Jacob Lew defends Obama’s spending plan

The Washington Post

White House Chief of Staff Jacob J. Lew on Sunday dismissed Republican criticism of President Obama’s latest spending plan, arguing that it charts a long-term strategy for tackling the national debt while offering a short-term boost to the recovering economy.

The budget request, due on Capitol Hill on Monday, calls for spending $3.8 trillion in 2013, according to sources with knowledge of the document, including fresh increases for roads, infrastructure, manufacturing and education, as well as a year-long extension of emergency unemployment benefits and a temporary payroll tax holiday.
The White House says those investments would “construct an economy that is built to last.” But they would also keep annual budget deficits above or hovering near $1 trillion for a fifth straight year.

Congressional Republicans seized upon the deficit projections when they were released Friday, noting that Obama has failed to keep a 2009 promise to cut the deficit in half by the end of his first term. The 2009 deficit was $1.4 trillion; Obama is projecting a $1.33 trillion deficit this year and a $901 billion budget gap in 2013.

During appearances on all five major Sunday talk shows, Lew, who served until recently as Obama’s budget director, refused to acknowledge that lapse, arguing that Obama had been forced to take expensive action to shore up an economy in far worse shape than anyone had imagined. While debt-reduction remains a top priority for the president, Lew said, it would be a mistake to cut too much too fast.

“The American people should be pleased that we now have a recovery that’s taking root,” Lew said on NBC’s “Meet the Press.” “The thing that we have to be careful about is to make sure that Washington doesn’t get in the way.”

Obama is set to unveil his 2013 spending plan Monday morning on the Annandale campus of Northern Virginia Community College, a venue chosen to highlight his proposed investments in a skilled workforce. The event kicks off an election-year budget season important primarily as a forum for drawing a contrast between Obama and his low-tax, small-government Republican opponents. Senate Democratic leaders have said they have no intention of adopting a budget this year.

Obama’s spending plan, which mirrors recommendations he made in September to the congressional debt-reduction “supercommittee,” would lead to significantly lower deficits in the years ahead, according to White House officials, and would trim future borrowing by more than $4 trillion over the next decade. That sum includes an agreement last summer to cut $1 trillion from agency budgets.

Of the new savings, $1.5 trillion would come from higher taxes on corporations and the wealthy, including the expiration of the George W. Bush tax cuts on income over $250,000 a year. An additional $278 billion would come from a hodgepodge of cost-saving maneuvers, such as charging higher premiums for federal pension insurance, asking federal workers to contribute more to their own retirement and cutting federal farm subsidies. About $850 billion would come from capping spending on the wars in Iraq and Afghanistan, though about $200 billion of those savings would be redirected to new road and rail projects.
Republicans have blasted Obama’s decision to count war savings, arguing that he never intended to spend that money. The gimmick is just one of many Republicans on the Senate Budget Committee said they expect to see when the president’s budget is presented Monday. Judging from information the White House has already released, GOP aides said, Obama is also assuming that policymakers will “magically” find $400 billion to prevent a sharp cut in reimbursements to doctors who see Medicare patients.

Lew on Sunday defended the war savings as “very real.”
“I guarantee you that if we don’t take the action that’s been proposed, there will be leakage,” he said, “and that money will end up being spent.”

An additional $360 billion would come from trimming spending on federal health programs, such as Medicare and Medicaid, the biggest drivers of future borrowing. Those savings would come primarily from cuts to providers, including drug companies, rather than the sort of broad restructuring that many analysts say will be necessary to control costs.

House Budget Committee Chairman Paul Ryan (R-Wis.) has criticized Obama for failing to offer a long-term cost-control strategy, such as his proposal to privatize Medicare for future retirees, which has come under fierce attack by Democrats.

Ryan declined to say whether his Medicare proposal would remain in the budget blueprint he is expected to unveil next month, or whether he would replace it with a new privatization approach that would preserve a government-run health program for the elderly and has garnered bipartisan support.

Either way, Ryan said Sunday on ABC’s “This Week With George Stephanopoulos,” “We’re taking responsibility for dealing with the drivers of our debt. You have to remember, George, that Medicare is going bankrupt. . . . I think it’s irresponsible not to” propose solutions.

Lew defended Obama’s approach to deficit reduction, arguing that his spending blueprint would achieve the widely held goal of $4 trillion in savings over the next decade, stabilize borrowing and leave the debt elevated but no longer growing as a percentage of the economy.

And he called on Congress to break a political impasse over the payroll tax holiday that threatens to raise taxes for 160 million Americans at the end of the month, delivering a blow to the nascent economic recovery.

“I hope Congress can do the job and get it done, and that we can start to keep the wind at our backs instead of becoming part of the problem,” he said.