Pelosi: Gov't Spending Problem 'Almost a False Argument'

To say that the federal government has a spending problem is "almost a false argument," House Minority Leader Nancy Pelosi (D-Calif.)

"With all due respect to the speaker, what he said is not the gospel truth," Pelosi responded, because, "a lot of the spending increases came during the Bush administration."

The two wars, the prescription drug benefit added to Medicare and the Bush era tax cuts did not increase revenue to the federal government, Pelosi complained.

The way to reduce deficit spending, Pelosi explained, is through economic growth and the way to get economic growth is through increased government spending. The biggest source of government revenue, she added, is government spending on education.

"Nothing brings more money to the Treasury of the United States than investment in education of the American people."

Since some spending leads to greater government revenue, Pelosi continued, "it is almost a false argument to say we have a spending problem."

"How do we get growth with jobs? [Government spending is] where the revenue comes from. You don't get it by cutting down your seed corn or cutting in education, cutting back on investments in science, and National Institutes of Health, food safety, you name it," Pelosi said.

Pelosi agreed that deficit spending is a problem and said that the yearly deficits, which have hovered around $1 trillion per year since President Barack Obama took office, and the national debt, now at over $16.5 trillion, "are at immoral levels."

To increase government revenue, Pelosi argued for eliminating certain tax loopholes, such as those for "big oil."

Government spending, taxes and the national debt will consume a large portion of the debate in Congress over the next few months. Congress will write a new budget, decide how to fund the government for the rest of this fiscal year and next fiscal year, and agree (or not) on a replacement for the sequester (a set of automatic spending cuts set to begin in March.)

Pelosi's comment highlights a key difference between Republicans and Democrats on what should be done about budget deficits. Republicans argue for cutting government spending and no tax increases, while Democrats argue for increased government spending and higher taxes, to lower budget deficits.

Obama made a comment similar to Pelosi's during his negotiations with Boehner last November. Boehner recalled the president repeatedly telling him "we don't have a spending problem." Boehner disagreed with Obama so often on that point, Obama became irritated and told him, "I'm getting tired of hearing you say that," according to Boehner.

Republicans also complain that when they agree to both spending cuts and tax increases, the tax increases usually occur but the spending cuts do not. Indeed, last week The Washington Post reported that a large portion of the spending cuts that were agreed to in April, 2011, were not real spending cuts but accounting gimmicks. The Census Bureau was credited, for instance, with cutting $6 billion for not doing a census in 2011, which it was not going to do anyway.

On CNN's "Fareed Zakaria GPS" Sunday, liberal economist Paul Krugman suggested that Obama offer Republicans "vague spending cuts" and "real revenue sources" to avoid the sequester. He also lambasted conservatives for misrepresenting what liberals want. Their belief that liberals want bigger government is "imaginary," he said.