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Obama Administration Defends Higher Government Spending

The Obama administration is defending its proposals to massively boost government spending in the wake of a congressional report that projects record federal deficits and a doubling of America's national debt in coming years.  Republicans and even some Democrats say the administration's ambitious spending plans will have to be curtailed. At the same time, economic adviser to U.S. Vice President Joe Biden says a congressional plan to tax executive bonuses of companies that received federal bailout money may be unconstitutional

For weeks, President Obama has maintained that his record-breaking $3.6 trillion budget for the next fiscal year makes vital investments in energy, health care, and education that will pay dividends once the nation emerges from a deep economic recession.

But selling the proposed budget on Capitol Hill became harder after Friday's report from the Congressional Budget Office, which projects significantly higher budget deficits than the administration estimates over the next decade, adding trillions of dollars to the national debt.

The president's top economic advisor, Christina Romer, defended the administration's proposed spending blueprint, arguing that future economic growth will be more vibrant than the CBO assumes. Romer appeared on Fox News Sunday.

"When you get out five, 10 years, they are assuming that real GDP [U.S. gross domestic product] is only going to grow 2.2 or 2.3 percent a year," said Romer.  "And that is just lower than private forecasters [project]; it is lower than the Federal Reserve.  We think it is just too pessimistic."

But Republicans in Congress appear united in their opposition to the president's budget as it now stands.  Maine Senator Susan Collins was one of only three Republicans to back Mr. Obama's economic-stimulus package last month.  Speaking on ABC's This Week program, Collins said she cannot vote for the president's budget.

"It brings our debt levels to an unprecedented level," said Collins  "It would double the public debt in five years, triple it in ten years - the highest percentage of GDP since after World War II.  That is not sustainable. It poses a threat to the basic health of our economy."

But it is not only Republicans who are questioning President Obama's budget numbers.  The chairman of the Senate Budget Committee, Kent Conrad of North Dakota, says the economy has worsened since the administration crafted its budget, meaning that revenue shortfalls will be greater than Mr. Obama had assumed.

"In fairness to this administration, they locked down their forecasts three months ago.  There has been a lot of bad news since [then].  So we have a worsening [fiscal] situation that requires adjustments across a broad front," said Conrad.

Conrad also appeared on This Week.

The U.S. Constitution gives Congress power over the nation's purse strings.  Although Democrats control both houses of the legislature, their Senate majority is not large enough to prevent Republicans from blocking legislation through parliamentary maneuvers.

Administration officials say they are prepared to negotiate with Congress on final budget numbers, but will not abandon national goals Mr. Obama set forth during his presidential campaign last year: promoting energy independence, reforming America's health care system, and boosting educational opportunities.

 

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