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Tag: balancing the budget

Geithner’s testimony

Expectations were justifiably pretty low for Treasury Secretary Timothy Geithner based on his prior performances, but I’ve been impressed with his testimony today as he explains the Obama administration’s budget in front of the House Ways and Means Committee. He has complete command of the issues, and he has been able to explain the strategy behind the plan.

The Obama administration needs effective surrogates to sell the President’s economic plan, and Geithner’s testimony today suggests he will be more effective than he was in the past.

Broder is shocked by Obama’s ambitious agenda

David Broder has been in Washington for a long time, and President Obama seems to have stunned him with the breadth and boldness of his agenda. Broder sees Obama taking on significant risks, and he’s right about that. Obama doesn’t want to play it safe – he wants to seize the moment and make real efforts to solve long-standing problems.

The size of the gamble that President Obama is taking every day is simply staggering. What came through in his speech to a joint session of Congress and a national television audience Tuesday night was a dramatic reminder of the unbelievable stakes he has placed on the table in his first month in office, putting at risk the future well-being of the country and the Democratic Party’s control of Washington.

It was also, and even more significantly, a measure of the degree to which he has taken personal responsibility for delivering on one of the most ambitious agendas any newly inaugurated president has ever announced.

Most politicians, facing an economic crisis as deep as this one — the threatened collapse of the job market and manufacturing, retail and credit systems here at home, along with the staggering, unprecedented costs of the attempted rescue efforts — would happily postpone tackling anything else.

But not Obama.

Instead, no sooner had he finished describing his plans for spurring economic recovery and shoring up the crippled automotive and banking industries, he was off to the races, outlining his ambitions for overhauling energy, health care and education.

The House chamber was filled with veteran legislators who have spent decades wrestling with each of those issues. They know how maddeningly difficult it has been to cobble together a coalition large enough to pass a significant education, health care or energy bill.

And here stood Obama, challenging them to do all three, at a time when trillions of borrowed dollars already have been committed to short-term economic rescue schemes and when new taxes risk stunting any recovery.

Is he naive? Does he not understand the political challenge he is inviting?

Broder ends this column with the following line: “When we elected Obama, we didn’t know what a gambler we were getting.”

In one sense, he shouldn’t be surprised. Obama was clear about all these initiatives during the campaign. On the other hand, Broder is used to seeing politicians who are too worried about politics and too timid to take bold chances. Obama is not one of those politicians.

Obama promises return to “pay-as-you-go” budgeting

When Republicans gained full control of the government during the Bush years, they abandoned the “pay-as-you-go” budget requirement that helped Bill Clinton and the GOP congress to balance the budget and ultimately create surpluses in the 1990s. The results were disastrous, as the national debt nearly doubled during the Bush years.

Many Blue-Dog Democrats have wanted a return to these policies, and Obama has pledged that all spending and tax changes enacted after the stimulus will be held to this standard.

House Democrats won a key procedural vote Tuesday on the stimulus after a last-minute promise from the Obama administration to return to “pay-as-you-go” budget rules after the stimulus is approved.

In a 224-199 vote, the House approved a resolution allowing the stimulus bill to come to the floor for debate. Twenty-seven Democrats – 24 of them members of the conservative Blue Dog Coalition – bucked their leadership and voted against the measure.

But according to Democratic leadership sources, the number was almost much higher – and could have been high enough to hand the Republicans a monumental victory – had it not been for a letter from President Obama’s budget director Peter Orszag.

The letter addressed to House Appropriations Committee Chairman David promised to return to “pay-as-you-go budgeting,” and stressed that the stimulus was an “extraordinary response to an extraordinary process” and thus subject to different rules.

“It should not be seen as an opportunity to abandon the fiscal discipline that we owe each and every taxpayer in spending their money – and that is critical to keeping the United States strong in a global, interdependent economy,” the letter stated.

Orszag also emphasized that Obama’s support for paying for any temporary tax cuts in the stimulus that he would like to make permanent. The budget director said Obama would detail those offsets in his budget.

“Moving forward, we need to return to the fiscal responsibility and pay-as-you-go budgeting that we had in the 1990’s for all non-emergency measures,” Orszag continued. “The President and his economic team look forward to working with the Congress to develop budget enforcement rules that are based on the tools that helped create the surpluses of a decade ago.

“Putting the country back on the path of fiscal responsibility will mean tough choices and difficult trade-offs, but for the long-term health of our economy, the President believes that they must be made.”

Though addressed to Obey, Democratic sources said copies of the letter were distributed in a last minute flurry to Blue Dogs, many of whom were already on the floor and ready to cast their votes. The centrist group already was ruffled by the fact the package included far more spending than Obama had called for, and were prepared to vote as a block against the resolution, Democratic sources said.

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