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Whether Democrats can keep control of the House in the 2010 election hinges on three things: the direction of job growth, Democrats' ability to convince independent voters that the country’s finances are not out of control, and the direction of Barack Obama’s approval ratings.

Podesta argued that no one unemployment figure will be a “magic number” for Democrats' political success. Instead, if by the summer of 2010 the number of jobs in the economy is growing consistently, then Democrats in Congress can hold the loss of seats “to a relative minimum,” he said. One question, he added, is “do people smell we are on the right path or do they feel still bogged down?”

For Democrats to demonstrate that control, Podesta argued in favor of a timetable to put the federal budget back in balance. “Once the economy is fully recovered, deficit reduction will be critical to growth and broadly shared prosperity,” he said. The Center for American Progress proposes establishing a mechanism to ensure that government income and spending for all items -- except debt service -- move into balance by 2014. The next goal would be to have all government spending – including debt service – be covered by income in 2020.

President Obama is pushing for a permanent middle-class tax cut, but only if Bush-era cuts for top earners are eliminated. Republicans, in turn, want permanent tax relief for all income levels. The divide is rapidly becoming the marquee issue of the midterm election.

Given the lackluster recovery — with crucial housing and job markets still ailing — an expiration of tax cuts worth about $300 billion a year would be a huge hit to the economy, equivalent to 2% of the nation's total output. The potential economic fallout is far less clear if tax rates rose only for high earners.

The chances are small that Congress might address the issue before the November election. But there are ample opportunities for both parties to use their economic messages during the campaign.

The Obama administration established new federal greenhouse gas pollution limits. An October executive order requires federal government agencies to set greenhouse gas emission reduction targets that must be met by 2020. All of these actions, along with additional steps forward, will help enhance American economic competitiveness. And on December 7, Environmental Protection Agency Adminstrator Lisa Jackson announced the "endangerment finding" under the Clean Air Act. This enables EPA to finalize limits on global warming pollution from motor vehicles and large industrial sources. President Obama would prefer that Congress, rather than EPA, establish these pollution limits, but the endangerment finding means that EPA will act if Congress fails to do so.

China announced a carbon reduction target. The Obama administration’s hard work with China and India is starting to pay off. China announced on Thanksgiving Day a target of reducing carbon pollution per unit of gross domestic product by 40 to 45 percent from 2005 levels by 2020. This is the first time China has committed to specific carbon reductions. The November joint statement by Presidents Obama and Hu Jintao on the creation of a greenhouse gas inventory between the U.S. EPA and China will make it possible to measure and verify these reductions.

India announced a carbon reduction target. India announced on December 2, soon after the U.S.-India summit in Washington, that it intends to offer a target for decreasing its carbon intensity 24 percent from 2005 levels by 2020. This is the first time India has proposed its own specific carbon reduction target, which adds to its already established commitment to set the largest solar power generation target in the world.

Obama recently pledged that the United States would reduce emissions about 17 percent by 2020 as compared with 2005 levels (though the Wall Street Journal is reporting that he might soon announce steeper cuts for 2050); his current pledge reflects numbers in bills now under review by Congress. The president probably can't offer much more without risking that any final treaty would later be rejected by Congress, similar to what happened when the U.S. Senate failed to ratify the Kyoto climate treaty in 1997.

Rather than absolute carbon cuts, some developing countries, including China and India, have declared goals of reducing the "carbon intensity" of their economies. In other words, they will use less carbon per unit of GDP growth, but as their overall economies grow, so too will carbon emissions, at least for the short term. China has pledged to reduce the carbon intensity of its economy by 40 to 45 percent. India has a target of 20 to 25 percent. The targets have been applauded by some as a step forward and pilloried by others as far too low.

The upshot: Nothing will happen unless there's money behind it, and for some countries, the financial pledge may be as politically difficult as the carbon-reduction pledge. (Sen. John Kerry has proposed that the United States pony up $2.5 billion to $3 billion, roughly equivalent to the annual budget of the U.S. Food and Drug Administration.) With many industrialized countries stuck in recessions and struggling with high unemployment, short-term generosity will be difficult.

