CAT | Fiscal Responsibility
Cross-posted from the OMB blog.
This morning, the President signed an executive order establishing a new, bipartisan National Commission on Fiscal Responsibility and Reform. The Commission’s co-chairs – former Clinton White House Chief of Staff Erskine Bowles and former Republican Senate Whip Alan Simpson – will bring Republicans and Democrats together to help tackle one of our looming fiscal challenges.
With members appointed by the leaders from both political parties in both houses of Congress as well as the President, the Commission’s objective is to put forward proposals to balance the budget excluding interest payments on the debt (the so-called primary budget) by 2015 and to meaningfully improve the long-term fiscal outlook. Meeting the medium-term target means that by the middle of this decade, we would be paying for the operations and programs of the federal government and not increasing our debt relative to the size of the economy; under current projections, the result would be stable overall deficits (including interest payments) hovering around 3 percent of GDP. The Commission will also examine changes to address the growth of entitlement spending and the gap between the projected revenues and expenditures of the Federal government over the long term.
To report out a recommendation, the Commission would need 14 out of 18 votes, ensuring that any report will have bipartisan support. The Commission will issue its recommendations by December 1, 2010, and the leaders of both the Senate and the House have assured us that they will bring these recommendations to a vote before the end of the current Congress.
In the past, our nation’s leaders used extraordinary processes – much like this fiscal commission – to construct solutions that, for example, helped address Social Security’s looming imbalance in the early 1980s. We believe that the National Commission on Fiscal Responsibility and Reform can be just as successful.
Erskine Bowles was a key architect of the 1997 bipartisan budget agreement which helped put it into surplus, and Alan Simpson – throughout his almost two decades in the Senate – was a consistent voice for fiscal discipline and commonsense solutions. I am glad that they have decided to serve their country once more, and look forward to the leadership of both parties on Capitol Hill making their appointments so that this Commission can begin its important work for the American people.
Peter Orszag is the Director of the Office of Management and Budget
The President, having just signed the "Pay As You Go" law, discusses the importance of this fundamental rule to getting budget deficits in check. Ensuring that new spending and tax cuts are offset was a important factor in creating the budget surplus of the late 1990’s.
Earlier today, President Obama discussed the 2011 budget, reflecting on the challenges for the country and the steps the administration is taking to meet them. While acknowledging that the inherited $1.3 trillion deficit from the previous administration can’t be brought down overnight, he relayed his continuing efforts to rein in spending and "lay a new foundation for lasting growth."
The President mentioned essential investments in areas of clean energy and scientific research included in the budget to foster jobs of the future. He proposed a 6 percent increase in funding for the Education Department to revitalize community colleges and make colleges more affordable. "In the 21st century there is no better anti-poverty program than a world-class education."
While making investments for future economic success, President Obama outlined the tough spending cuts to reduce the current deficit, and proposed a freeze in government spending for three years, excluding benefits from Social Security, Medicaid, Medicare, and benefits for veterans. He discussed the $20 billion in cuts for programs that are inefficient or have outlived their usefulness, and cuts for worthy programs that must be trimmed accordingly. "We have to do what families across America are doing: Save where we can so that we can afford what we need."
The freeze will not apply towards national security, though the President made clear that this does not mean a free pass: "even though the Department of Defense is exempt from the budget freeze, it's not exempt from budget common sense."
Helping to bring the deficit down in the coming years, a responsibility fee on big banks to compensate taxpayers for the bailout, and tax breaks for oil companies, investment fund managers, and those making over $250,000 a year would be ended.
To enforce responsible spending, the budget restores pay-as-you-go legislation, which allows Congress to spend a dollar only if it cuts a dollar elsewhere. President also proposed a bipartisan fiscal commission to encourage Democrats and Republicans to work together to create deficit-reducing proposals by a deadline.
These budget policies are projected to decrease the deficit by $1.2 trillion over 10 years. Visit the FY 2011 Budget website for details about different departments, terminations and reductions, or to learn how the budget will affect your state.
Last week the Middle Class Task Force previewed a series of initiatives in the President’s FY 11 budget aimed at costs -- like child care costs, care-giving, paying for college and retirement – that are squeezing middle class family budgets. These are costs that -- along with health care -- have risen dramatically for families at a time when their incomes have not.
