Transcript: White House officials on deficit reduction measures proposed in the FY2014 budget

Edited by Jenny Jiang

Partial transcript of remarks by White House officials on deficit reduction measures proposed in the FY2014 budget. The press briefing was held on April 10, 2013.

Question:
…I’m having a hard time figuring out the deficit reduction numbers this year. By your calculations, the effect of your proposals on the deficits reduce the 10-year projection by $1.4 trillion, which is less than the $1.8 trillion in the package. And I’m a little bit confused about the difference. And then there also seems to be a difference between the $5.3 trillion in deficits that you’re racking up over the decade and the increase in the debt, which is much larger. So could you explain?

Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB):
Well, on the first question, in the current law is the sequester, which is 100% across-the-board indiscriminate spending cuts. We are replacing the sequester, which has always been the President’s intent, with balanced deficit reduction. So in current law, you have the across-the-board spending cuts which are hurting the economy, which were never intended to be policy, and are replaced with balanced deficit reduction.

The other thing that’s going on I think that’s causing some of your confusion is that we are clear about our willingness to do the $1.8 trillion deficit reduction as we talked about in that first slide; at the same time, we believe there are important investments to be made – we just talked about a bunch of them – each of which is offset. So I think the place to pivot to is that chart that I showed, which is deficits as a percent of the economy and how we’re driving them down year over year. We’re below 2% at the end of 2023 – we’re at 1.7%. And debt is on a declining path.

So it can be confusing because we have the $1.8 trillion offer. It replaces the sequester, which was never intended to be policy, with balanced deficit reduction. And we do also have the investment modules – that to be clear that the President is willing to do the compromise offer with Speaker Boehner – separate from the investment…

…The total deficit reduction is the $2.5 trillion we’ve achieved to date…

…The $1.8 [trillion] incremental, which is made up of $400 billion in health care, $200 billion of discretionary, $200 billion other mandatory – the chained-CPI we talked about, $580 billion of revenues, and then the interest savings resulting from the $1.6 trillion.

…Do focus on where are we driving debt – deficits as a percentage of the economy – that’s the metric that everybody uses. They’re on a declining path. They’re below 2% at 1.7% at the end of the window.

Gene Sperling, Director of the White House National Economic Council:
The other reason I think it’s so important to look at that is…people are often using different baselines, et cetera. But all of that comes out in a wash when you just look at the bottom line. And if you look at the bottom line, whether you count a $50 billion decrease as something that was supposed to be in the baseline or whether you count it as a revenue or whether you count it as a spending or the categorizations, all those things that you and I and about 18 other people in the world care deeply about – all of them don’t actually really matter when it comes to what the ultimate impact this, and that is are you as a country seeing your debt declining as a percentage of your income or increasing?…The bottom line is the bottom line and what matters.

Question:
The Republicans have been complaining about using war savings in this war budget. You’re using to pay for about $166 billion in new spending on jobs and infrastructure programs as well as accounts in your deficit figures. What’s the rationale for using war savings to pay for new programs and deficit savings when we never paid for them in the first place?

Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB):
This is directly the result of the President’s policy to end the war in Iraq and Afghanistan. It’s CBO [Congressional Budget Office]; it’s in their baseline. This is consistent with CBO. And importantly, it closes the war for additional discretionary spending. So it’s good budget discipline.

We are using it, as you said, to offset jobs investments in the $4.3 trillion that we’ve talked about several times – not the OCO [Overseas Contingency Operation] savings as part of the $4.3 trillion in deficit reductions; it’s additional deficit reduction beyond that.

Question:
Right, but the Republicans say that your total deficit reduction, if you back that out and you back out the sequester, it’s closer to $100 billion in your budget when you take it as your total.

Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB):
…What I can tell you is that we’re driven by policy. It’s consistent with CBO. It closes the backdoor in discretionary spending. And we’re using, as you said, about $160 billion to offset directly investments in infrastructure and jobs. We are not counting any of those savings in the $4.3 trillion, which is the result of the $2.5 trillion which has already been achieved and the $1.8 trillion that we just went through.

Gene Sperling, Director of the White House National Economic Council:
And it’s not, as Jeff said, in the $1.8 trillion offer – compromise offer. So however you want to debate the accounting for that, it affects neither the bottom line on the deficit as a percentage of GDP or the debt GDP. It has no difference on that calculation of the ultimate bottom line. It has no effect on the $4.3 trillion as Jeff’s said. No affect on the $1.8 trillion. And for the record, the total OCO savings is, I believe, $675 billion so the amount being used to offset the rebuilding, modernizing infrastructure, and the jobs is about perhaps [one-fourth] of the amount of net savings.

Jeffrey Zients, Acting Director of the Office of Management and Budget (OMB):
But again, as Gene said earlier, there are lots of different ways to look at the numbers. At the end of the day, where are we on deficits and are we just – debt on the declining path as a percentage of GDPs – those are the two key metrics.

Gene Sperling, Director of the White House National Economic Council:
I think people who care about fiscal discipline should take much very seriously about what Jeff said about locking this in and not allowing this to be a cushion that people can go to. I think it is an important fiscal discipline policy and there’s no reason it shouldn’t be credited as such.

Jay Carney, White House Press Secretary:
…People who care about fiscal discipline should note that the same Republicans who make those assertions are ones who claim that their budget can give a $5.7 trillion tax cut mostly to the well-off and well-to-do and yet balance in 10 years but they will not tell you how.

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