President Barack ObamaBarack ObamaFBI found no wrongdoing in Flynn’s calls with Russia: report Repealing the ACA will threaten our mental health CDC cancels major climate change conference MORE’s economic team took heat from liberals Tuesday after predicting years of high unemployment while assuring deficit hawks it would deal with the debt problem.
Liberal Democrats criticized the administration officials for not pushing more spending to get the jobless rate down.
Romer, the chairwoman of the president’s Council of Economic Advisers, appeared at a House Appropriations Committee hearing on the economy with Treasury Secretary Tim Geithner and White House Budget Director Peter Orszag.
“Because we do not expect particularly robust job growth over the remainder of this year, we do not expect to see substantial further declines in unemployment this year,” Romer said.
Jobs would grow at a faster pace in coming years — about 200,000 per month in 2011 and 250,000 in 2012 — but that still wouldn’t be enough to bring the jobless rate down to pre-recession levels. The rate would be 8.9 percent by the end of next year and 7.9 percent by the end of 2012, according to White House estimates that were first released last month.
“Because of the severe toll the recession has taken on the labor market, unemployment is likely to remain elevated for an extended period,” Romer said.
Several House Democrats called on the White House to do more to jumpstart hiring.
Rep. Marcy Kaptur (D-Ohio) said she found the testimony “dismaying and out of touch.”
“Where is the urgency in your testimony?” Kaptur said.
A number of Democrats called on the administration to create a new national infrastructure bank to finance projects, instead of devoting $4 billion to an infrastructure fund.
“If you’re a Keynesian, you’d say spend some more money on this infrastructure to further drive down unemployment and help restore the stability of the Treasury,” said Rep. Norm Dicks (D-Wash.).
Much of the Obama team’s testimony was aimed at concerns over the $12.5 trillion debt, projected to grow by $9.8 trillion in the next 10 years under the president’s policies, according to the Congressional Budget Office. Those worries were stoked Monday by a report by bond rater Moody’s suggesting deficits had increased the risk of a downgrade to triple-A U.S. Treasury bond rating.
“There’s not a chance that’s going to happen to our country,” Geithner told Rep. Hal Rogers (R-Ky.).
Deficits are expected to average nearly $1 trillion over the next decade and won’t approach levels equivalent to 3 percent of the country’s gross domestic product, the maximum level considered sustainable by economists, according to the CBO.
“Your budget proposes a record $1.6 trillion in deficit spending [in 2010],” Rogers said. “I don’t think Moody’s is going to like it.”
Geithner agreed with suggestions that the fiscal picture is unsustainable, but he said it’s possible to find bipartisan support to fix that. The president’s bipartisan fiscal commission, which is tasked with producing a plan to reach sustainable deficit levels, offers Republicans a chance to work with Democrats to address the debt problem, Geithner said.
“It is very important for people on both sides of the aisle to say what you’re saying today,” Geithner told Rogers, “which is deficits matter, tax cuts aren’t free, we have to pay for the things we do as a government and we have to recognize that our long term requires we restore balance to our fiscal position.”
While House Democrats and Republicans argued over whether to focus on spending and deficits, the Obama economic aides said there’s no contradiction between job creation and deficit reduction. The former should be dealt with in the short term at the same time lawmakers put in place a plan to cut deficits in the future, they said.
Lawmakers should be “making sure we provide immediate, targeted reinforcements for expansion, but also making sure we lay a foundation for growth that’s stronger in nature, more sustainable and shared by more Americans,” Geithner said.
The Obama administration has proposed a number of job-creation measures that won’t cost as much as the $862 billion stimulus but would encourage businesses to hire. Obama has strongly backed a new tax credit for small businesses that hire new workers. The Senate is expected this week to send to the president a bill with $13 billion to fund the hiring tax credit, which could create 250,000 jobs, according to economist Mark Zandi.
Romer also encouraged continued aid to the unemployed and states and local governments struggling to keep workers. That aid would be spent immediately, boosting the economy by raising demand, she said.