Top Obama Officials Defend $3.6T Budget

Despite GOP Claims Of Hidden Tax Hikes, Treasury Secretary Says Budget Is "Right Path For The Country"

(CBS/AP)  President Barack Obama's top economic officials on Tuesday vigorously defended the administration's $3.6 trillion budget against Republican claims that it contained overly optimistic economic assumptions and included stealthy tax increases that could end up hitting most Americans.

Treasury Secretary Timothy Geithner and White House Budget Director Peter Orszag, in separate appearances on Capitol Hill, stuck to the administration line that the president's budget would benefit 95 percent of working Americans.

Higher taxes for affluent Americans would not come until 2011 once "we are safely into recovery," Geithner told the tax-writing House Ways and Means Committee.

"I'm confident this is the right path for the country," Geithner said.

But Republicans argued that the portion of the budget that would require polluters to purchase permits from the government for their greenhouse gas emissions would essentially impose huge new energy costs on all consumers and businesses.

"The president's budget increases taxes on every American, and does so during a recession," Rep. Dave Camp, R-Mich., told Geithner.

Camp also complained about provisions that would limit the size of charitable contributions that could be taken by families earning more than $250,000 a year.

Even some Democrats worry the plan may be too bold, reports CBS News correspondent Chip Reid.

"Are you aware that taking on too many issues is this economic recovery plan might sink the whole ship?" asked Rep. Allen Boyd.

But Geithner defended the overall proposal, saying far more people would benefit from lower taxes under the plan. He said the budget reflects what Obama viewed as "a deep moral imperative to make our society more just. But it's very good economic policy too. It will mean there is again a fairer, more equitably shared tax burden on the vast majority of Americans."

Orszag faced similar questioning before the House Budget Committee.

"The new administration has inherited an economic crisis unlike any we have seen in our lifetimes," Orszag said in defending the spending and tax levels of the budget.

Some lawmakers challenged the economic projections contained in the budget as far too optimistic.

The budget forecasts that the economy, as measured by the gross domestic product, would only shrink by 1.2 percent this year and then snap back and grow by a solid 3.2 percent in 2010, followed by several years of annual growth of over 4 percent.

That's more optimistic than most private forecasts, and comes despite a new government report showing the economy contracted by 6.2 percent in late 2008, far more than the 3.2 percent drop first reported.

"It looks like somebody's cooking the books," Rep. Kevin Brady, R-Texas, told Geithner.

"It does predict a somewhat more rapid recovery" than other forecasts, Geithner acknowledged. But, he added, "I believe this is a realistic forecast," even if it does come at a time of a still-deepening recession.

He promised the administration would "look at this with a cold, hard set of eyes" when it revisits its assumptions at a later point.

Geithner also said the administration will unveil a series of rules and measures in the coming months to limit the ability of international companies to avoid U.S. taxes.

Mr. Obama and his top aides have been promoting the budget package since unveiling an outline last week, but Tuesday provided lawmakers their first opportunity to publicly question top officials over details.

Questioning was pretty much along party lines. Democrats for the most part praised Mr. Obama's proposal.

"It is making the tax code more fair," Rep. John Lewis, D-Ga., told Geithner.

Mr. Obama's budget faces a difficult path through Congress because of its many controversial proposals on health care, taxes and global warming.

Meanwhile, Federal Reserve Chairman Ben Bernanke was generally supportive of Mr. Obama's efforts to stimulate the economy.

Bernanke, who was appointed to the top Fed job in 2006 by then-President George W. Bush, told the Senate Budget Committee that Mr. Obama's recently enacted $787 billion stimulus package of increased federal spending and tax cuts should help revive consumer spending, boost factory production and "mitigate the overall loss of employment and income that would otherwise occur."

Still, the Fed chief warned that the timing and magnitude of the impact of the stimulus package is subject to "considerable uncertainty, reflecting both the state of economic knowledge and the unusual economic circumstances that we face."

Asked whether Mr. Obama's economic assumptions in his budget are too rosy, Bernanke said although they are a little more optimistic than the Fed's projections, "these things are hard to predict with precision."

Bernanke testified that an economic recovery depends on the government's ability to stabilize weak financial markets.

The economy was taking another hit a day after the Dow Jones Industrial Average plunged below 7,000 for the first time since 1997. Stocks extended their losses in an erratic session Tuesday.

Mr. Obama, speaking with reporters at the White House, brushed off what he called Wall Street's "fits and starts."

He also said that Wall Street has been hammered so hard that "buying stocks is a potentially good deal."

He compared the stock market to the daily tracking polls used during campaigns and said that paying too close attention to markets could lead to bad long-term policy.

Like his economic aides, the president blamed the Bush administration for all aspects of the crisis, reports Reid.

"There were a lot of bad decisions that were made. We are cleaning that mess up," Mr. Obama said.

Mr. Obama wants to reduce the emissions blamed for global warming by auctioning off carbon pollution permits. The proposal, known as cap and trade, is projected to raise $646 billion over 10 years.

Most of the money would be used to pay for Mr. Obama's "Making Work Pay" tax credit, which provides up to $400 a year to individuals and $800 a year to couples. The plan also would raise money for clean-fuel technologies, such as solar and wind power.

