Senate negotiations over the upper chamber’s version of a tax extenders bill — which extends both unemployment benefits and several popular tax credits — are now in their third week, with a resolution seemingly not much closer than it was at the beginning of the process. Senate Democrats are now on their third version of the legislation, with each of the previous two unable to muster enough votes to invoke cloture.
Of course, the holdouts want to see cuts in the bill’s overall cost before giving it their approval. “The thing that I’m concerned about is the deficit,” said Sen. Joseph Lieberman (I-CT). “We’ve come to a time when we’ve just gotta keep saying no, and as a result we passed the so-called doc-fix and it was paid for.”
But Speaker of the House Nancy Pelosi may hold the Senate passed doc fix — which prevents a cut in Medicare reimbursements to doctors — hostage until the Senate acts on job-creation legislation:
“I see no reason to pass this inadequate bill until we see jobs legislation coming out of the Senate,” she said. “House Democrats are saying to Republicans in the Senate: Show us the jobs!”
As Congressional Quarterly’s Emily Ethridge put it, “frustration over the Senate’s inaction is increasing among House Democrats, who have taken several politically difficult votes only to see the legislation languish in the other chamber.” There’s good reason for this frustration, as the deficit hysteria gripping the Senate is not only leaving the House hanging, but is not doing any good for the economy.
When faced with legislation that will create and save jobs by boosting demand in the economy, it’s seemingly conventional wisdom in the Senate that the right thing for a “moderate” member to do is demand that the bill be cut somewhere. This is the same dynamic that ultimately won the day during debate over the economic recovery act, when Sens. Ben Nelson (D-NE) and Susan Collins (R-ME), among others, simply asked that the overall price of the bill come down, somehow.
In this instance, it seems that aid to states is going to be the victim, even though such aid is one of the most stimulative steps that the federal government can take (though it isn’t at stimulative as extending unemployment benefits, which the Senate also can’t seem to do).
As Matt Yglesias put it, “skimping on short-term stimulus doesn’t reduce the growth rate of health costs nor does it slow the aging of the population, so you’re not achieving anything on long-term fiscal challenges.” However, short-term deficit spending can put people back to work, which leads to tax revenue for the Treasury, more demand, and ultimately a stronger economic recovery. So Pelosi is right to be frustrated and to take steps to force action on the part of the Senate.