Democrats Find Deficit Spending A Tough Sell
President Obama's deficit commission will hold its second meeting Wednesday. And it comes at a moment when the leaders of the world's biggest economies are turning away from stimulus -- and toward deficit reduction.
Polls also show U.S. voters are increasingly concerned about the national debt and the deficit.
The political attraction of belt tightening -- in theory at least -- is proving to be a real obstacle to Obama's plan to create jobs by spending more borrowed money on unemployment benefits and state aid.
The Democrats suffered the latest in a string of defeats Tuesday when they failed to get the votes in the House to extend unemployment benefits.
Rep. Chris Van Hollen (D-MD) is the head of his party's campaign committee in the House, and he knows Democrats have a tough argument to make.
"It's absolutely essential that we continue to focus on jobs acceleration, but also take steps today to make it clear that we're on a predictable path toward spending and deficit reduction," Van Hollen says. "And while those messages sometimes get mixed in the public debate, the fact is they are perfectly consistent."
The argument for short-term deficit spending and longer-term austerity may be perfectly consistent to economists and many Democrats, but it's tough to explain.
"On the larger question of deficits vs. job creation and stimulus, it's kind of an important point that is understandably -- I'm not being a wise guy when I say this -- understandably difficult to sort of -- it's not intuitively arrived at," Vice President Joe Biden says.
Debt As Troublesome As Terrorist Attack
And it may not be just a communications problem. There are some in the White House who are beginning to think it may no longer be possible to pass any more stimulus bills unless they are very narrowly targeted and largely paid for. That's because the public is no longer receptive to the Keynesian idea that adding to the deficit will ease the recession.
"Debt is a dominant part of the political landscape now," says House Democratic Majority Leader Steny Hoyer (D-MD). "This month, a Gallup Poll asked Americans to name the greatest threat facing our country. Two answers tied for the top choice: One was terrorism, the other was debt. This is a remarkable moment, I think, in our political history."
A remarkable moment, Hoyer said, when $9 trillion of publicly held debt troubles Americans as much as another terrorist attack.
"I think the Democrats are in a bind," says Jim Kessler, vice president for policy at Third Way, a moderate Democratic think tank that was the venue for Hoyer's speech last week. "So in the short term, you want to see more spending, because you've got to continue to stimulate this economy, and you've got to make sure that we're creating jobs. But constituents right now are very deficit-sensitive, whether it's short term or long term, and they're putting pressure on members of Congress to put on the brakes."
It used to be hard to vote against extending unemployment benefits in a recession. But not anymore, when you explain it the way Republican Leader Mitch McConnell (R-KY) did on the Senate floor last week:
"What we're not willing to do is to use worthwhile programs as an excuse to burden our children and our grandchildren with an even bigger national debt than we've already got."
Of course, the Republicans do have a strategy of blocking almost all the president's proposals, but the White House has another problem. It's trying to convince voters it has the right plan at a time when there is great distrust of government.
"I think we're in a situation right now where the American public isn't really believing things that are coming out of Washington -- and I think that skepticism is running up against this deficit fever," Kessler says.
The combination of the two is powerful. It's part of the reason why despite all of Obama's recent efforts -- the deficit commission, a domestic spending freeze and a return to pay-as-you-go rules -- the public still isn't convinced he means business.
At last weekend's G-20 meeting in Canada, a frustrated Obama warned the GOP that soon they'll have to put their money where their mouths are.
"Next year, when I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, because I'm calling their bluff," Obama said. "And we'll see how much of that -- how much ... of the political arguments they're making right now are real, and how much of it was just politics."
But next year may not be soon enough for voters. If a debate about austerity is going to be the next chapter in American fiscal politics, it is coming a little sooner than the Obama team anticipated.
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