President Obama is reaching across party lines Monday to host a bipartisan "fiscal responsibility summit" as the government tackles the seemingly contradictory tasks of controlling a soaring federal deficit while spending the country’s way out of a deep recession.
The summit is intended to be the starting point for a “frank discussion” on the long-term fiscal problems facing the country, White House press secretary Robert Gibbs said Friday. “The summit is the first step in the process of beginning to lay out how we can bring down the deficit and put our economy back on sound financial footing. It opens a week that will be focused on the attention of many fiscal issues,” Gibbs added. Economic and budgetary issues are expected to dominate Obama’s address to a joint session of Congress on Tuesday night. The president is scheduled to officially unveil his fiscal year 2010 budget Thursday. Roughly 130 people have been invited to the unusual White House conference, including the Democratic and Republican leadership in Congress, heads of key congressional committees, and a range of business, academic, financial and labor leaders. Watch more about the summit and the deficit » Summit participants are expected to separate into small groups to discuss the country’s more specific fiscal challenges, including taxes, health care, Social Security and the budget process. Obama is seeking to cut the federal deficit in half by the end of his first term, an administration official told CNN Saturday. The official said most of the savings would come from spending less on the war in Iraq, raising taxes on those who make more than $250,000 a year and streamlining government.
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The president’s budget proposal projects that the estimated $1.3 trillion deficit he inherited from the Bush administration will be halved to $533 billion by 2013, or from 9.2 percent of the gross domestic product to 3 percent, the official said. In his weekly address Saturday, Obama pledged to “release a budget that’s sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don’t, and restoring fiscal discipline.” Obama’s plans to cut the deficit may be complicated by the continuing economic downturn, which threatens to reduce tax revenues. A group of leading economists is now forecasting a far deeper and more painful recession in the first half of the year, with a solid recovery not taking hold until 2010.
The economy is likely to decline at a 5 percent rate in the first quarter, even sharper than the 3.8 percent drop recorded in the fourth quarter of last year, according to a survey of 47 top forecasters from the National Association for Business Economics. And according to estimates by economists Alan Auerbach of the University of California at Berkeley and William Gale of the Brookings Institution, the deficit — largely because of the recession and the new economic stimulus effort — will average at least $1 trillion per year for the next 10 years, even if the stimulus is limited to two years and the jobs picture improves dramatically.