Grim economic news will greet members of Congress when they return next week, which could motivate liberal Democrats to push for stalled stimulus spending packages.

Retail sales are flat, the economy is still shedding jobs and the unemployment rate remains perilously high at 9.5 percent. The news was even worse for the housing industry, which reported a staggering 30 percent drop in pending home sales in May.

Before they left for a weeklong recess, spending jitters among lawmakers in both parties blocked legislation to provide $24 billion in aid to cash-strapped states to stop looming layoffs of firefighters, police and other municipal employees. And Congress failed to round up enough support for a $23 billion measure aimed at averting teacher layoffs.

Lawmakers in the Senate even fell short of the 60 votes needed to extend unemployment insurance benefits, which would have cost $33 billion -- all added to the nation's $1.3 trillion deficit. Republicans and one Democrat in the Senate refused to back the extension unless at least part of it was paid for.

"I think that the economic indicators that we've seen over the past few weeks provide a lot of support for Congress to come back into town and take steps to ensure that emergency unemployment benefits are extended, that teachers are back in the classroom in the fall and police are on the beat," said Heather Boushey, senior economist at the liberal Center for American Progress.

Democrats in Congress are being cajoled to spend more by both pundits and the president.

Influential New York Times columnist Paul Krugman recently predicted a depression unless Congress reversed its "stunning resurgence of hard-money and balanced-budget orthodoxy."

And in a speech he delivered Thursday at a car plant in Kansas City, Mo., President Obama acknowledged the stagnant economy, telling the audience, "We've got a long way to go."

Obama appeared at Smith Electric Vehicles, which received money from the $800 billion stimulus bill, and he made a veiled argument that further stimulus spending is needed to get out of the economic crisis.

"There are some people who argue that we should abandon some of these efforts, some people who make the political calculation that it's better to just say no to everything than to lend a hand to clean up the mess that we've been in," Obama said.

The Senate this month will likely try to at least pass another extension of unemployment benefits and both chambers will have to reconcile a war spending bill that will cost up to $80 billion.

Some believe it may be difficult for Democrats to garner support for additional stimulus spending.

"Now that they have spent most of the Congress working on other priorities, the Democratic majority is reaching for the panic button to connect with Americans about jobs and the economy," said Republican strategist Ron Bonjean, a former top GOP aide in the House and Senate. "It is a difficult vote for moderate and vulnerable Democrats who represent constituents frustrated by record debt and skyrocketing spending."

sferrechio@washingtonexaminer.com