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Obama Makes Case for Budget, Congress Considers Cuts

March 25, 2009 at 6:00 PM EDT
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Congressional Democrats outlined plans Wednesday to scale back the Obama administration's budget plan as the president visited Capitol Hill to drum up support. Reporters examine the politics at play.
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JIM LEHRER: President Obama lobbied Democrats in the U.S. Senate today to back his budget, while at the same time party leaders started making changes in the $3.6 trillion outline.

NewsHour correspondent Kwame Holman has our lead story report.

KWAME HOLMAN: The president went to the Capitol this afternoon seeking support for his spending blueprint, amid criticism from key Democrats. On the House side, he got help from Vice President Joe Biden, who met with Speaker Nancy Pelosi.

JOSEPH BIDEN, Vice President of the United States: Look, I am confident that, with the leadership of the speaker and with Harry Reid, we’re going to get our budget with all the major elements intact. I think our budget will — I’m absolutely confident will cut the deficit in half within five years.

We have to get down to rebuilding an economy that produces a solid foundation for the better part of the beginning of the century. And that requires us to deal with education, with health care, and it requires us to deal with energy, and also budget discipline built into this.

KWAME HOLMAN: Later, as Mr. Obama headed back to the White House, the question remained: how to address his priorities without causing crippling deficits.

The president’s budget estimates the red ink will total $1.4 trillion for the next fiscal year, then drop to less than half that amount by 2014. Last week, the Congressional Budget Office projected his plan would yield far larger deficits, and that raised alarms in Congress.

So Senate Budget Committee Chair Kent Conrad and House Budget Chair John Spratt laid out their own plans today. Their numbers are lower than or comparable to the president’s. They estimate a $1.2 trillion deficit for the coming fiscal year. And in five years, they project red ink in the range of $500 billion to $600 billion.

Still, Conrad sounded a note of compromise after meeting with Mr. Obama today.

SEN. KENT CONRAD (D), North Dakota: With respect to the budget, we have attempted to preserve, and I think have preserved, the president’s key priorities. That’s what he asked me to do when we got the reforecast of reducing our dependence on foreign energy, excellence in education, health care reform. All of those are possible to move forward in the budget resolution that I have written.

KWAME HOLMAN: For example, the budget chairmen would allow the president’s health care reform plans if they’re paid for by tax hikes or spending cuts, but they’d let his middle-class tax cuts expire at the end of next year.

They’d also leave out additional rescue funds for banks and the cap-and-trade system of selling greenhouse gas permits.

At his White House news conference last night, Mr. Obama said he believes that ultimately Congress will give him most of what he wants.

BARACK OBAMA, President of the United States: Now, we never expected, when we printed out our budget, that they would simply Xerox it and vote on it. We assumed that it has to go through the legislative process.

I have not yet seen the final product coming out of the Senate or the House, and we’re in constant conversations with them. I am confident that the budget we put forward will have those principles in place.

Republicans criticize budget plan

Adam Nagourney
The New York Times
[W]hat you heard last night at the press conference was a signal that he was not going to press, necessarily, in this budget for either cap-and-trade or the middle-class tax cuts.

KWAME HOLMAN: Amid the dialogue between the president and his own party, Republicans kept up their fire, charging the Obama plan is a disaster in the making.

REP. PAUL RYAN (R), Wisconsin: This is the most fiscally reckless and irresponsible budget I have ever seen, and I don't say that lightly. I'm very worried about this budget. I'm very worried that this budget is going to give us a mountain of new debt.

And during this budget, Medicare, Social Security and Medicaid all go insolvent at the same time. So not only are we not fixing the fiscal problems in this country, we're exacerbating the fiscal problems in this country.

KWAME HOLMAN: The prospect of sweeping spending plans and huge deficits also has raised concern abroad, especially in China. At a forum in New York today, Treasury Secretary Timothy Geithner discussed China's call for replacing the dollar with a new world currency.

TIMOTHY GEITHNER, Treasury Secretary: I think the dollar remains the world's dominant reserve currency. I think that's likely to continue for a long period of time. And as a country, we will do what's necessary to make sure we're sustaining confidence in our financial markets and on the productive capacity of this economy and our long-term fundamentals.

KWAME HOLMAN: There also was criticism in Europe today. The Czech prime minister, currently acting as head of the European Union, attacked U.S. calls for other countries to spend more.

MIREK TOPOLANEK, Prime Minister, Czech Republic (through translator): Timothy Geithner, the U.S. treasury secretary, talks about permanent action. And we, at our spring council, were quite alarmed by that. He talks about an extensive U.S. stimulus campaign.

All of these steps, their combination and their permanency is a way to Hell. We need to read history books and revisit the lessons taught by history and the biggest success of the spring European Council was the refusal to go this way.

