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Obama pleads for $50 billion in state, local aid

Washington Post: President Obama urges reluctant lawmakers to quickly approve nearly $50 billion in emergency aid to state and local governments.
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

President Obama urged reluctant lawmakers Saturday to quickly approve nearly $50 billion in emergency aid to state and local governments, saying the money is needed to avoid "massive layoffs of teachers, police and firefighters" and to support the still-fragile economic recovery.

In a letter to congressional leaders, Obama defended last year's huge economic stimulus package, saying it helped break the economy's freefall, but argued that more spending is urgent and unavoidable. "We must take these emergency measures," he wrote in an appeal aimed primarily at members of his own party.

The letter comes as rising concern about the national debt is undermining congressional support for additional spending to bolster the economy. Many economists say more spending could help bring down persistently high unemployment, but with Republicans making an issue of the record deficits run up during the recession, many Democratic lawmakers are eager to turn off the stimulus tap.

"I think there is spending fatigue," House Majority Leader Steny H. Hoyer (D-Md.) said recently. "It's tough in both houses to get votes."

Democrats, particularly in the House, have voted for politically costly initiatives at Obama's insistence, most notably health-care and climate change legislation. But faced with an electorate widely viewed as angry and hostile to incumbents, many are increasingly reluctant to take politically unpopular positions.

Last month, the House stripped Obama's request for $24 billion in state aid from a bill that also would extend emergency benefits for jobless workers. Senate Majority Leader Harry M. Reid (D-Nev.) has said he hopes to restore that funding, but with debate in that chamber set to resume this week, Democrats say they have yet to assemble the votes for final passage. And neither chamber has mustered support for another Obama priority: $23 billion to avert the layoffs of as many as 300,000 public school teachers.

Senior Democratic aides said the White House is partially at fault because it has not made additional spending on the economy a clear priority.

In recent weeks, the White House has appeared more intent on cutting spending -- calling for the sale of vacant buildings, threatening to veto a defense bill over a jet engine project the Pentagon views as unnecessary and urging every agency to come up with a list of low-priority programs for elimination. Obama has also proposed a three-year freeze in discretionary spending unrelated to national security, an idea endorsed by leaders of both parties at a meeting at the White House last week, according to White House chief of staff Rahm Emanuel.

With the letter, however, Obama makes a direct and unequivocal case for additional "targeted investments," including state aid and several less-expensive initiatives aimed at assisting small businesses, and he asks lawmakers to be patient on the deficit.

"It is essential that we continue to explore additional measures to spur job creation and build momentum toward recovery, even as we establish a path to long-term fiscal discipline," Obama wrote. "At this critical moment, we cannot afford to slide backwards just as our recovery is taking hold."

In an interview, Emanuel said the letter is intended to settle the growing debate over the opposing priorities of job creation and deficit reduction and "where you put your thumb on the scale."

"While some people say you have to spend and some people say you have to cut, the president wants to talk about both cuts and investing," Emanuel said.

Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), called the letter full of "contradictions."

"He's calling on Congress to pass a [jobless] bill that will add about $80 billion to the deficit, but then calls for fiscal discipline; he says these measures need to be targeted and temporary, but then calls for extending programs passed in the stimulus more than a year ago," Stewart said in an e-mail.

Stewart said Republicans have offered an alternative package that would cut deficits by nearly $55 billion over the next decade, according to the nonpartisan Congressional Budget Office.

The politics of the Democratic bill before the Senate are further complicated because it has become a grab bag of must-pass provisions. In addition to state aid and more money for jobless benefits, it includes a plan to extend $32 billion in expired tax breaks for individuals and businesses and a separate provision, known as the "doc fix," that would postpone until 2012 a scheduled pay cut for doctors who see Medicare patients.

When it was first unveiled last month, the total cost of the package approached $200 billion, with only about $50 billion paid for through higher taxes on multinational corporations, hedge fund managers and certain small businesses. Conservative Democrats in the House balked, forcing House leaders to scale back the doc fix and strip out the state aid, as well as $6 billion in health insurance subsidies for jobless workers. In the letter, Obama asks Congress to reconsider that decision. The House narrowly approved the trimmed-down bill.

Now the Senate is struggling to assemble a 60-vote coalition for the measure. Last week, Reid moved to restore the state aid, but the CBO said the resulting measure would add nearly $80 billion to budget deficits over the next decade. Moderates objected, saying they could not support such a big increase in borrowing at a time when the total national debt has topped $13 trillion, nearly 90 percent of the overall economy.

On Saturday, as Obama called for urgent action, senior Senate aides said the scramble for votes would delay final action on the bill for at least another week.