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Battle Lines Drawn for Budget Summit

By David Clarke, CQ Staff


February 20, 2009 -- As President Obama gets set to hold what is being called a "fiscal responsibility summit" on Feb. 23, battle lines are being drawn over how the new administration should address long-term budget challenges.

In one corner are fiscal hawks who believe the aging of the population and the rising cost of health care require aggressive action to deal with the long-term costs of Social Security, Medicare, and Medicaid. They also advocate an overhaul of the tax system because the rising tide of debt will soon deal another blow to the economy.

On the opposite side are liberals concerned that a focus on the major entitlement programs will lead to cuts in the social safety net when the real issue is not the efficacy of the government-run programs but the rising cost of health care across the economy.

While an agenda for the White House event has not been released, administration officials said it will be an attempt to start a dialogue about the long-term debt and budget shortfalls facing the government and will include breakout sessions on different issues.

The White House is expected to release more details about the guest list and agenda Friday, but the offices of House Speaker Nancy Pelosi, D-Calif., and Majority Leader Steny H. Hoyer, D-Md., said the two leaders plan to attend. Senate Majority leader Harry Reid, D-Nev., will not because he will be at the National Clean Energy Project meeting at the Newseum on that day.

At a time when the government is spending unprecedented amounts of money to try to jump start the economy and ensure that the financial and housing sectors stabilize, Obama has been making efforts to show he also is concerned about the growing deficits and debt, in part as a way to quiet the concerns of moderates in his own party.

There is a similar sensitivity among Hill leaders. Pelosi wrote to House committee chairmen Thursday urging them to hold hearings on the budgets of programs and departments under their jurisdiction.

The challenge for Obama is that if he wants to begin addressing the fiscal problems confronting the government, he will face the enormous task of building a political coalition that would allow him to address some of the thorniest political issues facing Washington: making changes to Social Security and Medicare.

Liberal groups are concerned that Obama's recent overtures to deficit hawks could put in motion efforts to make cuts to their favored programs.

"The concern is that in an effort to get bipartisan consensus, the White House could get locked into a path of austerity as the way to achieve long-term budget balance," said Roger Hickey, co-director of the Campaign for America's Future, a liberal group that organized a conference call on the subject Thursday. "The concern is that as soon as the economy is in recovery or declared in recovery, the White House and the Congress could start cutting—cutting entitlements at a time when people are still losing health care and retirement savings; cutting public investment at a time when our fragile economy has no other engine of growth."

Hickey and others on the call argued that Social Security is not in trouble because it will be able to meet its obligations through 2049, according to the Congressional Budget Office, and that the problem with Medicare and Medicaid is the growing cost of health care in general, not anything unique to these two programs.

"We don't have an entitlement crisis, we have a health care crises," said Dean Baker, an economist at the liberal Center for Economic and Policy Research.

Meanwhile, budget hawk groups made clear they want the summit to lead to legislation creating a commission or task force to propose policy prescriptions for long-term budget shortfalls facing the government, which Congress would then have to vote on.

"Tackling these problems will require a degree of sacrifice impossible under the existing policy process, which discourages bipartisan compromise and encourages procrastination and obstructionism," said a statement issued by 14 members of the Brookings-Heritage Fiscal Seminar. The group includes prominent Washington budget wonks from the conservative side of the spectrum, as well as moderate Democrats such as former Clinton Budget Director Alice M. Rivlin.

Baker argued the commission idea was undemocratic.

"They have no evidence that the system is broke," he said. "What they have is a system, a democratic system, that is not giving them the result they want."

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