Image: Peter Orszag, Melissa Bean
Evan Vucci  /  AP
Rep. Melissa Bean, D-Ill., walks last week with White House Budget Director Peter Orszag on Capitol Hill in Washington. Bean leads the New Democrats Coalition task force to modernize financial regulations.
updated 3/15/2009 5:04:43 PM ET 2009-03-15T21:04:43

Moderate Democrats in Congress who built their ranks in November's elections are nudging their party's liberal agenda to the center, working to add a pro-business dose of pragmatism to President Barack Obama's plans to rescue homeowners, overhaul health care and revamp energy policy.

With close ties to industry and a keen understanding of how markets work, these Democrats have taken an increasingly influential and visible role in debates over federal spending and housing.

They also have powerful allies in the White House. Obama told the House's band of New Democrats during a meeting last week that he considered himself one of them, according to several attendees. His chief of staff, former Rep. Rahm Emanuel, is one of their most prominent alumni.

Recent signs of clout
Among recent signs of their clout:

  • The 68-member New Democrat Coalition temporarily sidelined a measure to let bankruptcy judges rewrite mortgages. They held out for limits on court-ordered easing of mortgages, a move lenders were demanding.
  • A few centrist Senate Democrats helped slow passage of a $410 billion spending bill because of its cost.

"This is a healthy reprise (of) what we had in the Clinton administration. We were go-to people on the pro-growth area and on balancing the budget, and on making sure that we were competitive in the trade environment," said California Rep. Ellen O. Tauscher, head of the New Democrats. "We've got members strategically placed throughout all the big committees. ... We can really deliver votes."

They can withhold them too, forcing Democratic leaders to bow to their demands. They demonstrated that two weeks ago when House leaders canceled votes on the bankruptcy loan modification bill, which Obama backs, because of concerns among the moderates about how it could affect homeowners struggling to make their monthly payments.

The measure got back on track and passed only after the New Democrats won changes that could make it more difficult to qualify for a loan rewrite in bankruptcy.

Moderates taking heat from activists
In the process, the moderates took heat from liberal activists who called them "corporatists" working on behalf of banking lobbyists instead of their constituents.

Tauscher, a former Wall Street investment banker, said she hasn't met with a banking lobbyist in months. But she makes no apologies for her relationships with the business sector, which she notes employs her constituents. New Democrats' ability to work with industry to find a middle ground on major issues is important now, she argued, given the wave of crises that has shaken the public's confidence.

"Those that are advocating for purity in ideology or as a test for who's a good Democrat are going to have their heart broken. They're also not going to get anything done," Tauscher said.

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Business interests are pleased
Business interests are pleased to see the moderates gaining greater prominence. Fearing a rush by Obama and a strengthened Democratic congressional majority to impose burdensome new policies with little regard for how they might affect companies' bottom lines, their lobbyists say centrists can broker compromises.

"A number of the New Democrats have a Ph.D. in the art of the doable," said Jeff Peck, a top financial services lobbyist. "The more severe the crisis, the greater the desire and need for people off the Hill to find members who actually want to get stuff done, and the New Democrats have a well-deserved reputation for doing that."

In the Senate, a more loosely affiliated group of Democratic centrists led by Sens. Evan Bayh of Indiana, Tom Carper of Delaware and Blanche Lincoln of Arkansas plans to launch its own coalition in the coming weeks. The group of about 15 could be a critical voting bloc as Senate Democratic leaders, with a 58-41 working majority that includes two independents, search for the elusive 60 votes necessary to advance most legislation beyond the minefield of procedural hurdles.

"Our group is not to be a counterweight to anyone or to obstruct anything. On the contrary, our group is to get things done," Bayh said. "You've got to get to 60 votes in the Senate most of the time, and our group will be a key to making that happen."

Leading role in trade, health care, energy
In the House, New Democrats aim to play a leading role on expanding international trade and overhauling health care and energy policy. Already, they have been active pushing technology initiatives embraced by Obama, including funding the creation of a "smart," energy-efficient electricity grid and new incentives to switch doctors to electronic record-keeping.

They recently released a detailed set of principles for modernizing financial regulations following last year's meltdown. Their task force on the issue is led by Rep. Melissa Bean, D-Ill., who has the ear of the House Financial Services Committee's liberal chairman, Rep. Barney Frank, D-Mass. Rep. Jim Himes, D-Conn., a former executive at the investment bank Goldman Sachs, is also heavily involved.

"We're very connected to the business community and very much appreciate the importance of their success to our overall economic recovery. We are trying to champion their issues and concerns," Bean said. "We're going to be at the table and we're going to assert ourselves when we think it's important."

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