Democrats had hoped to launch the budget debate on Capitol Hill this week with a focus on their priorities: cleaner energy, healthcare reform, and education. Instead, they’re embroiled in a game-changing debate with Republicans over whether government – the White House, Congress, the bureaucracy, even the Federal Reserve – has what it takes to manage the financial crisis.
Between the AIG bonus debacle and prospects for $1 trillion annual deficits into the next decade, the likelihood is fading that President Obama’s first budget will survive with its key elements intact. The historic deficit numbers, in particular, make a tough sell on the budget even tougher, though some Democratic lawmakers say it’s not out of reach.
“The reality is we are going to have to make adjustments to the president’s budget if we want to keep the deficit on a downward trajectory,” said Sen. Kent Conrad (D) of North Dakota in a statement Friday, after the Congressional Budget Office (CBO) released projections showing federal red ink would total $9.4 trillion over a decade.
Sen. Charles Grassley of Iowa, the top Republican on the Senate Finance Committee, was more blunt.
“People can afford only so much government spending, even for the worthiest-sounding causes,” he said in a statement. “The White House should take a break from the heavy sales job on the budget.”
How much the government should do to try to buttress the weak financial system and spur a flagging economy is the germane question before Congress – and the news from last week may serve to point out the limits of government oversight and financial acumen to date.
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From the Christian Science Monitor
How Much Debt Can The Nation Afford?
Congressional Republicans on Sunday predicted a doomsday scenario of crushing debt and eventual federal bankruptcy if President Barack Obama’s massive spending blueprint wins passage.
But a White House adviser dismissed the negative assessments, saying she is “incredibly confident” that the president’s policies will “do the job” for the economy.
In a TV interview, Obama himself laughed when discussing the dire state of parts of the economy — and ascribed his laughter to “gallows humor.”
White House Council of Economic Advisers chairwoman Christina Romer insisted that the nation’s flailing economy will be rebounding by 2010.
Administration officials — and the president himself — have taken a cheerier tone despite economic indicators that are anything but positive.
“I have every expectation, as do private forecasters, that we will bottom out this year and actually be growing again by the end of the year,” Romer said.
The president, in an interview that aired Sunday on CBS News’ “60 Minutes,” talked about the need to spend taxpayer money to save financial firms and the auto industry.
“I just want to say that the only thing less popular than putting money into banks is putting money into the auto industry,” Obama said with a laugh.
Interviewer Steve Kroft asked how that laughter might be perceived, given the economy’s troubles.
“There’s got to be a little gallows humor to get you through the day,” Obama said. “If you had said to us a year ago that the least of my problems would be Iraq, which is still a pretty serious problem, I don’t think anybody would have believed it.”