- The Washington Times - Monday, February 23, 2009

President Obama and his advisers sounded an alarm Monday on the ballooning $1.3 trillion federal deficit, saying that it would get worse and offering tough talk with a promise the administration will cut the deficit in half by reverting to pay-as-you-go rules.

“The pay-go approach is based on a very simple concept. You don’t spend what you don’t have. So if we want to spend, we’ll need to find somewhere else to cut,” the president said at the White House Fiscal Responsibility Summit. “This is the rule that families across this country follow every single day, and there’s no reason why their government shouldn’t do the same.”

Mr. Obama said pay-go budgeting helped the United States end the 1990s with a $236 billion surplus under former President Bill Clinton. He didn’t mention former President George W. Bush but his criticism was directed at the president and the Republican party.

“The repeated failure to act, as our economy spiraled deeper into crisis, the casual dishonesty of hiding irresponsible spending, with clever accounting tricks, the costly overruns, the fraud and abuse, the endless excuses; this is exactly what the American people rejected when they went to the polls,” Mr. Obama said.

The president and his aides acknowledged the $787 billion economic stimulus is adding to the nation’s debt but said his budget will take that into account.

“We cannot and will not sustain deficits like these without end. Contrary to the prevailing wisdom in Washington these past few years, we cannot simply spend as we please and defer the consequences to the next budget, the next administration or the next generation,” he said.

Speaking to members of both parties and a group that included both deficit hawks and labor leaders, Mr. Obama outlined several areas of savings the administration already has identified, including $17.5 million in savings from a new financial management system at the Department of Agriculture, which also saved $1.3 million per year for moving training programs online.

Mr. Obama blasted the budgeting process of the past decades as a deceptive and dishonest “series of accounting tricks” that left out budgeting for the war in Iraq and natural disasters.

“We do ourselves no favors by hiding the truth about what we spend. In order to address our fiscal crisis, we’re going to have to be candid about its scope,” he said.

The president said the fiscal year 2010 budget blueprint he will deliver to Congress Thursday will look ahead 10 years and offer “a full and honest accounting” of spending and the expected deficit.

Among the cuts he outlined: ending payments to agribusiness, eliminating no-bid contracts in Iraq, stopping Medicare fraud and ending tax breaks for companies that ship jobs overseas, a regular campaign trail promise that Mr. Obama hasn’t mentioned recently.

The president and his aides suggested the best way to get to fiscal stability is to pass health care reform, saying that it may cost money in the short term but will have the strongest long term financial benefit.

Vice President Joseph R. Biden Jr. told the group they must not lose site of long-term goals, and especially health care.

“The nation is on a fiscally unsustainable course,” said Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities, at the start of the summit. “The path to fiscal responsibility must run directly through health care.”

Economist Mark Zandi, an adviser to Mr. Obama’s Republican presidential rival Sen. John McCain, also spoke at the summit.

Mr. McCain was present for the summit, along with Republican Sen. Judd Gregg of New Hampshire, who withdrew himself from consideration to be Mr. Obama’s Commerce Secretary earlier this month.

Earlier when addressing the National Governors Association, Mr. Obama announced he was appointing Mr. Biden and a former inspector general to oversee economic stimulus spending, also warning the nation’s governors gathered in Washington that it “sounds like politics” when they argue over small portions of his $787 billion plan.

Mr. Obama said Mr. Biden’s job of working with governors and mayors to “keep things on track” as they spend the money proves “how important it is for our country” and “a willingness to get this right.”

The president also named Earl Devaney, a former Secret Service agent, as chairman of the newly formed Recovery Act Transparency and Accountability Recovery Board. Mr. Devaney was inspector general at the Department of the Interior and was key to uncovering the Jack Abramoff political-influence scandal.

“This is not a blank check,” Mr. Obama said. “The American people are watching, they need this plan to work, and they expect to see their money spent with its intended purpose.” Mr. Obama also offered remarks pointed at Republican critics of his plan who appeared on cable news shows over the weekend to blast it as wasteful.

“From my perspective, keeping teachers in the classrooms is not wasteful,” he said. “Most of the things that have been the topic of argument amount to a fraction of the overall stimulus package … [that] sometimes gets lost in the cable chatter.”

Mr. Obama used as an example the $7 billion in unemployment insurance funds that several Republican governors said they will refuse.

“If we agree on 90 percent of the stuff and we’re spending all our time on television arguing about 1, 2, 3 percent of this thing … that’s sounding more like politics, and that’s what we don’t have time to do,” he said. “What I don’t want us to do is to just get caught up in the same old stuff that inhibits us from acting effectively and in concert.”

Mr. Obama said while it has been a “healthy” debate that keeps him on his toes, there will be “ample time for campaigns down the road.”

“I just want us to not lose perspective,” he said. Mr. Obama also applauded Democratic Govs. Tim Kaine of Virginia, Deval Patrick of Massachusetts and Ken Strickland of Ohio for creating their own versions of spending accountability Web sites for taxpayers to track the money at the local level.

The president said that as part of the stimulus plan, their states will start receiving on Wednesday more than $15 billion in federal funds to plug gaps in Medicare funding.

“By the time most of you get home, money will be waiting to help 20 million vulnerable Americans in your states keep their health-care coverage,” he said.

Republican Gov. Jim Douglas of Vermont noted when introducing the president there are “obviously some differences of opinion” in the room, even though he supported the stimulus plan.

But “there are so many common goals that we share that I’m confident we can find some common ground to move our country forward,” he said. “Every governor I know shares the goal of ensuring the fiscal integrity of the United States.”

Mr. Biden, not known for being brief, kept his remarks to the point Monday, saying he had a “simple message.”

“Let’s get to work; let’s make this work,” he said.

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