Matt Mackowiak

is president of Potomac Strategy Group and was press secretary to two Republican senators

There is an important thread that connects the failed stimulus bill and current efforts to reform health care: the federal deficit. And there is only one group on Capitol Hill with the commitment, credibility, and political mind-set to block the current health-care legislation.

The Blue Dog Coalition is currently made up of 52 conservative and moderate Democratic members of Congress and has been in existence for 15 years. The organization exists, primarily, to join politically vulnerable Democrats and serve as a moderating influence on the larger and more liberal Democratic caucus.

On the organization's Web site, you'll find the following figured prominently: "Currently, the U.S. Debt is estimated at: $11,226,807,380,955.11. Your share of today's public debt is: $36,683.01." The Blue Dogs have kept a laserlike focus on the federal deficit in recent years.

On July 13, the federal deficit reached $1 trillion for the first time in U.S. history, and there is now real concern about near-term inflation and necessary interest-rate increases. The federal deficit for the year is expected to be $1.8 trillion - a sum greater than the last five years combined.

Why does this matter?

The $787 billion stimulus bill, the most expensive in U.S. history, was signed into law on Feb. 18. Since that time, the national unemployment rate has reached 9.5 percent, a 26-year high. Unemployment seems likely headed into double digits this year and is higher than the Obama administration projected. Additionally, less than 10 percent of the stimulus funding has gone out the door since the bill was designed to spend more from 2011-2019 than it would this year, when the need is greatest.

The Blue Dogs were willing to support the stimulus, and the significant increase in the deficit, with the hope and expectation that the bill would forestall an economic depression and lead to a rosier economic picture by the end of this year. That has not happened.

The question is, do regular people really care about the deficit? The answer appears to be yes. A poll released on July 20 conducted by the Washington Post and ABC News showed that public approval with President Obama's handling of the deficit is now at 43 percent, with more independents disapproving than approving (48 percent to 42). Interestingly, the public does not just disapprove of his handling of the deficit; they prefer deficit reduction to increased spending to revive the economy by 55 to 40 percent in the same poll.

What does this all mean?

The Obama administration has made major health-care reform its signature domestic policy goal this year and set a deadline of early August for both houses to pass legislation.

The perceived failure of the stimulus bill made health-care reform even more complicated because Obama felt he had to promise that the bill would be deficit-neutral to attract Blue Dog support. With Republicans unanimously opposing the Democratic health-care bill, Obama must have the Blue Dogs to pass it.

But in order for the bill to be deficit-neutral, Obama and the Democrats have had to include unpopular provisions: slashing reimbursement rates, increasing taxes on small businesses and the wealthy, mandating that employers provide coverage or pay not to, and including a public option.

A poll released on July 20 by the USA Today and Gallup found that by a margin of 50 to 44 percent, Americans disapprove of Obama's handling of health care.

This complicated health-care plan, which is still coming together on Capitol Hill, has left Obama playing defense on the issue. Recently, the nonpartisan Congressional Budget Office reported to House Democrats that the legislation would not be deficit-neutral and would, in fact, add $239 billion to the deficit over 10 years.

Of the three committees in the House with jurisdiction over health care, two have reported their bills out. However, the third, the Energy and Commerce Committee, according to the Wall Street Journal, includes "a large bloc of members of the Blue Dog Coalition [who] have been raising concerns about the cost of the House leadership plan." The Blue Dogs have said that it takes seven votes to block the bill in committee and they have 10.

The irony of this situation is that Obama and the Democratic Congress rushed through a terrible stimulus bill, wasting their one opportunity to add to the deficit without risking major Blue Dog defections. Because the economy has worsened and the stimulus bill has had no real positive effect, Democrats in vulnerable districts are requiring that health-care reform not add to the deficit, which in turn is imperiling the bill's passage.

E-mail Matt Mackowiak at matt@potomacstrategygroup.com