WASHINGTON — Treasury Secretary Timothy Geithner faced heat from House Republicans Tuesday as he sought to defend President Barack Obama’s 2012 budget proposal.
Treasury Secretary Tim Geithner arrives at the House Ways and Means Committee on Tuesday to defend President Barack Obama's 2012 budget. (Elisa Santana / Medill News Service)
A day after the White House unveiled a budget plan for Congress to consider, Geithner faced the wrath of the GOP as he testified before the House Ways and Means Committee. Obama’s proposed budget is slated to spend $3.7 trillion.
“Frankly, this budget is a missed opportunity,” said the committee’s chairman, Rep. Dave Camp, R-Mich. “More borrowing, taxing and spending is certainly not the answer to what ails our economy.”
Geither said Congress should consider ideas to strengthen social programs and build for the future.
“Cutting services and programs too much, too soon would jeopardize the recovery and destroy tens of thousands of jobs,” Geithner said.
Geithner said the administration wants to protect current programs while looking seriously at the national debt. The Obama budget aims to reduce the deficit by $1.1 trillion over 10 years.
“We all share part of the blame of where we are today,” Geithner said.
Camp continued to press. “Do you really believe that we should be raising taxes on small businesses?”
“These taxes effect the top two percent … they are law firms, investment firms,” Geithner said. “We think it’s a responsible recommendation. We’re not going to be growing in the future, unless we make some tough choices.”
“The budget proposes that we pick winners and losers,” Camp said as he gave the floor to Rep. Sander Levin, D-Mich.
Levin addressed the “winners and losers” comment by reaffirming Geithner’s response and giving approval and then proceeded to ask his own question.
“Just quickly sum up …budget cutting combined with investment,” Levin said.
“If we’re going to be able to meet a growing demand of good and services around the world we want to make sure that next great American business, builds his or her next great factory in the United States, Geithner said. “When we look at fiscal policy choices, what’s going to be a better choice for growth and investment.”
“Those tax increases are dead on arrival in this House,” said Rep. Kevin Brady, R-Texas, about a plan for small businesses. “This budget does not add up”
While small businesses are slated to face higher taxes, the budget for education overall will increase.
“For example—they (businesses) need better access to high quality engineers, with the skills they need to compete,” Geithner said.
“We’ll agree to disagree,” Brady said.
The Office of Federal Student Aid, for instance, would receive $31.43 billion, a 56.5 percent increase from 2010. Pell grants, money awarded to needy college students, would benefit from this change, he said.
Changing the topic to social security, Rep. Sam Johnson, R-Texas asked, “How are we paying benefits, if we don’t have the payroll taxes?”
“Over the longer term we need to strengthen social security for future generations and that’s going to require those payments,” Geithner said.
“The debt held by the public is $12 trillion–where will the money come from?,” Johnson questioned again as he turned over the floor. “You are making my point”
Republicans were blunt.
Devin Nunes, R.-Calif. asked Geithner what he meant by “that you’re waiting for us to lead”
“We have to take the lead and the initiative, and you’re going to disagree about some of those choices, but we’re going to have to agree on what makes sense,” Geithner said.
Nunes then read from page 52 of Obama’s budget about healthcare and entitlement reform. “You kind of punt on entitlement reform,” Nunes said.
$1.1 trillion of Obama’s 2012 budget is for mandatory Medicare and Medicaid. An additional $65 billion will be spent on discretionary programs within Health and Human Services.
“We have an unsustainable deficit,” Geithner said. “We recognize that we need to build”
Geithner warned the committee. “If you try to do it (make too many changes) within one year, you’ll kill the economy.”
Some Democrats also carried the flag for the administration. “The Republican plan says one thing — we don’t care about you,” said Rep. Jim McDermott, D-Wash. “It seems as if the Republicans don’t know how to invest.”
Most committee members were looking at the macro effects of the 2012 budget, however Rep. Dean Heller, R.-Nev., asked about how the budget would play in his district.
“We have some real housing problems in Nevada … [One in very 79 houses in Nevada] has received a foreclose notice,” Heller said.
“We have a housing system that is a mess,” Geithner said “[We must] gradually restore this market where most of the mortgages are supplied by private capital”
When asked whose responsibility the economy’s problems are, the president’s or Congress’, Geithner responded, “We have to take the lead and the initiative, and you’re going to disagree about some of those choices, but we’re going to have to agree on what makes sense.”
Geithner will testify in front of the Senate Budget Committee on Thursday. (White House budget chief Jacob Lew faced difficult questions there on Tuesday.)
