Watching the House of Representatives vote on the Wall Street bailout plan Monday from the press balcony, I happened to be standing next to a House employee one of the wizened guys who's been there for years working the lights and audio for the chamber. As the vote stretched out and looked increasingly doomed, he nudged me, "Look at the center aisle, those Blue Dogs, when they need votes that's who they go courting."
As it turned out, 25 of the 47 moderate but fiscally conservative Democrats, more worried about the economic crisis than the price tag of the rescue package, voted for the measure, which went down to defeat after two-thirds of House Republicans voted against it. And when the House takes up the latest compromise version of the bill that the Senate overwhelmingly passed on Wednesday, those same Blue Dogs will once again be the center of attention.
In trying to woo wavering Republicans with a revised version of the bill, House Speaker Nancy Pelosi and her Senate counterparts risked souring the moderate Democrats she can't afford to lose. The bill the Senate passed included a $100 billion extension of unrelated tax benefits provisions like tax breaks for business R&D and alternative energy and money to prevent more Americans from being hit by the Alternative Minimum Tax that the Blue Dogs have fought for years. This increasingly powerful bunch of Democrats isn't opposed to tax cuts, but they are against passing them without offsetting the costs with spending cuts.
Not surprisingly, the Blue Dogs aren't too happy about being put in such an awkward position. "I am so thoroughly disgusted with the Senate this morning," said Rep. John Tanner, chairman of the Blue Dogs, who originally voted for the bailout but now is undecided on the package. "It is just breathtakingly hypocritical for them, particularly the minority leader in the Senate, to claim that this is their finest hour and they're sending us the bill here and we've got to make some tough decisions."
When Tanner talks about financial crises, he means not just the credit crunch on Wall Street but the massive deficits breaking the back of the federal government. For Blue Dogs, if there's a silver lining to the crisis that has shaken the financial markets, it's that it has highlighted problems they have been warning about for several years; their gripe is that the supposed solution now includes the same out-of-control pork barrel spending that they have been decrying. "The way I see it, the bailout forced us to go into the flooded basement and pump out the water," says Rep. Jim Cooper, a Tennessee Blue Dog, "and while we're down there we see there's termites everywhere."
Cooper says he plans to vote for the measure, and House Majority Leader Steny Hoyer, who has always stood behind the Blue Dogs and isn't happy about the Senate's maneuver, will likely sign on reluctantly as well. But even with Barack Obama calling some of the Blue Dogs to get their support, not all of them have been convinced. "I don't believe this bill is the right medicine to cure the disease," says Rep. Jim Matheson, a Utah Democrat who co-chairs the Blue Dogs. "The Senate version is even worse. It's larded up with more debt and doesn't include long-term reform language that would prevent this kind of crisis from happening again." Matheson, who voted against the first bill, remains a solid no.
Many of their Republican counterparts are equally ambivalent, even with the tax sweeteners and an increase in the maximum amount of bank deposits insured by the FDIC, from $100,000 to $250,000. But several influential conservative Republicans who oppposed the first bill, like John Shaddeg of Arizona and Zach Wamp of Tennessee, have signaled that they will reluctantly support the new Senate version. Still, the vote promises to be a nail-biter, and by Thursday evening, the White House and Congressional leaders were still not convinced that they had secured the additional 12 votes to guarantee passage. With the outcome still uncertain, the business community has launched a full-court press of every member of Congress, reminding fence sitters like the Blue Dogs of provisions in the bill help their parts of the country. "Some of them are from states that are affected by the state sales tax deduction [a measure that makes sure the seven states without income taxes do not lose money under the federal code], others come from Midwestern states affected by floods and need the disaster relief in the package. Still others live in areas affected by Hurricane Ike," says Bruce Josten, a senior vice president at the U.S. Chamber of Commerce, which represents three million U.S. businesses. "I think they're going to carefully going have to noodle out how they're going to vote on this."
Their importance to the bailout measure is a reflection of the Blue Dogs' growing clout within the Democratic Party. Decades ago, when the South was thick with Democrats, there was a saying that Southern Dems were so loyal they're rather vote for a yellow dog than a Republican. As the party moved to the left, forcing moderates like Billy Tauzin and Jimmy Hayes (both former Blue Dog leaders) to switch parties, one member joked that the remaining moderates had been choked blue by the left thus rechristening the group Blue Dogs. For a while their numbers dwindled but in recent years, they've seen a resurgence, gaining 11 members in the 2006 elections and another two in special elections earlier this year. That has boosted their power, and they've been instrumental in passing a series of balanced spending bills over the past two years, as well as a rule that requires that all new spending is offset by cuts.
Former Texas Rep. Charlie Stenholm, once a leading Blue Dog, says if Democrats want to maintain and grow their majority, they must take the Blue Dogs' fiscal conservative demands seriously. "If they don't you will see one of the largest turnovers of Congress in 2010," Stenholm says. "Blue Dogs that do not vote for fiscal responsibility, they'll be held accountable in their districts. Blue Dogs didn't get elected by beating liberal Democrats, they got elected by beating moderate and conservative Republicans, so those seats will flip if constituents aren't satisfied."
All of which could lead to some major battles next year when the Blue Dogs try to force the next President, whoever he is, to pay for whatever new programs or tax cuts he is trying to pass. "Nothing will pass without a majority of Blue Dogs voting for it, that's true on this vote," Stenholm says. And if they do help pass this bill, the Blue Dogs will be sure to remind Nancy Pelosi of it next year.