Today the President’s FY 11 budget is out – with greater detail about what we’re proposing and additional initiatives that will help middle class families get ahead. In coming weeks the Middle Class Task Force is going to focus on making the case for action on these issues. You can check out the details on our Supporting Middle Class Families fact sheet.
Terrell McSweeny is Domestic Policy Advisor to the Vice President
Cross-posted from the OMB Blog, read more details on the OMB Budget page.
Today, the President transmitted the FY 2011 Budget to the Congress. In about an hour, he will deliver remarks about the Budget, and after that I will be taking questions from the press with CEA Chair Romer. This post gives readers of OMBlog a brief overview of the document.
After a year in which we took immediate and unprecedented action to rescue the economy from the brink of a second Great Depression, the FY 2011 Budget takes steps to jumpstart job creation, strengthen the economic security of middle-class families, and make the tough choices to put our Nation back on the path to fiscal sustainability.
When the President took office, the economy was on the brink of a depression. The economic crisis required that we take immediate and extraordinary steps to prevent a complete economic collapse that would have caused millions more to lose their jobs. Not all of the efforts we undertook to avoid a deeper recession were popular. Nonetheless the President did what was right for our country’s future: signing into law the Recovery Act to jumpstart economic growth and taking steps to prevent the collapse of the financial system.
A year later, the economy is back from the brink – and is growing again. This "statistical recovery," however, is cold comfort for the millions of Americans who have lost their job. The President has therefore called for a package to spur job creation now – including small business tax cuts and investments in clean energy and infrastructure.
To sustain job creation and economic growth into the years ahead and provide room for the private sector to expand, we are also making tough choices in the Budget: cutting what doesn’t work or isn’t necessary and investing in what will help to expand the economy and employment in the coming years.
The Budget thus institutes a three-year non-security discretionary freeze that will save $250 billion over the next decade. We're not putting forward an across-the-board freeze, but rather an overall cap on non-security discretionary funding in which key investments are expanded but we cut back on programs that are ineffective, duplicative, or just wasteful. As part of that overall effort, we identified more than 120 programs across the government that should be terminated or reduced – generating $20 billion in savings.
At the same time, we are making critical investments in the areas critical to building a strong economy in the 21st century. That is why we increase funding at the Department of Education by $2.9 billion or 6.2 percent, make the largest proposed request for Elementary and Secondary Education Act programs while reforming it to be more effective, and provide more money for Pell grants and Race to the Top.
To build a more modern infrastructure, the Budget establishes a new $4 billion dollar National Infrastructure Innovation & Finance Fund to focus on infrastructure investments of national and regional significance.
To help put the nation at the top of the pack when it comes to the new clean energy economy, the Budget includes more than $6 billion in funding for clean energy technologies while also eliminating existing fossil fuel subsidies. And to continue our country’s proud, innovative history, the Budget invests $61.6 billion for civilian research and development – an increase of $3.7 billion, or 6.4 percent, over 2010 levels.
As we focus our efforts on spurring job creation and jumpstarting economic growth, we also have to change business as usual in Washington and restore fiscal responsibility. Because of the irresponsibility of the past decade, we’ve seen a projected 10-year surplus of over $5 trillion at the end of the Clinton administration turn into a projected 10-year deficit of over $8 trillion the day President Obama took office.
The Budget lays out a plan to put the country back on a sustainable fiscal path.
First, we have already taken action to avoid making the hole any deeper. The Administration proposed, and the Senate just joined the House in passing, statutory pay-as-you-go (PAYGO) legislation. PAYGO forces us to live by a simple but important principle: Congress can only spend a dollar on an entitlement increase or tax cut if it saves a dollar elsewhere. In the 1990s, statutory PAYGO encouraged the tough choices that helped move the Government from large deficits to surpluses, and it can do the same today.
Second, economic recovery – on its own – would take our deficits from 10 percent of GDP to 5 percent of GDP. To take them down further, the Budget proposes a series of policies including: the three-year non-security freeze mentioned above; restoring some balance to the tax code by allowing the 2001 and 2003 tax cuts to expire only for those making more than $250,000 a year and reducing the rate at which these same households write-off itemized deductions; ending subsidies for oil, gas, and coal companies and closing other loopholes; and putting in place a responsibility fee on the largest banks to compensate taxpayers for the extraordinary direct and indirect help they provided while also discouraging excessive leverage.
