As Washington Returns, It’s Back to Jobs vs. the Deficit

Obama hopes the tax debate will paint a bright line between Republicans and Democrats this month.

By Seth Freed Wessler Sep 09, 2010

Congress will return from vacation this week for a month of pre-election law making. It’s the last opportunity both parties have to appeal to voters nationally before November. In all likelihood, the next several weeks will consist of a whole lot of partisan rancor and a regular flow of Republican obstructionism. As was the case before lawmakers went on break, the deficit is going to be the animating core of Washington this month. Republicans have effectively used fears over the growing federal deficit to push back spending on vital safety net and jobs programs and Democrats remain anxious about how to respond. Which is a shame, because there’s a lot to get done.


Taxes are likely to take up a lot of Beltway space over the next several weeks. On Wednesday, President Obama demanded that Congress not extend Bush era tax breaks for the richest Americans. The breaks are scheduled to sunset at the end of the year, and the White House hopes the debate over whether and how to renew them will paint a bright political line between House Republicans and Democrats. Obama’s plan would end the Bush tax cuts for families with incomes greater than $250,000 or individuals with incomes above $200,000, but would leave in place the current tax structure for anyone who makes less than that amount. Bush’s tax cuts were the single biggest contributor to the pre-recession deficit.

House Minority Leader John Boehner does not agree, despite the numbers. He is arguing that the deficit ought to be addressed not with taxes but by cutting spending, which inevitably will hurt those already leveled by the recession. Boehner says he’d accept as a compromise a two-year extension of the tax cuts on the richest segment of the country rather than a permanent extension. But the White House wants the cuts gone for good.

Obama’s proposal is coupled with additional tax breaks for small businesses, which the White House no doubt hopes to use as a way to paint Boehner and the Republicans as concerned only about the wealthy. 


Obama also tied his plan to the investment in infrastructure. In a speech on Labor Day, he called on Congress to immediately pass a $50 billion infrastructure jobs package. The plan calls for massive investment in roads, airports and trains and would create jobs as soon as next year.

Congress would be wise to listen, as jobs are plainly priority number one for both the Democrats’ political future and the nation’s economic one. With unemployment holding steady at 9.6 percent nationally, and higher in many communities, refusing to create jobs is just bad politics. 

But as I noted earlier this week, for the package to have meaningful impact, it will need to target those hit hardest by the recession–people of color and single mothers. Given the administration’s clear reluctance to even passingly address those disparities thus far, such a targeted package seems unlikely. In any case, Obama’s plan is sure to face a brick wall from GOP deficit hawks, and at least one Democrat is already indicating he will not support the stimulative spending. 

In more jobs creation news, immediately upon return, Congress will decide whether or not to extend the Temporary Aid for Needy Families (TANF) Emergency Contingency Fund, which was created last year as part of the first stimulus package. The fund has created 240,000 jobs.

The program reimburses 80 percent of any additional money states spend on TANF because of the recession. Thirty-five states, D.C. and the Virgin Islands have all tapped into the pool. Most of the $4.2 billion dollars (of the $5 billion initially allocated) drawn from the program’s coffer have been spent directly on subsidized jobs programs. It’s the country’s only straight job creation program and it will expire on September 30 unless Congress extends the package. But the program is sure to come under assault by deficit hawks, just like most everything else.

The Safety Net

Like, say, food stamps. Before Congress went on recess in August, it axed the food stamp program in order to offset spending on an education jobs bill. The cuts will mean that the record number of families receiving food assistance will see their benefits diminished at the end of 2013. Many House Democrats have vowed to restore the food stamp funding by looking for offsets from elsewhere.

Along with food stamps and TANF emergency funds, congressional Democrats should attempt to restore funding to the COBRA health insurance program. Stimulus funds injected into the program last year expired in May and many can no longer afford the health insurance they need. A bill to fund COBRA is in the works but it may get stuck in committee.

On Friday, President Obama will hold his first formal press conference in four months. He’s likely to continue outlining his priorities for the next several weeks of legislative work. Here’s hoping he and congressional Democrats will be smart enough to push back against the GOP’s deficit fear mongers and move some of these job creating ideas forward. Their own jobs certainly depend upon it.