Obama Begins Doling Cash, Vows to Half Deficit
By Liz Sidoti — Associated Press Writer
WASHINGTON (AP) — Urging future restraint even as current spending soars, President Barack Obama pledged on Monday to dramatically slash the skyrocketing annual budget deficit as he started to dole out the record $787 billion economic stimulus package he signed last week.
"If we confront this crisis without also confronting the deficits that helped cause it we risk sinking into another crisis down the road," the president warned. "We cannot simply spend as we please and defer the consequences to the next budget, the next administration or the next generation."
Obama summoned allies, adversaries and outside experts to a special White House meeting on the nation's future financial health one week after triumphantly putting his signature on the gargantuan spending-and-tax-cut measure designed to stop the country's economic free fall and, ultimately, reverse the recession now months into its second year.
At the same time, federal regulators announced a revamped program to shore up the nation's banks that could give the government increasing ownership. It was the administration's latest attempt to bolster the severely weakened banking system without nationalizing any institutions, which the White House has said it does not intend to do.
Wall Street showed it was unimpressed by all the activity. The Dow Jones industrials were down more than 200 points just before the close of trading.
Obama goes before Congress and the nation Tuesday night to make the case for his budget plans, which the White House is to release in more detail on Thursday.
By the president's account, the administration inherited a $1.3 trillion deficit for the current fiscal year from the Bush administration — that's the figure Obama says he'll cut in half — and the stimulus law, coupled with rescue efforts for ailing automakers, the financial industry and beleaguered homeowners will raise this year's red ink to $1.5 trillion.
The administration hopes to trim the deficit by scaling back Iraq war spending, raising taxes on the wealthiest and streamlining government.
The president also said he would reinstitute a rule that the government pay as it goes, rather than racking up debt, and he sought to prepare people for "tough choices" in years to come. He called the long-term solvency of Social Security "the single most pressing fiscal challenge we face by far" and said reforming health care, including burgeoning entitlement programs, is a huge priority.
"We are paying the price for these deficits right now," Obama said, estimating the country spends $250 billion — one in every ten dollars of taxpayer money — in interest on the national debt. "I refuse to leave our children with a debt that they cannot repay. And that means taking responsibility right now, in this administration, for getting our spending under control," he said.
Earlier, Obama met with Republican and Democratic governors who are poised to benefit from his unprecedented emergency economic package. He told the chief executives, attending a three-day National Governors Association meeting in Washington, that he would begin distributing $15 billion to their states within two days to help them with Medicaid payments to the poor.
