President Obama vows to slash deficit in half

(Peter Howe, NECN) - Even as President Obama met with U.S. governors promising them a quick infusion of stimulus money, the president also promised Monday to cut the federal deficit by more than half by 2013. "Today I am pledging to cut the deficit we inherited by half by the end of my first term in office," Obama said before an afternoon summit meeting at the White House. After a first month that's been all about spending spending and more spending in the name of economic stimulus, Obama's vowing he'll be a deficit hawk: "I refuse to leave our children with a debt that they cannot repay, and that means taking responsibility right now in this administration for getting our spending under control." The Obama administration estimates it's inherited a $1.3 trillion deficit for this year from George W. Bush. Obama is pledging to cut that by more than half, to $533 billion in 2013. That would still be higher than most years of the 1990's and 2000's -- in fact, higher than all but two years during the 1992-2007 period, according to the National Bureau of Economic Research. His plans to close the budget gap including pulling troops from Iraq, ending Bush tax cuts for those making over $250,000 annually, and promoting honest, rigorous budgeting. "If we want to spend, we'll need to find somewhere else to cut," Obama said. "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." Mark Zandi, chief economist of Moody's economy.com, warned at the White House conference it's a huge challenge: "The current economic downturn is on track to be the longest, most severe and broadest based recession since the great depression of the 1930s." Jeffrey A. Frankel, Harpel Professor of Capital Formation and Growth at Harvard University's John F. Kennedy School of Government, served on the White House council of economic advisors for President Bill Clinton from 1996-99. Frankel calls Obama's goal realistic. "This is about the right goal to cut it in half,' Frankel said. "Anything more aggressive than that isn't really possible. You'd have to raise taxes a lot. Or however you did it, you'd kill the recovery before it started.'' But finally getting this country back to balanced budgets like it last saw with any regularity in the late 1990s? "If you're talking about the long term beyond just the next four years, there's no question that the huge issue is the entitlement programs [like] Social Security" and Medicaid and Medicare. On reducing deficits driven by Social Security, Frankel said it's clear that it will require some mix of smaller growth in Social Security payouts, and bigger taxes to fund the program, and making people wait later than age 65 to collect. "Everybody in Washington is very reluctant to say exactly what the solution to Social Security is, because even though it isn't that hard, it's extremely unpopular politically'' to talk about any changes to Social Security. The president's deficit-reduction salon at the White House ended with an extraordinary 40-minute question and answer session, with the first question -- about military cost overruns -- coming from his campaign rival Senator John McCain. Several New England senators participated in the White House discussion Monday: Republicans Susan Collins and Olympia J. Snowe of Maine and Judd Gregg of New Hampshire; and Democrat Christopher J. Dodd and Independent Joseph I. Lieberman of Connecticut.