West Wing Week: 8/5/11 or "Disaster Averted"

August 04, 2011 | 6:32

Welcome to the West Wing Week, your guide to everything that's happening at 1600 Pennsylvania Avenue. This week, President Obama announced a bi-partisan compromise to reduce the deficit and avoid default, announced a historic fuel efficiency standard that will save American families money, welcomed the crews of the Space Shuttle Endeavour and International Space Station expedition 26, held a cabinet meeting and celebrated his 50th birthday.

Download mp4 (203.5MB)

State and Local Officials Speak Out on Bipartisan Compromise

Posted by Cecilia Muñoz on August 02, 2011 at 09:47 AM EDT

On Sunday evening, President Obama announced a bipartisan deal to reduce the nation's deficit and avoid default.

Over the past 24 hours state and local officials from across the country have spoken out about the bipartisan compromise:

Los Angeles, California  Mayor and President of the U.S. Conference of Mayors Antonio Villaraigosa:
”Mayors across the country urge Congress to avert an economic crisis by passing legislation today to lift the debt ceiling. This legislation will create a framework for balanced fiscal discipline, which will help instill renewed confidence in our nation’s economy.”

California State Assembly Speaker John Pérez
“Today’s agreement on raising the debt ceiling will prevent the paralysis of our nation’s economy and allow us to move forward on addressing our country’s priorities. Thankfully, the President has set the stage for a balanced long term solution that includes revenues. And though the specifics of the first round of savings will not be known for several weeks, we are relieved to see that there should be little if any immediate impact on the balanced and on-time state budget we passed earlier this summer. It is critical that we prevent further debilitating cuts to schools, seniors and job creation efforts."

See more about Debt Debate, Fiscal Responsibility  

Baselines and Balance

Gene Sperling
Gene Sperling
August 01, 2011
04:07 PM EDT

The budget deal sets the stage for balanced deficit reduction.  It immediately makes a down payment on deficit reduction of more than $900 billion by limiting discretionary spending and sets up a new Joint Congressional Committee charged with recommending $1.5 trillion in additional deficit reduction by the end of the year.  As the President has said, that deficit reduction should be balanced and cut tax loopholes and expenditures just like it cuts traditional spending.

There are now reports that this Joint Committee won’t be able to raise revenue at all because of the way the budget deal is drafted.  That is simply wrong. 

The Joint Committee is tasked with deficit reduction, and the Committee can reduce the deficit by cutting spending and getting rid of tax loopholes and expenditures.  Everything is on the table, as it should be.

First, the Committee can consider getting rid of tax expenditures like subsidies for oil and gas companies or corporate jet owners. These types of tax changes have been a major part of the recent deficit reduction conversation and would be a smart part of an overall balanced plan. No one on any side can dispute that the Joint Committee could consider them.

Second, the Committee can consider the kind of revenue raising tax reform that has broad and growing bipartisan support.

The argument against this second claim is based on a misrepresentation of what is called “the baseline.”  The “baseline” is what deficit reduction is measured against.  Reports have suggested that the Committee would have to use a “current law” baseline—a baseline that assumes that all of the 2001 and 2003 tax cuts expire along with relief from the Alternative Minimum tax.  That would mean that any tax reform effort that raised less revenue than allowing all those tax cuts to expire would be scored as increasing the deficit. Even conservative Republican proposals for “revenue neutral” tax reform would be scored under this approach as increasing the deficit by more than $3 trillion.  

However the claim that the Committee is required to follow this approach is simply false.

The Budget legislation specifically calls for deficit reduction – not simply spending cuts – and does not anywhere require the Committee to work off a current law baseline.  Nor does it preclude the Committee from requesting CBO estimates based on alternative baselines and using those estimates for purposes of the certifying the deficit reduction achieved in the Committee. 

