Obama pledges to cut deficit in half

(AP) - Calling for fiscal restraint even while federal spending soars, President Barack Obama pledged to dramatically slash the annual budget deficit and announced $15 billion in Medicaid money to states from his $787 billion economic stimulus package.

"We cannot and will not sustain deficits like these without end. ... We cannot simply spend as we please and defer the consequences," the president said Monday.

He said the government must both confront the current economic crisis and address skyrocketing deficits or "we risk sinking into another crisis down the road."

"I refuse to leave our children with a debt they cannot repay," Obama declared.

The president summoned allies, adversaries and outside experts to a White House summit to address the nation's future financial health one week after signing into law the gargantuan stimulus measure designed to stop the country's economic free fall and, ultimately, reverse the recession now months into its second year.

By Obama's own account, the new law will add to this fiscal year's deficit, which the administration projects will be $1.5 trillion. Obama said he will at least cut that in half by the end of his first term 2013.

Earlier, he met with Republican and Democratic governors who are poised to benefit from his unprecedented emergency spending-and-tax cut measure.

The recession has had a huge impact on state budgets, and one area public officials are struggling with is in meeting costs in the Medicaid program for the poor. The program is underwritten jointly by states and the federal government.

Speaking to state chief executives at the close of the three-day winter session of the National Governors Association, Obama also addressed concerns about the stimulus plan raised by a handful of Republican governors who have called the plan overly large and wasteful.

"I refuse to leave our children with a debt they cannot repay."

At issue is a proposed expansion of state unemployment benefits for part-time workers and others who where previously ineligible to receive the funding.

Some GOP governors - several with an eye on the 2012 presidential contest including Mark Sanford of South Carolina and Bobby Jindal of Louisiana - say they may not accept that funding because it will require a tax increase on employers once the stimulus money runs out.

Obama addressed that critique directly, and warned against allowing political considerations to cloud a discussion of the stimulus program.

"I think there are some very legitimate concerns on the part of some about the sustainability of expanding unemployment insurance. What hasn't been noted is that that is $7 billion of a $787 billion program. And it's not even the majority of the expansion of unemployment insurance," Obama said.

He added, "If we agree on 90 percent of this stuff, and we're spending all our time on television arguing about 1, 2, 3 percent of the spending in this thing, and somehow it's being characterized in broad brush as wasteful spending, that starts sounding more like politics. And that's what right now we don't have time to do."

Obama also stressed the need for accountability and transparency in how the governors spend the stimulus funds.

He named Earl Devaney, a former Secret Service agent who helped expose lobbyists' corruption at the Interior Department, to head the new Recovery Act Transparency and Accountability Board. Vice President Joe Biden also will be given a role coordinating oversight of stimulus spending, Obama said.

Obama created the board as an at-large body to oversee how the government spends the $787 billion stimulus package.

(Copyright 2009 by The Associated Press. All Rights Reserved.)

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