Transcript: Remarks by OMB Acting Director Jeffrey Zients on the Obama FY2014 budget
Edited by Jenny Jiang
Partial transcript of remarks by Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB), on President Barack Obama’s FY2014 budget. The press briefing was held on April 10, 2013.
I’m going to do a quick overview of the major components of deficit reduction in the budget. And then I’m going to turn to Alan [Krueger] to review the economic assumptions, and Gene [Sperling] and Cecilia [Munoz] to walk us through some of the investments and other policy highlights.
…The main message of the President’s budget is that we can make critical investments to strengthen the middle-class, create jobs and grow the economy while continuing to reduce the deficit in a balanced way. We can do both – balanced deficit reduction and jobs investments.
On the left hand side, in terms of balanced deficit reduction, the budget builds off the deficit reduction achieved to date. It includes the President’s fiscal cliff compromise offer to Speaker Boehner from last December.
Importantly, the budget replaces the indiscriminate cuts of the sequester with balanced deficit reduction. So it turns the sequester off.
At the same time, the President’s budget proposes important job investments to enhance economic growth through skill and competitiveness and in investments in education and R&D [research and development]. All of these investments are fully paid for so the investments do not add a dime to the deficit.
And deficit reduction over the past couple of years with the Democrats and Republicans have worked to cut together to cut the deficit by more than $2.5 trillion.
Here’s the breakdown of deficit reduction achieved to date:
The Budget Control Act [BCA] capped discretionary spending, saving over $1 trillion.
Another $370 billion in savings through 2011 appropriations.
The end of last year’s fiscal cliff agreement reduced the deficit by more than $600 billion.
Together, this deficit reduction lowered interest payments, saving an additional $480 billion.
In total, more than $2.5 trillion in deficit reduction has been achieved.
The President is committed to achieving a total of $4 trillion in deficit reduction. $4 trillion is the amount or the benchmark, if you will, that Bowles-Simpson and other independent economists call for in order to put us on a sustainable fiscal path.
The good news is that we are more than half way to this $4 trillion target.
The President’s budget finishes the job with an additional $1.8 trillion in deficit reduction. This $1.8 trillion is from the compromise offer the President made to Speaker Boehner during the fiscal cliff negotiations in December.
By including this offer in the budget, the President is showing his willingness to compromise and make tough choices and his commitment to putting the country on a sustainable fiscal path.
Here are the components of the deficit reduction that take us from the $2.5 trillion achieved to date to over the $4 trillion target.
On the left side, starting with the $2.5 [trillion] we’ve already achieved, the first bar – $400 billion in health savings that strengthen Medicare by squeezing out waste and incentivizing delivery of high-quality and efficient health care.
Next, $200 billion in savings from other mandatory programs, including reductions to farm subsidies, reforms to federal retirement contributions, and selling of un-needed federal real estate.
Next, $230 billion in saving by indexing annual inflation adjustments to the chained-CPI [consumer price index]. This is directly responsive to Speaker [John] Boehner and Leader [Mitch] McConnell’s requests.
Another $200 billion in discretionary savings beyond the BCA caps.
Next $580 billion in revenues from tax reform by closing loopholes and reducing tax benefits for families with more than $250,000 in income.
As a result of these savings, $190 billion from reduced interest payments on the debt.
At the same time, we invest $50 billion in infrastructure to repair our roads, bridges, and create jobs. So an immediate $50 billion investment in infrastructure.
In total, this achieves $1.8 trillion in additional deficit reduction over the next 10 years, bringing total deficit reduction to $4.3 trillion, with more than $2 in spending cuts for every $1 in revenue.
To be very clear, this offer includes difficult cuts the President would not propose on their own, including [chained-]CPI, which the President is only willing to do with protections for the vulnerable and as part of this balanced plan.
However, by including this compromise offer in the budget, the President is showing his willingness to make tough choices and his commitment to reducing the deficit and putting the country on a sustainable fiscal path.
Here are the annual deficits from 2012 to 2023 as a result of this deficit reduction. As you can see, in 2012 the deficit was 7% as a percent of the economy. The budget phases in deficit reduction to support the ongoing recovery, and by 2016 the deficit is below 3%. By 2023, it’s below 2% at 1.7%. So 2023, deficit 1.7%.
As a result of this deficit reduction, debt as a percent of our economy is also on a declining path.
So with declining deficits and declining debt, the President’s budget achieves an important milestone of fiscal responsibility and sustainability.
The budget reaches this important fiscal milestone while investing in the drivers of economic growth. In doing so, it demonstrates that we do not have to choose between deficit reduction and economic growth. It shows that we can do both. And indeed, we must do both.
The country won’t prosper if we have unsustainable deficits. But it also won’t prosper if our infrastructure is crumbling and our workers lack the skills to compete.
To pay for initiatives like pre-K for all, job training, and accelerated infrastructure investment, this budget will enhance our nation’s competitiveness.
And through balanced deficit reduction, this budget will enhance confidence and lay the foundation for a more durable economic growth.
It’s the right strategy for our economy, for creating jobs, and for building prosperity.
- WhatTheFolly.com: Obama’s FY2014 federal budget
- WhatTheFolly.com: Transcript: Remarks by President Barack Obama on his proposed fiscal year 2014 budget
- WhatTheFolly.com: Transcript: House GOP’s response to President Barack Obama’s FY2014 budget
- WhatTheFolly.com: Transcript: Remarks by OMB Acting Director Jeffrey Zients on the Obama FY2014 budget
- WhatTheFolly.com: Transcript: Remarks by Council of Economic Advisers Chairman Alan Krueger on Obama’s FY2014 budget
- WhatTheFolly.com: Transcript: Remarks by National Economic Council Director Gene Sperling on Obama’s FY2014 budget
- WhatTheFolly.com: Transcript: Remarks by Domestic Policy Council Cecilia Munoz on Obama’s FY2014 budget
- WhatTheFolly.com: Transcript: Senior White House officials on chained-CPI & Social Security savings proposed in the FY2014 budget
- WhatTheFolly.com: Transcript: White House officials on deficit reduction measures proposed in the FY2014 budget
- WhatTheFolly.com: Transcript: Senior White House officials on corporate tax reforms proposed in the FY2014 budget
- WhatTheFolly.com: Transcript: White House official on tax increases for deficit reduction proposed in the FY2014 budget
- WhatTheFolly.com: Transcript: White House official on estate tax increases proposed in the FY2014 budget
- WhatTheFolly.com: Transcript: White House official on minimum wage increase proposed in the FY2014 budget
- WhatTheFolly.com: Transcript: White House official on the “Promise Zone” program proposed in the FY2014 budget
- WhatTheFolly.com: Transcript: White House official on the $3 million cap on tax exemptions for retirement savings proposed in the FY2014 budget
- WhatTheFolly.com: Transcript: White House officials on early childhood education & the tobacco tax proposed in the FY2014 budget
- WhatTheFolly.com: Transcript: White House official on why the administration’s FY2014 budget was delayed
- WhiteHouse.gov: Video of President Barack Obama announcing the FY2014 budget
- Office of Management and Budget: Fiscal Year 2014 budget overview
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