Obama budget director believes spending deal still possible

President Obama’s budget director stressed Thursday that a government shutdown can be avoided.

Obama and Speaker John BoehnerJohn BoehnerBoehner endorses DeVos for Education secretary Trump, House GOP could clash over 'Buy America' Lobbying World MORE (R-Ohio) have left room to negotiate even as they have drawn new lines in the sand over a spending measure to fund the government for the rest of the year, Office of Management and Budget (OMB) Director Jack LewJack LewObama faults corrosive political rhetoric in farewell address Lew: Eliminate the 'dangerous' debt limit Five regulatory fights facing tech in 2017 MORE said.

“We very strongly believe we will be able to avoid the type of confrontation that might lead to a veto or a government shutdown,” Lew said at a lunch sponsored by The Christian Science Monitor.

Lew spoke just more than an hour after BoehnerJohn BoehnerBoehner endorses DeVos for Education secretary Trump, House GOP could clash over 'Buy America' Lobbying World MORE said Republicans would not accept a short-term spending bill that does not cut spending.

House Republicans are preparing to vote later this week on a measure that would reduce current spending by $61 billion. OMB on Wednesday signaled the president could veto that bill, doing so in a statement that warned Obama would veto any spending measure he believes will hurt the economy. 

Lew suggested Thursday, however, that the president could accept reducing current spending by $61 billion depending on where the cuts were made.

He noted that the president has not said that cutting $61 billion from spending this year is unacceptable; it is that the White House has “yet to see” a bill that cuts that much spending without harming the future of the U.S.

The OMB director acknowledged it will be difficult to reach a deal by March 4, when the current measure funding the government runs out. He said “quite a lot will have to happen between now and March 4,” and that the next step is for the Senate to act on the House measure.

Asked if the administration is preparing for a shutdown, Lew reiterated that a shutdown is unlikely. He said he did not want to give the impression a shutdown is unavoidable.

The administration is encouraged that Republican leaders have said they do not relish a shutdown, and Lew contrasted recent GOP statements with those Republican leaders made in the mid-1990s, when the government did shut down over a spending fight between the Clinton administration and House Republicans.

Lew is a former Clinton budget director and a veteran of the 1990s fights over spending.  

Lew said the White House is encouraged about the work of a bipartisan group of six senators who are trying to reach a long-term debt deal, but said it would be wrong to overstate White House involvement in talks at a “very early” stage.

The senators are basing their work on the recommendations of Obama’s debt commission, parts of which the president could accept, Lew said.

Lew noted that debt commission framed reforms to Social Security as a parallel effort to work on the rest of the nation’s budget problems, and said Social Security is not contributing directly to the deficit.

The OMB director insisted the White House wants to work on a debt deal regarding entitlements sooner rather than later, and denied that the president wants to push off these conversations until after the next election.

“We have to use the next two years as much as we can,” he said.