In fact, Congressional requests to CBO to score proposals off different baselines happen as a matter of course. For example, at the request of members of Congress, CBO scored the deal being considered today using two different baselines. Or, to take another example—Paul Ryan, Chairman of the House Budget Committee, requested that CBO score his budget “Roadmap” against an “alternative fiscal scenario,” which assumed extension of the tax cuts described above.  As CBO said in response to Chairman Ryan: “As you requested, the analysis in this letter compares the Roadmap with the alternative fiscal scenario.” Relative to that baseline, tax reform—like that proposed by the bipartisan Fiscal Commission and Gang of Six—would reduce the deficit by hundreds of billions of dollars.

The bottom line is that the Joint Committee can reduce the deficit through tax reform and eliminating tax expenditures just like it can cut spending. What it ultimately does is up to the members of that Committee. We hope that they seize this an opportunity to come together and build on the down-payment in this deal to put the Nation on a sustainable fiscal course in a balanced way that cuts spending in the tax code as well in the rest of the budget.  The President believes that is possible and looks forward to working with both parties to accomplish this.

Gene Sperling is Director of the National Economic Council and Assistant to the President for Economic Policy

Related Topics: Fiscal Responsibility, Taxes
Subscribe

Thousands of Ways to SAVE

Posted by Kenneth Baer on August 01, 2011 at 01:27 PM EDT

Last Friday marked the end of the submission period for the President’s 2011 SAVE Award competition, and the final tallies are in.  

This year, federal workers submitted an incredible 19,559 ideas about how to make government more efficient and effective, besting last year’s submissions by more than 1,000.  We want to thank everyone who participated in this year’s contest – both for your ideas and your commitment to cutting waste across the federal government.

See more about Fiscal Responsibility  

The White House

Office of the Press Secretary

For Immediate Release
July 31, 2011

Fact Sheet: Bipartisan Debt Deal: A Win for the Economy and Budget Discipline

BIPARTISAN DEBT DEAL: A WIN FOR THE ECONOMY AND BUDGET DISCIPLINE

The debt deal announced today is a victory for bipartisan compromise, for the economy and for the American people. The agreement:

  • Removes the cloud of uncertainty over our economy at this critical time, by ensuring that no one will be able to use the threat of the nation’s first default now, or in only a few months, for political gain;
  • Locks in a down payment on significant deficit reduction, with savings from both domestic and Pentagon spending, and is designed to protect crucial investments like aid for college students;
  • Establishes a bipartisan process to seek a balanced approach to larger deficit reduction through entitlement and tax reform;
  • Deploys an enforcement mechanism that gives all sides an incentive to reach bipartisan compromise on historic deficit reduction, while protecting Social Security, Medicare beneficiaries and low-income programs;
  • Stays true to the President’s commitment to shared sacrifice by preventing the middle class, seniors and those who are most vulnerable from shouldering the burden of deficit reduction. The President did not agree to any entitlement reforms outside of the context of a bipartisan committee process where tax reform will be on the table and the President will insist on shared sacrifice from the most well-off and those with the most indefensible tax breaks.

Mechanics of the Debt Deal

  • Immediately enacted 10-year discretionary spending caps generating nearly $1 trillion in deficit reduction; balanced between defense and non-defense spending.
  • President authorized to increase the debt limit by at least $2.1 trillion, eliminating the need for further increases until 2013.  
  • Bipartisan committee process tasked with identifying an additional $1.5 trillion in deficit reduction, including from entitlement and tax reform. Committee is required to report legislation by November 23, 2011, which receives fast-track protections. Congress is required to vote on Committee recommendations by December 23, 2011.
  • Enforcement mechanism established to force all parties – Republican and Democrat – to agree to balanced deficit reduction. If Committee fails, enforcement mechanism will trigger spending reductions beginning in 2013 – split 50/50 between domestic and defense spending. Enforcement protects Social Security, Medicare beneficiaries, and low-income programs from any cuts.    

