How Dems can rebound

Yes, it sounds farfetched, with a new escalation in Afghanistan dividing the party, double-digit unemployment and deficits and debt as far as the eye can see — but the party’s downward spiral has been momentarily interrupted by good news. Despite fierce, universal and well-coordinated Republican opposition, plus industry and interest-group odds stacked against them, Democrats appear poised to pass healthcare reform and evidence is mounting that they are far more united in this goal than the skeptics predicted. If former Vermont Gov. Howard Dean (D) — a constant critic — is calling the Senate bill “real reform,” this train might just make it out of the station. Furthermore, the Senate Democrats are now ready to ditch a government plan as part of its overhaul, and if the House follows suit, the final package has a better shot at becoming an accomplishment than a political liability.

{mosads}Right after the news that November represented the best month since 2007, with the economy shedding only 11,000 jobs and unemployment shifting down to 10 percent from 10.2, came the revelation that the Troubled Asset Relief Program (TARP) is hardly the disaster we thought it was: Banks are repaying the government with interest.

To build on this momentum, Democrats should pass a reform bill close to the Senate version, the one with the best score from the Congressional Budget Office, and more importantly, the one that can’t be characterized as a government takeover of healthcare. Democrats should pass healthcare reform quickly, meeting the final deadline and getting it off the president’s desk well before his State of the Union in late January.

After dispensing with healthcare, Democrats need to move on to job creation and relief for the unemployed. They should take the Republicans’ advice and use a good amount of remaining TARP funds for deficit reduction to show the public and Wall Street that despite the bailout’s success, there won’t be a next time. In addition to passing tax relief to spur hiring, the Congress and the administration should mount a public push to increase small-business credit by asking the banks to loan more, stressing that the private sector, and not the government, will create the jobs that turn the economy around.

The administration will need to ensure a strong finish for the unpopular Recovery and Reinvestment Act; a recent report showed three-quarters of the stimulus money is left to be spent. It should be used wisely, in Michigan and Nevada and other states with stubborn unemployment, places where results can be measured quickly so Democrats can tout the effort as a credible success by late 2010.

A new plan to use the Environmental Protection Agency to regulate greenhouse gases instead of calling on Congress to pass far-reaching cap-and-trade legislation relieves pressure on the Democratic leadership to take on a climate change fight that will divide the party even more. Sure, there will be lawsuits, but such a move would spare marginal Democrats a reelection-killing vote.

Finally, Democrats should pass a regulatory relief bill that doesn’t send the financial community flying back into the arms of the GOP for good, but can be sold to the public as a package of reasonable consumer protections that won’t impede the free market.

None of this is easy or likely, but with some luck and economic improvement, it is possible.

Stoddard is an associate editor of The Hill.