There is an interesting piece in the Post today about Obama's efforts to reach out to the House Blue Dog caucus in the context of the bailout bill and his transition plans. The growing caucus will be a pivotal group for legislative negotiation in the next Congress, and the Obama camp has been responding by engaging the group and its brand of fiscal moderation (or conservatism, depending on who you ask).
On one level, this is a good thing: Obama is dead set on not repeating the mistakes of the Clinton administration and trying to railroad his agenda through Congress early in his first term (c.f. health-care reform) without getting members involved in the process. It seems like the Blue Dogs are responding well to his overtures. On the other hand, though, the Blue Dogs' fiscal policies are not appropriate for the recession the United States currently faces, which calls for deficit spending, which is why this quote worries me somewhat:
Jason Furman, Obama's economic policy adviser, has held his own extensive talks with Blue Dog Democrats and said Obama would seek to establish "a government unified around the concept of fiscal discipline and centered around the pay-go rule. Insisting on paying for things will lead to better economic policy."
Well, sure, but many BDs weren't pleased that the bailout bill had to violate pay-go rules, and it's likely that other economic stimulus measures will need to do the same. I'd hate to see Obama chained to that kind of promise as he goes about setting his agenda next year. Luckily, even the centrists in the Obama camp (folks like Larry Summers, for instance) seem to understand that counter-cyclical spending comes first, deficit reduction second. Hopefully the Blue Dogs will understand, as well -- and there are some indicators that their brand of populism will allow them to rationalize the lapse in fiscal discipline.
For some further reading, take a look at this post that includes economist Rob Shapiro explaining the stimulus, fiscal discipline one-two punch that seems to be developing as a consensus view among left-leaning economists, and my article on what our next Congress will look like. Simon Rosenberg money quote:
"The New Dems and the Blue Dogs are going to gain a disproportionate number of members in 2008," says Simon Rosenberg, head of the progressive group NDN. "If Obama gets elected, can Pay-Go survive? The things that worked for us in the early '90s are not going to work for us today. [There will be] a battle between a politics of investment versus a politics of austerity."
--Tim Fernholz
