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Lew Says Obama Open to More Spending Cuts in Budget Talks

OMB Director Jack Lew
Jacob "Jack" Lew, director of the Office of Management and Budget (OMB), speaks during an interview in Washington, D.C. Photographer: Andrew Harrer/Bloomberg

March 16 (Bloomberg) -- President Barack Obama’s budget chief, Jacob Lew, said he is optimistic lawmakers will reach an agreement to fund the government through the end of the fiscal year and signaled the administration is open to more spending cuts in negotiations with Republicans.

While he applauded Republican leaders for approaching the budget discussions pragmatically, Lew said one stumbling block may be Republican efforts to eliminate funding for the health-care law passed last year as well as money for Planned Parenthood and the Corporation for Public Broadcasting.

Those issues are “more emotional sometimes than the individual funding levels,” Lew said during a Bloomberg Breakfast with reporters today in Washington. “That’s why we were so clear right at the start that it was not acceptable to put extraneous social policy and broad policy directives in a must-fund continuing resolution. It’s not going to be acceptable to us, and we’re going to have to work our way through that.”

The Republican-controlled House of Representatives yesterday approved another short-term measure to pay for government operations until April 8. It includes $6 billion in cuts, which would keep Republicans on track with their push to reduce the budget by $61 billion this year.

There are points “between where things are now” and the $100 billion in cuts the Republicans originally sought “that we could live with,” Lew said. “I hope we can work our way towards that.”

Choosing Optimism

“With the choice between optimism and pessimism, I always choose optimism,” Lew, 55, said.

Yesterday’s 271-158 vote sends the measure to the Senate, where leaders of the Democratic majority said it soon will be forwarded to the president for his signature. Throughout this fiscal year, which began Oct. 1, lawmakers have relied on stopgap measures to avoid a shutdown of non-essential government services. The current spending authority, enacted earlier this month, expires March 18.

The measure passed yesterday in the House “reflects something that they had a very high degree of confidence would be acceptable -- that’s pragmatic,” Lew said of Republicans.

“One could have put a $6 billion package together that was $5 billion of things that were acceptable and $1 billion of things that were daring us to veto,” Lew said. “They didn’t do that. I applaud them for that.”

The drive to make cuts is being driven in part by White House projections that deficit will hit a record $1.6 trillion this year -- 10.9 percent of gross domestic product -- and $1.1 trillion next year.

Uncertainty

Lew reiterated the administration’s stance that repeatedly relying on temporary funding authority is irresponsible because it injects uncertainty into the economy. Still, he said, another temporary measure “beats a government shutdown by a long-shot.”

Lew said the three-week extension presents lawmakers with an opportunity to “maybe finish the year’s work.”

He declined to say whether Obama would refuse to sign another stopgap funding bill after the three-week extension, which is the sixth temporary spending authority approved this fiscal year.

“I don’t think it’s helpful to the process for us to deliver ultimatums,” Lew said. “I’m not going to say what he would do. I didn’t say he would, I didn’t say he wouldn’t.

To contact the reporter on this story: Julianna Goldman in Washington at jgoldman6@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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