Obama Aide Stakes Out Budget Stance
November 5, 2013
The Wall Street Journal
Peter Nicholas and Damian Paletta
The president's top economic adviser said the White House wouldn't try to dictate the shape of a possible deal to avert a set of looming across-the-board spending cuts, but he advised against taking steps that cut the deficit too quickly and could imperil the recovery.
Jason Furman, chairman of the White House's Council of Economic Advisers, said the Obama administration would like to see the cuts known as the "sequester" replaced by eliminating tax loopholes along with other spending reductions.
Speaking Monday at a Wall Street Journal breakfast, Mr. Furman said that while the administration prefers tax increases as part of any deal, it is up to Democrats and Republicans in Congress to try and reach an agreement ahead of a deadline next month. "We don't want to sit here and both engage in hypotheticals and prejudge the work that they're doing.…People know where we're coming from," Mr. Furman said.
A 29-member budget conference committee is attempting to overcome differences in House and Senate budget resolutions that passed earlier this year. The House Republican budget would reduce the deficit by cutting spending. The Senate Democrats' budget would cut the deficit through a mix of tax revenue increases and spending cuts.
Lawmakers are trying to find common ground that would set budget levels for the rest of the fiscal year, which runs through Sept. 30, 2014. If they do so, it will be much easier for Congress to avoid another shutdown when a stopgap spending plan expires in mid-January.
Mr. Furman noted that the budget deficit has fallen substantially since the start of the president's first term and that faster reductions would be counterproductive. "We need more support for jobs," he said.
Last month, the administration said the deficit in fiscal year 2013 stood at $680 billion, or 4.1% of gross domestic product. By comparison, the deficit was 9.2% of GDP in 2009, according to administration figures. Even long-run deficits projected over the next 75 years are looking more favorable, Mr. Furman said, in part due to the passage of the president's health-care overhaul in 2010.
Some budget experts said the administration is painting too rosy a picture when it comes to the nation's long-term deficits. Republicans point to a Congressional Budget Office blog post in September that concluded, "The fundamental federal budgetary challenge has hardly been addressed: The largest federal programs are becoming much more expensive because of the retirement of the baby boomers and the rising costs of health care."
Rep. Scott Garrett (R., N.J.), a member of the House Budget Committee, said in an interview Monday that the "long-term [deficit] projections are still catastrophic."
The sequester began in March and will cut spending by close to $1 trillion in total through 2021. Military spending stands to take the biggest cut in the next year. The White House and Republicans have said they want to replace the sequester cuts with other budget changes, but they disagree on how to go about it.
While Mr. Furman signaled that the White House would let congressional budget negotiators do their work he also indicated that the administration wouldn't sign off on just any budget deal. He said the White House would prefer that any deal include new spending to help boost economic growth.
"You don't want to take the sequester and replace it with something that is just as bad or even worse," Mr. Furman said.
One budget watchdog group said the White House must show leadership in the budget talks by deploying the bully pulpit.
Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in an interview Monday, "You can see that the White House is pulling back from playing a leadership role in getting something done on the budget. I think that's too bad."
Ms. MacGuineas, who attended the breakfast session, said "what they're doing is playing up the good news and trying to sweep the bad news under the rug for now.
"The problem is things like demographics aren't going to change. Many of our medium- and long-term problems aren't going to suddenly improve with economic growth, even."