Geithner explains why Obama never embraced Bowles-Simpson

Treasury Secretary Timothy Geithner on Thursday explained why President Obama never fully embraced the 2010 report of his fiscal commission, headed by former Sen. Alan Simpson (R-Wyo.) and Erskine Bowles.

Geithner, under heavy fire from the Senate Budget Committee, said the Obama administration “did not feel” it could embrace it because the cuts to defense were too deep and the reforms to Social Security relied too much on benefit cuts.

Fiscal conservatives, including many Democrats, have for the last year lamented that Obama did not seize the Bowles-Simpson report and try to build bipartisan consensus around it. The administration instead pursued secretive talks with GOP leaders that hit the rocks last July when the GOP could not back an approach that included higher taxes.

Geithner said Obama decided to “give them the best compliment we could” by including some reforms in an April Obama speech, September supercommittee recommendations and the 2013 budget.

He said that the Obama budget has more concrete Medicare and Medicaid reforms than Simpson-Bowles and goes deeper on non-defense discretionary cuts.

Geithner was responding to questions by Sen. Kelly Ayotte (R-N.H.), and at one point turned the tables on her. He asked Ayotte if, given her “affection” for Bowles-Simpson, she would support its tax reform that raised trillions in revenue for deficit reduction.

“Are you willing to embrace the broad balance of Bowles-Simpson? Then there is a lot to talk about,” he said

Ayotte would only say that it is up to the president to take the lead on the budget.

Geithner faced the same tough questions that dogged White House acting Budget Director Jeff Zients in his debut appearance before the Senate Budget Comittee. Ranking member Jeff Sessions (R-Ala.) repeatedly tried to get him to admit that in absolute dollar terms the budget would over 10 years spend more than would be the case under current law.

Sessions argued that because the administration is replacing $1.2 trillion in automatic cuts that resulted from the failure of last year's supercommittee with a mixture of tax increases and spending cuts, the budget is a spending increase.

Geithner did not answer yes or no, and instead repeatedly said that measuring spending against the size of the economy is more accurate. Such a measure factors out inflation.

“The savings that we proposed if enacted by the Congress will reduce deficits to below 3 percent of GDP,” he said. He said that this level would stabilize the growth of the national debt.

“You are right that, and I commend you for it, in saying that even if Congress were to enact this budget, we would still be left with, in the outer decades as millions of Americans retire, what are still unsustainable commitments in Medicare and Medicaid,” he added. He said the Obama budget if enacted would give the parties time to come together on a bipartisan solution.

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