Third, these policies will take deficits down to 4 percent of GDP – amounting to $1.2 trillion in deficit reduction excluding war savings. But that is still not enough, and the only way to solve this is to change Washington, and bring Republicans and Democrats together to work on this problem. That is why the President wants to establish a bipartisan, fiscal commission to look at a range of proposals and put forward a bipartisan recommendation to balance the budget excluding interest payments on the debt by 2015. This type of process has worked in the past, and if everyone in Washington puts the national interest first, we are confident it will again.
Finally, as I have said many times before and will again (since it’s still true!), the key to our long-term fiscal future is fiscally-responsible health insurance reform. All our steps to rein in the deficit will be for naught if we do not reduce the rate of health care cost growth over time. The legislation passed by both the House and Senate will reduce the deficit over the next decade and put in place the key pieces that will help to bring down health care costs over time. Congress must now deliver on this promise of fiscally responsible health reform – the stakes are high, both for the millions of Americans who lack a stable source of health insurance coverage and for the fiscal well-being of the Nation itself.
If we take follow the plans laid out in the Budget, I am confident that we will be able to spur job creation now and in years to come and put our Nation back on a fiscally sustainable path, which is critically important to the future growth and prosperity of the United States.
Peter Orszag is Director of the Office of Management and Budget
During these tough economic times, American families are forced to make tough choices about what they can spend money on and what they need to cut from their household budgets.
Through the course of the budget process we did the same thing.
The President believes we need to be honest about what is working and what isn’t and that making tough choices about which programs to fund and which to reduce or terminate is part of governing.
In the 2011 Budget we will release on Monday we terminated or reduced programs that weren’t working well or duplicated efforts, some in areas that are important to the President and to the Administration.
Last year, President Obama sought to end or reduce 121 programs for a one-year savings of approximately $17 billion of which $11.5 billion was from discretionary savings. Congress approved cuts that produced a net discretionary savings of $6.8 billion, nearly 60 percent of the discretionary cuts proposed. According to the Center for a Responsible Federal Budget, this far exceeds the best the last Administration did (40 percent), and far exceeds the less than 15 percent success rate they had in their last two years in office (pdf).
This year, we are proposing more than 120 terminations, reductions, and savings for approximately $20 billion in savings this year.
Some of the programs eliminated or scaled back include:
Consolidating 38 Education programs into 11. The current program structure at the Department of Education is fragmented and ineffective. The Department operates dozens of grant programs that impose narrow requirements on districts and fail to demand better outcomes or build a knowledge base of what works. Some of these programs have little evidence of success, while others are demonstrably failing to improve student achievement. As part of the Administration’s Elementary and Secondary Education Act (ESEA) reauthorization proposal, the Budget therefore proposes to consolidate 38 K-12 programs into 11 new programs that give states and districts more flexibility about means but impose greater accountability for outcomes. Cutting Save America’s Treasures and Preserve America grant programs at the National Park Service. Save America’s Treasures program was started to mark the millennium and was supposed to last for two years. Both programs lack rigorous performance metrics and evaluation efforts so the benefits are unclear. Eliminate the Advanced Earned Income Tax Credit (AEITC). EITC eligible taxpayers with children may file a form with their employers and receive a portion of their EITC throughout the year in their paychecks. Only a tiny number of EITC eligible taxpayers claim the AEITC; 3 percent, or 514,000 taxpayers according to the Government Accountability Office. And the error rate for the program is high: 80 percent of recipients did not comply with at least one program requirement. This ineffective and prone-to-error program should be eliminated. Terminate the Brownfields Economic Development Initiative. While a consistent supporter of the brownfield clean-up on the campaign trail and a strong advocate for expanding economic opportunity in urban areas, the President proposes to eliminate BEDI, a small program duplicative of larger programs. Instead, the Administration consolidates its support for the brownfield clean-up – funding larger programs and thereby reducing overhead costs. End Abandoned Mine Lands Payments to Certified States. The Abandoned Mine Land program was established to restore abandoned coal mine lands. Changes to this program allowed these funds to go to states and tribes who already have cleaned up these mine. Paying states and tribes to clean up mines that are already cleaned up was not the intention of this program, and is why it is being terminated.These choices are never easy, but the President never expected that governing during tough economic times with rising deficits would be easy.