1. REMOVING UNCERTAINTY TO SUPPORT THE AMERICAN ECONOMY

  • Deal Removes Cloud of Uncertainty Until 2013, Eliminating Key Headwind on the Economy: Independent analysts, economists, and ratings agencies have all made clear that a short-term debt limit increase would create unacceptable economic uncertainty by risking default again within only a matter of months and as S&P stated, increase the chance of a downgrade. By ensuring a debt limit increase of at least $2.1 trillion, this deal removes the specter of default, providing important certainty to our economy at a fragile moment.
  • Mechanism to Ensure Further Deficit Reduction is Designed to Phase-In Beginning in 2013 to Avoid Harming the Recovery: The deal includes a mechanism to ensure additional deficit reduction, consistent with the economic recovery. The enforcement mechanism would not be made effective until 2013, avoiding any immediate contraction that could harm the recovery. And savings from the down payment will be enacted over 10 years, consistent with supporting the economic recovery.

2. A DOWNPAYMENT ON DEFICIT REDUCTION BY LOCKING IN HISTORIC SPENDING DISCIPLINE – BALANCED BETWEEN DOMESTIC AND PENTAGON SPENDING

  • More than $900 Billion in Savings over 10 Years By Capping Discretionary Spending: The deal includes caps on discretionary spending that will produce more than $900 billion in savings over the next 10 years compared to the CBO March baseline, even as it protects core investments from deep and economically damaging cuts.
  • Includes Savings of $350 Billion from the Base Defense Budget – the First Defense Cut Since the 1990s: The deal puts us on track to cut $350 billion from the defense budget over 10 years. These reductions will be implemented based on the outcome of a review of our missions, roles, and capabilities that will reflect the President’s commitment to protecting our national security.
  • Reduces Domestic Discretionary Spending to the Lowest Level Since Eisenhower: These discretionary caps will put us on track to reduce non-defense discretionary spending to its lowest level since Dwight Eisenhower was President.
  • Includes Funding to Protect the President’s Historic Investment in Pell Grants: Since taking office, the President has increased the maximum Pell award by $819 to a maximum award $5,550, helping over 9 million students pay for college tuition bills. The deal provides specific protection in the discretionary budget to ensure that the there will be sufficient funding for the President’s historic investment in Pell Grants without undermining other critical investments.

3. ESTABLISHING A BIPARTISAN PROCESS TO ACHIEVE $1.5 TRILLION IN ADDITIONAL BALANCED DEFICIT REDUCTION BY THE END OF 2011

  • The Deal Locks in a Process to Enact $1.5 Trillion in Additional Deficit Reduction Through a Bipartisan, Bicameral Congressional Committee: The deal creates a bipartisan, bicameral Congressional Committee that is charged with enacting $1.5 trillion in additional deficit reduction by the end of the year. This Committee will work without the looming specter of default, ensuring time to carefully consider essential reforms without the disruption and brinksmanship of the past few months.
  • This Committee is Empowered Beyond Previous Bipartisan Attempts at Deficit Reduction: Any recommendation of the Committee would be given fast-track privilege in the House and Senate, assuring it of an up or down vote and preventing some from using procedural gimmicks to block action.
  • To Meet This Target, the Committee Will Consider Responsible Entitlement and Tax Reform. This means putting all the priorities of both parties on the table – including both entitlement reform and revenue-raising tax reform.

4. A STRONG ENFORCEMENT MECHANISM TO MAKE ALL SIDES COME TOGETHER

  • The Deal Includes An Automatic Sequester to Ensure That At Least $1.2 Trillion in Deficit Reduction Is Achieved By 2013 Beyond the Discretionary Caps: The deal includes an automatic sequester on certain spending programs to ensure that—between the Committee and the trigger—we at least put in place an additional $1.2 trillion in deficit reduction by 2013.
  • Consistent With Past Practice, Sequester Would Be Divided Equally Between Defense and Non-Defense Programs and Exempt Social Security, Medicaid, and Low-Income Programs: Consistent with the bipartisan precedents established in the 1980s and 1990s, the sequester would be divided equally between defense and non-defense program, and it would exempt Social Security, Medicaid, unemployment insurance, programs for low-income families, and civilian and military retirement. Likewise, any cuts to Medicare would be capped and limited to the provider side.
  • Sequester Would Provide a Strong Incentive for Both Sides to Come to the Table:  If the fiscal committee took no action, the deal would automatically add nearly $500 billion in defense cuts on top of cuts already made, and, at the same time, it would cut critical programs like infrastructure or education.  That outcome would be unacceptable to many Republicans and Democrats alike – creating pressure for a bipartisan agreement without requiring the threat of a default with unthinkable consequences for our economy.

