Tags: US | Obama | Deficit

Obama, GOP Joust Over Deficits, Stimulus

Wednesday, 16 Dec 2009 07:49 AM

President Barack Obama is sharpening the debate over federal spending, saying Republicans are stoking voters' fears by harping on deficits in a still-troubled economy.

With the House scheduled to vote on a higher debt limit Wednesday, Republicans are standing firm, saying it's time to end government stimulus efforts and let the private sector create jobs on its own.

The debate will animate much of Congress' actions in the days and months ahead. Public opinion seems mixed for now, but if it eventually moves one way or the other, the party on the short end might suffer in next year's midterm elections.

Obama said in a speech last week, "We have had to spend our way out of this recession," as he accused GOP lawmakers of trying to frighten voters with exaggerated and hypocritical attacks on deficit spending. It's too early to stop government spending programs designed to create jobs, Obama said, and he proposed using leftover bank-bailout money for that purpose.

Republicans, meanwhile, have attacked deficit spending in increasingly dire terms, even though deficits climbed sharply when they controlled the White House and Congress for most of this decade. House and Senate Republicans are virtually unanimous in opposing bids by Obama and congressional Democrats to raise the government's debt ceiling and to recycle the bank-bailout funds instead of using them to reduce the deficit.

Democrats "go right on spending taxpayer dollars with reckless abandon," said House Republican leader John Boehner of Ohio.

But the $787 billion stimulus passed in February has created more than a million jobs, Obama says, and it's Republicans who are out of touch. At a recent White House meeting with congressional leaders, he told top Republicans they seemed to be rooting for economic failure and trying to frighten people.

And in a speech at the Brookings Institution, Obama pointed blame at George W. Bush's presidency, when Republicans controlled Congress most of the time.

"The deficit had been building dramatically over the previous eight years," Obama said. "Budget-busting tax cuts and spending programs were approved by many of the same people who are now waxing political about fiscal responsibility."

He said those who claim the government must choose between reducing deficits and spurring job growth offer "a false choice."

Many economists agree that during a recession, the federal government should borrow and spend to help jump-start the economy. Obama said such stimulative efforts eventually will cause deficits to shrink.

But GOP lawmakers say spending has gotten out of hand. Some moderate Democrats in the House and Senate share their concerns. The loosely knit bipartisan coalition recently killed a Democratic leadership plan to extend the federal debt ceiling to $14 trillion, from the current $12.1 trillion.

Instead, the House plans Wednesday to vote on a two-month, $200 billion-plus increase in the government's ability to borrow, and a two-month extension of some jobless benefits. The House also plans to vote on nearly $50 billion in new spending on highways, housing, school repairs and other projects meant to create jobs.

The federal deficit for November alone was $120 billion. The Obama administration expects the 2010 deficit to be a record $1.5 trillion.

Economists and political strategists differ over how alarmed the public should be. Some liberal economists urge even more deficit spending until the nation's unemployment rate, now 10 percent, significantly improves.

But many conservative politicians and economists say it's time to worry more about the deficit's drawbacks, including heavy tax burdens on future generations and increased leverage by foreign debt-holders such as China.

Sen. Lindsey Graham, R-S.C., acknowledged that Americans sometimes show little concern about deficits.

"But I think it's here to stay now," he said in an interview, because the debt is growing so big and government spending seems out of synch with personal belt-tightening.

"People are really beginning to worry: Have we run up such a bill that our kids can't pay?" Graham said.

Sen. Jeff Sessions, R-Ala., said Republicans have not always made deficit reduction a priority, so their message may seem muddled to some.

"I don't know that the Republicans have been particularly coherent in our message," he said, "but it's getting across to the American people some way or another."

"They are communicating to Republicans their unhappiness," he said.

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President Barack Obama is sharpening the debate over federal spending, saying Republicans are stoking voters' fears by harping on deficits in a still-troubled economy.With the House scheduled to vote on a higher debt limit Wednesday, Republicans are standing firm, saying...
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