And while most Americans understand this system to be badly broken already, the US Supreme Court this year ruled, in Citizens United v. Federal Election Commission, to permit unlimited spending by corporations and unions to influence elections. Indeed, early figures show that vastly more money is being spent to influence the outcome of our elections this fall – $4.2 billion in political ad spending alone compared with just $2.1 billion in 2008, according to Borrell Associates. Less than a third of organizations spending money on the fall elections thus far are disclosing their sources of funds, thereby denying citizens any knowledge of who is trying to influence the election.

As an important first step in reclaiming our elections and curbing the undue influence of special interests on our candidates, it is high time that Congress passed the Fair Elections Now Act, introduced in the House by my former colleagues Democrat John Larson of Connecticut and Republican Walter Jones of North Carolina. Modeled after successful Fair Elections programs in eight states, the proposed law would require that participating candidates turn down special interest money and accept only $100-or-less donations from their constituents. Candidates who reach a qualifying threshold of 1,500 in-state donations would then be eligible to receive sufficient matching funds to run a serious campaign. This would dramatically reduce the influence of special interests, including unions and corporations. And Fair Elections would open the election process to many more Americans who currently have no opportunity to seek public office for lack of funds.

State government finances are a wreck. The drop in tax receipts is the worst in a half century. Fewer than 10 states ended the last fiscal year with significant reserves, and three-fourths have deficits exceeding 10% of their budgets. Only an emergency infusion of printed federal funny money is keeping most state boats afloat right now.

It's much more likely that we're facing a near permanent reduction in state tax revenues that will require us to reduce the size and scope of our state governments. And the time to prepare for this new reality is already at hand.

After crunching the numbers, my team has estimated that it would take GDP growth of at least twice the historical average to return state tax revenues to their previous long-term trend line by 2012.

Hailing from the Movement Toward Socialism (MAS), Morales won more than 62 percent of the vote in elections Sunday, with nearly all of the ballots counted. Bolivians also voted in a new Congress.

Morales has also tightened state control over natural gas and mining industries. Under his administration, relations with the US have at times soured. In 2008 he expelled both the US ambassador and the US Drug Enforcement Administration. His detractors say they fear he is taking Bolivia down the same path as Venezuela, where Chávez has also sought and won re-election and battled the country's elite. Most recently Chávez shut down several banks in a growing banking probe, including another one this past weekend. On Sunday a government minister stepped down amid the scandal and Chávez called bankers "dirty thieves."

The agency is also on weak legal ground in interpreting a four-decade-old law that was never intended to deal with global warming. And its efforts might be hung up in courts for years, providing yet another excuse for Congress not to act. (Both businesses and some eco-activists are expected to challenge the EPA move.)

Letting the agency take the initiative also makes the effort against global warming vulnerable to a new president reversing its action in future years.

In 1976, the EPA tried to avoid regulating diverse sources for lead emissions, focusing on major ones. But in a lawsuit brought by the Natural Resources Defense Council, it lost in court. It should not try such a move again.

After several years of crime rates holding relatively steady, the FBI is reporting that violent crimes – including gun crimes – dropped dramatically in the first six months of 2009, with murder down 10 percent across the US as a whole.

After several years of crime rates holding relatively steady, the FBI is reporting that violent crimes – including gun crimes – dropped dramatically in the first six months of 2009, with murder down 10 percent across the US as a whole. Concurrently, the FBI reports that gun sales – especially of assault-style rifles and handguns, two main targets of gun-control groups – are up at least 12 percent nationally since the election of President Obama, a dramatic run on guns prompted in part by so-far-unwarranted fears that Democrats in Congress and the White House will curtail gun rights and carve apart the Second Amendment.

The debate over whether guns spur or deter crime has been under way for decades. So far, research has come out with, in essence, a net-zero correlation between gun sales and crime rates. More likely factors for the crime rate decline have to do with Americans hunkering down, spending less time out on the town with cash in their pockets and more time at home with the porch lights on, experts say. So-called "smart policing" that focuses specifically on repeat offenders and troubled areas could also be playing a role, as could extended unemployment benefits that staved off desperation.

The "nays" have an edge over the "yeas" in the most recent Gallup poll on the issue, for instance. Forty-eight percent of respondents in the Dec. 16 survey said they would tell their member of Congress to vote against the healthcare bill as it now stands. Forty-six percent said they would advise their lawmaker to vote for it.

