With Unemployment In Double-Digits, Congress Set To Clash On Debt And Deficits

If and when health care passes, the White House and the Congress will be tugged in two seemingly different directions. On the one hand, with unemployment in the double digits (and an election around the corner), Democrats will have to do something about jobs--and that means another spending bill. The House has already begun its work and the Senate will have to follow suit if the economy is to improve, and if Democrats want to avoid a political blood bath. But the White House, and a bipartisan bloc in the Senate, have made very clear that they'll pay equal, or greater, attention to addressing the country's perilous fiscal situation. And that could touch off yet another tug of war between liberal Democrats and centrist legislators over the country's priorities.

Last month, liberals were taken by surprise when a number of senators--including several Democrats--issued a chilling ultimatum: let us tinker with entitlement programs and taxes, they said, or we'll block raising the amount of debt the government can take on. According to Sen. Kent Conrad (D-ND), 11 or 12 senators have said they will not vote for must-pass legislation to raise the country's debt ceiling unless they are authorized to create an external commission with extraordinary power over Medicare, Social Security and so on.

This week, Conrad and several of his supporters unveiled their proposal, and it turns out, liberals may have had less to worry about than it seemed at first blush. Not because the members of the commission would like to be gentle to American welfare programs, but because its authors seem to have set it up to fail.

The commission's recommendations will be far from set in stone. They'll have to receive the support of three-fourths of the task force and three-fifths of both chambers of Congress in order to become law.

So even if Conrad's creates his committee, he doesn't get carte blanche with the nation's budget. But the fact is, an influential bloc in the Senate sees reducing long term budget deficits as the issue Congress needs to address.

And the White House agrees, at least rhetorically. Obama has made it known that getting the debt under control is a key medium-to long-term priority for him, and an immediate rhetorical one.

The good news for those who think the top priority ought to be jobs, there is some good news. Recently, Obama showed some sympathy to the liberal view--and the view of many leading economists--that jobs should come before deficits. "The single most important thing we could do right now for deficit reduction is to spark strong economic growth, which means that people who've got jobs are paying taxes, and businesses that are making profits have taxes, are paying taxes."

We understand that in this administration. That's not always the dialogue that's going on out there in public, and we're going to have to do a better job of educating the public on that.

The last thing we would want to do in the midst of a -- what is a weak recovery, is us to essentially take more money out of the system either by raising taxes or by drastically slashing spending. And frankly, because state and local governments generally don't have the capacity to engage in deficit spending, some of that obligation falls on the federal government.

And in recent days, House Speaker Nancy Pelosi has discussed the possibility of enacting a program that would provide near-term stimulus, and long-term pay-fors, making it deficit neutral in the CBO's budget window. At her press conference yesterday, she said, "we hope next week that in our final appropriations bill we will be able to have a jobs piece that will create jobs in the near term to address the needs of those who are unemployed and do so in a fiscally sound way."

But the Democratic party is far from united on this score. The Senate's still immersed in health care. And if the appetite in the Senate after health care is for a counter-stimulative program of tax increases and spending cuts, it's hard to see how a significant jobs package can pass. That's a key tensions to keep an eye out for in the weeks ahead.