5. A BALANCED DEAL CONSISTENT WITH THE PRESIDENT’S COMMITMENT TO SHARED SACRIFICE

  • The Deal Sets the Stage for Balanced Deficit Reduction, Consistent with the President’s Values: The deal is designed to achieve balanced deficit reduction, consistent with the values the President articulated in his April Fiscal Framework. The discretionary savings are spread between both domestic and defense spending. And the President will demand that the Committee pursue a balanced deficit reduction package, where any entitlement reforms are coupled with revenue-raising tax reform that asks for the most fortunate Americans to sacrifice. 
  • The Enforcement Mechanism Complements the Forcing Event Already In Law – the Expiration of the Bush Tax Cuts – To Create Pressure for a Balanced Deal: The Bush tax cuts expire as of 1/1/2013, the same date that the spending sequester would go into effect. These two events together will force balanced deficit reduction. Absent a balanced deal, it would enable the President to use his veto pen to ensure nearly $1 trillion in additional deficit reduction by not extending the high-income tax cuts.
  • In Securing this Bipartisan Deal, the President Rejected Proposals that Would Have Placed the Sole Burden of Deficit Reduction on Low-Income or Middle-Class Families: The President stood firmly against proposals that would have placed the sole burden of deficit reduction on lower-income and middle-class families. This includes not only proposals in the House Republican Budget that would have undermined the core commitments of Medicare to our seniors and forced tens of millions of low-income Americans to go without health insurance, but also enforcement mechanisms that would have forced automatic cuts to low-income programs. The enforcement mechanism in the deal exempts Social Security, Medicaid, Medicare benefits, unemployment insurance, programs for low-income families, and civilian and military retirement.

The White House

Office of the Press Secretary

For Immediate Release
July 31, 2011

Remarks by the President

James S. Brady Press Briefing Room

8:40 P.M. EDT

THE PRESIDENT:  Good evening.  There are still some very important votes to be taken by members of Congress, but I want to announce that the leaders of both parties, in both chambers, have reached an agreement that will reduce the deficit and avoid default -- a default that would have had a devastating effect on our economy.

The first part of this agreement will cut about $1 trillion in spending over the next 10 years -- cuts that both parties had agreed to early on in this process.  The result would be the lowest level of annual domestic spending since Dwight Eisenhower was President -- but at a level that still allows us to make job-creating investments in things like education and research.  We also made sure that these cuts wouldn’t happen so abruptly that they’d be a drag on a fragile economy. 

Now, I've said from the beginning that the ultimate solution to our deficit problem must be balanced.  Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions.  Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations. 

That's why the second part of this agreement is so important.  It establishes a bipartisan committee of Congress to report back by November with a proposal to further reduce the deficit, which will then be put before the entire Congress for an up or down vote.  In this stage, everything will be on the table. To hold us all accountable for making these reforms, tough cuts that both parties would find objectionable would automatically go into effect if we don’t act.  And over the next few months, I’ll continue to make a detailed case to these lawmakers about why I believe a balanced approach is necessary to finish the job. 

Now, is this the deal I would have preferred?  No.  I believe that we could have made the tough choices required -- on entitlement reform and tax reform -- right now, rather than through a special congressional committee process.  But this compromise does make a serious down payment on the deficit reduction we need, and gives each party a strong incentive to get a balanced plan done before the end of the year. 

Most importantly, it will allow us to avoid default and end the crisis that Washington imposed on the rest of America.  It ensures also that we will not face this same kind of crisis again in six months, or eight months, or 12 months.  And it will begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.  

Now, this process has been messy; it’s taken far too long.  I've been concerned about the impact that it has had on business confidence and consumer confidence and the economy as a whole over the last month.  Nevertheless, ultimately, the leaders of both parties have found their way toward compromise.  And I want to thank them for that. 

