House passes downsized jobs bill

Democrats narrowly won House approval Friday of a nearly $90 billion jobs and tax package, capping days of turmoil that split the party and called into question its ability to effectively lead on budget and economic issues.


For the once activist House, the changed mood is quite extraordinary as if many members want only to hunker down and wait out November’s elections—still five months away. Going into Memorial Day, the budget process has all but collapsed, and an emergency war funding bill—requested in February—has yet to be even considered by the House Appropriations Committee.


The scaled-back jobs package, adopted 215-204, is roughly half of what had been envisioned just a week ago. And the internal divisions—and resulting delays—killed any chance of Congress completing action before hundreds of thousands of workers begin to lose their jobless benefits June 2.


The Senate left early for the holiday recess, meaning a June 1 deadline threatening Medicare payments to physicians will also go unmet. On a second 245-171 vote Friday, the House approved a $22.9 billion patch to forestall this reduction through 2011, but here too, nothing can be enacted until the Senate returns June 7.


The numbers are severe. The National Employment Law Project estimates that 340,000 workers will be impacted early by the disruption in jobless benefits; if no solution is found, a total of 1.2 million could be impacted by the end of June. For physicians, the threatened Medicare cut will begin to be felt by mid-month and means a 21% reduction under the erratic formula that now governs reimbursements.


Nonetheless, the costs also are real, and the joint House-Senate Democratic leadership—which had banked on using these same deadlines to force action— badly underestimated the fear in their caucuses over deficits and spending.


In similar circumstances last year, the dire economy gave more political cover to Barack Obama’s big-spending recovery plan which passed easily with only seven Democratic defections. Sixteen months later the European debt crisis and jittery markets make headlines; even as Democrats fear a double dip recession before November, they can’t come together behind a plan.


“We negotiated to get what we could get,” insisted a House leadership aide. “You put a marker down so that people can respond to it. But it’s the consensus building is why we win our votes,” Speaker Nancy Pelosi (D—Cal.) told reporters later. But 34 Democrats on the left and right opposed the end-product and the fact that the bill fell short of 218 votes will make it that much harder to move forward in the Senate.


The often intense talks got little attention in the national press, pushed out of sight by bigger events, like the oil spill disaster in the Gulf. But in the absence of any budget debate this year, this was very much a proxy test of what the party could do.


“No bill seems easy and this wasn’t. But it was absolutely vital,” said House Ways and Means Committee Chairman Sander Levin (D—Mich.).


Still, labor allies were infuriated Thursday night when the decision was made to jettison $24 billion in aid to cash-strapped states to help governors maintain Medicaid services. Government assistance to help the unemployed keep their health insurance was also a casualty, even as the leadership gave up about $1 billion in revenues by moving back to January 2011 the effective date for tax reforms opposed by powerful private equity and venture capital partnerships.


The long term deficit impact of the bill—about $31 billion—stems from a six -month emergency extension of jobless benefits for the long term unemployed through Nov. 30. When the Medicare “doc-fix” is added, the red ink grows to $54 billion drawing the ire of Republicans.


“if you want to walk a $54.2 billion deficit increasing, tax-hiking, job-killing plank, vote yes,” taunted Michigan Rep. Dave Camp, the ranking Republican on the Ways and Means panel. “Grandson of stimulus is on the floor,” added Indiana Rep. Mike Pence, chairman of the party’s conference and No. 3 in the leadership. “Why don’t we try something completely different like fiscal discipline in Washington.”


“Just say no is not going to work forever,” countered Rep, Charles Rangel (D—N.Y.), a senior Democratic tax writer. And if Republicans want new ideas, Democrats would argue that their bill breaks new ground with a self-contained $58 billion package of revenue and spending offsets that pays for more than $30 billion in tax cut extenders as well as infrastructure investments and a $1 billion summer jobs program.


It is one of the most aggressive examples yet of the restored “pay-go” rules that were used by the Clinton Administration in the 90’s. And much as the tax provisions have angered many business interests, Democrats see them as part of their “economic justice” platform going into November.


“This bill creates jobs and it pays for the creation of those jobs by saying those who outsource our jobs can’t get off the hook and have to pay their fair share of taxes,” said Rep. Robert Andrews (D—N.J.), citing new tighter rules for the Foreign Tax Credit. “Now I know this discomforts some on the minority side. I know it goes against their philosophy that whatever corporate America does must be OK. …Those days are ending.”



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