Lawmakers grill Geithner on federal deficits, tax hikes
Lawmakers railed against rising federal deficits as well as proposed tax increases at a House hearing Wednesday where Treasury Secretary Timothy Geithner defended President Obama's budget plan.
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Obama's planned budget deficit next year would be $1.267 trillion, not far below the current year's record level. For the coming decade, the deficit would never fall to 3 percent of the nation's gross domestic product (GDP) – a target advocated by economists and by the administration.
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Rep. Paul Ryan (R) of Wisconsin warned that other nations – with an eye on rising US debts and with other options for their money – may not remain willing to finance Treasury borrowing at low interest rates for much longer. "The vigilantes in the bond market are going to get us" and hurt the economy, he said.
Geithner said both parties must find a way to work together for the budget gap to be solved, so that debt is growing no faster than GDP.
Signs of such bipartisan dealmaking were in short supply at the House Ways and Means Committee meeting where he spoke. Republicans complain that the White House wants to stack the composition of a bipartisan fiscal commission against them.
Both sides sought to score points in an election-year blame game. Geithner and congressional Democrats repeatedly cited the Bush presidency as a major source of today's high deficits. Republicans countered by seeking credit for budget surpluses during the Clinton presidency, when they controlled Congress during key years.
Whoever is to blame, Rep. Ginny Brown-Waite (R) of Florida said that interest on the national debt will cost the nation $700 billion a year by the end of the decade.
"That’s kind of like a new TARP every single year, for which the taxpayers get zero in return," she complained, referring to the $700 billion bank-rescue program of 2008.
Still, even relatively modest efforts to raise federal revenue drew concern. Several lawmakers worried that a proposed repeal of so-called LIFO accounting (last-in, first-out) for business inventories would hurt firms in industries ranging from aerospace to alcoholic beverages.
"This proposal would represent an existential threat to many of our distilleries," said Rep. John Yarmuth (D) of Kentucky.
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