Dems struggle to find deficit solutions

House Democrats are struggling to come up with legislative solutions to the nation’s budget deficit, despite pledging that a return to fiscal discipline would be a top priority after the healthcare debate.

Along with creating jobs, looking at the “fiscal balance” of the country is one of the two major items the House will focus on, Majority Leader Steny Hoyer (D-Md.) said this week.

Democrats will be looking to return “to the fiscal health that we had, frankly, as we began this decade in 2000,” Hoyer said Tuesday.

But while work continues on various proposals to create jobs, a legislative portfolio for reducing the deficit and moving into fiscal balance is taking much longer to develop and move forward.

Part of the problem is the size of the deficit, which at an estimated $1.3 trillion cannot be reduced significantly in the near term without unthinkable spending cuts or tax increases.

What’s more, a fiscal reform commission created by an executive order issued by President Barack Obama — which is supposed to consider even the most politically unpalatable options, such as drastic changes to entitlement programs — won’t submit its recommendations to Congress until December, a full month after the November elections that Hoyer acknowledged will be, to some degree, about the deficit.

Another problem is that most of the ways the deficit could be significantly lowered are politically untenable, or would threaten to hurt the economy at a time when Democrats are looking for growth in jobs.

The Blue Dog Coalition, an influential group of 52 centrist-to-conservative Democrats that has rallied around the mantra of fiscal discipline, has put forward a “blueprint for fiscal reform” consisting of 15 separate bills — from a balanced-budget amendment and legislation requiring the federal government to stop accidentally paying contractors twice to a “pay-as-you-go” budgeting law and an independent fiscal reform commission.

House leaders last year embraced statutory pay-go, which became law in February. A much more tepid embrace of an independent fiscal reform commission led to the creation of the debt commission panel by executive order after the Senate failed in its effort to pass legislation creating a panel with the force of law.

Democrats have hailed the fiscal reform commission and statutory pay-go as major accomplishments, and have pinned most of their hopes of proving to voters that their commitment to deficit reduction is legitimate on the combination of the two.

Beyond those two items, though, House leaders don’t appear to be rushing additional debt- and deficit-reduction measures to the floor.

On Wednesday, the Oversight and Government Reform Committee held a hearing on a “performance-based budgeting” bill authored by Reps. Henry Cuellar (D-Texas) and Dennis Moore (D-Kan.), a former Blue Dog leader who is retiring from the House at the end of this year. Cuellar and Moore’s legislation calling for all federal programs to be assessed for their performance at least once every five years has seen more action than any other part of the Blue Dog plan aside from the debt commission and pay-go.

Cuellar said he hasn’t been told whether his bill would make it to the floor, but said it’s got “a good shot” in this environment.

“I think [leaders] realize that there are different pieces of legislation out there that help us get at the deficit,” he said. “I think they feel like the time is right for a lot of these things.”

Democratic leadership aides, though, were unsure at best and, at worst, cagey when asked this week about those fiscal discipline items they will look to move in the coming months.

And since passing a pay-go law, Congress has been burning through items that have been marked as exempt, including a $154 billion jobs bill that House leaders still hope to take into conference with the Senate.

A number of House Democrats — beyond the usual group of Blue Dogs — have taken note of the trend, and are not pleased.

“We need to be more judicious and selective about what constitutes an ‘emergency’ spending bill,” said Rep. Gerry Connolly (D-Va.), a member of the centrist New Democrat Coalition. “The other thing is we can’t accept false promises.”

Some Democrats also worry that with liberals posturing against entitlement cuts and Republicans pre-emptively rejecting tax increases, the fiscal reform commission amounts to just that.

But the non-political alarm bells are getting louder as well.

On Wednesday, Federal Reserve Chairman Ben Bernanke warned the Joint Economic Committee that Congress must soon make “difficult choices” on the deficit or risk putting the economy in even greater jeopardy.

“At some point, the markets will make a judgment, really not about our economic capacity but our political ability, our political will, to achieve longer-term sustainability,” Bernanke said.

Bernanke conceded that, in the short term, there is little that can be done to close the budget gap, but he said that a “credible plan” to reduce the deficit is urgently needed.

Partly because of fears about the deficit’s potential to harm them politically, House leaders are still wrestling with the question of whether to pass a 2011 budget resolution at all.

While failing to do so could threaten their standing as a responsible governing party, House leaders are aware of the need for a growing number of Democrats to either see a budget with cuts measurably deeper than those proposed by President Barack Obama, or none at all.

“I cannot support the president’s budget,” Connolly said. “I believe there are enough other Democrats on the [Budget] Committee who share this view to prevent a budget from passing that’s anything close to the president’s … It isn’t just the Blue Dogs.”