The House and Senate Committees on the Budget held hearings on the President’s FY13 budget request immediately after its release. The first set focused solely on the President’s FY13 budget request, with Jeffery Zients of the Office of Management and Budget (OMB) testifying.
In the Senate hearing on February 14, Mr. Zients stated that the President’s budget is a compromise between spending cuts and revenue generation and would lead to an expected deficit reduction of $4 trillion over the next 10 years.
Chair Kent Conrad (D-ND) began the hearing by acknowledging the difficult financial situation the President inherited from the previous administration and commending the steps that OMB has taken to help mitigate the damage. Chairman Conrad asked that all committee members remember that both the long-term issue of debt reduction and the short-term issue of rebounding from the recession needed to be addressed. He complimented the President’s budget for speaking to both needs.
Ranking Member Jeff Sessions (R-AL) expressed his concern that the President’s budget did not adequately address the growing costs of entitlement programs, and said he did not believe that the budget would effectively reduce the nation’s debt. He had hoped that the President would propose a reform of Medicare and Social Security to ensure the programs’ sustainability.
The committee was largely concerned with the growing costs of health care and the preservation of the entitlement programs for future generations. Senators Kelly Ayotte (R-NH) and Pat Toomey (R-PA) both expressed disappointment that the budget does not include any plan for the sustainability of the programs. Senator Sheldon Whitehouse (D-RI) stated his frustration at the constant attacks on Medicare and asserted that the Administration should seize this opportunity to come to the defense of the program.
Senator Bill Nelson (D-FL) shifted the focus to current mortgage and homeowner issues. He stated that too many people are “stuck” in their situations with no clear path out and expressed concern over the funding of the current deal made between the administration and the banks.
In the House hearing on February 15, Committee Chairman Paul Ryan criticized the President’s budget request for not addressing what he referred to as unsustainable growth of the cost of entitlement programs. Chairman Ryan referred to the President’s request as an “unserious budget.” Mr. Zients’s testimony contrasted with Chairman Ryan’s portrayal of the budget, characterizing the President’s request as a plan that makes difficult choices to cut valuable programs while supporting economic growth to increase employment.
The Senate Committee on the Budget held a second hearing on the President’s FY13 budget and revenue proposals on February 16. Secretary of the Treasury Timothy Geithner testified that while the economy remains weak, it is imperative to balance spending cuts with revenue increases when difficult budgetary decisions need to be made. He testified that now is not the time for harsh austerity measures. Secretary Geithner said that the President’s budget strikes this balance between gaining revenue and making spending cuts.
Chairman Kent Conrad (D-ND) began the hearing by emphasizing the current income inequality in the U.S. despite the nation’s wealth. He said that taxes of the top 1% of earners are too low, revenues are currently at lower level than they have been in recent history, and that this combination places the country on an unsustainable course.
Ranking Member Jeff Sessions (R-AL) countered the Chairman, stating that it is the President’s budget keeping the nation on an unsustainable economic path. Senator Sessions said the nation needs stronger leadership on these difficult issues.
Senators Lindsey Graham (R-SC) and Kelly Ayotte (R-NH) expressed frustration that the President’s budget did not incorporate the Simpson-Bowles report on deficit reduction strategies or the opinions of Republican leadership on deficit reduction. Senator Graham was adamant that the FY13 budget request would get no support from Republican Senators, saying it is too similar to the President’s FY11 budget.
The House Committee on the Budget also held a hearing on the President’s revenue and economic proposals on February 16, with Secretary Geithner testifying.
Many Republican committee members speculated as to whether the Senate would consider and vote on the President’s budget request. Secretary Geithner clarified that the Senate in fact does not need to pass a budget resolution to consider appropriations, tax reform or any other policy provision included in the President’s budget request, given that a spending cap for the fiscal year was already set in the Budget Control Act (see Memo, 8/5/2011).
Representative Bill Pascrell (D-NJ) expressed concerns about the ongoing foreclosure crisis and asked the Secretary whether the President’s budget proposal included a call for principal reductions for mortgages held by the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. Secretary Geithner said that such a proposal was not in the budget because the Administration believes that the GSEs regulator, the Federal Housing Finance Agency (FHFA), already has the authority to take such action, and that the Administration is working with FHFA on this issue.
The House and Senate will continue to hold budget and appropriations after the February 20th recess week. The House Financial Services Subcommittee on Insurance, Housing and Community Opportunity will hold a February 28 hearing on the President’s FY13 budget request for HUD. Carol Galante, Acting Federal Housing Administration Commissioner; Sandra Henriquez, HUD Assistant Secretary for Public and Indian Housing; and Mercedes Marquez, HUD Assistant Secretary for Community Planning and Development, will testify at the hearing. The hearing will be at 10 am ET in room 2128 of the Rayburn House office building.
The Senate Committee on the Budget will also hold a hearing on February 28, titled “Fiscal FY13 Budget.” The hearing will be at 9:30 am in room 608 of the Dirksen Senate office building.