W.H., Dems sound alarm on budget deficit

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By Jon Ward and Matthew Mosk THE WASHINGTON TIMES

"Director Orszag will discuss the state of the economy, our fiscal situation, and the administration's commitment to returning our nation to fiscal sustainability and building a new foundation for economic growth," said Ken Baer, a spokesman for the White House Office of Management and Budget.

As his top aides try to make clear that they recognize the problem, Mr. Obama has added an element to his speeches: He reminds the public that he "wasn't sworn in yet" when the nation's economy took a nosedive.

"You know, you got a little bit of revisionist history, a little selective memory going on, a little amnesia about how we got into this mess," he said at a rally Sunday in Newark, N.J. "This crisis that we are digging ourselves out of came about because of the same theories, the same lax regulation, the same trickle-down economics that the other guy's party has been peddling for years."

The White House notes that $5 trillion was added to the deficit by the 2003 enactment of a Medicare program that expanded access to prescription drugs, and by tax cuts in 2001 and 2003. Another $4 trillion was added, the administration says, by the bailouts required during the near-economic meltdown last autumn.

One significant political concern the White House has faced is polling that shows most Americans do not think the spending is helping them.

"Voters appear to be aware that the federal government is spending at unprecedented levels, but they believe the benefits are accruing mostly to large banks, Wall Street and manufacturing firms (which I'd wager really means General Motors), but not to average people," Mark Blumenthal, the editor and publisher of Pollster.com, wrote in a recent blog post.

The White House on Monday was noncommittal on one of the top political solutions under discussion: the creation of a bipartisan commission to study the problems of the long-term deficit and debt and to deliver recommendations to Congress for up or down votes that could not be amended.

White House press secretary Robert Gibbs said Monday that the idea will "be looked at."

On Capitol Hill, Democratic leaders already are responding to the issue.

The Senate's most recent version of an energy bill, for instance, gives away fewer free emissions permits than the House version in order to keep the legislation deficit neutral. Speaking to reporters Thursday evening, Sen. Barbara Boxer said: "Everyone wants deficit reduction. There isn't a person on my committee, on the Democratic side, that wants to have anything but a deficit-neutral bill."

Mr. Orszag is at work crafting the president's second budget, for fiscal 2011, which is set to be released in February. When Mr. Orszag released the budget for fiscal 2010 earlier this year, a centerpiece of the White House rollout was a commitment to cutting the deficit in half by the end of Mr. Obama's first four-year term.

The budget outlook has darkened considerably since that time. The 10-year forecast then was for a $7 trillion combined deficit, but that number has since gone up to $9 trillion, which is roughly two-thirds the size of the entire American economy's output for a current year.

The national debt, which passed the $10 trillion mark in September 2008, is now nearing the $12 trillion mark and is expected to go over that number before the end of the year.

Mr. Gibbs on Monday reiterated the pledge to cut the deficit in half from the $1.3 trillion the White House says it inherited in fiscal 2009 from the Bush administration down to roughly $533 billion by the end of fiscal 2013.

But Brian Riedl, a budget analyst at the conservative Heritage Foundation, said that that promise is little more than a ploy that drafts behind three naturally occurring events: the end of the recession, the end of the war in Iraq, and the winding-down of spending $787 billion in stimulus money.

Those dynamics by themselves would have cut the deficit in half, Mr. Riedl said. In addition, the Congressional Budget Office estimates that the deficit will spike after Mr. Obama's first term to higher than $1 trillion again.

"The better way to measure is before the recession we had deficits of $360 billion. One would hope after the recession we'd go back to that level," Mr. Riedl said. "How come the post-recession deficits are going to be three times higher than the pre-recession deficits?"