Yesterday, during a conference call with economics bloggers, House Speaker Nancy Pelosi offered a snapshot of one way she and Democratic leaders are considering structuring a new jobs bill to avoid the political and substantive problem of further increasing the deficit.

"We are never going to reduce the deficit until we create jobs that bring revenue into the treasury, and stimulate the economy until we have growth," Pelosi said.
"We have to shed any weakness that anyone might have about not wanting confrontation on the subject out of fear that we will be labeled not sensitive to the deficit. For example, we can frontload the infrastructure bill in the first couple of years to create as many jobs as possible and pay for it over the five-year period. It isn't an either-or situation. It's a question of how we do this."

The theory is simple. Stimulus requires near term deficit spending that ultimately has to be paid back down the line when the economy improves. However, the stimulus bill that Congress passed earlier this year punted on how to pay for the funds. A new jobs bill could address that problem, without stifling the stimulus itself, by including pay-fors that don't kick in for a year or more, when they won't counteract the stimulative effects, and when the government will be taking in more tax revenue anyhow.

It also could solve a political problem with Democratic fiscal hawks, who want jobs legislation, but don't want to further increase the deficit. Ultimately they'll need to be placated. Republicans will almost certainly oppose any major Democratic initiative--particularly one involving new spending--and Senate Democrats will have to be unanimous, or near unanimous in their support for a jobs bill if it's to pass.