White House Budget Director Shaun Donovan wanted to talk about President Obama’s spending plans for aiding the middle class and keeping the economy on a solid path of recovery with a new $4 trillion budget request brimming with new spending programs and higher taxes.
But Senate Republicans, who are back in control of Congress for the first time in nearly a decade had one thing in mind during the Senate’s first budget hearing Tuesday morning: the long-term deficit and debt that they say are unsustainable under Obama’s proposal.
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“Every year since the president took office he has proposed the same approach to the fiscal challenge facing our government,” said Sen. Mike Enzi (R-WY), the new chair of the Budget Committee. “He wants to spend more, he wants to tax more, he wants to regulate more, he want to borrow more, and he wants to owe more and more and more.”
“His plans always end up with the Americans holding the tab, stuck with the deficits and debt as far as the eye can see,” he added.
The hearing before the Senate Budget Committee vividly exposed the vast political and philosophical divide separating the Obama administration and the new Republican majority over fiscal and budgetary matters. The president and his supporters insist that the economic recovery, declining unemployment rate, robust stock market and shrinking deficit all make this the ideal time to invest heavily in the economy to keep the recovery on track.
“If we are serious about rebuilding the disappearing middle class, reducing income and wealth inequality, and strengthening Social Security, Medicare, and Medicaid we need a budget that creates millions of jobs, raises wages, makes college more affordable, and demands that the wealthiest people in this country pay their fair share,” said Sen. Bernie Sanders (I-VT), the ranking member of the committee. “In all of these matters, the President’s budget moves this country in the right direction.
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But when Republicans scan the distant horizons in evaluating Obama’s ambitious spending and tax plans what they see are steadily rising deficits and debt, mounting interest payments on the debt, and future demands on Social Security, Medicare and other entitlement programs as the baby boomers retire.
The GOP is not alone. A new Rasmussen telephone survey of likely voters found that 54 percent want a budget that cuts spending, 16 percent favor spending increases and 21 percent think there should be no change in federal spending.
Under the fiscal 2016 spending and tax blueprint unveiled by the president on Monday, the deficit would drop from $583 billion this year to $474 billion or 2.5 percent of the gross domestic product, a level that the Obama administration and many economists believe is quite manageable for the foreseeable future. The deficit would gradually grow to $687 billion by 2025, although it would remain stable as a measure of the overall economy.
At the same time, the federal debt – the portion held by China and other outside investors – would rise from $13.5 trillion this year to $20.3 trillion in 2025. However, it would decline to 73.3 percent of the gross domestic product in 2015 from 75 percent this year. It should be noted that White House economists shows three years where GDP is slightly under 3 percent, other years range from 3.1 – 4.1 percent.
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While the administration insists this is the proper path to follow, Republican members of the Senate Budget Committee are outraged that the president’s plan would indefinitely allow for hefty deficits in dollar terms, instead of the approach they favor of wiping out the deficit within the next ten years. Some GOP lawmakers berated Donovan and the administration for endorsing deficit and debt projections that, as The New York Times pointed out, are higher than at any time in U.S. history except for World War II.
Enzi set the tone for a morning hearing on the budget plan by lecturing Donovan on what he thinks Americans like and don’t like. “They think we spend too much, they think we tax too much, they think were regulate too much, that we borrow too much. And their biggest worry is that we owe too much.”
Then Sen. Chuck Grassley (R-IO) weighed in, denouncing the president’s budget as an “ideological statement,” based on the faith of government making decisions as opposed to individuals.”
“The president’s budget speaks to deficits mattering,” he said. “They have consequences, because the president’s own budget shows that the cost of interest is going up from a little less than $300 billion a year to $800 billion a year over a ten-year period of time.” Sen. Kelly Ayotte (R-NH) warned that unless somehow reined in, rising interest payments on the national debt would shortchange defense and other national security programs in the future.
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Donovan fired back that after a financial crisis and recession that drove the deficit to record levels well above $1 trillion a year Obama achieved the fastest deficit reduction since immediately after World War II and brought deficits below the 40-year average.
“In addition, we make further changes in this budget, both on the spending side and in other areas, that would reduce our debt by $1.8 trillion” over the next ten years,” Donovan said. “And so, we do take that seriously. But we also take seriously that this country needs to invest in the things that are going to grow our middle class,” he argued. “We cut taxes for 44 million families by an average of $600 through this budget, and we do ask that where we have places in our tax code that are not only unfair but actually discourage economic growth, that we make changes to our tax code.”
Sen. Jeff Sessions (R-AL) repeatedly challenged Donovan to justify the president’s proposal to lift the spending caps under the 2011 Budget Control Act to permit more than $70 billion of spending on defense and domestic programs in the coming year. While many Republicans support lifting the caps on the defense budget in the face of the rising terrorist threats abroad, Sessions strongly opposes breaching the caps for tens of billions of dollars of additional domestic programs.
“Our budget fully pays for those increased investments on the discretionary side with mandatory spending reductions and cutting spending, wasteful spending,” Donovan replied.
See the full interactive chart at Whitehouse.gov
