WASHINGTON – On the second anniversary of the passage of the stimulus bill,Treasury Secretary Timothy Geithner became the latest member of the Obama administration to feel the heat for the president’s proposed 2012 budget
The Senate Budget Committee blamed Geithner and the president for failing to take proper leadership in taming the government’s surging spending and addressing pressing fiscal issues.
Sen. Kent Conrad,D-N.D.,the committee chairman,expressed his concerns about the 10 year debt and deficit increases predicted by the budget. He said the budget correctly emphasizes educational and economic recovery initiatives but fails to properly address the debt issue. Conrad said the budget predicts that the current gross federal debt of $15.5 trillion will rise to more than $26 trillion in 10 years,an average increase of $1 trillion a year.
“That to me cannot be the path,” Conrad said.
Sen. Jeff Sessions,R-Ala.,the committee’s senior Republican,was even more critical than Conrad. Before discussing the budget,Sessions bashed Geithner for failing to recognize warning signs of the financial crisis while he was president of the Federal Reserve Bank of New York.
Sessions told Geithner the budget will steer the country on an unsustainable course and does not properly address the government’s habit of rabid spending. He said the U.S. will follow Greece into bankruptcy if it does not curb spending. Sessions said the budget will not “win the future” as President Barack Obama has predicted but “lose the future.”
“We need to stop growing the government and start growing the economy,” Sessions said. “That means reducing spending now.”
Geithner admitted the predicted debt,deficit and spending increases are some of the budget’s most important issues. He said that when the Congressional Budget Office releases its analysis of the budget,its predictions for the debt,deficit and spending may be higher than the ones outlined in the proposed budget.
In his written testimony,Geithner said the budget will cut deficits in half by 2013 and deficits will stabilize at 3 percent of GDP by the second half of the next decade. Geithner said the budget’s freeze of non-security spending at 2010 levels and cutting wasteful programs will save $400 billion and bring government spending to the lowest levels as a share of the economy since the Eisenhower administration.
“We share a critical obligation to restore fiscal sustainability,fiscal responsibility and go back to living within our means as a country,” Geithner said.
Geithner’s defense of the budget did not placate the committee,particularly its Republican members. Sen. John Ensign,R-Nev.,said the president failed to take “bold leadership” by not incorporating reforms for entitlement programs such as Medicare and Medicaid.
Sen. John Thune,R-S.D.,said the White House’s predictions about the economic future of entitlement programs and health-care reform are overstated.
“I think this picture is much more grim than many of us realize,” Thune said. “It does come back,in my view,to a spending issue.”
Sen. Pat Toomey,R-Pa.,said the country’s current spending habits have it on a path to a “financial train wreck.”
Geithner told the committee that aspects of the budget-writing process are flawed. He said he would welcome additional spending cuts if Congress can cut spending not directed at essential programs
“We will join you in that cause,” Geithner said.