Dan Pfeiffer is White House Communications Director
The President pledges to rein the deficit, citing three specific steps to this end. He praises the Senate for restoring the pay-as-you-go law, discusses his proposal for a freeze in discretionary spending, and calls for a bipartisan Fiscal Commission to hammer out further concrete deficit reduction proposals.
Ed. Note: You can watch video of each Cabinet member describing what his or her department or agency has accomplished this year and what to expect in the year ahead at our The President's Cabinet Reporting to You page.
In his first year in office, President Obama crafted an ambitious agenda that called on all Federal agencies to change the way government works and provide an unprecedented amount of support to the American people. The U.S. General Services Administration (GSA) took this call to action as an opportunity to provide leadership in areas such as sustainable building design, online citizen engagement, and green IT alternatives.
As the business arm of the government, GSA is responsible for laying the foundation on which other Federal agencies can build. For example, just this week GSA’s Office of Citizen Services made available an online public dialog tool for government agencies to use in order to engage community members and meet President Obama’s Open Government Directive.
Moving forward, GSA will continue to support the Federal agenda with innovative business solutions, quality acquisition services, superior workplaces and effective government-wide policies.
Stephen Leeds is the Acting Administrator of the General Services Administration (GSA)
Ed. note: Also watch shorter video clips from the speech, broken down by topic.
In his State of the Union Address tonight, the President laid out an agenda attempting to attack one problem from every conceivable angle: the terrible squeeze felt by America’s middle class. Fundamentally, that means prying government away from special interests and dedicating it to measures that put Americans to work and lay the foundation for a stronger economy for our country – lowering health care and tuition costs, spurring creation of the next generation of clean energy jobs. It also means putting a cop on the beat on Wall Street, so major banks can no longer take advantage of families and taxpayers.
To do all that, though, we need to change the way Washington works. Already the President has taken unprecedented steps in this direction, from releasing the names of all visitors to the White House for the first time ever to clamping down on the revolving door between government and lobbying. But as much progress was made on this front in this first year, it was still only the first year, and the President will keep pushing forward, whether that’s shining sunlight on any contact between lobbyists and the White House, or pushing Congress to disclose all earmark requests in one place for Americans to see.
This was the vision that shaped the President's address, but this is not just a matter of rhetoric. The President made clear that there is tremendously busy agenda ahead for his second year – the policies and proposals below are just examples of the plans the President laid out in his address to put government to work for the middle class.
Here are a few initiatives you might have missed in the course of the speech:
The President called on the Senate to pass a financial reform package. “A strong, healthy financial market makes it possible for businesses to access credit and create new jobs. It channels the savings of families into investments that raise incomes. But that can only happen if we guard against the same recklessness that nearly brought down our entire economy.” Essential reforms include measures to protect consumers and investors from financial abuse; close loopholes, raise standards, and create accountability for supervision of major financial firms; restrict the size and scope of financial institutions to reign in excesses and protect taxpayers and address the ‘too big to fail’ problem; and establish comprehensive supervision of financial markets. A vision for a clean energy economy. “…to create more of these clean energy jobs, we need more production, more efficiency, and more incentives.” We will build on the historic $80 billion investment made through the Recovery Act. The President’s vision includes investments in important technologies to diversity our energy sources and reduce our dependence on foreign oil, including: the renewal of our nation’s nuclear energy industry after a 30-year hiatus, cutting edge biofuel and clean coal technologies, and additional offshore oil and gas drilling. To fully transition to a clean energy economy and create millions of new American jobs, we must pass comprehensive energy and climate legislation to promote energy independence and address climate change. The President will continue his push to invest in the skills and education of our people. “This year, we have broken through the stalemate between left and right by launching a national competition to improve our schools. And the idea here is simple: instead of rewarding failure, we only reward success... In this country, the success of our children cannot depend more on where they live than on their potential.” The Obama Administration supports a new vision for increasing student achievement, delivering opportunity, and supporting excellence in America’s public schools. The President’s 2011 budget supports a new framework for the Elementary and Secondary Education Act that will foster innovation, reward excellence, and promote reform in our schools, as well as invests an additional $1.35 billion to continue the historic Race to