Senior Republicans Call for 'Hard Choices' From Obama
By Scott Wilson
Republican congressional leaders today called President Obama's budget proposal wasteful and his plan to rescue the nation's ailing banks unrealistic, and they urged the administration to "make hard choices," even if that meant allowing some major financial institutions to fail.
White House officials responded that correcting a dismal economy would take time. They urged patience as the administration takes up health-care reform, reviews an inefficient government procurement process, and awaits the effects of the just-enacted stimulus package's new public spending and tax cuts.
As Congress prepares to consider a $3.6 trillion spending plan, the contours of the debate over economic priorities appeared in sharp focus on the Sunday morning talk shows.
Obama's political proxies echoed a point the president emphasized last week, alleging that this White House inherited the country's dire financial condition from the Bush administration.
"Fundamentally, the economy is weak," Peter Orszag, Obama's budget director, said on CBS's "Face the Nation." "Job losses began in January of 2008. The stock market started declining October 2007. This has been, you know, eight years in the making, and again, it's going to take some time to work our way out of it."
Sen. Evan Bayh (D-Ind.), appearing on ABC's "This Week," said, "The depth of domestic problems was worse than expected. The global nature of the recession, with Europe and China now struggling, was worse than we expected."
"But," Bayh said, "let's give this a little time."
Unhappy over the size and shape of the stimulus package, Republican leaders have turned their attention to the administration's expensive bank rescue plan, criticized by many as too vague on details, such as how it would account for the problem assets burdening many financial institutions.
In recent months, the government has given direct aid to and taken large stakes in major financial institutions, with little evidence that the capital infusion has improved things.
Several Republican senators warned that the Obama administration, by trying to keep alive banks with potentially untenable balance sheets, is following the path Japan took in the 1990s, which many believe prolonged its debilitating recession.
"They've got to close some big banks," Sen. Richard Shelby (Ala.), the ranking Republican on the Senate banking committee, said on ABC.
"I don't want to nationalize them. I think we need to close them," he continued. "If they're dead, they ought to be buried. We bury the small banks; we've got to bury some big ones and send a strong message to the market."
On "Fox News Sunday," Sen. John McCain (R-Ariz) leveled a similar charge at the White House.
"I don't think they made the hard decision, and that is to let these banks fail, to let General Motors go into bankruptcy and re- emerge and reorganize with new contracts with labor and others," McCain said. "I don't think they've made the tough decisions. Some of these banks have to fail."
McCain also accused Obama of reneging on his pledge to reform the budget process, an issue in their presidential contest last year. He challenged Obama to veto the spending bill that contains roughly 8,000 so-called earmarks, projects requested by individual lawmakers usually to benefit their states or districts.
Obama administration officials have argued that the earmarks, which in McCain's estimate add up to $8 billion, have been carried over from last year's budget process. On CNN's "State of the Union," Orszag said, "This is like your relief pitcher coming in into the ninth inning and wanting to redo the whole game."
"It is not last year's business," McCain said on Fox. "It's money that's going to be spent as soon as the president signs the bill. And he shouldn't sign it. He should veto it and send it right back."
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