Big Ideas=Bags Of Cash

On another day in another time, the White House chief of staff might have been on Air Force One, flying to the metropolis of Los Angeles, where his brother is a famous Hollywood agent and the president was doing "Jay Leno." But Rahm Emanuel stayed in Washington last week, hunkered down behind closed doors in the U.S. Capitol, plotting ways to push his boss's colossal, ambitious $3.6 trillion budget through a Congress that increasingly looks like it might blanch at the price tag. Even as he met with Speaker Nancy Pelosi and other House Democrats—longtime allies from his days as a Chicago congressman—officials elsewhere on the Hill were issuing grim new predictions about federal deficits five years hence. To which Emanuel, I am told by a source in the leadership, had a characteristically scatological response, involving an anatomically impossible sex act. Rahm denied the remark, but not the sentiment. "Now is not the time to pull back," he said to me. "Those long-term predictions are meaningless—and usually wrong."

While the Beltway is getting its populist freak on over AIG, a bigger, more fateful drama is underway in the Speaker's office. It's about nothing less than whether the Obama administration can reverse a generation's worth of skepticism about the role of government in our lives. The federal budget is the Rosetta stone of American public philosophy, and Obama and Emanuel want to re-chisel it in expensive new ways: quality health care for all; better, more innovative public education; a rewritten IRS code that taxes the wealthy more heavily to channel benefits to lower-income Americans; and a new global effort to slow climate change.

As you watch the drama unfold, think of the Obama budget as Iraq in reverse. Neocons in the Bush administration used the attack of 9/11 to push us into Mesopotamia; progressives see economic crisis as an opportunity as well. "We believe in the affirmative role of government," Emanuel says. "Not 'active' for its own sake, but affirmative in the sense of being a force for good in everyday lives—education, health, a lessening of economic and social schisms in society."

The problem is that affirmation is expensive. The budget projects a deficit next year of at least $1.7 trillion—piled atop the trillions already spent or loaned to try to dig us out of a global recession. "It is totally unsustainable," says Democratic Sen. Kent Conrad, a Stanford M.B.A. who chairs the Budget Committee. Even if Obama is correct in claiming that he can cut the deficit in half in the next few years, the burdens on future generations will continue to grow. Motivated by such concerns, 15 Senate Democrats last week formed a "moderate" bloc. A creature of the House, Emanuel —and Obama—will have to win them over. "As long as they're not just posturing, I can work with them," he told me.

But he's not taking any chances. While his battle plan isn't final, it probably will involve tinkering with the Senate's rules to allow health-care, tax and education bills to pass with only 51 votes—not the filibuster-proof 60 that has become the norm in the Senate. But even getting 51 votes won't be easy. There is already talk of dropping Obama's environmental plan from the 51-vote bill—a concession to moderates such as Evan Bayh of Indiana. Emanuel denied there was such a deal. But the dealmaking has just begun, and the theatrics will be worthy of Hollywood by the time the credits roll.

© 2009