Policy and Politics of Contraception Rule Fiercely Debated Within White House

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"What are we doing here?" asked Defense Secretary Leon Panetta, stepping outside his wheelhouse to ask about a rising storm involving the Obama administration and the Catholic Church. "What's the point?"

It was the Fall of 2011 and Panetta had read about a proposed Obama administration rule that would require employers - excluding houses of worship but including religious organizations such as charities, hospitals, and schools - to offer health insurance that fully covered contraception.

Panetta - a Catholic, former U.S. Representative, and White House chief of staff - didn't quite understand why the Obama administration would be stepping into this conflict.

Panetta's fears have to a degree been realized as White House officials now find themselves taking heat on a policy debate about conscience and religious liberty; the Obama administration is working to find a way to allow religious organizations to not pay for services they find morally objectionable, while also ensuring that, say, the women nurses and doctors who work at Catholic hospitals have full access to birth control. Some officials are discussing a way to introduce something like the law in Hawaii, where religious organizations don't have to pay for employee insurance that covers contraception, but they do have to inform employees how they can get it on their own.

The debate within the White House on this issue was, sources say, heated, and President Obama was legitimately torn. Panetta wasn't alone in his concerns. For months, Vice President Joe Biden and then-White House chief of staff Bill Daley argued internally against the rule, sources tell ABC News. Biden and Daley didn't think the rule was right on either the policy or the politics, sources said. Joshua Dubois, head of the Office of Faith Based and Neighborhood Partnerships, also expressed concern.

The policy was wrong, the two Catholic men, Biden and Daley, argued, saying that the Obama administration couldn't force religious charities to pay for something they think is a sin. Sources say that Biden and Daley in these internal debates emphasized the political fallout more so than the policy issue. Catholics are the ultimate swing voters, they argued. President Obama won the Catholic vote 54-46% in 2008, but he lost among white Catholics 47-53%, according to exit polls.

But Biden and Daley faced a strong group making the case for the rule within the administration - including Catholics such as senior adviser David Plouffe and Human Services Secretary Kathleen Sebelius, senior White House advisers Valerie Jarrett and Pete Rouse, and then-domestic policy council director Melody Barnes. Others outside the White House also pushed hard for the rule, including former White House communications director Anita Dunn, Senators Barbara Boxer, D-Calif. and Jeanne Shaheen, D-N.H., and Planned Parenthood Federation of America president Cecile Richards. (Some of the details of this internal division were first reported yesterday by Bloomberg's Mike Dorning and Margaret Talev.)

For these advocates, this issue was logical and based on science: birth control saves women's lives, reduces the number of unwanted pregnancies, and is a fundamental issue of a woman controlling her own health care. And the politics were in the long term good, they said. Even with the current controversy raging, many Democrats maintain that the voters they need to vote for Obama in November - young voters nationwide, women voters in battleground states such as Colorado, Virginia, and Pennsylvania - support the president's decision.

Those advocating for the rule argued that the Catholics likely to be most offended by this rule - those who attend mass at least once a week - voted for Sen. John McCain, R-Ariz., 59-41%. (Though sources say this tidbit was not discussed internally at the White House, it's interesting to note that President Obama narrowly won the Catholics who don't attend church regularly, 52-48%.)

The two sides couldn't even agree about what they were debating. In the fall, Richards brought in polling indicating that the American people overwhelmingly supported the birth control benefit in health insurance. She also highlighted statistics showing the overwhelming use of birth control.

The Vice President and others argued that this wouldn't be seen as an issue of contraception - it would be seen as an issue of religious liberty. They questioned the polling of the rule advocates, arguing that it didn't explain the issue in full, it ignored the question of what religious groups should have to pay for. And they argued that women voters for whom this was an important issue weren't likely to vote for Mitt Romney, who has drawn a strong anti-abortion line as a presidential candidate, saying he would end federal funding to Planned Parenthood and supporting a "personhood" amendment that defines life as beginning at the moment of fertilization.

Political hands disagreed with that interpretation. Cultural issues will play a bigger issue in the 2012 election than they did during the economic crisis of 2008, they said. Some of the suburban women up for grabs in this election, ones who are starting to feel more confident about the economy, can be firmly won over if they learned about this rule - if they also were told that President Obama supported an exemption for houses of worship while Romney opposes not only abortion but federal funding for contraception.

Some in the White House thought that the president's hands became tied when Sebelius issued the proposed rule in August; they would have preferred a delay so as to work out some sort of arrangement with religious charities and schools. The president was boxed in by this rule, they say; after the rule was issued, any discussion about expanding the exemption became a rallying cry for groups that support contraception and legal abortion, such as Planned Parenthood. When President Obama met with Archbishop Timothy Dolan, president of the U.S. Conference of Catholic Bishops, in November, discussing this topic as well as others, these groups sounded the alarm.

In addition to lobbying by Richards and Dunn, Rouse - a former Senate staffer so plugged in he has been called "the 101st Senator" - spent a great deal of time talking to Boxer, Shaheen, and other senators who felt strongly in support of the rule.

The president ultimately sided with the rule's advocates. He and Secretary Sebelius felt that the policy needed a way to treat religious universities, hospitals, and charities different than general employers, White House officials insist, which is why the Department of Human Services announced that the policy would not be fully implemented until August 2013, giving the administration and these groups more time to work on a policy that would alleviate most concerns.

The president wanted the decision about the rule to be announced before the State of the Union, so as not to step on his economic message. So much for that.

-Jake Tapper