and I agree," he says, referring to the liberal House Democrat from Illinois, who is also a member of the deficit commission.
Cote has quietly nudged the panel, too. When Democrats and Republicans started to trade barbs last month over the president’s stimulus program, Cote warned that the group was veering off into politics. The other panel members backed down, earning a heartfelt thanks from Simpson, the Republican co-chair.
Simpson and Bowles have labored mightily to squelch the party feuding. But unless Republican and Democratic political leaders in Congress show more willingness to compromise, analysts doubt the commission will agree on broad proposals by their deadline of Dec. 1.
Recommendations will require the support of at least 14 of the 18 commission members — a high bar to clear. Supporters say that even if a supermajority of the panel fails to reach agreement, the deliberations could still help nurture a consensus in Congress next year, especially if the members named by Obama — four Democrats and two Republicans — can agree on a set of recommendations.
To hear the Cote and Stern riff off each other, one would think they agreed on almost everything. Both describe themselves as pragmatists who had to grapple with hard choices while running large organizations.
"Running a company, you learn that the needs always exceed the resources," said Cote, a former top executive at General Electric. "There’s only so much you can do and you gotta pick the places you’re going to work on."
Stern was quick to sympathize. "What Dave and I have found interesting is that we both ran big organizations," he said. "It’s a very practical set of questions. You have a certain amount of income and you have a certain amount of expenses."
But the murmurings of agreement can be deceptive. Cote emphasizes that economic growth is the key to fiscal stability, while Stern politely contends that it’s unrealistic to bank on economic growth alone as the solution. "There are some people who say let’s grow our way out of it," Stern said, still sitting next to Cote. "Okay. Tell me how much growth we’re going to need? Has it ever happened before?" The subtext of their exchange is clearly about the broader clash. Republicans warn that higher taxes will imperil economic growth, and focus on the need for spending cuts. Democrats argue that the deficits are too big to be closed without at least some tax hikes.
Despite the obvious fissures, the two are hunting for unexpected areas of common ground. To that end, Cote and Stern recently arranged a private field trip to the Business Roundtable, where they spent several hours talking about international corporate taxation. Why? The two suspect that deficit-reduction measures could include tax reforms that reduce the competitive disadvantages of the U.S. tax system.
Similarly, Stern has begun probing top union officials about ways to bolster Social Security. One idea: to have state employees, who currently do not contribute to Social Security, join the program.
It’s anybody’s guess whether those efforts will lead to a breakthrough on the commission, much less in Congress.
"We’re still at the trust-building stage," Cote said, referring to the deficit panel as a whole. "Andy’s done the best of everyone in reaching out, including to me."
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