"This massive hidden energy tax is going to work its way through every aspect of American life," Rep. Dave Camp of Michigan, the top Republican on the Ways and Means Committee, told Orszag. "How we light our homes, heat our homes and pay for the gas in our cars, in every phase of our daily lives, we will be paying higher costs."

Orszag acknowledged that the energy proposal would increase costs for consumers, but argued that the vast majority of consumers will get tax breaks elsewhere in Obama's budget package.

[withad-2009]

"The new administration has inherited an economic crisis unlike any we have seen in our lifetimes," Orszag said in defending the spending and tax levels of the budget.

The Dems. had control of the house and congress for the last two years, maybe if Obama had not spent the last two years running for president and attended some of the senate votes or at least did something besides voting "present" he wouldn't have "inherited" this mess. It was his party that ran the country for the last two years so let's get over this "inherited" crap. Over 9000 earmarks in the new budget plus the 100's that were in the stimulus package, doesn't seem like a whole lot of change to me, just a change in who is president.

[promaclaura]

Even some Democrats worry the plan may be too bold, reports CBS News correspondent Chip Reid.


-Fourteen Senate Democrats are bothered by this bill, they have been quoted as saying this budget is going to "choke" them. Evan Bayh of Indiana said "shouldn't we cut spending before we raise taxes?". Good for these Democrats, wiping the victory glaze from their eyes and "seeing" reality.

[McHineguy]

So when he said he was going to increase taxes for those above 200,000 a k year, you thought he meant Main Street.

Get real, your false outrage is transparent.
Posted by curse914 at 6:52 PM : Mar 3, 2009

Its simple. Cap and Trade will tax all carbon fuels. Your utility company uses carbon fuel to generate power and they are required by law to pass those taxes on to the customer. So, your electric bill is going up a LOT more than that $13.00 per week tax break he plans to give you.

Then check into how corporations pay their income taxes. They dont reduce dividend, they raise prices. So, here comes another pice increase. Get used to it. Obama is goign to tax the rich and the rich are goign to pass the hat to you. You can either pay up or do without.

[McHineguy]

...

By comparison, the Republican Party ? which resisted Obama's recently passed stimulus plan and has criticized the spending in his budget ? finds its favorability at an all-time low. It also receives most of the blame for the current partisanship in Washington and trails the Democrats by nearly 30 percentage points on the question of which party could best lead the nation out of recession.
Posted by cs4466 at 7:26 PM : Mar 3, 2009

It doesnt matter who is winning the popularity contest. What matters is that things keep going down and down. Obama isnt leading, he is just pandering to the left to build up "political capital". American cant afford his mistakes much longer.

Stop shouting your partisan slogans. Look at what is happening and continues to happen. Most economists say we are on the wrong track. And Obama is as stubborn as Bush. The rich will be ok, but the rest of us are losing jobs, losing savings, and going on Obama welfare.

[Newster1]

This budget will do nothing but add to America's spiral downward.
Posted by sogaman

Oh yeah, I'm sure YOU have all the answers, prolly would do just what the repubes have done I bet!

[cpelzar--2008]

I saw these Obama bafoons on the news in front of congress. Reminded of the movie dumb and dumber. They have made up their numbers and truly have no clue.

In a recession and the market in free fall after all of Obamas spending sprees, we are increasing taxes on capital gains, dumb.

with cap and trade, the price of energy including electric will be raised almost 1400 per year to the average family. dumber.

Obamas presidency is already growing tired. when is his term over, isn't it over yet. I can't afford him any more and it has only been a few weeks. He cannot go soon enough.

[cs4466]

Poor, poor bitter neocons.

WASHINGTON - After Barack Obama's first six weeks as president, the American public's attitudes about the two political parties couldn't be more different, the latest NBC News/Wall Street Journal poll finds.

Despite the country's struggling economy and vocal opposition to some of his policies, President Obama's favorability rating is at an all-time high. Two-thirds feel hopeful about his leadership and six in 10 approve of the job he's doing in the White House.

"What is amazing here is how much political capital Obama has spent in the first six weeks," said Democratic pollster Peter D. Hart, who conducted this survey with Republican pollster Bill McInturff. "And against that, he stands at the end of this six weeks with as much or more capital in the bank."
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By comparison, the Republican Party ? which resisted Obama's recently passed stimulus plan and has criticized the spending in his budget ? finds its favorability at an all-time low. It also receives most of the blame for the current partisanship in Washington and trails the Democrats by nearly 30 percentage points on the question of which party could best lead the nation out of recession.

[sogaman]

This budget will do nothing but add to America's spiral downward.

[curse914]

We need numbers sport, or at least an example to illustrate your point, can you come up with the goods?
Posted by curse914

I suppose you believe the 9-11 attack was an inside job too.
Posted by flopez5 at 7:07 PM : Mar 3, 2009

What kind of answer is this? I was not implying conspiracy, but if that is how out keep from addressing the points then so be it.

Here is a snip and a link to an article with the actual time line of the Deregulation of the financial market that has led to our financial crisis. Can you counter without some conspiracy hokem?

