A Path to Economic Recovery

When the chairman of the Senate Budget Committee, Kent Conrad, a Democrat from North Dakota and Judd Gregg, the senior Republican from New Hampshire on the Senate Budget Committee write a column together in the Washington Post it gets noticed; and for the reader, it offers a chance to assess the legislative responsibilities and goals they face. The point of the two senators' missive is to announce their agreement that: "When Congress takes up an economic recovery package this month, it should be linked to a bipartisan commitment to begin addressing the long-term budget challenges confronting our nation." Both men realize that the economic recovery package presents both opportunity and a need for diligence: "Washington must act quickly to respond to the economic crisis. More than 2 million jobs have been lost in the past year; businesses are struggling; credit markets have been virtually frozen; home values have plummeted; and retirement savings have been wiped out. Our first priority must be to reverse this decline and restore economic growth. We recognize that enacting an economic recovery package will involve a worsening of our near-term budget picture. In this case, more borrowing by the government is reasonable and understandable, as long as it is for proposals that will truly help spur economic activity. But we also face a long-term budget crisis of unprecedented proportions. The leading edge of the baby-boom generation began retiring in 2008. The combination of this demographic tidal wave and the exploding cost of health care and inadequate government revenue will swamp federal finances." The two leaders recognize that any attempt to provide relief to the economy carries with it a "need to simultaneously signal to the markets that we are serious about restoring fiscal discipline and putting our budget back on a sound long-term path. Linking these short-term and long-term plans is the best way to instill global confidence in the U.S. financial system." Conrad and Judd are in agreement with President-elect Barack Obama's commitment "that "part and parcel" of our economic recovery package should be a "plan for a sustainable fiscal situation long term." That is exactly what we are calling for." And in order to achieve Obama's goals, the senators propose swift action to control "the cost curves of entitlement programs that will otherwise overwhelm our budget, as well as make needed reforms to our out-of-date and inefficient tax code." The greatest threat to success in the senators' opinions would occur with the length of time it takes for the passage of the legislation which would leave fewer palatable choices and determine the extent to which: "the more draconian our choices will become and the more likely they are to be forced upon us." So the two leaders of the Senate Budget Committee seek the formation of a "bipartisan fiscal task force" that "would establish a process to confront the long-term fiscal imbalance. It would consist of a bipartisan panel of lawmakers and administration officials tasked with developing a legislative proposal to steer our budget back on course. Everything, including spending and revenue, would be on the table." The senators seek a form of bipartisanship focused on "assembling the best minds and the best ideas from across the political spectrum. This spirit of bipartisanship is crucial. We cannot afford to return to the acrimony that has stymied past efforts to address our long-term budget issues." The dire consequences of our economic recession have forged an agreement between the two ranking members of the Senate Budget Committee founded upon hopeful but necessary proposals for co-operation. Only their ability to remain true to their plans for bipartisanship and avoid partisan rancor and obfuscation will determine their success as a committee, a Congress and a desperate but hopeful nation that is staring straight into the darkness of an impending economic Depression.

Obama and Congressional Democrats Contemplate Expanding Help to Jobless Americans

JACKIE CALMES and CARL HULSE report in the New York Times that: “President-elect Barack Obama and Congressional Democrats are considering major expansions of government-assisted health care insurance and unemployment compensation as they begin intensive work this week on a two-year economic recovery package. One proposal, as described by Democratic advisers, would extend unemployment compensation to part-time workers, an idea that Congressional Republicans have blocked in the past. Other policy changes would subsidize employers’ expenses for temporarily continuing health insurance coverage to laid-off and retired workers and their dependents, as mandated under a 22-year-old federal law known as Cobra, and allow workers who lose jobs that did not come with insurance benefits to be eligible, for the first time, to apply for Medicaid coverage.” In his weekly YouTube and radio address on Saturday Obama explained the need for swift action. “Economists from across the political spectrum agree that if we don’t act swiftly and boldly,” Mr. Obama said, “we could see a much deeper economic downturn that could lead to double digit unemployment and the American dream slipping further and further out of reach.” In describing his economic plan, Obama said he intends to use government spending and tax incentives to increase renewable energy production; prioritize energy efficient government buildings; make infrastructure repairs and improvements; and bring modernized methods to health care and he pledged to “put people back to work today and reduce our dependence on foreign oil tomorrow.” Obama also intends to “reshape the economy, especially for the good of low-wage and middle-class workers.” One of Obama’s goals is “that he would seek money to develop a national energy grid to harness and distribute power from wind, water and other local alternative energy sources.” Congressional Democrats plan to be very aggressive in keeping “...the emerging legislation free of the pork-barrel projects that could invite criticism from Republicans and foster public skepticism.” House leadership has pledged that: “Every dollar will have to be justified as to whether it is targeted to our economy,” Speaker Nancy Pelosi, Democrat of California, said last week. “This is not a bill that will be an excuse to put things in that otherwise might not be justified.” Democrats are under extreme pressure to produce meaningful results without overspending. “...officials said the size of the proposed two-year stimulus, equivalent to nearly a year of federal discretionary spending, had tested imaginations both in Congress and the Obama camp. Aides and advisers are struggling to identify enough projects that would meet Mr. Obama’s criteria that they be truly stimulative, create jobs and not be open to being branded as pork. This has really forced people to think outside the box,” one aide on the House Appropriations Committee said, “because this is more money than anybody expected to be spending.” There have also been: “Tensions on the opposite side involve demands from fiscally conservative Blue Dog Democrats in the House and from some Senate Democrats — notably the Senate Budget Committee chairman, Kent Conrad of North Dakota — for provisions imposing budgetary controls on future spending and tax cuts for the long-term health of the economy. According to both sides, Obama officials have assured the fiscal conservatives that Mr. Obama would propose long-term controls in his first five-year budget, which is due by late February.” Conservative democrats “support deficit spending to jump-start the economy” but they also make the case that proper planning must be in place to retire the creation of increased debt. An idea that is making its way among Democrats is the creation of “a bipartisan commission to propose limits on future benefits for Social Security, Medicare and Medicaid, the entitlement programs whose projected future costs would squeeze out all other spending; a nonpartisan entity to designate infrastructure projects, like roads and public buildings, based on merit, and federal pay-as-you-go rules requiring offsetting savings for spending increases and new tax cuts.”