Sen. Gregg: Obama budget will bankrupt U.S.

WASHINGTON — New Hampshire Sen. Judd Gregg said Sunday that President Barack Obama’s massive budget proposal will bankrupt the country and is doomed to failure.

Gregg made the comments during an appearance Sunday on CNN’s “State of the Union.” He said he has no regrets in withdrawing his nomination to become commerce secretary. He pulled out after deciding he could not fully back the administration’s economic policies.

“The practical implications of this is bankruptcy for the United States. There’s no other way around it,” Gregg said. “If we maintain the proposals which are in this budget over the 10-year period that this budget covers, this country will go bankrupt. People will not buy our debt; our dollar will become devalued.”

The Republican senator said Obama’s spending plan in the midst of a prolonged recession would leave the next generation with a country too expensive to live in.

The White House said Sunday that using tax law to pry bonuses from bailed-out company executives is “a dangerous way to go.”

While acknowledging public outrage over $165 million in bonuses paid by a financial firm that had turned to taxpayers for aid, the administration’s economic advisers said President Barack Obama wouldn’t “govern out of anger.”

In the latest campaign to sway a skeptical public that Washington could right an ailing economy and reassure Wall Street that better days were possible, the advisers expressed optimism that Obama’s policies would work.

White House Council of Economic Advisers chairwoman Christina Romer defended the stimulus package and financial rescue plan. “I have every expectation, as do private forecasters, that we will bottom out this year and actually be growing again by the end of the year,” she said.

Before that, though, Obama’s economic team has to deal with a House-backed plan that would tax American International Group Inc. executives 90 percent of bonuses paid this year. The president, they added, didn’t embrace the populist legislation.

Rep. Barney Frank, the Massachusetts Democrat who heads the powerful banking committee, supported the legislation but said Washington should consider more steps, including suing AIG to recoup the money. The government has an 80 percent equity stake in the financial giant, a position Frank said should be used “to assert our rights.”

The White House and Senate Democrats, including Senate banking chairman Kent Conrad, urged restraint, instead hoping executives would voluntarily return their bonuses.

Vice President Joe Biden’s economic adviser, Jared Bernstein, criticized the AIG tax plan as it headed to the Senate, where it was likely to be modified with bipartisan backing.

“I think the president would be concerned that this bill may have some problems in going too far — the House bill may go too far in terms of some — some legal issues, constitutional validity, using the tax code to surgically punish a small group,” Bernstein said. “That may be a dangerous way to go.”

Not going anywhere: Treasury Secretary Timothy Geithner.

Obama defended his embattled treasury secretary in an interview with CBS’ “60 Minutes,” saying he still has faith in Geithner and that if Geithner offered to resign, the answer would be, “Sorry buddy, you’ve still got the job.”

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