1960s-70s


First efforts to loosen Glass-Steagall restrictions


Beginning in the 1960s, banks lobby Congress to allow them to enter the municipal bond market, and a lobbying subculture springs up around Glass-Steagall. Some lobbyists even brag about how the bill put their kids through college.

In the 1970s, some brokerage firms begin encroaching on banking territory by offering money-market accounts that pay interest, allow check-writing, and offer credit or debit cards.

LINK to the article: http://www.pbs.org/wgbh/pages/frontline/shows/wallstreet/weill/demise.html

[curse914]

Higher taxes for affluent Americans would not come until 2011 once "we are safely into recovery," Geithner told the tax-writing House Ways and Means Committee."...or most likely never...Comrade Obama will want to run again, and you can be your bottom dollar he's not going to tax a hand that feeds his campaign funds.

But he's sure willing to rain down another huge tax on us with his freaking carbon tax...he's not worried at all about hitting us with that made up BS! Global warming is the biggest hoax of the century to give the government more excuse to pull up money into it's control.

And lastly, there is no justification whatsoever for this totally UNNECESSARY spending spree...not ONE!
Posted by ChgUBINOT at 5:52 PM : Mar 3, 2009

So when he said he was going to increase taxes for those above 200,000 a k year, you thought he meant Main Street.

Get real, your false outrage is transparent.

[curse914]

Hey burtwoody - you need to check your facts and quit listening to the Liberal spin machine! Only the last 2-3 years of those 8 were problems - and the DEMs had control of the Congress since '06. But I don't want to make this a party issue - because this is an American issue - regardless of party affiliation. What the BHO administration wants to do will hurt every single one of us with higher energy costs, higher inflation, less opportunity for employment etc.
Posted by taxed2debt at 5:56 PM : Mar 3, 2009

So you are saying the Deregulation of the Financial markets occurred in the last 2 years of Bush's presidency? Do you have proof?

Name the specifics as to who caused the Mortgage meltdown and Default Credit Swaps?

We need numbers sport, or at least an example to illustrate your point, can you come up with the goods?

[Whoever4321]

Obaaaama made it absolutely clear during has campaign that it was the end of earmarks. Yet the Dumocrooks are pushing through a bill with around 8600 earmarks (including $1.8M to manage swine manure in Iowa, $2.2M to study grape genetics in NY, and $41.5M for presidential libraries), and nobody is blinking an eye. I seriously doubt that Obaaama will dare to veto the bill, since he is not the one wearing the pants in Washington.

[taxed2debt]

Hey burtwoody - you need to check your facts and quit listening to the Liberal spin machine! Only the last 2-3 years of those 8 were problems - and the DEMs had control of the Congress since '06. But I don't want to make this a party issue - because this is an American issue - regardless of party affiliation. What the BHO administration wants to do will hurt every single one of us with higher energy costs, higher inflation, less opportunity for employment etc.

[julesarcher1]

I will leave you people with this---OPEN YOUR EYES & NOSE---
See and smell the ****...
Posted by Mr_Mr2258 at 5:36 PM : Mar 3, 2009

I like that post. Well, the part about "I will leave".

[Mr_Mr2258]

I will leave you people with this---OPEN YOUR EYES & NOSE---
See and smell the ****...

[julesarcher1]

No amount of government money is likely to provide that confidence.
Posted by rhs648 at 5:28 PM : Mar 3, 2009


Thank you for a reasonable post. i just don't happen to agree with that last sentence. I'm scared about the spending. But the downward spiral was going to happen because of what was occuring before the spending started. The spending . . . investing . . . is at least an attempt to stem the tide. Whether or not it works is another story. But at least something is being done. Letting companies fail is a natural consequence of business but in some cases propping them up to improve what is happening could be good. The jury is still out. It desrves a chance to succeed.

But it's scary.

[drsuz]

**I just hope that the people that voted for Obama are not that stupid...**

Obama is Prez....Did that answer your question??

[rhs648]

How about the person who takes out a loan for a family business?
Posted by julesarcher1

Most posters would probably agree that there are times when borrowing money is useful for purposes such as buying a home or a new car. A good business person weighs the pros and cons and generally borrows money to expand a business. In some cases, they use short term loans to shore-up temporary casg flow shortages. In any event, the worst that happens is a business person goes out of business. President Obama is subjecting America to massive debt to cure an ailing economy. Whether it works or not, it will be incredibly expensive to the American people. Even scarier, is giving taxpayer money to failing businesses. Ordinarily, a business fails and other people or businesses step in to fill the void. A case example is Circuit City. Other retailers like Best Buy and Walmart and perhaps even some new businesses will pick-up the slack. A rapid and complete overall of our system might lead to our downfall. The economy is complex and sensitive to change. What is needed is renewed confidence that the economy will improve. No amount of government money is likely to provide that confidence.

[julesarcher1]

Here is the democrats plan. They know that most people that voted for Obama are not very smart.

Posted by Mr_Mr2258 at 5:18 PM : Mar 3, 2009


They think you voted for him?

[cbs4111]

Welcome to the ObamaNation.