Obama Q+A at the 2010 House Republican retreat: on Budget & Economy

Barack Obama: Recovery Act averted a second Great Depression

Well, that's what the Recovery Act was. Now, I am happy to report this morning that we saw another sign that our economy is moving in the right direction. The latest GDP numbers show that our economy is growing by almost 6%--that's the most since 2003.

Barack Obama: Appoint bipartisan fiscal commission and re-establish PAYGO

At this point, we know that the budget surpluses of the '90s occurred in part because of the pay-as-you-go law, which said that, well, you should pay as you go and live within our means, just like families do every day. 24 Republicans voted for that, and I appreciate it. And we were able to pass it in the Senate yesterday.

But the idea of a bipartisan fiscal commission to confront the deficits in the long term died in the Senate the other day. So I'm going to establish such a commission by executive order and I hope that you participate, fully and genuinely, in that effort, because if we're going to actually deal with our deficit and debt.

Barack Obama: Across-the-board tax cuts wouldn't stimulate economy

Pres. OBAMA: This notion that this was a radical package is just not true. A third of them were tax cuts, and they weren't--when you say they were "boutique" tax cuts--95% of working Americans got tax cuts, small businesses got tax cuts, large businesses got help in terms of their depreciation schedules. I mean, it was a pretty conventional list of tax cuts. And the notion that I would somehow resist doing something that cost half as much but would produce twice as many jobs--why would I resist that? I wouldn't. I am not an ideologue. The problem is, I couldn't find credible economists who would back up the claims that you just made.

Barack Obama: Increased spending comes from Bush's automatic stabilizers

Pres. OBAMA: I want to just push back a little bit on the underlying premise about us increasing spending by 84%. The fact of the matter is, is that most of the increases in this year's budget, this past year's budget, were not as a consequence of policies that we initiated but instead were built in as a consequence of the automatic stabilizers that kick in because of this enormous recession. So the increase in the budget for this past year was actually predicted before I was even sworn into office and had initiated any policies.

Rep. RYAN: I would simply say that automatic stabilizer spending is mandatory spending. The discretionary spending, the bills that Congress signs that you sign into law, that has increased 84%.

Barack Obama: Spending freeze now would be destimulative; later is better

Pres. OBAMA: The reason that I'm not proposing the discretionary freeze take into effect this year is, I am just listening to the consensus among people who know the economy best. And what they will say is that if you either increase taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a destimulative effect and potentially you'd see a lot of folks losing business, more folks potentially losing jobs. We'll have a longer debate on the budget numbers, all right?

Barack Obama: Some earmarks are defensible, if done in full light of day

Pres. OBAMA: We didn't have earmarks in the Recovery Act. We didn't get a lot of credit for it, but there were no earmarks in that. I was confronted at the beginning of my term with an omnibus package that did have a lot of earmarks from Republicans and Democrats when we had to make a whole bunch of emergency decisions about the economy. So what I said was let's keep them to a minimum, but I couldn't excise them all. I think all of us are willing to acknowledge that some earmarks are perfectly defensible, good projects; it's just they haven't gone through the regular appropriations process in the full light of day. So one place to start is to make sure that they are at least transparent, that everybody knows what's there before we move forward.

Barack Obama: We inherited $8T of debt; and only added $1T more

Pres. OBAMA: When we came into office, the deficit was $1.3 trillion, before I had passed any law. We came in with $8 trillion worth of debt over the next decade--had nothing to do with anything that we had done. It had to do with the fact that in 2000 when there was a budget surplus of $200 billion, you had a Republican administration and a Republican Congress, and we had two tax cuts that weren't paid for. Now, we increased it by a trillion dollars because of the spending that we had to make on the stimulus. The major driver of our long-term liabilities, everybody here knows, is Medicare and Medicaid and our health care spending. That's going to be what our children have to worry about.

Jason Chaffetz: No earmarks in any bills

Pres. OBAMA: We didn't have earmarks in the Recovery Act. We didn't get a lot of credit for it, but there were no earmarks in that. I was confronted at the beginning of my term with an omnibus package that did have a lot of earmarks from Republicans and Democrats whe we had to make a whole bunch of emergency decisions about the economy. So what I said was let's keep them to a minimum, but I couldn't excise them all. I think all of us are willing to acknowledge that some earmarks are perfectly defensible, good projects; it's just they haven't gone through the regular appropriations process in the full light of day. So one place to start is to make sure that they are at least transparent, that everybody knows what's there before we move forward.

Jeb Hensarling: Spending 40% of GDP on government causes unconscionable debt

Pres. OBAMA: When we came into office, the deficit was $1.3 trillion, before I had passed any law. We came in with $8 trillion worth of debt over the next decade--had nothing to do with anything that we had done. It had to do with the fact that in 2000 when there was a budget surplus of $200 billion, you had a Republican administration and a Republican Congress, and we had two tax cuts that weren't paid for.

Mike Pence: Across-the-board tax relief stimulates broad-based growth

Pres. OBAMA: I'm going to take a look at what you guys are proposing. What you may consider across-the-board tax cuts could be, for example, greater tax cuts for people who are makin a billion dollars. I may not agree to a tax cut for Warren Buffet. You may be calling for an across-the-board tax cut for the banking industry right now. I may not agree to that. If you're calling for just across-the-board tax cuts, and then on the other hand saying that we're somehow going to balance our budget, I'm going to want to take a look at your math and see how that works, because the issue of deficit and debt is another area where there has been a tendency for some inconsistent statements.

Paul Ryan: Automatic stabilizer spending is mandatory spending

Pres. OBAMA: I want to just push back a little bit on the underlying premise about us increasing spending by 84%. The fact of the matter is, is that most of the increases in this year's budget, this past year's budget, were not as a consequence of policies that we initiated but instead were built in as a consequence of the automatic stabilizers that kick in because of this enormous recession. So the increase in the budget for this past year was actually predicted before I was even sworn into office and had initiated any policies.

Rep. RYAN: I would simply say that automatic stabilizer spending is mandatory spending. The discretionary spending, the bills that Congress signs that you sign into law, that has increased 84%.

Paul Ryan: Freeze spending now, rather than in future budget

Pres. OBAMA: The reason that I'm not proposing the discretionary freeze take into effect this year is, I am just listening to the consensus among people who know the economy best. And what they will say is that if you either increase taxes or significantly lowered spending when the economy remains somewhat fragile, that that would have a destimulative effect and potentially you'd see a lot of folks losing business, more folks potentially losing jobs. We'll have a longer debate on the budget numbers, all right?