Fiscal summit looks at how to halve deficit
WASHINGTON -- President Obama pledged Monday to target Medicare, farm subsidies, tax breaks for companies that ship jobs overseas and no-bid contracts in Iraq in the proposed 2010 budget he will unveil later this week.
Turning his attention from short-term economic stimulus to long-term fiscal discipline, Obama said he will urge Congress to require that any spending increases or tax cuts be paid for, rather than add to a $1.3 trillion deficit. That requirement was dropped as the Bush administration waged wars in Afghanistan and Iraq.
"If we want to spend, we'll have to find somewhere else to cut," Obama said.
The focus on budget-cutting came as the president and his economic advisers held an unusual "fiscal responsibility summit" at the White House with members of Congress and outside experts. Wall Street was unimpressed; the Dow Jones industrials dropped 251 points to their lowest close in nearly 12 years.
Even as he spoke soberly about deficit reduction, Obama told the nation's governors that he would begin distributing $15 billion in federal Medicaid funds to states this week. It's the first installment in the $787 billion economic stimulus package passed by Congress this month.
White House spokesman Robert Gibbs acknowledged some "push-pull" between increased spending to stimulate the economy and cutting spending to reduce the deficit, but said the best way to address the fiscal challenges is by "dealing with all of them at the same time."
Obama said the key to getting the deficit and nearly $11 trillion debt under control was to confront skyrocketing health care costs, both in Medicare and Medicaid as well as the private sector.
"Some of these things will ultimately involve some tough decisions and some tough votes," Obama said after three hours of discussions on health care, Social Security, taxes and other issues.
Challenged by Rep. Joe Barton, R-Texas, on the need to include Republicans in decision-making, the president warned the GOP minority in Congress not to be partisan.
No Republican House members and only three GOP senators voted for the stimulus plan.
"On the one hand, the majority has to be inclusive," Obama said, referring to Democratic leaders. "On the other hand, the minority has to be constructive."
Obama's budget on Thursday will call for cutting the federal deficit in half by 2013, when his term ends, partly by winding down the war in Iraq and raising taxes on the rich. That's the same goal President Bush had for years — but with the deficit soaring, it would remain above $500 billion, more than Bush ever faced.
"I refuse to leave our children with a debt that they cannot repay," Obama said.
Some of the issues cited during Monday's summit:
• Raising taxes. Sen. Jon Kyl, R-Ariz., warned that raising taxes on the wealthy in 2011, as Obama wants to do, could "kill this recovery we are trying to nurture along." Treasury Secretary Timothy Geithner responded, "We're going to be very careful."
• Reducing health care costs. While not agreeing on areas to cut, lawmakers said the public must be engaged, and certain words must not be used. "Socialized medicine," Obama quipped.
• Cutting Social Security. House Minority Leader John Boehner, R-Ohio, said benefits should be slashed for high-income seniors, and "we need to get serious about raising the retirement age."
• Reducing defense costs. Sen. John McCain, R-Ariz., Obama's opponent in last year's election, warned of procurement cost overruns for new presidential helicopters. A new fleet of 28 Marine One helicopters is slated to cost $11.2 billion.
Obama agreed: "The helicopter I have now seems perfectly adequate to me."