Budget

Vice President Joe Biden said that the president laid out "significant cuts" in his State of the Union address, and that the administration would be open to further suggestions from Republicans.

"We are open to additional savings that are suggested by our Republican colleagues," he said in an interview with Yahoo News.

Defense Secretary Robert Gates on Thursday waded into the battle over 2011 spending and said that if Congress fails to provide new appropriations this year for the Pentagon, America’s security will be at risk.

In strong terms, Gates said that simply extending the continuing resolution that runs out March 4 would serve to "hollow out" the military. It would result in cuts to operations, maintenance, training and readiness, he said.

"I have a crisis on my doorstep," Gates said.

The Treasury Department took an initial step Thursday to position itself against the rapidly approaching debt ceiling, announcing it will reduce the size of one of its programs to free up more space for borrowing elsewhere.

Over the next eight weeks, the Treasury will shrink the size of its Supplementary Financing Program from its current $200 billion size to just $5 billion. The program, created in 2008, allows the Treasury to issue short-term notes and place the funds into accounts with the Federal Reserve.

The downsizing is being done "to preserve flexibility in the conduct of debt management policy," said Mary Miller, the Treasury's assistant secretary for financial markets. The Treasury similarly wound down the program when it neared the debt limit in 2009.

A bipartisan pair of senators is introducing legislation that would do away with a yearly budget in favor of a two-year process.

Sen. Johnny Isakson (R-Ga.) — who is pushing the bill with Sen. Jeanne Shaheen (D-N.H.) — has been calling for a biennial budget cycle since coming to the Senate six years ago. But Isakson signaled that, given the current concern over the federal deficit, the measure might have a better shot this time around.

Conrad says his panel might have to take action absent a negotiation between the White House and lawmakers.

Senate Majority Leader Harry Reid (D-Nev.) said Thursday that President Obama should "back off" his pledge to veto bills with earmarks and let Congress decide where federal funding goes. 

"He's got enough to do without messing in what we do," Reid said during an interview Thursday with NBC News. 

Obama vowed in his State of the Union address on Tuesday to veto any bills that include earmarks. 

"And because the American people deserve to know that special interests aren't larding up legislation with pet projects, both parties in Congress should know this: If a bill comes to my desk with earmarks inside, I will veto it. I will veto it," Obama said. 

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Sens. Orrin Hatch (R-Utah) and John Cornyn (R-Texas) announced Wednesday they had introduced a balanced budget amendment, calling it a necessary step in the face of the nation’s growing deficit. 

In separate statements, the two senators said the federal government had historically not been able to keep the budget in order. 

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The head of the Congressional Budget Office, Doug Elmendorf, was reappointed Wednesday after Democrats and Republicans both backed his bid for a new term.

Elmendorf’s term ended Jan. 3; his new one will run through Jan. 3, 2015.

The CBO came under fire from Republicans for its spending estimates for the healthcare reform law and for the 2009 stimulus package. In recent weeks, House Majority Leader Eric Cantor (R-Va.) has instead blamed Democrats for feeding CBO faulty assumptions.

Democrats blasted a new Republican proposal to work around the statutory debt limit, saying it prioritizes paying foreign lenders before the American people.

On Wednesday, members of the House Republican Study Committee (RSC), introduced a bill that would require the Treasury to pay principal and interest due on public debt before making any other payments. Companion legislation has been introduced in the Senate by Sen. Pat Toomey (R-Penn.).

But Senate Budget Committee Chairman Kent Conrad (D-N.D.) said the proposal is a "very, very bad idea."

"What they are saying is, 'Pay the Chinese first,'" he said.

In a party-line vote of 239-160, the House approves a bill eliminating the $3 payment to the presidential campaign fund.