News Release



Spratt Opening Statement at Hearing with OMB Director Peter Orszag

FOR IMMEDIATE RELEASE
February 2, 2010

Once again, Dr. Orzag, Director Orszag, welcome to the hearing. 

Today we take up President Obama's budget for fiscal year 2011.  Our witness is Director Peter Orszag, welcome to this hearing.

If I can borrow a line from your budget narrative, "in order to understand where we are headed, it helps to remember where we started." 

Our economy began backsliding into a recession in December of 2007, one full year before President Obama was sworn in.  Within weeks of taking office, his administration and Congress launched a massive supplemental to get this economy moving again. 

The Recovery Act added to the short-term deficit, then estimated at $1.3 trillion to $1.2 trillion.  The deficit was already swollen by the recession and by the Bush administration's own budgets and bailouts. 

According to the CBO, the Recovery Act has made a difference.  By their reckoning, the Recovery Act raised real GDP by 1.3 to 3.5 percentage points in the second half of 2009 and increasing employment by as many as 1.6 million jobs. 

As recently as January a year ago, the economy was not growing.  It was shrinking, contracting by 5.4 percent in that month alone; 741,000 workers lost their jobs in January of 2009.  By contrast, in the last quarter of 2009, the economy grew by 5.7 percent.  Job losses averaged 69,000.

From the start, the Obama administration has realized, under your guidance, that it would be almost impossible for us to bring the deficit down without moving the economy up.  That is why the President's budget for 2011 has dual objectives; one lies on the economy, the other lies on the deficit. 

We brought the economy back from the brink, but too many Americans are still feeling the recession and not the recovery.  And no one -- no one -- can be satisfied when unemployment averages 10 percent, and in many places, my district included, it is far worse.  One of the biggest initiatives in this budget is for a job bill, at least it makes provision for it. 

The President's budget stays focused, however, on the bottom line.  The deficit is cut by half, from $1.556 trillion in 2010, that is 10.6 percent of GDP, to $727 billion, that is 4.2 percent of GDP, in 2013.  In 4 years, it is cut in half.  The budget keeps bringing the deficit down in 2014 when it reaches 3.9 percent of GDP. 

Now, $727 billion in the red is nothing to crow about, but halving the deficit in 4 years is a worthy goal.  The President's shifts the emphasis of the budget from big business to small business, from Wall Street to Main Street.  This budget freezes non-security spending overall, but it singles out priorities like education for increases well above a freeze. 

A 3-year freeze on non-security spending and a bipartisan commission, which you propose in the budget, is not enough to finish the job, and frankly, I would like to see a lot more deficit reduction, but these are concrete commitments on the President's part to bringing the deficit down.  We are on an unsustainable path of deficits and mounting debt.  And the longer we avoid the hard choices, the harder they become.

We proved in the 1990s that it is possible to reduce deficits responsibly, but it cannot happen without concerted effort.  That is why the President's appointment of a fiscal commission is a step in the right direction.  Later this week, the House will take another step in that direction; we will vote to reinstate a statutory pay-as-you-go rule, modeled on the rules that helped us turn record deficits into record surpluses in the 1990s. 

On both the budget and the economy, there are hard choices ahead of us, but the budget sent up by the President today marks one more step toward moving the economy up while bringing the deficit down.