Fumble! Reid pulls jobs bill White House had already endorsed

It only took a couple of hours for the White House to endorse the new, bipartisan stimulus plan launched by Sens. Max Baucus and Charles Grassley yesterday — and a few minutes after for Harry Reid to kill it.  The move angered Democrats in both the Obama administration and on Capitol Hill as Reid sent conflicting signals, surprised his colleagues, and might have touched off a leadership crisis if Reid wasn’t already destined to lose in November:

Senate Majority Leader Harry Reid led colleagues and the White House to believe he supported a bipartisan jobs bill — only to scuttle the plan as soon as it was released Thursday over concerns it could be used to batter Democratic incumbents, according to Senate sources.

Senate Finance Committee Chairman Max Baucus (D-Mont.) and Sen. Charles Grassley (R-Iowa) worked for weeks with Reid’s blessing and frequent involvement to craft an $85 billion jobs bill, a measure that seemed destined to break the partisan logjam that has ground the Senate to a halt.

But as Baucus, Grassley and President Barack Obama were preparing to celebrate a rare moment of bipartisan Kumbaya on Thursday, Reid stunned a meeting of Senate Democrats by announcing he was scrapping Baucus-Grassley, replacing it with a much cheaper, more narrowly crafted, $15 billion version.

Reid will have a new plan that strips out many of the items unrelated to stimulus, such as the “doctor fix” and the Patriot Act extensions, and will have it ready after the Presidents Day recess.  One of Reid’s allies said that the Baucus-Grassley bill would have only received three or four Republican votes and that the GOP would have used the bloated initiative to “beat the living s**t out of us” — although Democrats have not had any problem hailing their legislation as bipartisan with as few as three Republican votes.  After all, that’s what they got with Porkulus, and look how well that turned out for Democrats!

Unfortunately for Reid, he may have come to that realization a little too late, and set off a strange series of reversals.  According to Politico, the bill’s contents didn’t come as that big of a surprise to Reid, who had blessed the bipartisan effort a few weeks ago.  Instead, he quailed at the last moment at the laundry list of pet programs and riders that Reid believed would water down the job-creation message.  Democrats, however, got angry when small-business loans and unemployment-benefit extensions were among the items removed:

California Democratic Sen. Dianne Feinstein said she’d like more provisions increasing lending to small business and fewer tax cuts. And Iowa Democratic Sen. Tom Harkin argued passionately that, if lawmakers plan to extend corporate tax breaks, they should also extend employment insurance. …

And Baucus seemed puzzled by the change in course, particularly Reid’s decision to drop a package of tax extenders from the bill – a piece with strong bipartisan backing.

Reid’s decision takes the second stimulus package cost down from $85 billion to $15 billion.  That may please fiscal conservatives, but it sets up an embarrassing problem for Barack Obama.  No one believes that his $787 billion Porkulus package, now repriced to $862 billion, worked to create jobs, but the Left wing of Democrats thinks it didn’t work because the Democrats didn’t spend enough money.  Obama himself has promised a “hard pivot” to job creation and built expectations for a large-scale effort.  A $15 billion program that only contains the silly payroll-tax exemption that gives businesses a maximum $6000 for every person they hire and keep all year, more highway project money, a business tax deduction that amounts to a whopping $35 million over 10 years, and a program allowing states to borrow money at a lower interest rate will not only not create jobs, but it will make a laughingstock of the notion that Congress or Obama is taking the problem seriously.

Don’t expect the GOP to climb back on board after this, either.  Grassley released an angry statement that Reid’s decision meant that the Democratic leadership wanted to go it alone in 2010.  In the current political environment, Grassley took a not-inconsiderable political risk by working on the bipartisan effort with Max Baucus to craft a stimulus bill and give Democrats a little bit of bipartisan cover.  What Republican will take that kind of risk on a stimulus bill this year now?  The $15 billion Reid plan won’t be worth filibustering — it’s better to hang that on the Democrats when it inevitably fails to stimulate jobs — but the GOP will leave the Democrats to shoulder it themselves.

Reid has become an embarrassment not just to Nevadans now but also to the White House and his caucus.  Reid’s almost certain to lose his re-election bid in Nevada, but even if he wasn’t, he may not have lasted as Majority Leader for 2011 anyway.  And if the White House starts thinking that Reid’s expendable, they may step up efforts to push him into retirement in a last-ditch effort to save his seat.

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