Congress returns, and so does the partisan budget war
Reporting from Washington and Detroit — As Congress returns to work this week, Republicans and President Obama are bracing for a new round in the budget battles that have rattled Washington all year and, at their heart, pose a simple question: What kind of government do Americans want?
The nation’s finances are on an unsustainable course, with the federal government spending more than it takes in — like a family budget out of whack. Revenues simply do not cover the costs of running Medicare, defense and all the other programs Americans have come to expect from Washington. Something has to give.
Against this backdrop, Obama is readying a jobs package to put unemployed Americans back to work and jump-start the sluggish economy. It may cost money or require cuts elsewhere. And it is expected to receive a cool reception when he presents it Thursday to a joint session of Congress, as Republicans want to cut government and spending, not increase them, and see little value in Washington efforts to grow the economy.
These differing views of the proper role of government have vexed Washington — and the public — for decades.
“We as a society will either have to pay more for our government, accept less in government services and benefits, or both,” Douglas W. Elmendorf, the director of the nonpartisan Congressional Budget Office, wrote recently on his blog. “For many people, none of those choices is appealing — but they cannot be avoided for very long.”
In his Labor Day speech in Detroit on Monday, Obama pledged to hold Republicans accountable if they fail to support his job-creation plan filled with “bipartisan ideas.”
“We’re going to see if congressional Republicans will put country before party,” Obama said of his initiative. “We’ll give them a plan, and then we’ll say, ‘Do you want to create jobs?’”
Obama held back specifics as he addressed union activists, many of whom want to see him propose a bold spending plan that would create jobs and spur the economy. The president suggested he would call for road and bridge construction but did not hint at its scope or cost. He also all but promised to propose extension of the payroll tax break, which benefits the middle class.
The budget debates this fall will drive the political conversation into the 2012 presidential campaign and help define the government that emerges.
Rep. Eric Cantor (R-Va.), the majority leader, foreshadowed the coming debate when he said this summer: “We understand the election battle in November 2012 is going to be much about the future of how this country runs its entitlement programs and constructs its safety net for those who need it — and, frankly, not for those who don’t.”
Rep. Emanuel Cleaver II (D-Mo.), the chairman of the Congressional Black Caucus, also cast the debate as reflecting fundamental principles about the role of government.
“This new theology of government is we have no responsibility to help people out of anything,” Cleaver said in an interview. “That’s a fundamental change — that’s a U-turn in the historic role the U.S. government has played. If that’s new normal in the United States, then all of the sacrifices of the previous generations are for naught because that’s not the America we’re accustomed to.”
Cleaver, Cantor and other members of Congress will return to a political and economic landscape largely unchanged from the one they left earlier this summer, when the debt ceiling standoff consumed Washington and both sides walked away politically wounded as the nation’s credit rating was downgraded for the first time in history.
The economy continues to struggle. Unemployment, at 9.1%, remains stubbornly high. Americans are reluctant to spend as household wealth has deteriorated with depressed home prices and fluctuating financial markets.
Americans’ approval of Congress has fallen to just over 10%, polls show, but neither party is showing signs of softening hardened positions. Republicans are resisting new taxes on those earning beyond $250,000, as Obama proposes to bring down deficits; Democrats are unwilling to rein in the spiraling costs of Medicare and other entitlements without new revenue.
Obama is considering a two-pronged strategy, offering short-term job creation remedies — possibly a package that would include business tax credits for new hires, continuation of the payroll tax break that is putting an extra $1,000 in workers’ paychecks this year before it expires in December, and school renovation projects to help get Americans back to work.
The president has also called on the new bipartisan “super committee” on deficit reduction, which is convening its first meeting this month, to go beyond its goal of finding $1.5 trillion in savings by Thanksgiving. Obama is urging a mix of new taxes on the wealthy and corporations alongside federal spending cuts to curb annual deficits.
Economists generally support such an approach, warning that a sudden reduction in federal spending could harm the fragile economy. Running deficits risks the nation’s long-term fiscal health, economists say, but going cold turkey would cause immediate pain. A mixed approach to taxes and spending is warranted for the long run, budget experts advise.
So far, congressional Republicans have panned such an approach, especially in the GOP-led House, where the new generation of “tea party”-aligned conservatives fuels the majority.
Emboldened by the debt ceiling debate, Republicans are pressing for more spending cuts, new tax breaks and regulatory relief to spur economic growth.
Yet within their ranks, GOP leaders face a restive flank that is eager to launch its first fall battle, over the budget for the new fiscal year, which begins Oct. 1. Conservative Republicans want steeper cuts than were agreed to as part of the summer debt ceiling deal. A standoff could lead to the threat of a government shutdown.
Yet, spending cuts alone would not balance the books. Neither would new tax revenue, which would require tax rates on the wealthy to skyrocket to politically unfeasible levels.
“All on the tax side isn’t going to happen; all on the spending side is going to require draconian cuts,” said Roberton Williams, a tax expert at the Urban Institute-Brookings Institution Tax Policy Center.
“What’s the right combination,” he said, “is the question.”
Mascaro reported from Washington and Parsons from Detroit.
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