KWAME HOLMAN: Back at the White House, presidential spokesman Robert Gibbs played down the criticism.

ROBERT GIBBS, White House Press Secretary: From what I can tell, the speaker has some domestic political problems that might speak more to what he was talking about. And I think the Czech people and the American people can stand assured that the president of the United States of America is going to do all and everything in his power to get our economy moving again and to restore confidence in that economy.

KWAME HOLMAN: President Obama will have a chance to explain his budget and economic policies himself next week when he makes his first official trip to Europe.

Budget reflects priorities

Shailagh Murray
The Washington Post
Democrats feel very vulnerable to this Republican argument that they will...be seen as tax increasers and spenders into the future.

JIM LEHRER: Gwen Ifill has more on the budget politics.

GWEN IFILL: President Obama has outlined his priorities. Now it's up to Congress to act. That's where the push and the pull begins.

For a closer look at the president's and at Congress's spending priorities, we turn to Shailagh Murray, who covers the Capitol for the Washington Post, and Adam Nagourney, who covers politics for the New York Times.

Shailagh, what is the president's blueprint that we saw him talk about and make kind of a pitch for last night? What does that tell us about his priorities and about Congress's priorities? And are they the same?

SHAILAGH MURRAY, Washington Post: I think they are the same. I think today was a significant day for the president, because these two blueprints that emerged from the House and Senate, leaving his main priorities intact. It doesn't make it easy for him to achieve these goals of expanding health coverage and reforming energy policy and adding more money to education, but it does allow them to happen, and that's significant.

That's a major endorsement of -- of the president, the heart of his domestic policy agenda, by Democrats at a very vulnerable time, when deficits are sky high, only rising. And Democrats feel very vulnerable to this Republican argument that they will, you know, be -- they will be seen as tax increasers and spenders into the future.

So that's sort of their long-term concern. And yet, in the face of that, they're willing to cast their lot with this very popular president on this sweeping, very ambitious agenda.

GWEN IFILL: Adam Nagourney, what is missing from the priority list? For instance, if we hear the president talk about health care and education and renewable energy, what's not on that list?

ADAM NAGOURNEY, New York Times: Well, I mean, I think what you heard last night at the press conference was a signal that he was not going to press, necessarily, in this budget for either cap-and-trade or the middle-class tax cuts.

I would point out, though, that those tax cuts are included for the next two years in the stimulus bill, and so that's not that big a concession on his part, I don't think. And, secondarily, I think that most people were expecting he'd give up on cap-and-trade now. So those are the two main things that hit me.

GWEN IFILL: Adam, let's follow up on that a little bit. Did you -- when you say most people expected he would give up, are we talking about the Democrats in Congress or Republicans in this case?

ADAM NAGOURNEY: Democrats. Democrats. I'm not sure what Republicans were thinking, but I think Democrats -- just the sort of sense out there was that he was not going to be able to get cap-and-trade through, at least for now, because of divisions within the Democratic caucus. And, therefore, he'd want to put that one aside.

GWEN IFILL: Shailagh, you were on Capitol Hill today when the president showed up for his meeting with Senate Democrats. What was going on up there? What was that all about?

SHAILAGH MURRAY: Well, clearly, there's a -- a few days ago, the fate of this budget looked a lot shakier than it does now. And I think that is -- I think this press conference last night really helped.

I also think that President Obama's willingness to concede ground on this across-the-board domestic spending increase, which was significant in his blueprint and is significantly lower in both the House and the Senate proposals, whether that translates -- you know, how that translates into the transportation programs and the agriculture programs and all that that Congress holds near and dear and how this plays out months ahead is unclear.

But, for the moment, the party has decided to rally around these core principles that we heard over and over again the president advocate last night. And they have decided to pursue them.

Now, in the case of cap-and-trade, as Adam was saying, the Republican argument that this will translate into an electricity increase for consumers has resonated. And I think that's why you've seen in the past few weeks and months a retreat from that.

Growing deficit is a problem

Adam Nagourney
The New York Times
I'm not sure...whether [President Obama] came into this aiming high, figuring he'd have to give up a little bit. I mean, he's new to us and he's new to the Hill, so we don't really know all his negotiating tactics.

GWEN IFILL: So the president is -- so the president gets his priorities; they're just willing to spend a lot less on them?

SHAILAGH MURRAY: Exactly. And he'll have to work harder to achieve them. I mean, in the case of health care reform, they have to pay for expansions in coverage.

Now, they talk all the time about how you have to cut costs at the same time as you're expanding coverage, so this will force them to do that. You know, one of the little-noticed features of the president's budget is that he proposed a means test for the Medicare drug benefit. That is an enormously significant concession on the Democrats' part.