the Top program to open it up to districts in order to spur innovation and additional progress. At the same time, the Administration is moving to consolidate ineffective policies and practices. The President’s Budget eliminates six programs and consolidates 38 others into 11 new programs that emphasize using competition to allocate funds, giving communities more choices around activities, and using rigorous evidence to fund what works. The President is committed to making college affordable for all Americans. “(I)n this economy, a high school diploma no longer guarantees a good job.” To increase college access and completion, the Administration will make student loans more affordable by limiting a borrower’s payments to 10 percent of his/her income and forgives remaining debt after 20 years – 10 years for public service works. We will also make permanent the American Opportunity Tax Credit. The President urges the Senate to pass the American Graduation Initiative, which invests more than $10 billion over the next decade in reforming our nation’s community colleges, promoting college completion, and moving toward the President’s goal of having the highest proportion of college graduates in the world by 2020. The President is also asking colleges and universities to do their share to make college affordable for all Americans cutting their own costs. The President is making investments to ensure that the middle class benefits from this economic recovery. “(T)he price of college tuition is just one of the burdens facing the middle class. That's why last year I asked Vice President Biden to chair a task force on middle-class families.” The President has outlined immediate steps to reduce the strain on family budgets and help middle class families manage their child and elder care responsibilities, save for retirement and pay for college. He will double the child tax credit this year, make it easier to save for retirement with automatic IRAs for workers without access to existing retirement plans, provide larger tax credits to match retirement savings for millions of additional workers, and provide new safeguards to protect retirement savings. Changing the way we do business. “To close that credibility gap we have to take action on both ends of Pennsylvania Avenue to end the outsized influence of lobbyists; to do our work openly; to give our people the government they deserve.” The President has called for additional new lobbyist reforms, including enhanced disclosure of lobbyist contacts, strict campaign contribution limits by lobbyists, and a single earmark database, so American taxpayers find out what earmarks are being requested, and where their money is going. Countering Citizens United. “I don't think American elections should be bankrolled by America's most powerful interests, or worse, by foreign entities.” Last week’s Supreme Court Citizen’s United decision opens the floodgates to special interests and foreign countries and companies bankrolling national campaigns. The President called for bipartisan support for legislation that will remedy the Supreme Court’s unprecedented and troubling decision. The President stands by military families. “Tonight, all of our men and women in uniform...have to know that they have our respect, our gratitude, our full support.” The President’s 2011 budget announces significant new investments, totaling more than $8 billion, and protections for our nation’s military families, including increased military pay and housing allowances, increased funding for family support programs, expanded availability of affordable, high-quality child care, the renovation or replacement of schools, and expanded and improved care for wounded, ill and injured service members. The President is establishing a National Equal Pay Enforcement Task Force. “We're going to crack down on violations of equal pay laws -– so that women get equal pay for an equal day's work.” To make sure we uphold our nation’s core commitment to equality of opportunity, the Obama Administration is implementing an Equal Pay initiative to improve compliance, public education, and enforcement of equal pay laws. The Task Force will ensure that the agencies with responsibility for equal pay enforcement are coordinating efforts and limiting potential gaps in enforcement. The Administration also continues to support the Paycheck Fairness Act, and is increasing funding for the agencies enforcing equal pay laws and other key civil rights statutes. Immigration reform. “And we should continue the work of fixing our broken immigration system - to secure our borders and enforce our laws, and ensure that everyone who plays by the rules can contribute to our economy and enrich our nation.” The President is pleased Congress is taking steps forward on immigration reform that includes effective border security measures with a path for legalization for those who are willing to pay taxes and abide by the law. He is committed to confronting this problem in practical, effective ways, using the current tools at our disposal while we work with Congress to enact comprehensive reform.And here are still more initiatives the President spoke to just tonight:
