White House defends deficit

Washington Sun Feb 12, 2012 1:14pm EST

White House Office of Management and Budget Director Jack Lew answers questions during the Reuters Washington Summit in the Reuters newsroom in Washington November 8, 2011. REUTERS/Jonathan Ernst

White House Office of Management and Budget Director Jack Lew answers questions during the Reuters Washington Summit in the Reuters newsroom in Washington November 8, 2011.

Credit: Reuters/Jonathan Ernst

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Washington (Reuters) - President Barack Obama's chief of staff, Jacob Lew, defended his boss on Sunday for failing to cut the U.S. budget deficit, making the election-year argument that now was the wrong time to impose austerity measures that could sap an economic recovery.

Republicans have slammed Democrat Obama for laying out a budget plan that raises taxes on the rich, which they view as designed to help his campaign for re-election on November 6, rather than controlling the growth of the U.S. deficit and debt.

But Lew, speaking on Sunday television news shows on the eve of Obama's 2013 budget proposal to Congress, said the plan would outline $4 trillion in 10 year deficit reductions, alongside measures to deliver essential support to near-term growth.

"I think there is pretty broad agreement that the time for austerity is not today," Lew, Obama's budget chief until few weeks ago, told NBC's "Meet the Press".

This was also why Congress ought to pass a payroll tax cut extension before it expires in two weeks' time, he said.

Obama's budget will request over $800 billion in multi-year spending for job creation and infrastructure programs, including tax breaks for companies and individuals worth more than $300 billion in 2012 if passed into law.

Congress is free to ignore the president's proposals and Republicans have said Obama's budget will be dead on arrival.

"Jack Lew did the full tour of all five Sunday shows this morning, failing on each show to articulate how their upcoming budget would lift the crushing burden of debt," said Gerrit Lansing, spokesman for House of Representatives Budget Committee Chairman Paul Ryan, a Republican.

The budget, which will delivered to Congress on Monday, projects the deficit at $1.33 trillion this fiscal year or 8.5 percent of gross domestic product, declining to $901 billion, or 5.5 percent of GDP, in 2013.

DEFICIT PLEDGE

Obama pledged in 2009 to have halved the deficit by next year, and his failure to deliver has provided Republicans with ammunition as they seek to deny him a second term by portraying him as old style tax and spend liberal.

"On this issue - the debt - this president has been completely AWOL. Republicans have had to fight tooth and nail for every dime in savings we've secured," Mitch McConnell, the top Republican in the U.S. Senate, said on Thursday.

Lew, however, argued that Obama's deficit promise was made before he truly understood the depth of the recession he had inherited from Republican President George W. Bush.

"When we took office, the economy was falling so fast that the first thing we had to do was put a bottom in ... It cost money in terms of lost revenue and slower economic growth. We're on track now," Lew told ABC News.

The White House said the funding gap will shrink to 2.8 percent of GDP by 2018, below the 3 percent/GDP threshold that credit rating agencies and investors see as the goal to stabilize the growth in national debt as a share of the economy.

Lew said Congress and the administration are working to see if a compromise can be reached over extending the payroll tax cut for 160 million Americans, which will expire on February 29 unless Congress acts.

"They have two weeks now to do the important business so they don't get in the way of our economic recovery," he told NBC. The White House estimates extending the payroll tax cut for all of 2012 could add a percentage point to growth this year.

(Additional reporting by Jackie Frank; editing by Christopher Wilson)

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Comments (4)
speaker12 wrote:
How in the world can one defend the undefensable? We get nothing but doublespeak from this administration.

Feb 12, 2012 12:21pm EST  --  Report as abuse
OneOfTheSheep wrote:
Just as parents are responsible for undisciplined children, so taxpayers are responsible for ineffective and/or inefficient government. Neither get more than they demand. Just as it falls to parents to change the ways of children who don’t or won’t learn to manage financially within their allowance, so must taxpayers reign in their irresponsible governmental representatives (or replace them). Raising the allowance before necessary lessons are learned only rewards unacceptable performance, and may make necessary reforms ultimately impossible.

When an administration is willing to print endless dollars backed by absolutely NOTHING that will eventually and inevitably reduce the purchasing power of each in circulation. The moment we pull the plug on the government’s printing presses, unprecedented change is upon Congress. The mind set of politicians of both parties has long been “if we spend it they will pay”.

The necessary first step of the journey of a thousand miles is to hold serious and public debate so as to create a majority citizen consensus as to the kind of government we can afford at the present productivity of our society. A future of finite funding (available revenue) will mandate Congressional priorities. The very concept of “limited means” applicable to a genuine “budget” and, eventually, SHRINKING “debt limits” has been foreign to the halls of our Congress. Instead America has become addicted to ever more frequent increases in the “debt limit” that are a mockery of their original purpose.

Taxpayers must (1) Convince Congress they want such reform SERIOUSLY, and will replace those who can not or will not deliver it. Only when Congress demonstrates it can and will create and accept in good faith an honest budgetary process should taxpayers “increase their allowance”. Only when taxpayers KNOW that existing “available revenue” is being used effectively and with appropriate priorities will ADDITIONAL revenue be appropriate to consider.

Again and again Congress has shown that meaningful fiscal reform will never take place so long as there is any alternative. The single effective Congressional motivation towards such reform is increasingly irresistible financial pressure focused by a firm deadline. Only when their feet are ever closer to the fire with the passing of time can we be CERTAIN they will act (because they MUST).

At present we do NOT have “good” government. The “system” as it currently exists and those who run it are not cheap, efficient, friendly or responsive. I see absolutely NO reason to keep doing what we are (and have been) doing and expecting different results. But THESE changes will be resisted by every career bureaucrat and every politician of every party. Good arguments for “cleaning house”, lower salaries and universal two-term MAXIMUM political limits.

Feb 12, 2012 7:17pm EST  --  Report as abuse
Harry079 wrote:
“that now was the wrong time to impose austerity measures that could sap an economic recovery.”

“Now is the time for all good men to come to the aid of their party.”

“Greece is the word, is the word, is the word…”

“The wheel that squeaks the loudest gets the Greece”

Feb 12, 2012 9:19pm EST  --  Report as abuse
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