Most of all, I want to thank the American people.  It’s been your voices -- your letters, your emails, your tweets, your phone calls -- that have compelled Washington to act in the final days. And the American people's voice is a very, very powerful thing. 

We’re not done yet.  I want to urge members of both parties to do the right thing and support this deal with your votes over the next few days.  It will allow us to avoid default.  It will allow us to pay our bills.  It will allow us to start reducing our deficit in a responsible way.  And it will allow us to turn to the very important business of doing everything we can to create jobs, boost wages, and grow this economy faster than it's currently growing. 

That’s what the American people sent us here to do, and that’s what we should be devoting all of our time to accomplishing in the months ahead. 

Thank you very much, everybody.

END
8:44 P.M. EDT

Weekly Address: Compromise on Behalf of the American People

Nikki Sutton
Nikki Sutton
July 30, 2011
05:30 AM EDT

President Obama urges both Republicans and Democrats to take action to avoid defaulting for the first time in our nation’s history.

Transcript | Download mp4 | Download mp3

Related Topics: Debt Debate, Economy, Fiscal Responsibility

More State and Local Officials Join the Call for Compromise

Posted by Cecilia Muñoz on July 29, 2011 at 10:22 PM EDT

Earlier, over 100 state and local officials added their voices to the growing chorus urging Congress to compromise on behalf of the American people and to remove the cloud of uncertainty that currently hangs over our economy. 

Since then we’ve heard from 50 more officials urging Congress to do their job before August 2.

Kyrsten Sinema, Arizona State Senator:

“Rather than finding compromise for the sake of American families, the U.S. House GOP continues to squabble our tax dollars on political poker. The Boehner bill will leave a cloud of uncertainty hanging over our economy – something we can’t afford during such tough times. It would hurt our country’s ability to grow business, and it would shed even more jobs.  The time for compromise on behalf of the American people is now. It is time to unite and conquer for the sake of the future of our country.” [7/29/2011]

Letter to Congressional Leaders from 37 Florida mayors:

“To protect our citizens from further financial hardship, we urge you to support a balanced approach to raising the debt ceiling. Reasonable cuts to domestic spending, combined with the elimination of some tax loopholes for the wealthiest Americans and largest corporations, is the most responsible way to preserve our economic security and promote future growth.” [Signed 7/29/2011]

See more about Debt Debate, Economy, Fiscal Responsibility  
Subscribe

SAVE Award 2011: Final Day

Posted by Kenneth Baer on July 29, 2011 at 01:02 PM EDT

It’s been a little more than two weeks since we launched the third annual SAVE Award competition – and federal employees have really answered the President’s call to help out in the Campaign to Cut Waste.  

As of this morning, we’ve received 15,000 ideas about how to make government more efficient and effective.  More than 19,000 federal employees from across the country have weighed in, submitting ideas or casting some of the 72,000 votes in support of their favorite ideas.

But we’re not done yet.

See more about Fiscal Responsibility  

President Obama Calls on the American People to Make their Voices Heard

Nikki Sutton
Nikki Sutton
July 29, 2011
12:09 PM EDT

Watch the President's full remarks here.

This morning, President Obama spoke on the status of the debt ceiling negotiations from the Diplomatic Reception Room at the White House. The President urged Republicans and Democrats in Congress to find a bipartisan solution to avoid default that he can sign by Tuesday. Though we are almost out of time, the President made it clear that there are multiple ways to resolve this problem:

Now, keep in mind, this is not a situation where the two parties are miles apart.  We’re in rough agreement about how much spending can be cut responsibly as a first step toward reducing our deficit.  We agree on a process where the next step is a debate in the coming months on tax reform and entitlement reform –- and I’m ready and willing to have that debate.  And if we need to put in place some kind of enforcement mechanism to hold us all accountable for making these reforms, I’ll support that too if it’s done in a smart and balanced way.   

Related Topics: Debt Debate, Economy, Fiscal Responsibility