Ex-budget chiefs call for defense cuts, higher taxes

budget cuts money recession cut economy generic currency money puzzle iStockphoto

Two former budget officials from two presidential administrations weighed in yesterday on how the Obama administration should manage the nation's economic recovery, according to Reuters, agreeing that the government should reduce its expenditures on defense and Social Security while demanding voters pay higher taxes.

Peter Orszag and David Stockman, former budget directors under the Obama and Reagan administrations respectively, spoke Monday at a Thomson Reuters Newsmaker event, where they alternately sparred and concurred on budgetary matters.

Both argued the government should "scale back Social Security payments and end decade-old income tax cuts to reduce the federal deficit," according to Reuters, and said the economy would be in better shape if "citizens paid more taxes and took smaller benefits from the government in their old age."

On deficit reduction, however, Stockman, in line with conservative Republican ideology, believes the government should reduce spending to pay down the national debt. Orszag, true to the Obama administration's long-held philosophy, argued that projecting people's jobs will be better off in the long run than reducing the nation's deficit through dramatic spending cuts, according to Reuters.

"David wants us to flog ourselves to have some brighter future and the problem is that the flogging can do some serious damage to that future," Orszag said, according to Reuters, in response to Stockman's proposal for deficit reduction.

Their differences on deficit reduction appropriately reflect the ongoing budget battles in Washington today: As Democrats and Republicans prepare for negotiations over a full-year bill to fund the government, the two sides are starting from dramatically different positions. The Democratic bill seeks $1.85 trillion worth of savings over 10 years, through an equal combination of tax revenue increases and spending cuts; the Republican bill would balance the budget over 10 years through spending cuts and an overhaul of the nation's Medicare system.

Comments