Politics & Government

How much government spending is ahead? Stay tuned

President Obama will have a busy week.
President Obama will have a busy week. Ron Edmonds / AP

WASHINGTON — The Obama administration will devote much of next week to explaining for the first time how it wants to spend trillions of government dollars, but its plans will confront daunting deficits, skeptical experts and lawmakers who are eager to get their own favorite projects funded.

The $787 billion stimulus bill that President Barack Obama signed Tuesday was a warm-up act, an emergency provision aimed at stimulating a moribund economy.

Starting Monday, Obama will take a longer view, as he hosts a three- to four-hour "fiscal summit" at the White House that will feature about 100 lawmakers, academic experts and others discussing a wide range of topics including the outlook for Social Security, Medicare and Medicaid.

"This fiscal summit is to start that conversation. It's the beginning of a process — really putting out a marker, if you will — that no longer are these issues going to be ignored," said Kenneth Baer, Office of Management and Budget spokesman.

Tuesday, the president will make his first address to a joint session of Congress — effectively his premiere State of the Union address — and on Thursday he plans to offer an outline of his budget for fiscal 2010, which begins Oct. 1.

Budget officials described the outline as a 10-year plan, "an honest budget" that avoids the accounting gimmickry seen in past years, such as paying for the Iraq and Afghanistan wars through supplemental budgets and failing to project the long-term costs of tax cuts.

Obama's first budget also will provide $20 billion a year to handle hurricanes, earthquake or manmade disasters; in the past, such funds weren't set aside in advance.

Overall, the plan will budget $2.5 trillion more in spending over 10 years — or about $250 billion more a year — by eliminating such gimmicks.

Congress will take a separate path next week.

Money to pay for most government programs runs out March 6, and lawmakers will consider a $410 billion measure to keep agencies going through Sept. 30, the end of the fiscal year. Details are expected Monday, and votes could come as early as Wednesday.

Budget-watchers see reasons to worry and to hope about the week's events.

"The very fact that the White House is having a summit just before putting out a budget blueprint tells you they're serious about long-term plans," said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, which studies fiscal issues.

There's a long history of 10-year plans that are little more than wishful thinking, however, so budget researchers are just as focused on Congress' spending package, which will involve real decisions now.

"There is a worry that this is an opportunity for people to get things that they didn't get in the stimulus," MacGuineas said. With most attention focused on the White House, she said, "a lot of things could come in under the radar."

Congress' scramble to pass a fiscal 2009 second-half budget is largely a result of politics and disputed priorities. President George W. Bush threatened last year to veto any spending bills that exceeded his requests, as most of the Democratic-authored bills did. The only legislation that passed with full-year funding was for the military, veterans and homeland security.

Democrats gave up on the rest, knowing that if Obama won, they could come back and get domestic spending legislation that was more to their liking.

They almost certainly will. Bush met opposition when he tried to eliminate some law-enforcement grant programs, cut environmental and Interior Department funds by 3 percent and slash billions for health, labor and education.

Some of those funds were placed in the stimulus bill, and more is likely in next week's budget measure.

At the same time, the White House will be looking to 2010 spending and beyond.

The program Monday will include remarks by Obama and presentations from opposite ends of the ideological spectrum setting out long-term fiscal challenges. The summit will break into small groups that will focus on Social Security, health care, defense procurement, the budget process, and taxes and revenue.

Baer explained the reason for the meeting: "We're facing an economic crisis of historic proportions. The immediate response was to sign into law the Recovery Act, but there's twin deficits. The house on fire was the first deficit. The other one, while not as urgent, is also extremely important."

The nonpartisan Congressional Budget Office — which Obama Budget Director Peter Orszag headed until November — projects a 2009 deficit of more than $1.4 trillion, which would be about 10 percent of the nation's gross domestic product, shattering the post-World War II record of 6 percent in 1983.

The CBO estimates that the deficit will drop to around $855 billion next year, sliding to $188 billion by 2018. It also could grow more, however, as the reeling economy adds to the cost of social welfare programs such as Medicaid, which helps pay for health care for poor people and those with disabilities.

Social Security reserves are expected to be exhausted in 2041, and Medicare's Hospital Insurance Trust Fund is expected to exhaust its reserves in 2019, according to the programs' 2008 trustees report.

The summit could feature sharp exchanges.

Rep. Jim Cooper, D-Tenn., a fiscal conservative, said that Obama "has signaled that he is ready to work with members of both parties to reform health care, entitlement spending and the tax code."

However, liberal economists such as James Galbraith of the University of Texas see too much emphasis on overhauling entitlement programs such as Social Security, and they question the value of the summit.

"We're not returning to the 'normal' world anytime soon," Galbraith said, so talking about fiscal responsibility simply doesn't fit into these troubled economic times. The summit "reflected a hangover from an earlier mind-set," he said.

ON THE WEB

US Budget Watch stimulus analysis

Official government economic recovery site

Congressional Budget Office analysis of stimulus

Department of Transportation Q&A on stimulus package

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