Federal spending bill tests debt limit

WASHINGTON – The Senate cleared for President Barack Obama’s signature on Sunday a $447 billion omnibus spending bill that contains thousands of earmarks and double-digit increases for several Cabinet agencies, the latest target for Republicans seeking to make growing federal deficits a focal point of the 2010 elections.

The House may vote this week to raise the federal debt ceiling by at least $1.8 trillion, as the current limit is set to be breached by New Year’s Eve. Republicans and Democrats are also engaged in a rhetorical war over how to use unspent funds from the financial bailout program, with the GOP clamoring that the money be devoted to deficit reduction.

Those debates, combined with the $787 billion stimulus package passed earlier this year and the slow march toward a roughly $1 trillion health care reform bill, have focused Republican attacks on Democrats’ spending habits – a preview of the GOP’s probable strategy in November.

“It is business as usual, spending money like a drunken sailor, and the bar is still open,” Sen. John McCain, R-Ariz., said during the weekend’s omnibus debate.

Democrats say they do not deserve most of the blame for the red ink. They say that President George W. Bush inherited a budget surplus in 2001 and turned it into a large deficit by the time he left office, and that earmarks and spending grew robustly in the 12 years Republicans controlled Congress.

Still, Democrats are planning a two-pronged response: Put procedural controls in place to stem future deficits and, more important, boost federal tax revenue by growing the economy and reducing unemployment.

Christina Romer, chairman of the White House Council of Economic Advisers, said Sunday on NBC’s “Meet the Press” that it would be “suicide” for the government to focus too extensively on the deficit when job creation is a more pressing priority.

Obama made a similar point in his economic address at the Brookings Institution last week. Many congressional Democrats, who are up for re-election two years sooner than Obama, feel the same way.

“The number one thing you need to do to improve the economy and improve the deficit is put people back to work,” said Rep. Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee.

House Democrats will probably move a sizable jobs bill this week. The $70 billion-plus package will include funding for unemployment benefits, food stamps, Medicare and COBRA health insurance, along with separate money for infrastructure and aid to state and local governments.

The Senate’s ability to clear a jobs bill this month remains unclear, as the chamber is preoccupied by the health care reform debate. But whether it passes in December or January, this will not be the last such package Democrats put forward.

“We are in a very special kind of economic situation and, frankly, jobs have to be the top priority, and every bill is going to be a jobs bill going forward,” Lawrence Summers, director of the National Economic Council, said on ABC’s “This Week.”

The House jobs bill will be added to the defense spending measure, which will also probably carry an increase in the current debt ceiling of $12.1 trillion. The House has already cleared an increase of about $900 billion, and the Senate could pass the same increase before it adjourns.

But that would require Congress to vote on another increase during the 2010 election season, so Democrats would rather take a vote now on a larger increase rather than on two smaller ones. Republicans are already trying to make them pay for it. The National Republican Congressional Committee e-mailed supporters Thursday, highlighting the $1.8 trillion number and asking for contributions to “join the fight to rein in uncontrolled spending.”

Unhappy that they have to vote on the debt-limit issue, conservative Democrats in both chambers want any increase to be coupled with cost-cutting initiatives. Conservative “Blue Dog” Democrats in the House want rules put into law requiring new spending increases or tax cuts be offset by spending cuts or tax increases, and several Senate Democrats are demanding the creation of a commission with authority to force Congress to cut the deficit.

Van Hollen said there are more such proposals to come. “Next year, you will see a number of initiatives to put us on a sustainable path,” he said.

Including spending on such mandatory programs as Medicare and Social Security, the omnibus measure the Senate passed on Sunday totals $1.1 trillion, including average spending increases of 10 percent for dozens of federal agencies.

It also contains more than 5,200 disclosed lawmaker earmarks worth $3.9 billion, according to the spending watchdog group Taxpayers for Common Sense. Those numbers are down from the same bills the previous year, but that hasn’t stopped Republicans from turning the projects into political weapons.

Last week, House Minority Whip Eric Cantor, R-Va., wrote a letter to Obama, noting that during his 2008 presidential campaign, he said he was “committed to returning earmarks to … the level they were at before 1994,” the year Republicans took over the House and Senate. But with the president set to sign the omnibus measure and the expected passage of a defense spending bill laden with pet projects, he will not meet that pledge this year.