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PEBO: Stimulus Package Won't Be As Big As Some Economists Want Because of Concerns About Deficits

January 07, 2009 12:19 PM

"Today the Congressional Budget Office announced that the deficit we are inheriting for this budget year will be $1.2 trillion," President-elect Obama said today, noting that the stimulus package "will necessarily add more."

Even after our economy "pulls out of its slide," the President-elect warned, "trillion dollar deficits will be a reality for years to come. But as I said yesterday, our problem is not just a deficit of dollars. It’s a deficit of accountability... a deficit of trust. So change and reform can’t just be election-year slogans. They must become fundamental principles of government."

With that the President-elect introduced his choice to head a new position in the White House, the Chief Performance Officer. Former Treasury Department official Nancy Killefer, currently Senior Director in McKinsey & Company's Washington, D.C. office, will work with Obama's Cabinet and others "to discuss how they can run their agencies with greater efficiency, transparency and accountability."

With that, the President-elect took a few questions. One, from the Wall Street Journal, noted that "the real key to controlling federal spending lies with the entitlement programs.  How early do you plan on addressing Medicare and Social Security?  And what will your approach be?" The President-elect said that "we are beginning consultations with members of Congress around how we expect to approach the deficit.  We expect that discussion around entitlements will be a part, a central part, of those plans."

Mr. Obama was asked if his silence about Gaza because of his "one president at a time" mantra. "We can't have two administrations running foreign policy at the same time," Mr. Obama said. "We cannot be sending a message to the world that there are two different administrations conducting foreign policy.  That is not safe for the American people." Asked if he was worried that the Palestinians are interpreting his silence negatively, Mr. Obama said, "I can't control how people interpret what I'm saying."

Asked whether Roland Burris should be seated in the Senate as the junior Senator from Illinois, the President-elect said, "that is a Senate matter. But I know Roland Burris. ... I think he's a fine public servant. If he gets seated, then I'm going to work with Roland Burris just like I worked with all the other senators to make sure that the people of Illinois and the people of the country are served."   

I got a chance to ask him about the stimulus package. Here's that exchange:

TAPPER: Thank you, Mr. President-elect. Welcome to Washington.

OBAMA: Oh, yeah. It's great to be here. (LAUGHTER)

TAPPER: Your team has talked about the stimulus package being $675 billion to $775 billion.  But at the same time, you have distributed a memo -- your team has distributed a memo in which economists say it should be between $8 billion -- I'm sorry -- $800 billion and $1.3 trillion.

OBAMA: Right.

TAPPER: How do you reconcile that difference? And, also, could you explain what you consider to be truly stimulative? I mean, any project will create jobs in the short term.

OBAMA: Well, we are still in consultation with members of Congress  about the final size of the package. We expect that it will be on the high end of our estimates, but will not -- will not be as high as some economists have recommended, because of the constraints and concerns we have about the existing deficit.

In terms of the components of the package, as I've made clear over the last several days, we're going to have a (sic) investment component designed to create or save 3 million new jobs.  Part of what the charge of my team has been is to figure out how can we make sure that even as we're creating short-term jobs and spurring demand in the economy that we're also laying the groundwork for long-term economic growth, which is why a lot of the stimulative -- a lot of the investments are going to be around things like energy, health care, education, things that we need to be doing anyway.

Part of the stimulus package will be to provide tax relief to middle-income families, and, where it makes sense and is going to work, to provide some tax relief to businesses to spur on investment in the private sector.  And part of the package is going to be to help states who are under extraordinary budget pressures to prevent them from laying off more workers in vital service areas like teaching, law enforcement and so forth, so that not only are we saving jobs, we're also making sure that states are able to provide basic services to their citizens at a time of critical need.  In terms of what I consider appropriate stimulus, you know, the criteria that we've tried to lay out is, are we able to use this money wisely, effectively, in a two-year time span so that we're not creating long-term obligations that would add to the structural deficit that exists, but would provide an immediate boost to the economy?

And as I indicated yesterday, one of the things that I think is important is that we do not have earmarks in this package.  You know, I've  said before I think it's entirely appropriate for members of Congress to want to have some say in terms of projects that take place in their district.  Many of the projects that they might advocate for are worthy.  But isn't the place to do it. And so I think it's important for us not to have earmarks here. It's important for us to have transparency in how the money is spent. I intend to make sure that we have unprecedented measures to ensure that taxpayers can keep track of how this money is spent.

So if, you know, we can get this done quickly, then I've -- I have confidence that not only are we going to be able to create jobs, but we're also going to be making a down payment on some critical areas that, as the economy recovers and the private sector starts investing again, we're going to see some long-term benefits and long- term savings. 

I'll just take one example.  Part of our stimulus package is going to involve revamping all federal buildings so that they're energy efficient.  If we -- if we do that effectively then over the long-term we are going to  save billions of dollars in energy costs for the federal government and for taxpayers. That's the kind of charge that Nancy's going to have, is identifying where are areas where we can make big change that lasts beyond the economic recovery plan and will save taxpayer money over the long term. 

