The war in Afghanistan and the health care bill are consuming much of Washington’s oxygen today, but looming in the background is a high-stakes clash over what to do with an estimated $210 billion in unspent and returned cash from the government’s rescue of Wall Street.

Rep. Earl Blumenauer (D-OR) (Photo: Airdye.com)

A growing bloc of congressional Democrats hope to see bailout aid redirected to create jobs through new infrastructure spending, and Rep. Earl Blumenauer (D-OR) gave voice to their perspective with a USA Today op-ed. Blumenauer wrote:

Infrastructure represented
only 4% of the economic recovery package, yet produced more than 25% of
the jobs saved or created. For every billion dollars spent rebuilding
America, 25,000 jobs are created. This employment goes beyond the hard
hats. When you include the engineers, the equipment and materials, even
the workers stopping at the coffee shop next to the job site, there’s a
vast chain of economic activity. …

The question is not whether we should do this, but how. In the
current economic crisis, taxpayers provided hundreds of billions of
dollars to bail out a collapsing financial sector. Those funds were
necessary to protect the financial system from meltdown. That collapse
has been averted.

Blumenauer suggested that bailout funds could help pay for a new long-term federal transportation bill, which remains stalled in Congress amid a stalemate over financing.

Despite the seeming merits of that move, it could run afoul of Capitol budgeteers who depend on a reliable source of funding to set a floor, or "baseline," when the next six-year federal legislation comes up for debate. In addition, White House economic adviser Larry Summers and Treasury Secretary Tim Geithner are believed to oppose the use of Wall Street money on infrastructure.

Still, supporters of diverting Wall Street’s bailout to pay for Main Street improvements may have some time to make their case. House Majority Leader Steny Hoyer told reporters today that while the lower chamber plans to take up an extension of the Bush-era estate tax breaks before the end of the year, a new jobs bill could fall to 2010.