–Senate Budget Committee Chief: Must Not ‘Impose Austerity Now’
–Rep. Van Hollen: Obama Budget Helps Nurture ‘Very Fragile Economy’

By John Shaw

WASHINGTON (MNI) – Senate Budget Committee Chairman Kent Conrad and
Rep. Chris Van Hollen, the ranking Democrat on the House Budget
Committee, Monday defended President Barack Obama’s fiscal year 2013
budget proposal, which successfully balances the duel objectives of
long-term fiscal deficit reduction and short-term economic growth.

Conrad said at a briefing the president’s plan “moves the country
in the right direction.”

The approach favored by congressional Republicans would “impose
austerity now” and might derail the economic recovery, while the
administration’s approach is to “phase in fiscal discipline as the
economy improves,” he said.

The Senate Budget chairman said the Obama budget accomplishes an
“economic two step” — with a solid focus on both short-term growth and
long-term deficit reduction.

These two goals are “fully compatible and indeed they are mutually
reinforcing,” Conrad said.

The Obama budget “borrowed heavily” from some key elements of the
Simpson-Bowles deficit reduction plan, he said.

Van Hollen said the Obama budget is successful at “nurturing a
very fragile economy” while also putting in place longer-term fiscal
controls.

“It takes a balanced approach to deficit reduction,” Van Hollen
said.

The administration earlier Monday released the fiscal year 2013
budget and claimed it would secure about $3 trillion in deficit
reduction over 10 years.

The budget projects a $1.33 trillion deficit for FY 2012, the
current fiscal year. This is slightly above the actual FY 2011 deficit
of $1.296 trillion.

For FY 2013, the president’s budget would spend about $3.8 trillion
and take in about $2.9 trillion in revenues, resulting in a $900 billion
deficit.

Obama’s budget calls for $1.5 trillion in additional revenues, with
higher taxes proposed on some corporations, upper income earners and
hedge funds.

The president’s fiscal outline calls for about $350 billion in
short-term stimulus measures, with about half of this coming from a
year-long extension of the payroll tax cut and unemployment insurance
benefits.

The plan calls for about $580 billion in entitlement savings from
programs such as Medicare, Medicaid, and agriculture subsidies.

** Market News International Washington Bureau: (202) 371-2121 **

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