White House Budget Director Defends Spending Plan

The Obama administration released its budget proposal for 2012 Monday. Steve Inskeep talks to Jack Lew, director of the Office of Management and Budget, about the administration's budget proposal. Many Republicans argue that the cuts don't go nearly deep enough.

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RENEE MONTAGNE, host:

It's MORNING EDITION, from NPR News. I'm Renee Montagne.

STEVE INSKEEP, host:

And I'm Steve Inskeep.

We sat with the White House budget director at the end of a busy Monday at the start of a busy week. Jack Lew is explaining President Obama's budget.

MONTAGNE: The president proposed to bring down the federal deficit over several years. His budget is criticized for what's in it, and also for what is not.

INSKEEP: Some lawmakers in both parties are dismayed by certain spending cuts.

MONTAGNE: Many Republicans argue that the cuts don't go nearly deep enough.

INSKEEP: And some budget experts ask why the White House was not more ambitious. That's the point on which our conversation begins with Jack Lew.

As you know, the president's deficit commission came out with a plan not very long ago that reduced the deficit more than your budget, also dealt with Social Security, and it was bipartisan. Why not just propose that?

Mr. JACK LEW (White House Budget Director): When the deficit commission completed its work, the president appropriately gave them a lot of credit for having done very important work, and said that there were things in there that he was prepared to embrace, other things that he had questions about.

And it was - when we put this budget together, we took many ideas from the deficit commission. There are proposals ranging from dealing with medical malpractice reform, corporate tax reform - literally, a dozen-plus provisions.

INSKEEP: But you don't go as far as the commission did. And, in fact, you don't meet the target that the president himself had set for that commission once upon a time.

Mr. LEW: Well, that actually was the point I was going to make. The commission's target was to bring the deficit to three percent of our economy by the middle of the decade. We actually do meet the target. The budget that the president sent to Congress will bring the deficit down to 3.2 percent of the economy by 2015. It's now over 10 percent. That's an enormous reduction. We stay in the range of three percent for the rest of the decade and beyond.

INSKEEP: The spending cuts here are in the discretionary/non-defense spending, which your own budget documents point out that's only 12 percent of the money that's out there. In fact, I wrote down a quote from your own documents: "The solution to our long-term fiscal problems cannot rest on this alone."

Why not make a proposal that deals with the real problem?

Mr. LEW: Well, what the president has said is this budget is a down payment. If we're able to reduce the deficit to the point where we can pay for our spending and invest in the future, that is an enormous accomplishment. This budget has specific proposals that would do that.

Clearly, there's a longer-term problem. There are issues that go beyond the next 10 years, but we need to deal first with stabilizing what is a very dangerous deficit if we don't bring it under control.

The president made clear in the State of the Union, and the budget that we submitted makes clear that we need to work in bipartisan basis on some very thorny issues.

INSKEEP: Well, given what you just said about bipartisan basis, were you afraid to out front and make a proposal on Social Security or on Medicare?

Mr. LEW: No, it's not a question of fear. It's more a question of trying to define what we could put forward that would move the conversation forward, by our putting the details out there. And I actually want to get back to Social Security for a minute, because I think that there's a pretty common misunderstanding.

Social Security is something that we need to deal with, because people who are working today, who will retire in the future, people who are retired today, they have a right - and it's part of the compact that they can depend on their benefits. We should fix the long-term funding problem of Social Security because that's the right thing to do.

It doesn't contribute to the deficit this year, or next year, or in this 10-year window, or even for a long time beyond that. The only time in recent history we've dealt with it effectively on a bipartisan basis, it's because the groundwork was laid for the kind of conversation that culminated in l983 with the bipartisan Social Security agreement.

History shows us that where presidents have put proposals out there that have been shot down, it slowed the process down. It didn't speed it up.

I think if you look at the president's statement and the budget, it is a clear expression of interest in working towards a bipartisan solution, with principles laid down that reflect how we are going to evaluate options.

INSKEEP: If I might, when you talk about principles, your budget documents includes some which the president himself has said a couple of them - off the top of my head, here - no reduction in current benefits, and you're not going to slash benefits for future recipients.

What does that leave?

Mr. LEW: Well, I'm going to leave those words to stand. I think they actually are reflective of the way we've used Social Security. There is a compact there, and we shouldn't be making changes that reduce the benefits people are depending on today. And we shouldn't be slashing future benefits.

INSKEEP: Can you define slash for me?

Mr. LEW: No, I...

INSKEEP: Does that mean no reduction at all? Or does that mean gentle reduction? What does it mean?

Mr. LEW: I think that the words actually speak for themselves, because this is the beginning of a process. And there's going to be a need to build trust on both sides if we're going to make progress. And, you know, I was very deeply involved in the 1983 Social Security agreement. I worked on it for House Speaker O'Neill. While we were fighting bitter political battles over Social Security, we left options on the table. You know, the taxation of Social Security benefits, which was part of the 1983 agreement, is something that could have become toxic, but didn't. And I think we have to be...

INSKEEP: Have you left off...

Mr. LEW: ...let me - we have deliberately not said things to make one or another option something that we can't talk about.

INSKEEP: Have you left options all options on the table with the principles that you've laid out?

Mr. LEW: I think we've put out principles that were deliberately designed to leave room for a conversation.

INSKEEP: How do you propose to begin that?

Mr. LEW: Well, we've got a lot of things to...

INSKEEP: Or is it up to Republicans?

Mr. LEW: No, we've got there are some very immediate challenges. We present a budget today. We're going to spend the next couple of weeks explaining that budget. You know, last December, there was very little confidence that the Congress and the president could reach a bipartisan agreement on the tax bill. We found a way to work together because we talk to each other.

INSKEEP: I'm glad you raised that example of bipartisan compromise. It was a major compromise. But it was also a compromise in which - as I'm sure you know very well - everything was, in the short term, free. Nothing was financed -hundreds of billions of dollars in tax cuts and spending, and none of it was financed. Now you're talking about a situation where you're actually going to try to pay for things. Isn't that going to be a lot harder to get agreement on?

Mr. LEW: I would say that the issues that we worked through in December were issues of core principle on both sides. We found a way - by reaching to the middle and limiting things to the things we could agree on and the time periods we could agree on - to get the job done. I don't disagree that it is a different exercise when one is cutting taxes than one is reducing the deficit, but I think it is illustrative of how you work together.

INSKEEP: Mr. Lew, thanks very much.

Mr. LEW: Thank you.

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