The White House case against ‘Cut, Cap, Balance’

I just got off a conference call with White House communications director Dan Pfeiffer and deputy NEC director Jason Furman, in which they elaborated on the administration’s opposition to the “Cut, Cap, Balance” plan that the House is voting on Tuesday. The White House put out a statement Monday afternoon saying in no uncertain terms, “If the President were presented this bill for signature, he would veto it.”

The rhetoric on the call was unusually heated. In a prepared statement, Furman called CCB a “extreme, radical, unprecedented” proposal, and Pfeiffer described it as “the Ryan plan on steroids”, noting that it would require much deeper cuts than Rep. Paul Ryan’s budget proposal. To be specific, Furman alleged that the balanced budget amendment included in the CCB plan would force $400 billion in yearly cuts on top of the cuts in Ryan’s budget. If defense spending is exempted, that amounts to a 12 percent across-the-board spending cut that includes Medicare and Social Security. It would involve a 70 percent reduction in clean energy funding, $6,000 in extra annual costs for the average senior due to Medicare and Social Security cuts, and a one third cut to infrastructure spending, he said. These cuts, Furman said, are “essentially historically unparalleled.”

Perhaps most interesting was that Pfeiffer and Furman emphasized strongly the negative economic impacts of immediate cuts, noting that CBO director Doug Elmendorf has said a $100 billion annual cut would have a noticeable impact on near-term GDP growth. They insisted that Obama’s preferred debt plan would heavily backload spending cuts, so that they didn’t come during the economic recovery. This gets back to a point Ezra made the other day: the administration really wants to get a deal where they can control the timing of any cuts.