The President will fight to recover the money American taxpayers spent to bailout the banks. “To recover the rest, I've proposed a fee on the biggest banks. Now, I know Wall Street isn't keen on this idea. But if these firms can afford to hand out big bonuses again, they can afford a modest fee to pay back the taxpayers who rescued them in their time of need.” The President has proposed the Financial Crisis Responsibility Fee, which will require the largest and most highly leveraged Wall Street firms to pay back taxpayers and provide a deterrent against excessive leverage for the largest firms. The conservative estimate for the cost of TARP in the budget is $117 billion, but the Treasury Department expects it to be much less and the fee will be in place for a minimum of ten years or however long it takes to recoup every last penny to the American taxpayer. The President recognizes that Small Businesses will be key to our nation’s economic recovery. “I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. I'm also proposing a new small business tax credit – one that will go to over one million small businesses who hire new workers or raise wages.” To get small businesses growing again, and growing our economy, the President has proposed a range of provisions that include tax incentives to spur investment; expanded access to capital and growth opportunities to create jobs; and increased support for entrepreneurship to foster innovation. He is proposing an employment tax credit for small businesses to encourage hiring, eliminating capital gains taxes on small business investments, extending enhanced small business expensing, and transferring $30 billion in resources from TARP to a new program to help community and smaller banks give small businesses the credit they need. The President and members of his Administration will announce additional details in the coming weeks. The President reiterates his support for continued investment in our nation’s infrastructure. “Tomorrow, I'll visit Tampa, Florida, where workers will soon break ground on a new high-speed railroad funded by the Recovery Act. There are projects like that all across this country that will create jobs and help move our nation's goods, services, and information.” Through the Recovery Act, we made the largest investment in our nation’s infrastructure since President Eisenhower called for the creation of our national highway system over half a century ago. In his speech, the President announced funding to make a down-payment on a new nationwide high-speed rail system being built in-part with ARRA dollars. Tax breaks to keep jobs at home. “(I)t’s time to finally slash the tax breaks for companies that ship our jobs overseas, and give those tax breaks to companies that create jobs right here in the United States of America.” The President has called for an end for tax breaks for companies that ship our jobs overseas to help fund tax cuts – like making the R & E credit permanent – that reward companies for investing and creating jobs in the United States. The President also called on the Senate to pass a jobs bill that he can sign. “The House has passed a jobs bill…. As the first order of business this year, I urge the Senate to do the same, and I know they will. People are out of work. They are hurting. They need our help. And I want a jobs bill on my desk without delay.” The bold and difficult steps the President took to stabilize the financial system have reduced the cost of TARP by more than $200 billion, providing additional resources for job creation and for deficit reduction. In December, the President outlined a package of targeted measures to help further stimulate private sector hiring, including measures to facilitate small business growth, green jobs and infrastructure. The House has passed strong legislation - it is time for the Senate to do the same. We must invest in American ingenuity and innovation. “We need to encourage American innovation.” The Obama Innovation Agenda will get us closer to the President’s long-term goal of increasing combined private and public R&D investment to three percent of GDP. The Obama 2011 budget will move us closer to restoring America to first in the world in college completion; and invest in the next generation of scientists so we will not lag behind countries like China in science and engineering graduates. More details will be announced in the coming weeks. We need to export more of our goods around the world. “We will double our exports over the next five years, an increase that will support two million jobs in America.” To meet this goal, we’re launching a National Export Initiative that will help farmers and small businesses increase their exports and expand their markets. Details will be announced in the coming weeks, but the NEI includes the creation of the President’s Export Promotion Cabinet and an enhancement of funding for key export promotion programs. We will work to shape a Doha trade agreement that opens markets and will continue to work with key allies like South Korea, Panama, and Colombia on trade agreements that provide real benefits to our workers. The President and members of his Administration will announce additional details in the coming week. The President remains committed to helping Americans stay in their homes and help their homes retain their value. “… we’re working to lift the value of a family’s single largest investment – their home.” Last year, we took steps allowing millions of Americans to take out new loans and save an average of $1,500 per family on mortgage payments. This year, we will step up programs that encourage re-financing so that homeowners can move into more affordable and sustainable mortgages. In addition to the changes proposed last week to ensure sound risk management, the FHA is continuing to evaluate its mortgage insurance underwriting standards and its measures to help distressed and underwater borrowers through other FHA initiatives going forward. In order to ensure American families receive the same consideration American corporations do, the Obama Administration remains supportive of efforts to allow bankruptcy proceedings to renegotiate all debts, including home mortgages. As