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Source: Reuters -
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President Barack Obama pledged to cut the ballooning US budget
deficit by half in the next four years and said the country would
face another economic crisis if it did not address its debt
problems soon.
Obama, whose month-old administration has pushed through a $1.5
trillion economic stimulus package to try to jolt the country out
of recession, said the need for spending now did not mean US budget
problems could be put off.
"If we confront this crisis without also confronting the deficits
that helped cause it, we risk sinking into another crisis down the
road," Obama told participants at the opening of a White House
summit on fiscal responsibility.
Obama, who rolls out his first budget on Thursday, emphasized he
inherited a $2.5 trillion deficit when he took office and said
interest payments in 2008 alone hit $490 billion - three times more
than the country spent on education.
"We cannot and will not sustain deficits like these without end,"
he said.
"Today I'm pledging to cut the deficit we inherited by half by
the end of my first term in office."
Obama, a Democrat, took over from former Republican President
George Bush last month.
His current term in office goes through January 2013.
The president said health care reform - one of his key promises
during the 2008 campaign - would be crucial to bolstering the
country's fiscal position.
He announced a health care summit would take place next week and
said Republican and Democratic participants on Monday agreed action
on the issue was needed this year.
In another potential budget cut, Obama cast doubt over an expensive
project by Lockheed Martin Corp to replace the presidential
helicopter.
"The helicopter I have now seems perfectly adequate to me, he
said."
Reassure markets, focus on health care
Obama needs to reassure markets he has a responsible attitude
toward the deficit and wants to show fiscal discipline that will
keep interest rates down and the economy in shape.
The Dow Jones industrial average and S&P 500 fell to 12-year
lows on Monday as investors dumped shares on uncertainty about the
US government's ability to stabilize the financial system.
White House spokesman Robert Gibbs sought to play down fears of
bank nationalizations, saying Obama favoured leaving banks in
private investors' hands.
"The president believes that a privately held banking system
regulated by the federal government is the best way to go," Gibbs
told a regular briefing.
Although his administration has focused its energies on pulling the
United States out of recession and addressing the financial sector
problems that sparked it, Obama also wants to make good on campaign
promises such as extending health care benefits to uninsured
Americans and fighting climate change.
His budget director, Peter Orszag, said reducing healthcare costs
was critical to assuaging US economic ills.
"The single most important thing we can do to put the nation back
on a sustainable (fiscal) course is slow healthcare costs," he
said.
Vice President Joe Biden underscored Obama's push to boost the
country's fiscal position, saying the economic crisis should not
overshadow necessary fiscal changes.
"We want to be clear: as we take the steps that we must to get
through the crisis that we're in now, we will not lose sight of the
long-term," Biden told the same gathering.
Obama invited lawmakers from both parties, business people, union
leaders and budget experts to Monday's fiscal summit to discuss
ways to deal with long-term issues including healthcare,
entitlement programs and federal contracting in areas such as
defence.
Prominent Republicans including House of Representatives Minority
Leader John Boehner and Arizona Senator John McCain, Obama's rival
in last year's presidential campaign, attended.
Boehner and other Republicans, who have lambasted the president's
stimulus package, called for a federal spending freeze.
"President Obama has called for both parties to get serious about
fiscal responsibility," Boehner said in a statement.
"With our budget deficit potentially reaching $5.8 trillion this
year, Republicans stand ready to work with him, and we believe we
should start right now."
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