Congressional Reaction Mixed To Obama's Budget

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President Obama unveiled his budget for 2010 on Thursday. Democrats praised the president's commitment to expanding health care coverage, education funding and clean energy. Republicans were skeptical — especially about plans to raise taxes on businesses and wealthy households.

STEVE INSKEEP, host:

It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.

RENEE MONTAGNE, host:

And I'm Renee Montagne.

The budget President Obama proposed yesterday is preliminary, really just an outline. But the 10-year plan drew a big response on Capitol Hill. Democrats praised the president's commitment to expanding health care coverage, education funding and clean energy. Republicans were skeptical, especially about plans to raise taxes on businesses and the affluent.

NPR's David Welna has the story.

DAVID WELNA: Minority Leader Mitch McConnell was among the first to pan President Obama's budget. In his statement, McConnell took aim at what he called that plan's unprecedented spending increases. While the American people are tightening their belts, he added, Washington seems to be taking its belt off.

And Mr. Obama's plan to let tax cuts expire at the end of next year for those making more than a quarter-million dollars a year prompted this from House Minority Leader John Boehner.

Representative JOHN BOEHNER (Republican, Ohio): The administration's plan I think is a job killer, plain and simple. And it raises taxes on all Americans while we're in the middle of a recession.

WELNA: House Speaker Nancy Pelosi, on the other hand, defended the tax hikes on the wealthiest. In fact, the top Congressional Democrat said she would have had them take effect even sooner than the year after next, as called for in the president's plan.

Representative NANCY PELOSI (Democrat, California, Speaker of the House): It's not about raising taxes; it's about ending a tax cut that should not have been there in the first place that contributed enormously to our deficit, which has not contributed very much to the growth of our economy. Do you need any more evidence of that?

WELNA: Another Democrat, Senator Budget Committee Chairman Kent Conrad, said Republicans seem to overlook the fact that the Obama budget makes the Bush tax cuts of 2001 and 2003 permanent for everyone but those in the top tax bracket.

Senator KENT CONRAD (Democrat, North Dakota): They talk about massive tax increases. If you look at the scoring of this budget that would be done by the Congressional Budget Office, the non-partisan Congressional Budget Office, what you see is on a net basis there are substantial tax reductions here.

Senator CHARLES SCHUMER (Democrat, New York): This budget is aimed at the middle class like a laser.

WELNA: That's New York Democratic Senator Charles Schumer. He praised President Obama for making permanent the two-year college tuition tax credit that Schumer managed to include in the big stimulus package.

Sen. SCHUMER: And this a real shot in the arm because it's a credit - $2500 in effect off on your tuition 'cause you get to deduct that full amount from your taxes. And I want to thank and salute the president for putting that in. It's another example of focusing tax cuts not on the wealthy, as was done in the past, but on the middle class.

WELNA: In his budget proposal, President Obama promised that by the end of his fourth year in office he will have cut the more than trillion dollar budget deficit he inherited in half. That deficit reduction target did not impress Judd Gregg, the top Republican on the Senate Budget Committee, who briefly agreed to be the president's Commerce secretary before backing out.

Senator JUDD GREGG (Republican, New Hampshire): That number, that 500 billion, is very, very large, obviously. But more disturbing about it is the fact that it goes on forever. Once they hit that, they plateau at that number. And why is that? Well, it's because there is no fiscal restraint in this budget. There is no attempt to address the spending side of the ledger in any aggressive way.

WELNA: And Paul Ryan, who's the ranking Republican on the House budget panel, accused the president of using slight of hand to claim he's included $2 trillion in deficit reductions in his budget.

Representative PAUL RYAN (Republican, Wisconsin): They're taking the highest level of spending in the war - that 2008 level - and they're inflating it into the baseline. And then the inevitable drawdown accrues $1.6 trillion in savings that then they take credit for to spend and grow government. That's not real good budgeting. That's not honest budgeting.

WELNA: A more complete budget proposal is being promised for April. Then Congress has to act. Over the past few years, Congress has tried and failed to approve a budget, but that did not seem to faze President Obama yesterday.

President BARACK OBAMA: I am absolutely confident that as messy as this process can sometimes be, that we are going to be able to produce a budget that delivers for the American people.

WELNA: And he'll be counting on his big democratic majorities in both chambers to approve that budget.

David Welna, NPR News, the Capitol.

MONTAGNE: And if you want to know more about the President's budget, you'll find a breakdown of the spending at npr.org.

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Sen. Gregg: Obama's Budget Has 'Serious Problems'

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Judd Gregg i

New Hampshire Senator Judd Gregg speaks during a news conference on Capitol Hill Feb. 12. Alex Wong/Getty Images hide caption

itoggle caption Alex Wong/Getty Images
Judd Gregg

New Hampshire Senator Judd Gregg speaks during a news conference on Capitol Hill Feb. 12.

Alex Wong/Getty Images

President Barack Obama on Thursday released his $3.5 trillion budget plan, which calls for major spending in many of his key initiatives. Taxes would be boosted for the wealthy and deficits would certainly increase, which Sen. Judd Gregg of New Hampshire, the senior Republican on the Budget Committee, called "serious problems."

"The budget is reasonably honest, and in fact, I give them credit for having brought on line and made clear the costs of the war," Gregg told NPR's Melissa Block.

"But the budget itself has some real serious problems, in my opinion, because it is a massive expansion in spending and a massive expansion in taxes. And the real problem is that in the out years, not only does it increase spending in taxes, but it passes on to our children a government that can't be afforded, and that's a big problem."

The Democrats strengthened their majority in Congress on an agenda that included new initiatives on things like health care, energy and education. But Gregg disagrees with the notion that more spending is necessary.

"I don't think [Obama] was elected to bankrupt the country," Gregg said. "Basically if you run up deficits at this level — where you're doubling the national debt in five years and tripling it in 10 years and then doing virtually nothing to bring it down in the out years — and you don't address the fundamental underlying problems that's driving the cost of spending, which are the cost of the major entitlement programs as a result of the retirement of the baby boom generation, you're going to pass on to our children a government that simply can't be afforded."

Gregg says he worries that unlike people of his generation, current young people won't be able to send their children to college or buy homes.

"The burden of taxation will be so extraordinarily high to maintain the cost of the retired generation that they simply won't be able to have a high quality of life," Gregg says.

"The simple fact is that under our system we have an extremely progressive tax law right now, where 85 percent of the taxes are borne by the top 20 percent of [income-earning] people, which is more progressive than occurred under the Clinton years, where about 82 percent was borne by the top 20 percent," Gregg explains.

Gregg says those making over $250,000 are frequently the small-business owners and sole proprietors.

"Seventy percent of the jobs in America today are created by small-business people," Gregg says. "So basically what you're putting in place is a tax burden which is going to make it very difficult for those folks who are the entrepreneurs and job creators in our society to be successful."

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