Obama Pledges to Slash Federal Budget

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President Obama is vowing to cut the trillion dollar federal deficit in half by the end of his first term.

The promise comes as the government prepares to dole out billions of dollars in taxpayer money to stimulate the economy.  It's a tall order, but one Obama says must be addressed.

A Meeting on Fiscal Responsiblity

The room was filled with policy makers, economic analysts and experts from every political hue at Monday's White Hous fiscal responsibility summit, but the warning call was one and the same.

"The nation is on an unsustainable fiscal course and to be responsible we must begin the process of fiscal reform now," Peter Orszag, Director of the White House Office of Management and Budget, said.

And with a $1.3 trillion deficit and growing, spending must be put in check.

"That's why today I'm pledging to cut the deficit we inherited in half by the end of my first term in office," Obama said. "Now, this will not be easy... but I refuse to leave our children with a debt they cannot repay and that means taking responsibility right now in this administration by getting our spending under control."

Returning to Previous Policy

President Obama said he'll do that with what he calls "honest accounting," which would allocate for disasters and the war in the official budget, something he says his predecessor didn't do.

Obama also announced a return to "pay-go" spending.

"The pay-go approach is based on a very simple concept. You don't spend what you don't have," Obama explained. "This is the rule families across this country follow every single day. And there's no reason why their government shouldn't do the same."

Obama says he'll cut the nation's projected deficit in half by the end of his first term.

He plans to do that, in part, by letting the Bush tax cuts on wealthy Americans expire at the end of 2010, and by slowing healthcare costs by reforming Medicare and Medicaid.

Reducing Funding in Iraq

The president also plans to reduce the amount of money that goes to fund the Iraq war.

"This is a budget estimate, and the estimate is based on things going well in Iraq," said Tony Cordesman of the Center for Strategic International Studies.

After hosting a summit on the need to cut the nation's deficit Monday afternoon, Obama will outline his plans on how the government is using taxpayer money in a joint address to Congress, Tuesday.

He will send his first budget to Capitol Hill, Thursday.

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