Tags: Treasury | Lew | Spending | Recovery

Lew: Cutting Spending ‘Too Deeply’ May Hurt Fragile Recovery

Thursday, 11 Apr 2013 11:37 AM

U.S. Treasury Secretary Jacob J. Lew said cutting spending too severely would hurt the nation’s economic recovery and expressed confidence lawmakers can reach a bipartisan agreement on President Barack Obama’s budget proposal.

“While deficit reduction is necessary to put our nation on a sound fiscal course, we have to bear in mind that the recovery remains fragile,” Lew said in testimony to the House Ways and Means Committee.

“Cutting spending too deeply or too soon would harm the recovery in the near term, undermining our shared fiscal goals and our ability to make necessary investments for growth over the long term.”

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

Lew was testifying before Congress for the first time since he was confirmed as secretary in February, appearing initially before the House panel and then to the Senate Finance Committee.

The U.S. must “pursue tax reform that closes loopholes and addresses deductions and exclusions that allow the wealthy to pay less in taxes as a percentage of income than many middle- class families,” Lew said.

Representative Dave Camp, a Republican from Michigan and chairman of the Ways and Means committee, said Obama’s proposal doesn’t go far enough in rewriting the tax code and raises revenue that isn’t needed. Camp said he was willing to work with Lew and Obama on rewriting the tax system.

“The American people can do better than what the president’s proposing here,” Camp said.

Tax Revenue

Obama sent to Congress a $3.8 trillion budget, calling for more tax revenue and slower growth for Social Security benefits in a political gamble intended to revive deficit-reduction talks.

Lew said the budget is based on a “conviction that an agreement is within our reach,” and “there is a path to a bipartisan agreement that moves the country forward.”

The president is proposing to replace across-the-board budget cuts known as sequestration with what White House budget officials say is $1.8 trillion in additional deficit reduction over 10 years that includes collecting more taxes from the wealthy and trimming some federal programs.

Editor's Note: Economist Warns: ‘Money From Heaven a Path to Hell.’ See Evidence.

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