Confronted with a Republican majority in the House of Representatives and a recovery that has failed to gather pace, Barack Obama is assembling a team of Clinton Administration veterans to steer his economic policy in the new year. But it seems his party’s leader in the Senate, Harry Reid, hasn’t adjusted to political reality yet.

The administration has now to work with Republicans who intend to slash federal expenditures and threaten to derail a vote on raising the debt ceiling unless serious cutbacks are introduced. Personnel changes in the president’s economic team reflect the shift in power that occurred in Washington as a result of November’s midterm elections.

The new White House chief of staff, William Daley, former commerce secretary and JPMorgan Chase executive, is but one among moderate Democrats who will design the president’s economic agenda in years to come. Gene Sperling, an economic advisor to President Bill Clinton’s, will direct the National Economic Council while Jacob Lew, who headed the Office of Management and Budget between 1998 and 2001, will reclaim his old job as budget chief. “Our mission has to be to accelerate hiring and accelerate growth,” the president declared Friday.

Neither has happened so far. Even as unemployment dropped slightly last month, partly due to people who simply gave up looking for work, the chairman of the Federal Reserve is far from optimistic about the near future. Testifying before Congress Friday, Ben Bernanke predicted that joblessness will remain close to 8 percent for at least another two years. “At this rate of improvement, it could take four to five more years for the jobs market to normalize slowly,” he said.

Bernanke warned that the federal government is on an “unsustainable fiscal path,” borrowing approximately a third of what it spends. He characterized the trend as nothing short of a “critical threat to our economy.” The United States may have the economic capacity to pay back its loans eventually, he said, but “it’s really a question [of] political will.”

In an interview with The Wall Street Journal, Bernanke’s predecessor at the Fed, Alan Greenspan, was even more pessimistic, fearing a bond market crisis unless Congress reins in spending soon. He expressed support for the recommendations of the president’s budget commission whose chairmen two months ago proposed tax reforms and spending cuts that would cut some $4 trillion in debt. In the long run however, even their plans would not restore full balance to the budget.

Democrats have adamantly rejected proposals to curb entitlement spending. Former House speaker Nancy Pelosi professed in November that reform “must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare.” The president himself has pledged to preserve Social Security “forever.” He denounced privatization as “an ill conceived idea that would add trillions of dollars to our budget deficit while tying [people’s] benefits to the whims of Wall Street traders and the ups and downs of the stock market.”

On Meet the Press Sunday, Senate Majority Leader Harry Reid even pretended that public pensions were in no need of reform for decades to come. “Stop picking on Social Security,” he said. “It’s not in crisis. This is something that’s perpetuated by people who don’t like government. Social Security is fine.”

Total entitlement spending currently accounts for about a third of the federal budget. In the next ten years, the Congressional Budget Office expects the programs Medicaid, Medicare and Social Security to grow substantially. By 2020, they would swallow up half of all expenditures. Obamacare is likely make matters worse after that date.

Yet Reid characterized the Republicans’ effort to repeal health-care reform as “a gesture in futility.” A conservative majority in the lower chamber has agreed to debate the repeal of Obamacare next week. Reid has threatened that he will not bring a repeal law to a vote in the Senate where it is almost certain to fail anyway.

“They can’t be serious,” Reid said about the Republicans’ plans. “To increase the debt by more than a trillion dollars? They can’t be serious to want, have people now that have preexisting disabilities no longer be able to get insurance. They can’t be serious when people who are on Social Security now can get a free checkup, wellness checks anytime they want and not have to pay for it.”