Spending plan attracts bipartisan criticism

Office of Management and Budget Director Peter Orszag drew criticism from the right and left Tuesday as he defended President Obama's fiscal 2011 budget, particularly its reliance on a presidential commission to recommend difficult cuts to reduce the deficit to 3 percent of gross domestic product.

House Budget ranking member Paul Ryan, R-Wis., questioned the credibility of using the commission to get to the 3 percent goal, a level most economists say is sustainable, during a Budget Committee hearing.

"Last November you said in the medium term, out in 2015, 2016 ... we need to get something about 3 percent of the economy ... you went on to say that the credibility of the budget was at stake. Am I missing something? The president's budget doesn't meet this standard," Ryan asked Orszag.

Orszag agreed that Obama's fiscal 2011 budget does not meet that standard without the commission's recommendations, and he stressed that the commission -- which will explore spending cuts and tax increases -- will play an important role and that the White House is counting on Congress to participate.

But Republicans did not accept Orszag's answer.

Rep. John Campbell, R-Calif., mockingly asked, "The president can't come up with his own idea, or make a suggestion on how to make a sustainable budget; he has to punt it to a commission?"

Orszag responded that "to just put out ideas is what I used to do at [the Brookings Institution]. That is the easiest thing in the world. We need to move toward a situation where together we actually come up with something that can be enacted."

Republicans have been critical of the White House deficit panel because they think it is a partisan exercise and have been reticent about saying whether they will participate.

Senate Minority Leader Mitch McConnell, R-Ky., said Tuesday he would prefer a commission that focused just on spending cuts, but he would consider naming Republicans to the panel.

"I'm not exactly sure what the game plan of this executive branch commission would be," McConnell said. "I think it's probably not going to have a whole lot of credibility, but I'm willing to consider it and we'll be discussing it in our conference, the appropriateness of participating in something that is not likely to be as good a mechanism as the variety of the commission -- as the commissions that were offered here on the floor last week."

Senate Budget Chairman Kent Conrad, D-N.D., sponsored an amendment to a debt limit increase bill last week that would have created a congressionally mandated commission, but it fell seven votes short of the 60 it needed to pass.

Conrad said Tuesday it might be too late to try again, noting the commission needs to submit its recommendations after the November elections and House and Senate Democratic leaders have pledged to take the recommendations up this year.

Senate Republican Conference Chairman Lamar Alexander of Tennessee and Sen. Mark Warner, D-Va., said they hope the commission proposal can be passed by the Senate.

Under the president's fiscal 2011 budget, the deficit falls to $706 billion in fiscal 2014, or 3.9 percent of GDP.

That figure is reached after enacting a series of proposals designed to bring the deficit down by $1.2 trillion over 10 years, such as allowing the 2001 and 2003 tax cuts to expire in 2011 for those making over $250,000 a year, which would reduce the deficit by almost $700 billion over 10 years.

In order to get to its goal of 3 percent of GDP by 2015, Obama will create the deficit commission whose recommendations will move the needle the rest of the way.

Orszag also got an earful from Democrats on the three-year proposed freeze on nonsecurity discretionary spending, which will not affect defense, homeland security, veterans' programs, or foreign aid.

House Democratic Caucus Vice Chairman Xavier Becerra of California said he expects Congress to apply the freeze to defense spending.

"So many of us believe that ... if you are going to freeze spending for our schools, if you are going to freeze spending for seniors programs, if you are going to freeze spending for housing programs, for environmental cleanup programs, then we should take the same brush to scrub the Department of Defense," he said.

"I know that you've mentioned some reductions and cuts that are being made at DOD, but that doesn't mean that we can't continue to examine it and I suspect that Congress will continue to do so," said Becerra.

Orszag also heard from Rep. Lloyd Doggett, D-Texas, a member of both the Budget and Ways and Means committees, who raised concerns about the White House proposal to give companies a $5,000 tax credit for each new worker they hire in 2010, which could be part of a jobs package being drafted in the Senate.

Doggett said that "a wide range of tax experts say that this proposal only encourages firms to do what they would have done anyway in most cases, and that is especially true of this one since you apply it retroactively." He added that Congress rejected the proposal last year for the stimulus.

Orszag said the White House is open to other ideas, but that the proposal, in addition to affecting hiring, would also help inject cash into small businesses, which have had trouble accessing credit lately.

Dan Friedman contributed to this report.