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Spending Spike Needed Now, Geithner Says

President Barack Obama's ambitious new budget faced bipartisan skepticism Thursday as key senators questioned the administration's long-term budget outlook and the deficits it envisions rising in the middle of the next decade.

Treasury Secretary Timothy Geithner defended it in testimony before the Senate Budget Committee, saying current increases in spending are short term and will have to be substantially reduced to get the country back into fiscal shape.

Still, the Democratic chairman of the Budget Committee, Kent Conrad of North Dakota, called the track of future deficits "unsustainable" and singled out Obama's proposal for spending $634 billion on health care over the next 10 years.

"Some of us have a real pause about the notion of putting substantially more money into the health care system when we've already have a bloated system," he said.

Sen. Judd Gregg, R-N.H., complained that the budget does not tackle rising entitlement spending on Social Security and Medicare. Geithner countered that the administration intends to confront rising health care costs with broad reforms that will significantly reduce Medicare spending.

Geithner is at the center of the president's economic policy, advocating both it's budget proposals and it's tax policies, but also a $700 billion rescue program for the financial sector.

Geithner was facing questions on all those fronts Thursday. By the end of the day, he was scheduled to leave for talks Friday and Saturday in London with finance officials from the Group of 20 nations.

Sen. Jeff Sessions, R-Al., dismissed Geithner's defense of the budget as "campaign mode."

"This budget is based on more taxes, more spending and more debt," Sessions said.

Meanwhile, the White House was immersed in a conference with state officials gathered to hear details about how the $787 billion in stimulus money will be disbursed.

"You've got this wonderful mission," said Mr. Obama. "And it's rare where you get your chance to put your shoulder to the wheel of history and put it in a better direction." (Read more on the conference)

The president appeared shortly after Vice President Joe Biden opened the meeting by warning states that if they misuse money from the stimulus package, they shouldn't expect more help from the federal government for a long time.

"If we don't get this right, folks, this is the end of the ability to convince Congress that anything should go to the states," Biden said.

The conference was billed as a way for state officials to propose and discuss ideas for spending the money, as well as to hear from several Cabinet secretaries and other administration officials.

"We are all on the line," Biden said. "The American people are looking for us to get this right. And you need to do that."

Obama told the state officials they were "at the front lines of what is probably the most important task that we have in this country over the next couple of years and that is getting the economy going again."

He said that as bad as economic conditions are, the work of the federal, state and local governments now carries with it the opportunity to "lay the foundation" for long-term growth.

"The American people are behind what we're doing, and they're going to be watching very carefully," he said. "What you do in the coming weeks, in the coming months, in the next couple years, is going to make a huge difference in whether the trust people have placed in us will be justified."

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