Obama's Jobs Bill Hits a Familiar Buzzsaw: How to Pay for It

The president and congressional Republicans can't agree on the shape of spending offsets. Again.

Obama stumping for jobs bill - Pablo Martinez Monsivais AP - banner.jpg

President Obama is crisscrossing the country to stump for his new $447 billion jobs bill, but back in Washington, D.C., he has once again hit a partisan snag over how to fund programs he wants to enact.

Republicans immediately criticized the president's suggestion to fund the new bill by limiting tax deductions for the top 1.5 percent of American incomes. Some Democrats on Capitol Hill have joined in, Politico reported today:

"Terrible," Sen. Jim Webb (D-Va.) told POLITICO when asked about the president's ideas for how to pay for the $450 billion price tag. "We shouldn't increase taxes on ordinary income. ... There are other ways to get there."

"That offset is not going to fly, and he should know that," said Democratic Sen. Mary Landrieu from the energy-producing Louisiana, referring to Obama's elimination of oil and gas subsidies. "Maybe it's just for his election, which I hope isn't the case.

The White House introduced that funding plan after the president suggested, in his speech to a joint session of Congress last week, that Congress pass the bill now and pay for it later. The new deficit "supercommittee," created when Obama and Congress raised the federal debt limit in August, should find extra deficit reduction above the $1.5 trillion it will try to propose by Nov. 23, the president offered. That idea didn't sit will with Republicans, and supercommittee co-chair Rep. Jeb Hensarling (R-Texas) objected that "this proposal would make the already-arduous challenge of finding bipartisan agreement on deficit reduction nearly impossible."

It's not the first time Obama has encountered friction over funding. Disputes over deficit impact have become something of a theme during the Obama presidency:

  • In April 2010, Republicans opposed a temporary extension of unemployment insurance, objecting that Democrats hadn't proposed spending offsets. Democrats managed to pass the extension anyway. Two months later, Republicans blocked another extension, objecting on the same grounds.
  • In April 2011, House Majority Leader Eric Cantor (Va.) led Republican demands that disaster-recovery funds for tornado-stricken Joplin, Mo., be offset by unrelated spending cuts, sparking criticism from Democrats.
  • During the debt-limit stalemate in July and August, partisan disagreement centered on how to offset added Treasury borrowing that, as Obama pointed out, would have to be undertaken to pay for programs already mandated by Congress. Obama proposed a "balanced approach" including similar high-income tax hikes and corporate tax hikes in the form of closed "loopholes." Republicans objected, and Washington ended up shunting the responsibility of deficit-reduction onto the supercommittee.

The recurring dispute speaks to different philosophies on spending offsets. When Democrats assumed congressional majorities in 2006, they re-institued "pay-go" rules requiring offsets for any new spending. But since then, they've been much more willing to consider the nation's lagging economy as an "emergency" situation that should exempt Congress from those rules. Republicans, meanwhile, have repeatedly bucked suggestions that recession-era spending be funded by tax increases on corporations or the wealthy.

And so Obama and Republicans are re-entering a deficit fight they've had multiple times under various guises, once again pitting the president's "balanced approach" against the Republican House majority reluctant to approve money for stimulus measures.

The precedents here suggest how this latest round of the fight might play out, too.

Image credit: Pablo Martinez Monsivais/AP