Despite grim new deficit estimates, the Senate rejected efforts Tuesday to create a bipartisan commission empowered to force up-and-down votes in Congress on long-term steps to relieve the mounting debt facing the nation.

A majority of senators backed the measure on the 53-46 roll call but it still failed after falling seven votes short of the 60 required under prior agreement for passage.

President Barack Obama is now expected to step in and by executive order create his own commission, also designed to force action after the November elections. But the landscape ahead is clearly difficult given the economic outlook and raw politics seen in the Senate debate.

Not only Obama but also Scott Brown, the newly elected Massachusetts senator and Republican hero, had supported the commission idea, sponsored by Senate Budget Committee Chairman Kent Conrad (D-N.D.) and his ranking Republican, New Hampshire Sen. Judd Gregg. But old guard elements in both parties resisted and it was ultimately doomed because top Republicans feared it would help Democrats extricate themselves from a difficult debt ceiling bill.

It’s now estimated that Treasury will need another $1.9 trillion in borrowing authority to carry the government past the November elections into the spring of 2011. Republicans would prefer more of an “installment plan” forcing multiple votes in the same period to bleed the Democrats politically.

Both parties were ultimately divided in Tuesday’s vote, and Republicans could yet pay a price for their tactics.

Tennessee Sen. Lamar Alexander, chairman of the Senate Republican conference, stood with Gregg in the fight despite the opposition of others in his leadership. In an interview with POLITICO, he anticipated that more would have to be done by Obama than belatedly endorsing the commission only days before the vote.

“For it to win, the president will have to more,” Alexander said. “I think he’ll have to produce a Democratic majority in favor of it, and if he does, I think there will be a significant number of Republican votes to go with it.”

“The president’s the agenda setter. The debt’s the issue. And if this is his proposal he needs to produce the votes to pass it.”

In fact, a majority of Democrats did back the measure including most of the party’s top leaders. But there was a fatal undercurrent of opposition from top chairmen of tax writing and appropriations committees, and Majority Leader Harry Reid (D-Nev.) made little effort to temper this campaign led by Senate Finance Committee Chairman Max Baucus (D-Mont.).

Tuesday’s maneuvering came as the Congressional Budget Office released new spending and revenue estimates showing a $1.35 trillion deficit for the current fiscal year ending Sept. 30.

This is only modestly less than the $1.4 trillion wave of red ink that the government experienced in 2009, as revenues continue to lag with the slow economic recovery. Even in 2011, CBO shows a nearly $1 trillion shortfall, and that picture could well be worse depending on the costs of the war in Afghanistan and what Congress decides on long term tax policy.

CBO is projecting that unemployment will average slightly above 10% in the first half of 2010 and then turn downward in the second half. But the building debt carries with an added burden since once the economy improves, CBO says that higher interest rates will come back and bite the Treasury trying to finance these deficits.

“Interest payments on the debt are poised to skyrocket,” CBO says. From 2010 through 2020, CBO projects the annual costs will triple in nominal terms from $207 billion to $723 billion and more than double as a share of GDP.

Read more: http://www.politico.com/news/stories/0110/32017.html#ixzz0dkA83EiN