Yesterday, Bloomberg News reported that seven Wall Street lobbyists “trooped to Capitol Hill,” in an attempt to talk Rep. Paul Kanjorski (D-PA) out of proposing legislation that would allow the government to break up any financial firm deemed systemically risky. According to Bloomberg, the lobbyists left with the “sobering conclusion” that Kanjorski isn’t backing down.

Of course, that setback won’t end the banks’ effort to stop such legislation from going forward. In fact, next week they will be calling on some of their friends from around the business world to try to convince New York’s congressional delegation that such legislation “would undermine the Big Apple’s economy and its reputation as a world financial hub”:

Among roughly 20 business leaders slated to come to a meeting called by Rep. Charles Rangel (D-N.Y.) are: Rupert Murdoch, CEO of News Corp.; Lloyd Blankfein, CEO of Goldman Sachs; Larry Fink, CEO of BlackRock; and William Lauder, CEO of The Estee Lauder Companies Inc.…“If the U.S. dismantles our leading institutions, then it will destroy the American financial center, which is largely anchored in New York,” said Kathryn Wylde, president and CEO of the [Partnership for New York City]. “It’s just frightening.”

Of course, the UK has already begun breaking up firms that were deemed “too big to fail,” and the financial sector is arguably more important to London than it is to New York.

This isn’t the first time that large corporations have gone to bat for the banks when it comes to regulatory reform. When the House Financial Services Committee was working on a bill reforming the derivatives market, a coalition of business groups came in to pressure lawmakers, despite the fact that 97 percent of derivatives are held by just five large financial firms.

The details of these provisions — particularly what constitutes an undue amount of risk and who gets to ultimately pull the trigger to break up a firm — have yet to be ironed out, and I would hope that Rupert Murdoch and William Lauder don’t have enough sway over regulatory policy to make much of a difference. (Since they’re joining with Goldman Sachs CEO Lloyd Blankfein, are they also doing “god’s work”?)

As Kanjorski said, this could be “one of our potentially last chances to get control, particularly of financial institutions in their mega-forms, before they take over the world.” It’d be a shame if News Corp. took that chance away.

The Politico reported today that, in his 2010 State of the Union address, President Obama is going to announce a serious focus on deficit reduction:

President Barack Obama plans to announce in next year’s State of the Union address that he wants to focus extensively on cutting the federal deficit in 2010 – and will downplay other new domestic spending beyond jobs programs, according to top aides involved in the planning. The president’s plan, which the officials said was under discussion before this month’s Democratic election setbacks, represents both a practical and a political calculation by this White House.

As Andrew Sullivan wrote, “this classic Politico piece — in as much as it regurgitates almost comically process-oriented Beltway wisdom — fails to mention a few things about Obama’s spending in his first year,” including: the recession, that health care reform is paid for, and that “there’s a big big difference between spending on green and infrastructure investment and slashing taxes or increasing Medicare entitlements.” Chris Hayes added “there’s one big maddening conceptual error at the heart of this piece…which is to confuse relatively substantial pieces of domestic legislation with a spending ‘binge.’”

But if true, what does the administration mean by “focus extensively” on deficits next year? And what will that entail for the domestic agenda? I certainly hope that no one is thinking of making a 1937-style haul back on recovery efforts. Judging by the public statements of Treasury Secretary Tim Geithner and Office of Management and Budget Director Peter Orszag, they aren’t, but if the administration is quaking over the political ramifications of the deficit now, how long until they head in that direction?

This week, we’ve already seen a group of senators threaten to force the U.S. to default on its debt (by refusing to increase the federal debt ceiling), if they don’t get a bi-partisan commission that will be tasked with cutting Social Security and Medicare. This deficit-mania comes despite a stubbornly weak labor market, and at the same time that Congress is insisting that more must be done in terms of job creation.

Of course, there’s nothing wrong with wringing waste from the system, and there are surely some ineffective or duplicative programs in the various federal agencies that can afford to go by the wayside. And if that’s what the administration means, more power to them.

But as Paul Krugman wrote, “conventional wisdom in Washington seems to have congealed around the view that budget deficits preclude any further fiscal stimulus — a view that’s all wrong on the economics, but that doesn’t seem to matter.” It’d be a shame to see the administration turn this particular bit of conventional wisdom into policy that doesn’t provide more support to the job market, and at worst, could choke off economic recovery.