Americans are getting their budgets in order, the President is getting the nation’s financial house in order. “Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don’t.” The President has announced the three year, non-security discretionary spending freeze, and also called for a bipartisan Fiscal Commissionto identify policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run. The President and members of his Administration will announce additional details in the coming weeks. The President’s focus on national security includes rooting out terrorists where they hide. “Since the day I took office, we have renewed our focus on the terrorists who threaten our nation.” In the last year, hundreds of Al Qaeda’s fighters and affiliates have been captured or killed – far more than in 2008. The President’s commitment to Non-Proliferation results. “Even as we prosecute two wars, we're also confronting perhaps the greatest danger to the American people - the threat of nuclear weapons.” The United States and Russia are completing negotiations on the farthest-reaching arms control treaty in nearly twenty years. He will also host a Nuclear Security Summit in April, which will bring forty-four nations together behind a clear goal: to secure all loose nuclear materials around the world in four years, so that they never fall into the hands of terrorists. The President is launching a bioterror and pandemic threat initiative. “We are launching a new initiative that will give us the capacity to respond faster and more effectively to bioterrorism or an infectious disease - a plan that will counter threats at home and strengthen public health abroad.” The President called to action key U.S. Government leaders to re-design our medical countermeasure enterprise to protect Americans from bioterror or infectious health threats. We will pursue a business model that leverages market forces and reduces risk to attract pharmaceutical and biotechnology industry collaboration with the U.S. Government. The President announced that he will work this year to repeal “Don’t Ask, Don’t Tell.” “I will work with Congress and the military to finally repeal the law that denies gay Americans the right to serve the country they love because of who they are.”Mona Sutphen is Deputy Chief of Staff
So I’m on my way to do a TV interview last night on a set of middle-class initiatives we announced yesterday, when I learn that what they really want to talk about is our proposed freeze on non-security discretionary spending. Ok — I’m flexible — and in fact, the two are related in an important way that folks need to understand.
First, an important note on timing. No one is arguing that we should take our foot off the accelerator today, when the economic recovery remains fragile and job growth has yet to return. In fact, you’ll hear from the President tomorrow night about measures we should undertake right away jumpstart job creation. In his words and deeds, the President has made clear that recovery comes first. But that doesn’t mean we should wait to start changing the same bad habits in Washington that left a $1.3 trillion deficit on our doorstep when we entered office in January 2009, especially when we can do so without cutting back on our jobs agenda.
Second, a little background on freeze-eology: there are two ways to do a freeze like this: (1) an across-the-board freeze on every program outside of national security; and (2) a surgical approach where overall totals are frozen but some individual programs go up and others go down. In short, a hatchet versus a scalpel.
During the campaign, you may recall that John McCain touted option 1 – the hatchet approach of an across-the-board freeze.
The President was critical of that approach then, and we would be critical of it now. It’s not what we’re proposing. To the contrary, the entire theory of the President’s proposed freeze is to dial up the stuff that will support job growth and innovation while dialing down the stuff that doesn’t. Under our plan, some discretionary spending will go up; some will go down. That’s a big difference from a hatchet.
Take, for example, the policies we announced yesterday — a significant expansion (a 20% increase) in a program that provides services for seniors, like respite care and in-home services; a program to limit student loan repayments to 10 percent of income (after living expenses); an expansion of two tax credits, one for child care and another for retirement savings.
How can we expand these programs in the context of a freeze? By making sure that the freeze either holds steady or increases those parts of the discretionary budget that support jobs and income security for folks who need them, while whacking the wasteful subsidies that support lobbyists and special interests.
President Obama deeply understands the various imperatives of this moment in time, even if they don’t always point in the same direction.
We must do all we can to help those who are still reeling from the impact of the great recession; we must create the economic conditions for robust, private-sector job growth, and we must make the investments in clean energy, health care, and education that will ensure that the next economic expansion is characterized by broadly shared prosperity, not narrow gains to financial speculators.
At the same time, we must take steps to move toward a sustainable fiscal position, and that’s where the discretionary freeze comes in.
You can’t thread that needle with a hatchet. You’ve got to use a scalpel. That may be a truly lousy metaphor, but it’s good public policy.
Jared Bernstein is Chief Economist to Vice President Biden, and Executive Director of the Middle Class Task Force