As the federal deficit hits the $1 trillion mark, Democrats are attempting to avoid electoral fallout by approving an enforcement resolution instead of a full budget. By doing so, they disallow the use of budget reconciliation next year. Critics fear that the loss of this key legislative tactic may hammer the final nail into the coffin of a comprehensive jobs bill and other crucial legislative efforts.
The distinction between an enforcement resolution and a full budget is largely technical, but the crucial difference is that with the former approach, Democrats can no longer engage in reconciliation, under which debate on a budget bill is limited to twenty hours. This tactic, long seen as one of the most powerful tools that Democrats can use to pass controversial budget legislation, allows bills to pass with 51 votes in the Senate, as opposed to the usual 60 needed to overcome a filibuster.
Democrats’ aversion to voting “yes” on a budget that would add to the deficit seems to have overcome their desire to preserve the reconciliation option.
“Members looked at the budget and said, ‘We might need more deficit spending,'” said Jim Horney, the director of federal fiscal policy at the Center for Budget and Policy Priorities. “And anything you do to try to reduce those deficits would necessarily include policies that might not be popular – tax increases, cuts in major programs.” The House leadership judged the enforcement resolution as less of a political risk for conservative Democrats who face difficult reelection campaigns in the fall.
Gary Therkildsen, a federal fiscal policy analyst with OMB Watch, which seeks to keep oversight of the Office of Management and Budget (OMB), said, “Congress is literally paralyzed by [the fear of] deficits right now.”
Some notable examples of bills killed or delayed due to defecit worries are the administration-backed jobs bill, a federal extension of unemployment benefits and federal funding for Medicaid.
Taking reconciliation off the table “basically dims the chances of the Democrats being able to put through any substantive policy that they really like that would be controversial or wouldn’t garner any Republican support,” Therkildsen continued.
Stimulus and job measures in particular would have been prime candidates for the reconciliation process.
Attempts to pass a jobs bill in early June were stalled due to concerns over the deficit. The measure, which would have extended unemployment benefits through November, extended subsidies for municipal bonds and provided $24 billion in aid to state governments, was blocked by all the Republicans in the Senate, 11 conservative Democrats and Senator Joe Lieberman (I-Connecticut).
While negotiating cuts in the bill to reduce the projected $80 billion it would have added to the deficit, lawmakers decided to end a 65 percent subsidy created last year to help the jobless buy health insurance.
The week lawmakers failed to extend expiring unemployment benefits, the Labor Department estimated that more than 900,000 unemployed Americans would see their unemployment aid cut off. Physicians were also expected to be hit with a 21 percent cut in their Medicare reimbursements while lawmakers debated the legislation.
Some lawmakers viewed reconciliation as a last hope to push through such contentious measures.
“What we want to do is end up with legislation that is going to create a substantial number of jobs,” Sen. Bernie Sanders (I-Vermont) told reporters. “We don’t have 60 votes to do that. We could do that through majority rule, 51 votes.”
An additional challenge to passing any legislation, Therkildsen noted, is that “bills that deal with finance normally lean to the right anyway. Conservative Democrats – any number of those Senators in the Democratic caucus – would vote against their caucus several times.”
Horney, from the Center for Budget and Policy Priorities, says this may be a sign that the Democrats have not committed to any other significant legislation such as the health care bill, for which reconciliation was kept in last year’s budget.
“Even if they had gotten a full budget, there was no agreement that they would want to have reconciliation instructions for any big, significant legislation,” Horney said, noting that Democrats had promised not to move either cap-and-trade or a carbon tax via reconciliation. “There was just no consensus among Democrats about what to do here.”
Therkildsen says the inability to use the tool of reconciliation could have significant consequences, not only for budget-related legislation like the jobs bill but also for immigration or climate-change legislation.
“You can look at what the effect of that will be further down the road” for Democrats tackling “all the issues that are divisive between Republicans and Democrats,” he said. Their lessened ability to act might mean a “do-nothing” Congress so unpopular with voters that it would stand little chance of the Democrats maintaining a hold in the White House.
Despite their efforts to avoid criticism, Democrats will most likely face heavy disapproval both now and down the line, according to Therkildsen.
“They are going to face consequences either way,” said Therkildsen. “They chose short-term political expediency over the benefits that could have been included down the road.”
“Congress is literally caught between a rock and a hard place, and they decided to go with the rock instead of the hard place,” he said.
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