With Deficit Worries, Democrats Get Spooked

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Bebeto Matthews / AP

Job seekers wait in line to see potential employers at the Diversity Job Fair in New York City on June 2, 2010

For decades, few issues in Washington have symbolized the disconnect between politicians' bold words and timid actions more than budget deficits. Politicians on both sides of the aisle rarely missed an opportunity to opine ominously about the dangers of out-of-control spending, all the while doing precious little to actually bring it under control.

But lately, it seems, that political free ride may be coming to an end.

Credit the Tea Party movement and voter weariness at the litany of bailouts — cars, banks, small businesses, the unemployed, the uninsured, the guys who makes windmills — for making deficits suddenly a very real issue. In a Gallup poll this month voters ranked the deficit as as much of a threat as terrorism. Politicians are balking at what in years past would have been routine legislation, leaving the Senate facing a backlog of bills including a $140 billion measure to extend unemployment benefits and business tax breaks and prevent Medicare cuts on doctor's fees on the floor this week; the $59 billion war and disaster supplemental; President Obama's request for $50 billion in aid for the states; and the annual budget. Nothing is getting through as Republicans dig in their heels — even at the expense of natural allies such as doctors, business and soldiers — and moderate Democrats worried about their re-election campaigns increasingly defect. "Deficit concerns have risen very substantially," says Senate Budget Committee chairman Kent Conrad, a North Dakota Democrat. "Members are concerned, their constituents are concerned. And they should be because on the medium term we're on a course that's unsustainable."

A vote to prevent a filibuster on the $140 billion mixed bag of legislation is expected on Wednesday, but even before that, Dems have pared down the bill several times. They first tried for an $89 billion, five-year fix of Medicare doctors' fees; the reimbursement formula has been broken for a decade, and annual fixes have been required to avoid massive cuts. That was then bartered down to a $65 billion, three-year solution and then, finally, a $23 billion, 19-month extension as Republicans balked at the cost. The American Medical Association, which has consistently counted on GOP allies, is more than upset. "The mood of my colleagues is one of frustration and outrage," Dr. J. James Rohack, the AMA's president, told reporters on Monday. The Senate's "failure to avert a 21% cut has real-world consequences for seniors, the disabled, military families — and the physicians who care for them."

With current funding for the docs' fix set to expire at the end of the week and unemployment starting to run out at the end of the month, Democrats are also looking at trimming unemployment benefits in hopes of a deal. Senator Jon Tester, a Montana Democrat, on Tuesday proposed cutting $25 a week in extra unemployment compensation, which would reduce the overall cost of the bill by $6 billion. But even that cut may not be enough. "There's $80 billion in this bill that's not offset," says Senator Ben Nelson, a Nebraska Democrat who says he's not inclined to vote for the bill unless the nonemergency provisions — by his definition almost everything save flood aid — are paid for. "If you want to get out of the hole, the old adage is, You've got to stop digging. So we're digging the hole deeper."

It's not just domestic spending that is being threatened by Capitol Hill's newfound frugality. Congress is also weighing a war supplemental-spending bill for Afghanistan just as a growing number of Democrats are beginning to question the human and financial cost of a war that seems to have no end in sight — and be perpetually hampered by rampant government corruption. While the Administration has always ultimately prevailed in votes on war spending, it's the fraying support from moderate Democrats that is beginning to worry leaders. Even if Republicans don't have that much credibility on the issue — they passed seven mostly unfunded emergency war measures under President Bush with few complaints — their cries of runaway government spending, mostly aimed at the disaster funds in this case, are starting to have an effect. Odds are still good the measure will pass, but not without a certain amount of discomfort for Dems across the political spectrum.

The concerns over spending have proved to be a point of friction between Democrats and the White House. Some members of the party are particularly upset with President Obama for sending a rare Saturday letter to congressional leaders requesting $50 billion to help states prevent layoffs of firefighters, teachers and police. Many congressional Democrats had wanted to tie this funding to the war supplemental, but the Administration refused, even going so far as to ask Senator Tom Harkin, an Iowa Democrat, to not offer an amendment seeking to stave off teacher furloughs to the war bill. "I think that something will eventually be enacted but it may be trimmed back because of concerns about the deficit," says Senator Evan Bayh, an Indiana Democrat. Not everyone's so sure: Nelson went even further, saying he wouldn't vote for any bill that's not fully offset — Obama made no suggestions on how to achieve that — and Conrad flatly predicted that the $50 billion request couldn't make it through the Senate.

Democrats also have yet to put out an annual budget — something that given the lateness of the year looks less and less likely. "I don't think the Democrats want to admit to the American people how profligate they're being with spending around here. They're running a $1.4 trillion deficit this year. They've got trillion-dollar deficits as far as the eye can see," says Senator Judd Gregg of New Hampshire, the top Republican on the Budget Committee. "They just don't want to admit it to the American people by bringing out a budget which they're supposed to do by law but they're not going to do it." Conrad says he and House Budget chairman John Spratt are still speaking of putting together a budget — a nonbinding resolution that outlines Democratic priorities for the year — but the appropriations process for the next fiscal year has already begun.

Democrats argue, as do many economists, that this final surge in spending is necessary in order to protect against a double-dip recession, which would end up impacting the deficit in much the same way. "Yes, concerns about the deficit are having an effect on legislation. People want to take a substantial change in direction and to begin to focus only on deficit reduction," says Senator Bob Casey, a Pennsylvania Democrat. "I think there's a real danger in that because if we start to go to all deficit reduction before the recovery is complete, it's going to hurt the economy." Unfortunately for the majority, fewer and fewer Democrats feel this way.