The pace of US home sales surged 7.4 percent in November, helping to bring down the inventory of for-sale homes to pre-recession levels. November's robust performance was fueled, however, by an extraordinary factor – the anticipated expiration of a tax break for first-time home buyers. First-time buyers accounted for 51 percent of purchases tracked in the report on previously owned homes, released by the National Association of Realtors Tuesday.

A case for optimism rests on several factors: Mortgage interest rates are low, Congress has extended the home buyers' tax credit through the first half of next year (it was set to expire at the end of November), and an improving job market next year could offset a continued high rate of mortgage defaults by households in financial trouble. While not auguring for a new housing boom, those forces could help keep the market on a path toward recovery.But other factors suggest that the housing market still faces significant headwinds. The biggest question mark is interest rates. The Federal Reserve has become a big investor in the mortgage market this year, creating demand for mortgage-backed bonds and thus pulling down the cost of loans for people buying homes. A 30-year fixed-rate loan averaged just 4.88 percent interest in November. But this month the Fed reaffirmed that it expects to complete its mortgage buying by the end of the first quarter of 2010.

Also weighing down the housing market is a large "shadow inventory," including homes in various stages of foreclosure. The record volume of foreclosures, highlighted in another report this week, shows no sign of stopping soon. In fact, "shadow inventory" continues to rise, according to a recent analysis by First American CoreLogic, which tracks the housing market.

The US Supreme Court has agreed to hear three cases in its current term examining a controversial federal statute that makes it a crime "to deprive another of the intangible right of honest services." The law is a powerful weapon in the arsenal of prosecutors seeking to root out all forms of public and private corruption. But the statute, critics say, fails to give fair warning of precisely which conduct violates the law.

In 1987, the Supreme Court struck down a similar "honest services" law, saying the outer boundaries of the statute were too ambiguous. The court said that federal prosecutors seeking to prove mail fraud would have to show a deprivation of actual physical property. In other words, it wasn't enough to provide evidence that a defendant had infringed "the intangible right of the citizenry to good government." The court declared: "If Congress desires to go further, it must speak more clearly than it has."

The bill must now go to a conference committee to resolve significant differences between the House and Senate versions. And history shows that agreement is far from guaranteed. In fact, just last year, a bill reforming the Indian Health Service died when the conference committee couldn't overcome its differences on abortion. Similarly, in 2007, bills dealing with issues as varied as campaign-finance reform, corporate pensions and closing tax loopholes passed both chambers but never became law. .author_pub2 a { float:right; margin: 10px 0 8px 8px; display:block; height: 142px; width: 110px; background: url(/people/pub_photos/tanner.jpg) no-repeat -110px 0; } .author_pub2a a { float:right; margin: 10px 0 8px 8px; display:block; height: 142px; width: 110px; background: url(/people/pub_photos/tanner.jpg) no-repeat 0 0; }

It's important to remember that the House bill passed with just three votes to spare and the Senate bill received exactly the 60 votes needed for passage. Democratic leaders have little room to maneuver as they try to resolve such issues as:

The Public Option: The Senate rejected the concept of a government-run insurance plan to compete with private insurance. Sens. Joe Lieberman (I-Conn.) and Ben Nelson (D-Neb.) made it clear that inclusion of the so-called public option would cause them to join a Republican filibuster. They are justifiably concerned that a taxpayer-subsidized government plan would drive private insurance out of the market and lead to a single-payer government-run system. But the House did include a public option -- and retaining it has become the top priority for the Dems' liberal wing. Public-option advocates seemed willing to go along with a proposed Medicare "buy-in" for those 55 to 64, but even that compromise was dropped from the final Senate bill. Now Rep. Anthony Weiner (D-Brooklyn), among others, has made it clear his vote is in doubt if the final bill does not include some form of public option. And such liberal activist groups as Moveon.org have promised to spend the holiday vacation pressuring their allies to fight for the public option.

At heart, the House and Senate versions of healthcare reform legislation are very much the same. Both require virtually all Americans to have health insurance, while offering low- and middle-income people subsidies to make that mandate more affordable. Both would establish new marketplaces, called "exchanges," where individuals who don't get insurance from employers could buy coverage. Both would cost about $1 trillion over 10 years and pay for themselves via cuts in projected Medicare spending and tax and fee increases. Both would ban insurance firms from denying anyone coverage due to pre-existing health conditions.