If they proceed with and make choices like that, you know, then they may be able to reach these goals ultimately. But, you know, those are debates that are going to have to unfold in committees and on the House and Senate floors in the months ahead. This budget simply lays down a marker and allows these things to happen.

GWEN IFILL: Adam Nagourney, how important was it for the president or Republicans or even for moderate Democrats to be able to make the case to the president -- and did it work -- that, in fact, he couldn't expand all this spending and not do some more cutting, which is, he couldn't -- his fourth priority, which was to cut the deficit in half, didn't -- did he convince people that he could do all of this and cut the deficit in half? Or did he have to back away from that a little bit?

ADAM NAGOURNEY: I think he did. What I'm not sure of is whether he came into this aiming high, figuring he'd have to give up a little bit. I mean, he's new to us and he's new to the Hill, so we don't really know all his negotiating tactics.

And, remember, he wasn't on the Hill for that long, though his chief of staff, Rahm Emanuel, was. So I kind of suspect that there could have been some sort of like expectation setting here, that he came in asking for a lot knowing that he wasn't going to get as much.

I think also very important what he's been doing through this is talking about reducing the deficit. Now, we can argue about whether that's still a huge deficit or not, but I think the talking point of saying, well, it's going to be, whatever, $1.8 trillion, I think, next year, and he'll cut it in half by 2014, that has, I think, some impact, particularly among moderate Democrats who are worried about -- as Shailagh was saying -- were worried about the idea that they're leaving huge deficits behind them.

GWEN IFILL: Adam, how much does it matter for the president to get his way? How much is he depending on his popularity, his own personal popularity, in order to get members of Congress or anyone to go along with his priorities?

ADAM NAGOURNEY: I think it depends on the district and the state. Keep in mind that the old Obama campaign organization, OFA, or whatever they're calling it now, Organization for America, is out there lobbying members of Congress, trying to get people to sort of get in touch with members of Congress.

Members of Congress, senators, House members, they're political leaders. They're looking at the same polls we are. They know that right now President Obama is very, very popular, and they know that he won an election with a lot of support here, so they're not immune to that kind of pressure.

It will be interesting to see how directly President Obama or his political organization tries to press them, but I think it's, you know, obvious that they're going to be very, very much aware of the fact that right now they're negotiating with a president who's in a very strong position.

Pressure within Democratic Party

Shailagh Murray
The Washington Post
[T]he concern [is] now, as the House and Senate take these bills to the floor next week, that members will try to reduce spending more and that that will create some friction on the left within the parties.

GWEN IFILL: Adam, does the profligate spending brush -- has he been effectively tarred by that, by Republicans or Democrats?

ADAM NAGOURNEY: I'm not sure he has, only because I think that right now people have different concerns and they're -- I'm not saying they're not concerned about spending, but they're also concerned about, you know, the idea that the bank system is sort of in collapse or frozen.

And I think that the argument the president made last night -- and you heard him make it again and again in a very sort of consistent way -- is that the budget he is proposing has this long-term effect -- and, Gwen, we can argue whether it's true or not -- but the long-term effect of getting the economy back onto sound footing that it hasn't been on before, in other words, that we're not a sort of boom-and-bust economy, as he kept talking about last night again and again.

And his arguments are that all these things that Republicans are talking about as profligate spending, whether it's health care, trade, whatever, are, in fact, part of his sort of package to try to get the economy long term in good shape.

Now, A, is that a true argument policy-wise? We'll see. Does that work politically? You know, it might. I mean, President Obama has certainly proven to be a very effective communicator.

GWEN IFILL: And, Shailagh, briefly, what is it -- what tension points should we be looking at between Obama and Democrats right now, President Obama and Democrats right now? Is there pressure coming from within the party on this?

SHAILAGH MURRAY: There is. And the concern now, as the House and Senate take these bills to the floor next week, that members will try to reduce spending more and that that will create some friction on the left within the parties, because, don't forget, they're a significant portion of both the House and Senate Democratic caucuses.

So I think they feel like they've found this middle ground right now. There's concern that amendments will come along that will seem irresistible to moderates and will undermine the integrity of the product. I mean, you know, large increases in college loan programs, that sort of thing, that are important, but vulnerable with this deficit.

GWEN IFILL: The devil being in the details, as always.

SHAILAGH MURRAY: Absolutely.

GWEN IFILL: Shailagh Murray of the Washington Post, Adam Nagourney of the New York Times...

ADAM NAGOURNEY: Thank you.

GWEN IFILL: ... thank you both very much.

SHAILAGH MURRAY: Thanks, Gwen.

ADAM NAGOURNEY: See you soon.