-- jpt

January 7, 2009 | Permalink | Share | User Comments (199)

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why is the goverment so damn dumb

Posted by: kelly massey | Jan 13, 2009 5:07:11 PM

Regular readers have probably noticed that whenever an ABC story tends to be controversial,their editors always opt for this goofy, unreadable 'online chat' format. It ensures that comments will be as tedious to follow as a Federal Reserve meeting. Speaking of, if Obama truly wants to save what's left of this country, he has a simple option-- start by abolishing the Federal Reserve and their criminal banking cartel. There's even a bill waiting for this purpose- HR 2577 'A Bill to Abolish the Federal Reserve'. Yet another "stimulus" will do nothing but hand our leaders a bigger shovel with which to bury us.

Posted by: h5mind | Jan 8, 2009 11:08:20 PM

SSI is for anyone of any age.
SSI is NOT Social Security and YOU NEVER HAVE TO WORK A SINGLE DAY IN YOUR LIFE.
SSI will get another increase, not a decrease and SSI pays ZERO taxes.
SSI can own a HOME OF ANY VALUE WHATSOEVER.
SSI is $579 in all States but California where SSI pays $907!
SSI is given to anyone over 65 no matter what country they come from, no matter if they are here legally or not.
Chinese and Hispanics over 65 are dumped off at Social Security Offices and told to go and Apply & Qualify for SSI, and they get it and they also get MediCal & Section 8 Housing and Low-Income Heating and air-conditioning assistance.
MAKE NO MISTAKE, OBAMA AND THE DEMOGRANTS WILL PASS THE CUT, CUT, CUT TO SENIOR CITIZEN SOCIAL SECURITY & MEDICARE, BUT NOT, AGAIN, NOT TO SSI-SUPPLEMENTAL SECURITY INCOME.
Most All SSI's own their own homes Free & Clear, they can. They get 95% of their Property Taxes BACK at the end of each year in a Check.
In California, SSI has an additional check called SSP adding up the Tax Free checks on the 1st of the Month to Tweekers and Drunkards and Gluttons to $907 a Month per Individual.
IF that Induvidual is 'Head of Household', then the ENTIRE family get's an SSI & SSP check on the 1st of the month, TAX FREE,
If you think for one second that Obama OR the Demogrants CARE, your WRONG, they ONLY CARE ABOUT THE SSI's & SSP's, and Welfare Mommies & TANF's.
Watch, what happens, it will Pass FAST.
YOU WILL BE CUT, and CUT AGAIN AND AGAIN.
But, SSI will Swell.
YOU should All Transfer your Assets and Get to Social Security Offices that process SSI Applications and get on it!
It pays almost As Mush As Senior Citizen Social Security BUT pays ZERO Taxes & Get's a Cola each year!
In States other than California a couple on SSI that NEVER WORKED A SINGLE DAY IN THEIR LIVES GET-> $889.
In California, $1,560!
They never worked for it, yet they get more than YOU do.
This is where the problem lies.
And, remember when you see fatso's waddling into stores on the 1st of the month with handicapped placards on their cars, THEY ARE ON SSI AND NEVER WORKED NOR' PAID A PENNY OF TAX FOR THAT FREE MONEY!
Yet, since most minorities and illegals are on SSI, the Demogrants will pass this cut to YOU FAST!
Tried to tell Seniors before you went and voted for him, now it's too late.
He is NOT worried about gray haired old people protesting!
He's more worried about Young, able-bodied liers that collect SSI, getting angry, that's why he's Rolling out the Red Carpet to make sure SSI's will continue to get FREE EVERYTHING NOT YOU.

Posted by: SSIwillgetanincrease | Jan 8, 2009 9:11:07 PM

Senior,
Like I said, we were DUPED into voting for Obama, if what you say are the facts, referring to entitlements. NO ONE campaigned harder for him than I. I will be totally disgusted if he does not keep this promise.

Posted by: william C. | Jan 8, 2009 2:21:41 PM

What about Tax Cuts for Senior Citizens??? Were DUPED???....It was on his transition website !

Posted by: William C. | Jan 8, 2009 2:12:19 PM

Of course the entitlement programs are going to be scrutinized, which means the seniors are at risk--the age group who basically have little say in their behalf. Social Security & Medicare are perhaps the most costly of the govt. budget, but there is a lot of "pork" for states from Congressmen. Why aren't these reviewed instead of being "sacred cows" not to be touched?

Posted by: Senior | Jan 8, 2009 10:58:02 AM

trying to be positive. obama has great rhetoric, doesn't he? no, really. doesn't he? at least, we are all in for a good show if nothing else.

Posted by: Lawrence | Jan 8, 2009 6:55:57 AM

Oh great Obama, oh great Obama, will you now kiss and make up with Osama?

Posted by: TEO | Jan 8, 2009 2:46:36 AM

U.S. Department of the Treasury, Bureau of the Public Debt

Posted by: pefros | Jan 7, 2009 11:38:26 PM

It is undeniable Bush ran up record deficits 2002, 2003, 2004, 2005 and 2006 with Republican control of Congress, any way you want to rejig the numbers.

Bush and the Republicans dug the hole and it will be a long time before the country can climb back out of it.

