By DAVID ROGERS | 7/9/09 4:24 AM EDT

For a party that wants to dream big, Democrats keep tripping over the small stuff.

This summer’s agenda is historic: health care, climate change, financial regulatory reform. So why can’t the White House — with a 60-vote majority in the Senate — win a simple fight over a $12 million bus security program targeted for termination?

The picture’s no better in the House, where the Democratic leadership didn’t even allow a floor vote last month on cutting the F-22 — Defense Secretary Robert Gates’s No. 1 target in revamping the Pentagon’s budget. And with the highway trust fund running on fumes, Transportation Secretary Ray LaHood and House committee chairmen are at loggerheads with the money due to tap out Aug. 21.

White House chief of staff Rahm Emanuel likes to say that each legislative victory builds muscle for the next battle. But Democrats look like a team that could use a few more basic-training pushups before taking on huge sectors of the economy.

The party’s budget resolution this spring required little sacrifice, and Senate Finance Committee Democrats — under pressure from big donors and university presidents — fled quickly from a White House proposal that the rich get the same deductions as the middle class when it comes to charitable giving.

Even the House’s landmark victory on energy and climate change legislation had a certain self-indulgence to it. Speaker Nancy Pelosi (D-Calif.) used the 219-212 vote to put down an important marker, challenging the Senate, the president and perhaps G-8 nations, as well. But she did so by allowing 17 percent of her Democrats to oppose the legislation — a luxury Senate Majority Leader Harry Reid (D-Nev.) can’t afford if he is to prevail.

As if sensing this vulnerability, Barack Obama’s old rival, Sen. John McCain (R-Ariz.), has helped force a series of votes this week exposing splits between the president and Democrats on small but nettlesome questions.

The bus program termination — a very modest initiative by Obama — was blocked 51-47 on Tuesday. A second amendment, initiated by Sen. Russ Feingold (D-Wis.) and co-sponsored by McCain, would have struck millions in earmarks opposed by the president. It failed 60-38 on Wednesday, with just 12 Democrats and Connecticut independent Sen. Joe Lieberman backing Obama from his side of the aisle.

McCain taunted: “The Senate just voted against the president of the United States. There are 60 votes over there,” he said, pointing to the Democratic side of the chamber. “We could not get 51.”

All this comes at a critical period of introspection for Democrats and Obama. The president inherited huge economic problems and devoted his early energy to these, including a $787 billion stimulus bill. With that in place, he moved on to define success more in terms of moving his ambitious legislative agenda. But in truth, the economy is still the make-or-break issue going into the 2010 elections — a lesson hammered home by last month’s jump in unemployment.

“They have made this year a legislative test: pass health care, pass climate change,” said one Democratic strategist. “But the fact of the matter is, the only test that matters is, ‘Is the economy working?’”

The White House would argue that the big pieces of Obama’s agenda, such as health care and energy, all tie back to the economic recovery. But this message can get drowned out in what are often ideological fights over public health plan options or rebates on pharmaceutical manufacturers. And the failure to act on even the relatively modest budget savings proposed by Obama can make Congress seem frivolous, intramural at a time of real economic worry for voters.

Gates is preoccupied — some would say to a point of fault — with halting F-22 production at 187 planes, and Obama has already raised a veto threat against any effort to continue funding. Nonetheless, the House-passed defense bill includes advanced procurement, and the Senate Armed Services Committee overruled its own leadership and added funds for the twin-engine front-line fighter, which combines stealth qualities with an ability to fly at high altitudes and speeds for a sustained period of time.

An effort will be made to strike the funds on the Senate floor, but Senate Appropriations Committee Chairman Daniel Inouye (D-Hawaii), a longtime supporter with an F-22 base in his state, has thrown his weight behind the program. This leaves Rep. John Murtha (D-Pa.), chairman of the House Appropriations defense panel, as perhaps Gates’s best shot, and the two men met at the Pentagon recently in anticipation of Murtha’s writing his bill later this month.

“He’ll prevail in the end, no doubt about it,” Murtha told POLITICO, but the path ahead could be circuitous. “We want to work with him. He and I have a little different perspective, but in the end we want to work very closely with the secretary.”

Lockheed, the chief contractor for the F-22, has actually laid back in the fight, in part because it also has an interest in future production of the F-35 Joint Strike Fighter, which would grow under Gates’s budget. And the greater political focus has been Connecticut-based Pratt & Whitney, a unit of United Technologies, which manufactures the F-22’s engines.

Sen. Chris Dodd (D-Conn.), facing a tough reelection next year, is being helped by his friends on Armed Services and Appropriations. Rep. John Larson (D-Conn.), who chairs the Democratic Caucus and is a Murtha ally, has put pressure on his friend, who would like to find a way to maintain at least some engine production and avert layoffs.

The threat of job losses brings the fight back to the whole economic debate. But the massive dislocations already with this recession — such as the historic restructuring of the auto industry — also put the choices in a different light.

“It’s a very expensive jobs program,” said House Financial Services Committee Chairman Barney Frank (D-Mass.), a critic of the F-22 program. “It could mean less money for cops.”

“On the one hand, they say they’ll lose the work force,” Frank told POLITICO. “On the other hand, they’ll all be unemployed. But they can’t be both. They can’t be unemployed and lose the work force. They underestimate themselves. They shut it down, they reopen. There would be people to work there.”

Shutting down the highway trust fund is not in the cards, but with gas tax revenues down, the government won’t have sufficient money by late August to meet the claims expected then from states. A disruption would be a serious setback for Obama’s larger economic recovery plan, which seeks to create more jobs through many of the same types of transit and highway projects financed by the trust fund.

Thus far, the administration has held firm to the idea of an 18-month fix, costing about $20 billion and to be at least partially offset by some of the tax compliance measures in the president’s budget targeted at offshore corporations and shelters.

But Democrats like Rep. Peter DeFazio see a problem that could be a solution: “Stimulus II” — a major five-year investment in roads, transit and high-speed rail.

Not as big as health care reform, but a problem that’s hard to ignore.

This entry was posted on Friday, July 10th, 2009 at 2:20 pm and is filed under Business News, Financial, Political. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.