Team Obama Flubs Budget Outreach to GOP
Business + Economy

Team Obama Flubs Budget Outreach to GOP

Jack Lew testifies before the Senate during his confirmation hearings, Feb 13, 2013 (REUTERS/Kevin Lamarque)

Top Obama administration officials trucked over to Capitol Hill on Thursday to pitch their budget plan to skeptical House Republicans.

Not surprisingly, they struggled.

Treasury Secretary Jack Lew and Jeffrey Zients, acting director of the Office of Management and Budget, faced a tough crowd. It was a thankless task to try explaining to GOP deficit hawks why a balanced budget should not be the top priority.

But they strained to sell what they see as the core virtues of their budget in a way that connects with average Americans. Neither articulated why the country can safely continue to rely on a steady diet of deficits, nor how relatively modest government expenditures can revive a middle class
that has been receding for many decades.

The congressional hearings on Thursday were quickly bogged down in sniping about numbers and the kind of bureaucratic-speak that puts much of the country to sleep.

President Obama’s 2014 budget plan stems from two years of talks with House Speaker John Boehner (R-Ohio). Essentially, it’s a slight variation on what the White House privately offered GOP leaders last December.

“This framework does not represent the starting point for negotiations,” Lew told the House Ways and Means Committee, later clarifying his remark by saying, “This budget reflects where the president was after two years of negotiation.”

Two years of gridlock have produced the ten-year blueprint that Obama unveiled yesterday:

• Stabilizes the national debt at an historically high share of the economy
• Lowers annual budget deficits from $744 billion to $439 billion
• Hikes taxes by $580 billion
• Shrinks spending on defense and other discretionary programs by $401 billion relative to the Congressional Budget Office baseline.

The budget pushes more of the deficit reduction out into the later years in order to shield the economy from the potential damage of sudden austerity. It provides doses of stimulus such as $50 billion for infrastructure projects and a new 94-cent-a-pack cigarette tax to fund childhood education.

Lew cited both of these programs as evidence of how the budget would revive the middle class, after Rep. Jim McDermott, D-Wash., said to him, “Imagine that we’re a bunch of workers from Ohio out of work for a year. What would you say about this budget?”

The Treasury secretary said he would comfort unemployed Buckeyes with the possibility of highway construction jobs and pre-school investments that would pay off decades from now. Those construction jobs were promised before to Ohioans and the rest of the country with the $825 billion stimulus package passed in 2009.

Lew also stressed that the budget plan – with its loophole-closing tax increase on wealthier Americans and minimum wage increase – would help to address income inequality, but it would not “fix” the growing economic disparity among Americans.

As a former Clinton administration official, Lew was the only individual in the hearing room who could claim to have successfully balanced the federal budget

But the president’s point man flubbed his explanation when Rep. Dave Reichert, R-Wash., asked bluntly, “Why is it important for people at home to balance their budget, but it’s not important for the government to balance its budget?”

“Governments are measured by their ability to service the debt,” said Lew, citing a principle that also holds true for any family with a mortgage or auto loan.

Possible answers that Lew did not use: The government has been in operation for more than 220 years and servicing its debt, while individual family members will die and their debts must be resolved; and unlike households, the government has the ability to issue currency to manage its debts.

Meanwhile, acting OMB Director Zients found himself tied in knots by the budget numbers and hammered at a House Budget Committee hearing.

Zients noted that the administration’s $1.8 trillion in additional deficit reduction over ten years – on top of $2.5 trillion in previous savings – means, “We do not have to choose between deficit reduction and economic growth. It shows that we can and indeed we must do both.”

Wisconsin CongressmanPaul Ryan, the committee chairman and 2012 Republican vice presidential nominee, pounced on that claim with math of his own.

“So,” he began, “Missing from this computation of $4.3 trillion of achieved deficit reduction is the stimulus that passed during the same time, $831 billion;, the payroll tax holiday, $111 billion;, the other payroll tax holiday, $89 billion;, the 24 percent increase in non-defense appropriations in the first two years of the president’s first term, $576 billion; disaster spending above the caps, $100 billion,” and so on, he said.

“If you go with net numbers, it’s about $500 billion, generously, of deficit reduction, not $4.3 trillion,” Ryan concluded.

As noted at the hearing, the House GOP budget also relies on gimmicks and accounting tricks to balance the budget in ten years, making its numbers just as suspect, if not more, than what the White House released. Roughly 40 percent of all deficit reduction in the Republican measure comes from eliminating spending for Obamacare, something  the president would never support.

But any claims about hypocrisy mattered little, as Zients found himself defending his own figures for an unsympathetic group of Republicans.

Rep. John Campbell, R-Calif., railed at him about an Obama budget that he said would indefinitely allow annual deficits of a half trillion dollars or more – and dismissed the administration’s budget numbers as “garbage.”