Centrists vs. Pelosi: Blue Dog Democrats beginning to show spending fatigue

The reservoir of Democratic support for legislation to stimulate the economy — while adding to the deficit — is drying up.

Already faced with what many economists are labeling a jobless recovery, Democratic leaders on Capitol Hill are considering passing more measures to lower the nation’s highest unemployment rate in 26 years.

{mosads}Most of the fixes Democrats are eyeing would add to the budget deficit, which was recently estimated at $1.4 trillion.

But fiscally conservative Blue Dog Democrats and the Democratic freshman class of 2008 are raising objections. Some members of these two factions reluctantly went along with the $787 billion stimulus package earlier this year, but they are not ready for a sequel.

“I think we have just got to get serious about the deficit,” said Rep. Gerry Connolly (D-Va.), the president of the class of freshman Democrats. “I would have to really be persuaded of a dire situation and one that’s getting worse, frankly, to have any enthusiasm for a second stimulus.”

Rep. Baron Hill (D-Ind.), a co-chairman of the 52-member Blue Dog Coalition, said he would have to hear a “very compelling” justification for further adding to the deficit, even for the sake of fostering more job growth.

“My constituents, I think, have had it with spending,” Hill said. “And I concur with their sentiments.”

Republicans are targeting Hill’s seat in the 2010 cycle.

While the ingredients for another stimulus have not been finalized, House Speaker Nancy Pelosi (D-Calif.) on Wednesday made two things clear: Additional stimulus measures are needed, and Democrats will add to the deficit to pay for them.

Pelosi held a forum with top House Democrats and a team of economists whom Democratic leaders have entrusted with guiding them toward the best legislative responses to the recession.

Each of the economists who spoke to reporters following the session said everyone in the room had signed off on a strategy of temporarily ignoring the budget deficit for the sake of economic recovery.

“Despite the fact that we’re looking at an absolutely horrendous long-term fiscal problem… most of us around the table believe that at least a modest increase in the deficit, targeted very strongly on job creation, not a scattershot … would be appropriate,” said Alan Blinder, a former Federal Reserve and Council of Economic Advisers official during the Clinton administration. “I think this is a case where it’s both good policy and good politics.”

Hill said the Blue Dogs have not talked formally about their collective approach to further economic patches embraced by the White House, ranging from unemployment insurance extensions to $13 billion worth of one-time Social Security checks.

But the Blue Dog leader said there is far less appetite among the group for stimulus-based deficit spending than there was in February, when 10 Blue Dogs rejected the final $787 billion stimulus.

“The Blue Dogs are going to have to speak for themselves on that particular issue because we haven’t talked about it in our caucus,” Hill said. “But knowing many of my Blue Dogs, I think they would probably have the same views.”

{mosads}Rep. Jim Matheson (D-Utah), another Blue Dog co-chairman, and Connolly both spoke about the greater level of public anxiety about the deficit, which they believe is catching up with disquiet about the economy and unemployment.

“There’s a growing concern about the deficit spending that we’ve encountered just in this calendar year,” Matheson said. “We have to be very careful about the way we’re running up our debt right now.”

Connolly agreed, adding that whatever Democratic consensus existed in February doesn’t necessarily exist now.

Borrowing to fund the $787 billion stimulus bill “was appropriate” earlier this year, Connolly said. “But it’s now October, the economy is growing … and I think we have to now reset the balance between needed stimulus and needed fiscal restraint.”

Many of the freshmen in Connolly’s class are vulnerable to GOP charges that they have helped balloon the deficit while creating fewer jobs than Democrats promised.

The White House and congressional leaders have argued that the stimulus prevented a Great Depression, claiming it saved many jobs. But some have acknowledged that the stimulus did not create as many jobs as they predicted.

Pelosi said she is considering a range of stimulus ideas, including an “array of initiatives” from the Appropriations Committee.

Despite her openness to another spending bill and her admission that controlling the deficit is a secondary priority, Pelosi’s aides maintain that Democrats are approaching job creation in a fiscally responsible way.

“[Wednesday’s] meeting with leading economists was critical as Congress formulates fiscally sound and economically effective policies to help create jobs and grow our economy,” Pelosi spokesman Nadeam Elshami said.

Meanwhile, polls show that Republicans have yet to rid themselves of the fiscally reckless reputation they earned during their 1995–2006 reign over Congress, but they continue to believe that Democrats are now just as vulnerable.

“The deficit is a bill that we pass to our children and grandchildren in the form of higher taxes, slower economic growth, less freedom and a lower standard of living,” said Michael Steel, spokesman for House Republican Leader John Boehner (Ohio). “Anyone who isn’t deeply concerned about it is living in La-La Land.”