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San Francisco Chronicle: Pelosi Outlines Her Priorities

By Carolyn Lochhead, Chronicle Washington Bureau

Washington - -- Fresh from a visit with her newest, eighth grandchild and an astonishing three-month run of lawmaking that ends the Republican era in Washington, House Speaker Nancy Pelosi vowed Friday to press ahead on climate change and health care, while making a moral and practical case for restraining U.S. debt levels that have many in her own party worried about the future.

'Washington is a very, shall we say, perishable town,' Pelosi said. 'You have an opportunity, you must seize it, otherwise it might not be there. The forces of the status quo are mighty, and they have deep pockets, and they can wait you out.' The public asked for change, she said, and the economy requires it.

Her anger at the $1.8 trillion deficit left by the Bush administration was on full display at a meeting with reporters in her conference room at the Capitol, flush with a victory on a $3.5 trillion budget for 2010. That followed a nearly $800 billion fiscal stimulus bill, an expansion of health care coverage for low-income children, a new national service corps and the largest public lands and conservation legislation in 15 years.

This year's deficit is also projected to reach $1.8 trillion, far and away a record.

'We inherited the debt from the Bush administration, an unconscionable, almost immoral, obscene debt,' Pelosi said, vowing to cut the deficit in half in four years.

Investing is the answer

But her answer to Republicans gaining newfound support by criticizing Democratic spending plans was that federal investments in education, energy and health care are the answer to reducing the debt, not the cause of it. In Pelosi's view, closely aligned with President Obama's, such spending will rebuild the economy on a new foundation.

Not only does she think climate change and health care legislation should be done this year, but she also said they 'must be done' as an integral part of the Democratic economic agenda.

So begins a reversal of a generation of Republican orthodoxy grounded on the idea that big government slows economic growth and tax cuts revive it.

Twenty-two years ago, when Pelosi came to Congress as San Francisco's newly elected representative, Republican President Ronald Reagan was in the White House.

'We as progressives saw that unless you could get rid of that debt, you were not free to do the other things you wanted to do,' Pelosi said. 'Imagine, in our budget, a quarter of a trillion dollars is for interest on the national debt. Nothing. You get nothing for it.'

Spending on education, by contrast, she said, will eventually bring money to the Treasury. Health care reform, she said, is the key to reducing unsustainable entitlement spending, and alternative energy likewise could free the economy from foreign oil. While under pressure from conservative Democrats, who trimmed some of Obama's spending plans, Pelosi said reducing the deficit 'is the mantra across the board in our caucus.'

Fight over cap and trade

Pelosi was equally adamant about rolling back the Bush administration's tax cuts on high-income earners and said she is 'not shedding a tear' over the departure of General Motors chairman Rick Wagoner, as ordered last week by the White House as part of a fresh infusion of federal cash and the possible expedited bankruptcy reorganization of the company, which Pelosi said President Bush should have ordered six months ago.

She conceded that action on climate change legislation will be daunting, acknowledging Democratic divisions over a cap-and-trade mechanism that would set a limit on greenhouse gas emissions and auction emissions permits to businesses that pollute over the cap. Such a system, depending on how it is structured, would raise electricity rates and bring in hundreds of billions of dollars to the government. While the idea has support from pro-environment Democrats, especially in California and in the West where solar and other alternative power hold promise, many Democrats from regions dependent on coal-fired electricity or that produce coal and oil are raising stiff opposition to the idea.

'We are working with our coal patch, our car patch, our oil patch, everybody to see what their concerns are precisely, and they are legitimate concerns,' Pelosi said. 'You can't do this unless you have consensus. Even if you had the votes - even if you had the votes - you wouldn't want to do this unless you had consensus on how you go forward.'

A moral issue

That is why she said she was willing to remove climate change legislation from special rules that would get around a Senate filibuster.

But Pelosi insisted that action will come, calling energy a national security, environmental, health and economic issue.

'And it is in my view a moral issue,' she added. 'I believe, as do many of us, that this is God's creation. We have a moral responsibility to preserve it.'

At the same time, she said, a cap-and-trade system would probably force up energy costs, promising that any revenue raised by the government should first go to compensate consumers.

'You can't say, 'Well, we're preserving the planet, we're reducing our dependence on foreign oil, we're becoming innovative leaders in the world, and by the way, you're paying for it as a ratepayer,' ' Pelosi said. 'This is a very big deal. This is something we have to come together on and build consensus around.'

She also acknowledged that a straight carbon tax would be more efficient, but said it has no political viability, although she left open the possibility of some kind of hybrid carbon tax combined with various iterations of a cap-and-trade system.

Pelosi was much less accommodating toward Democrats who have expressed resistance to Obama's idea of paying for expanded health care coverage by limiting tax deductions for charitable contributions and mortgage interest for those at the top income levels.

'Decisions will have to be made,' she said. 'At the end of the day, what matters is how it affects the American people. I don't think anybody in this Congress or the White House wants to go to them and say, 'It would have been great, it would have happened except we couldn't have this, or we had it except we couldn't get reconciliation, so you don't get health care.' There are no excuses that are possible on the health care issue. It's too personal, too immediate in the lives of the American people.'