Obama Aims to Cut Federal Deficit in Half

WASHINGTON (Feb. 22) - President Barack Obama has committed hundreds of billions of dollars to help revive the economy and is working on a plan to cut the federal deficit in half by the end of his first term.

Obama will touch on his efforts to restore fiscal discipline at a White House fiscal policy summit on Monday and in an address to Congress on Tuesday. On Thursday he plans to send at least a summary of his first budget request to Capitol Hill. The bottom line, said an administration official Saturday, is to halve the federal deficit to $533 billion by the time his first term ends in 2013. He inherited a deficit of about $1.3 trillion from former President George W. Bush.

The official, speaking on condition of anonymity because the president has not yet released his budget for the fiscal year 2010, which begins Oct. 1, said the deficit will be shrunk by scaling back Iraq war spending, ending the temporary tax breaks enacted by the Bush administration for those making $250,000 or more a year, and streamlining government.

"We can't generate sustained growth without getting our deficits under control," Obama said in his weekly radio and Internet address that seemed to preview his intentions. He said his budget will be "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."

Republicans were not convinced. They said Obama's plan would hurt small businesses, including many filing taxes as individuals and possibly facing higher taxes under his plan.

"I don't think raising taxes is a great idea," Senate Republican leader Mitch McConnell of Kentucky told CNN's "State of the Union" on Sunday. "And when our good friends on the other side of the aisle say raising the taxes on the wealthy, what they're really talking about is small business."

Obama's budget also is expected to take steps toward his campaign promises of establishing universal health care and lessening the country's reliance on foreign oil.

Obama has pledged to make deficit reduction a priority both as a candidate and a president. But he also has said economic recovery must come first.

Last week, he signed into law the $787 billion stimulus measure that is meant to create jobs but certainly will add to the nation's skyrocketing national debt. He also is implementing the $700 billion financial sector rescue passed on Bush's watch; about $75 billion of which is being used toward Obama's plan to help homeowners facing foreclosure.