White House Pledges to Cut Deficit

Budget Director Reiterates Obama Promise to Reduce $1.4 Trillion Deficit to About $650 Billion by 2013

(AP)  President Barack Obama's top budget official promised Tuesday that the administration will try next year to wrestle the skyrocketing budget deficit under control to avoid higher interest rates and putting the health of the economy in jeopardy.

But it is an illustration of just how dire the nation's fiscal picture has become that a promise to cut the deficit in half by 2013 would produce a deficit about $200 billion higher than ever recorded by former President George W. Bush.

In a speech casting most of the blame for deficits averaging almost $1 trillion a year over the next decade - unless action is taken - on tax cuts and a Medicare drug benefit enacted during Bush's tenure, budget director Peter Orszag said the country faces a "serious" and "unsustainable" deficit problem.

Orszag said the administration would propose to cut the deficit inherited by Obama in half by 2013. Under White House budget office calculations, the deficit goal for 2013 is about $650 billion.

The speech was intended to send a signal that after the ongoing health care overhaul debate, the administration is determined to try to take on the deficit - hardly an easy task in a midterm election year.

CBSNews.com Special Report: Health Care

Orszag promised that Obama's budget submission next February will propose solutions to shrink the deficit to sustainable levels. At $650 billion, the 2013 deficit would equal almost 4 percent of the size of the economy, a major improvement from this year's $1.4 trillion deficit, which registered at 10 percent of gross domestic product.

"We are currently considering a number of proposals to put our country back on firm fiscal footing, and to cut the deficit we inherited in half by the end of the President's first term," Orszag said in remarks delivered at New York University.

Orszag, however, gave no details on the higher taxes or spending cuts that will be required to curb the deficit. Obama has endorsed most of Bush's tax cuts except for those only benefitting people making more than $250,000 a year.

But red ink reaching such levels would equal almost 4 percent of the size of the economy, which is greater than Orszag himself says is sustainable. Orszag said deficits in the range of 3 percent of GDP are sustainable.

"As the economy recovers, we must pull together - as a nation - and make the tough decisions to put our country back on a solid fiscal foundation," Orszag said. "None of this will be easy. After all, it took us years to dig ourselves into the current fiscal hole. And, it will take years for us to get out."

It's not clear how much sacrifice the administration will call for, but the steps are sure to be painful and are virtually certain to force Obama to abandon his promise to not raise taxes on families making less than $250,000.

Under the latest administration estimates, the government would run a $775 billion deficit in 2013, the target year for Orszag's promise, meaning that about $125 billion in spending cuts or tax increases would be needed to trim that year's deficit to the promised level.

In using 2009 deficit figures as the yardstick, the White House is starting from a deficit "baseline" inflated by about $250 billion in spending for the Wall St. bailout. The 2009 deficit also reached such heights because of the recession, which caused plummeting revenues and increases for benefit programs such as food stamps and unemployment compensation. Obama's stimulus bill added $185 billion.

Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a group that advocates for fiscal responsibility, praised the administration for sending a signal "that this is going to be a serious budget."

[Marc_1986]

We could easily make surplus money by drilling for oil in America now. Sure we won't see returns for 5 or 6 years, but I don't see us being completely off oil for at least another 25-30 years at the earliest. That would give us about 20 years to reap profits (or cut costs) off of our oil.

50 years from now, oil will be worth pennies compared to what it is today. We should start taking advantage of it now before it's too late.

[apachekid]

White House Pledges to Cut Deficit ..... Budget Director Reiterates Obama Promise to Reduce $1.4 Trillion Deficit to About $650 Billion by 2013.

(CBS/ AP) An early progress report on President Barack Obama's economic recovery plan overstates by thousands the number of jobs created or saved through the stimulus program, a mistake that White House officials promise will be corrected in future reports.

[apachekid]

White House Pledges to Cut Deficit ..... Budget Director Reiterates Obama Promise to Reduce $1.4 Trillion Deficit to About $650 Billion by 2013.


Is this the same administration that swear they've created 5,000 jobs so far and saved 10 million more????? with our bail out money. Now they're going to cut our 5 trillion dollar deficit by the year 2115 ???????? BY raising taxes of course. These People are so out of touch. It is time for them to go.

[apachekid]

White House Pledges to Cut Deficit ..... Budget Director Reiterates Obama Promise to Reduce $1.4 Trillion Deficit to About $650 Billion by 2013.


Is this the same administration that swear they've created 5,000 jobs so far and saved 10 million more????? with our bail out money. Now they're going cut our 5 trillion dollar deficit by the year 2115 ???????? raising taxes of course. These People are so out of touch. It is time for them to go.

[nojoy01]

There are only Two ways to "reduce the deficit". 1. Don't spend money you don't have. Simple concept but that would require the Federal Goverment to stop trying to be all things to all people. The loss of programs, entitlements, jobs, and vote buying would raise a howl from one end of the nation to the other. Not a good choice. 2. Raise taxes to pay for the programs, entitlements, jobs, and votes to be bought with a little extra to pay down the national debt. The howl that would cause when people saw their new paychecks, the new higher prices as producers struggled to maintain some sort of profit by raising prices to compensate for their new taxes, the lost jobs from companies going out of business, would equal or exceed the howl from cutting spending. Neither one of these choices are very appealing but, again, if you want to reduce the deficit, those are the only two things that will work. So we either have to pick one of the Two and suffer for awhile or do nothing, proceed as we are, borrowing money until no one will "loan" us any more. If we proceed until that happens, well, what happens then will make the great depression look like mild recession. I do not look forward to living in a bankrupt nation that owes the rest of the world money we can't pay.

[velma179]

Do you folks understand fiscal accounting?

They have to start now in order to submit a budget for the upcoming fiscal year (starting on Oct 1st 2010).


Of course, I have never seen it -- but my guess the US Budget isn't anything like my four page Excel spreadsheet.

Like Afghanistan, I want the government to do things correctly, more than doing them quickly.

Just my opinion.

(sheesh... we're not going to be completely out of debt anytime soon, unless some American discovers the secret to all things and gives the patent to the people...)

[inketolstoy]

"Orszag promised that Obama's budget submission next February will propose solutions to shrink the deficit to sustainable levels. At $650 billion, the 2013 deficit would equal almost 4 percent of the size of the economy"

Typical government promises, like your old uncle the drunk. I will stop drinking tomorrow. Now give me one more round. I'm tired of all these promises to fix spending problems after the next election. It is unsustainable. We need to fix it now. Maybe it is too late for 2009. Can't we start for 2010, at least by 2011? This is government urgency? I'll be sure to tell my banker I'm only going to spend ten thousand more than I make in 2020, but until then keep the blank checks coming. And I guess I'll go on the diet too, after Christmas 2040.

[Henri_Rochard]

I agree. Show me the money. Or rather, show me the actual deficit reduction.

[stn_sage]

I agree. I like the analogy of the 'old drunk uncle'!

It needs to be fixed...and it needs to be fixed NOW...NOT years from now!