Five Key Economic Battles Await Congress

Decisions on Krueger, Cordray, deficit plan could slow or boost economic recovery.

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The sweltering heat is gone, tourist season is winding down, and the Hill interns are heading back to school—three clear signs that August is nearly over in Washington, D.C., meaning Capitol Hill will soon be buzzing with activity once again as lawmakers return from recess. Congress is facing a fall full of policy battles surrounding the nation's troubled economy, and as with the summer's debt ceiling wrangling, things could again get ugly. "The debt ceiling battle was very bruising, and hopefully some time apart in August will allow tempers to cool, but the atmosphere is certainly going to be deeply contentious," says Ryan McConaghy, director of the economic program at centrist think tank Third Way.

Can Republicans and Democrats bridge the differences between their economic philosophies? The nation will find out as it watches these five economic battles unfold this fall.

Confirming Alan Krueger

The Obama administration has announced the Princeton University economics professor as its nominee to head the White House Council of Economic Advisers. Krueger, a labor economist who helped design the "cash for clunkers" program, would in this position be tasked with helping the administration promote job growth and recovery in the dismal current economic environment. But first, the Senate will have to confirm him. Though Krueger has in the past espoused some ideas that conservatives may not like, such as his finding that the minimum wage does not hurt job growth, the nomination is not expected to be too difficult of a fight. "I think of all the legislative fights relative to economic policy broadly conceived, the easiest will probably be the Krueger nomination," says William Galston, a senior fellow in governance studies at the Brookings Institution and former adviser to President Clinton.

Confirming Richard Cordray

Galston says that getting congressional approval for Krueger "will be certainly a lot easier than filling the top slot at the new consumer protection agency." Richard Cordray, a former Ohio attorney general, is President Obama's pick to head the new Consumer Financial Protection Bureau, the agency created by the Dodd-Frank financial reform bill to "promote fairness and transparency" in the consumer financial product marketplace, in the words of the Treasury Department. This confirmation is shaping up to be a major battle, as the very idea of the CFPB is objectionable to many congressional Republicans. Forty-four GOP senators signed a letter last spring vowing not to support any nominee without significant reform to the CFPB. Opponents say that a single presidential appointee, serving a five-year term, would be too powerful at the helm of the agency.

[Read analysis of the coming confirmation fight over Cordray.]

Passing (or Blocking) a New Jobs Plan

President Obama is slated to unveil a new jobs plan next week. Though details are not known yet, possible components under discussion include the creation of an infrastructure bank, a new push for ratifying trade agreements, creating hiring incentives for employers, and school construction. On some proposals, there will be room for compromise, says McConaghy. "Certainly there will be some who are against anything" the president proposes, he says, but trade deals and infrastructure both show particular signs of promise. "These are things where President Obama and the [conservative-leaning] Chamber of Commerce actually see eye to eye," he says. While there are certain to be disagreements along the way, says McConaghy, there is the potential for meaningful job-creating policies out of Capitol Hill this fall. "It may be hard, but I wouldn't call it hopeless," he says.

Slashing the Deficit

The so-called supercommittee, a product of the summer's debt-ceiling compromise, is a group of 12 lawmakers tasked with finding a way to reduce the federal deficit by $1.5 trillion over the next 10 years. If they fail to reach an agreement, steep across-the-board cuts will automatically go into effect on both domestic and defense spending. Even given that steep price tag of failing to compromise, this fight is shaping up to be among the toughest of the current Congress. "It's not clear to me that the leadership on either side has yet decided that an agreement would be preferable to a standoff," says Galston. McConaghy agrees that reaching compromise will be difficult, and adds that Republican openness or, alternatively, obstinacy will be the key to that compromise. "The president and Democrats have signaled at various points that they'll be willing to [accept entitlement reform]," he says. "So the key question is, 'Can the supercommittee succeed?' The answer to that is the same as, 'Are Republicans willing to accept more revenue?'"