Full plate of economy issues awaits Obama

Health care, job creation and tackling the gaping U.S. budget deficit await both President Barack Obama and lawmakers upon their return to Washington, getting the new year and new decade off to an intense start with a sharp focus on economic issues.

With midterm congressional elections coming up later this year, the heat is on Democrats in particular to deliver as the economy begins to crawl out of recession.

The health-care overhaul, Obama’s top domestic priority, will be front and center when lawmakers return to work in earnest in the middle of the month. On Dec. 24, the Senate passed its plan to revamp the health-care system, which seeks to extend insurance to millions of Americans and bar insurers from denying coverage to the sick.

Senate and House lawmakers must now hammer out a compromise version of the legislation, which Obama wants to sign before his State of the Union address. Republicans have vowed to continue their fight against the bill. Leadership and committee chairs will be discussing the process for conference this week, said Stephanie Lundberg, a spokeswoman for House Majority Leader Steny Hoyer, D-Md.

Obama’s State of the Union speech is likely to be in the first days of February, and in it the president is expected to take on the $1.4 trillion U.S. budget deficit. The White House is backing a bipartisan commission to cut federal borrowing, and Obama’s budget director Peter Orszag has said the administration will offer ways to tackle the deficit in its next budget, in February.

Lawmakers also will have to mull an increase in the nation’s borrowing limit. Just before leaving town on Christmas Eve, the Senate joined the House in approving a short-term increase in the U.S. debt limit. But the $290 billion increase only bought the government borrowing power into February, meaning lawmakers must kick off an election year with a debate about the country’s debt. The U.S. debt ceiling now stands at $12.4 trillion.

House and Senate lawmakers will converge on the Capitol for a pro-forma session on Tuesday, but won’t get back to work in earnest until mid-month. The House will be back in session on Jan. 12 and the Senate will return for votes on Jan. 20.

With unemployment at 10 percent and with prospects for significant job growth dim, lawmakers are also poised to take up job-creation legislation.

The House cleared its $174 billion job-creation bill in December and now it’s the Senate’s turn to act. But Republicans have roundly criticized the measure and have compared it to the $787 billion economic stimulus bill signed by Obama last year. Republicans charge that the stimulus has been ineffective at creating jobs, but the White House says 3.5 million jobs are on track to be created by the end of the year.

Bank reform is also high on the congressional agenda. The House has passed its bill but the Senate hasn’t. At issue are rules that would prevent a reprise of the market meltdown that shook the world in 2008. But action is going to be slow out of the gate: the Senate Banking Committee is just beginning to debate the legislation, and analysts think a final vote by the Senate may not come until spring.

November’s congressional elections will hang over everything lawmakers do this year, and since a new president’s party usually loses seats, Democrats will need to be on the lookout for Republican attempts to unseat them. All of the House’s 435 members are up for reelection, and there will be 36 Senate contests. Republicans would need 40 House seats to capture that chamber, and 10 seats to wrest Senate control from Democrats.

(c) 2010, MarketWatch.com Inc. Source: McClatchy-Tribune Information Services.