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"My guess is that musty folders on reconciliation got dusted off this morning," Podesta told reporters at a breakfast sponsored by the Christian Science Monitor. The reference was to a budget procedure that requires only 51 votes to pass and can't be filibustered.
Podesta, president of the Center for American Progress, a liberal think tank, said Senate Democratic leaders are "extremely close to 60" votes for their health reform bill. If Lieberman and Nebraska Democrat Ben Nelson look like non-starters, he said, the next question is, is there a way to get Maine moderates Olympia Snowe and Susan Collins on board?
Podesta said he is confident a health care bill will pass. Reconciliation is difficult and complicated, he said, but "it definitely can be done." Among the complications: it can only include provisions that directly relate to how much money the government spends and takes in. Insurance reforms such as banning exclusions of people who have pre-existing conditions would have to be in a separate bill, which would be subject to a filibuster. Finally, anything passed as part of a budget reconciliation bill would expire in 10 years unless it was renewed or revised.
"There's wisdom in trying to get the 60 votes and passing it that way, both substantively and politically," Podesta said. "But if the question is 'let's fail again' or 'let's go to reconciliation,' I don't think that's a real question."
Podesta said it will help Democrats in the 2010 midterm elections if they pass health reform and other Obama priorities, but said the two top issues will be Obama's approval rating and whether jobs are being created in the months before the election.
His advice to Democrats: "They have to reassure and ensure, to independent voters in particular, that things aren't haywire, that they're not out of control, that they have a plan that ought to move forward -- and indeed one which restores things to the more appropriate balance between the private sector and the public sector."
Podesta said one way to do that is send clear signals about future plans to reduce the budget deficit and national debt. He said that is critical "once the economy is fully recovered" and steps in that direction could start when the unemployment rate starts ticking downward.
A balanced budget should be the default policy of the federal government in flush times, he said, with borrowing reserved for crises and emergencies. He released a policy paper that proposes what he calls "'primary balance" by 2014 -- that is, money taken in would equal money spent with the exception of money spent on debt service -- and total balance by 2020.
Among the steps recommended in the report are reinstating budget rules that require any spending to be offset by new taxes or budget cuts and requiring Pentagon savings to finance the $30 billion Afghanistan war buildup rather than giving the department more money. Podesta said he did not know how much traction that latter idea would get, but said other alternatives such as a war surtax proposed by Rep. David Obey would trigger a useful debate.
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