As Bush said after 9/11, the big secret . ... go out and spend. Good advice.

Posted by: pefros | Jan 7, 2009 10:53:46 PM

"Now they're trying to excuse the astronomical Bush deficits and his atrocious handling of government, when Republicans had control of Congress and the Presidency in 2002, 2003, 2004, 2005, 2006 and rang up half a TRILLION in deficits each of those years."

Where do you get your numbers from? I'm not saying they are wrong, but I when I look on the CBO web site xls for Historical Data I see different figures:

2000 105 2.5
2001 102 1.3
2002 -131 -1.5
2003 -288 -3.4
2004 -294 -3.6
2005 -239 -2.6
2006 -229 -1.9
2007 -152 -1.2

The first number is the "standarized" constant dollar deficit. The second is the % of GDP. Since the GDP has been going up enormously the % deficit has been going down.

And after this I think you *still* have a problem rationalizing that there was no need for a stimulus after the enormous financial impact of 9/11.

Posted by: BertieW | Jan 7, 2009 10:48:23 PM

Oh don't be silly. The budget deficit is now so large that they're going to have difficulty finding other countries to fund it. Time to live within our means, make the eligibility age for social security higher than average life expectancy like when it was invented, stop keeping troops in 130 countries, etc... It's all do-able.

Posted by: Skeptic | Jan 7, 2009 10:40:59 PM

Interesting to see the anti-Obama types in here trying to scratch up the tiniest bit of dirt they can find on Obama . . . and coming up with so little.

Propagandists.

Now they're trying to excuse the astronomical Bush deficits and his atrocious handling of government, when Republicans had control of Congress and the Presidency in 2002, 2003, 2004, 2005, 2006 and rang up half a TRILLION in deficits each of those years.

Crawl back in your holes; thank goodness Bush and the Republicans are gone. Let's hope the situation can be recovered from; it ain't gonna be easy, but the brightest and best are going to be working with Obama so there's a chance.

Posted by: pefros | Jan 7, 2009 10:36:18 PM

"Doesn't it go pretty much with out saying, we are coming in to this inheriting a 9 trillion dollar deficit, that is going to be with us for awhile? "

No. 9T or 10T is the debt.

$1.2T is the new deficit. But even that number is funny since it contains a number of one time charges such as TARP and the Fannie Mae buyout. Those one times are non-reoccuring charges and in the case of TARP the actual cost is projected to be nothing like $700B. The deficit for 2008 had been projected at around $400B but need for TARP and Fannie Mae has driven it to 1.2T according to the CBO web site.

But there is no reason why the baseline for 2009 and 2010 should be over a trillion. You arent going to do TARP again. So the only way you get to a trillion dollar deficit each year is if Obama plans on a 600-700B stimulus each year. Maybe even more since you would have an offset of recovered TARP monies.

Those are enormous numbers- it would be like building a entire new Department of Defense each year.

Posted by: BertieW | Jan 7, 2009 10:36:04 PM

Yes the deficit, and who was in charge of Congress that passed the budget that poor whittle Barry is complaining about? Who passed the stupid TARP bailout? And who passed the past failed stimulus package?

Why yes, that was all done by the Pelosi Congress. Yes the very same Democrats who are now saying the deficit is too big. Well duhhh.

Might also note that the last two stimulus packages, one for the people, the other for Wallstreet didn't work. So why will the next crap sandwich do better? Pork by the dump truck full.

And then the presses quit.

Posted by: bill-tb | Jan 7, 2009 7:29:22 PM

PAY THE DEFICIT FIRST!

1.2 trillion dollar? pay the damn deficit
and jumpstart the remains

Posted by: Abiodun | Jan 7, 2009 7:05:15 PM

I Could care less, both parties destroyed this country, especially this useless fascist adminstration who took this country to hell and nobama will not be much bettet.

Thank goodness ron paul is better than those two clowns combined.

Posted by: Afi K. James | Jan 7, 2009 6:54:59 PM

Chief of Staff. CHANGE??...WHAT CHANGE..??

CW just what kind of change were you wanting? More George Bush?

I see us going from pretty far to the right to just a little left of the center. To me that is a
PRETTY BIG CHANGE !!

Posted by: Right man | Jan 7, 2009 6:14:33 PM

Even after our economy "pulls out of its slide," the President-elect warned, "trillion dollar deficits will be a reality for years to come."
---------
Oh my goodness no wonder everyone is so concerned. We are not used to having a president that can be quite so honest!

Doesn't it go pretty much with out saying, we are coming in to this inheriting a 9 trillion dollar deficit, that is going to be with us for awhile?

What amazes me the most is amount of intolerance that is so quickly being aimed at probably the only man in the world that can even concieve of getting us out of this mess. 18+ months from now when we are solidly recovering and showing to be back on the path to physcal reponsibility, will these same intolerant people appologize and show the proper amount of respect.

Don't count on it. Respect is just not something these folks are made of.

Posted by: David Williams | Jan 7, 2009 6:06:58 PM

Mark--
Look forward to your comments in a year
or so....

Posted by: lvh | Jan 7, 2009 6:05:56 PM

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