Obama defends budget as deficit forecast surges

US President Barack Obama defended his budget plans Saturday, insisting that he remained committed to halving the deficit within four years despite new data showing it was bigger than expected.

He also threw his weight behind Treasury Secretary Timothy Geithner, under attack for his handling of the economic crisis and a political scandal over massive bonuses paid out by insurance giant American International Group, which has received bailout money funded by taxpayers.

In an interview with the CBS program "60 Minutes" to be broadcast Sunday, Obama said neither he nor Geithner had discussed a possible resignation by the Treasury chief, but he acknowledged public criticism of his administration's economic plans.

Should Geithner offer his resignation, Obama joked that he would say: "Sorry buddy, you've still got the job," according to interview excerpts released Saturday.

In his weekly radio and video address, Obama said his administration was scouring every corner of the budget to produce two trillion dollars in deficit reductions over the next decade.

"In total, our budget would bring discretionary spending for domestic programs as a share of the economy to its lowest level in nearly half a century," he said.

"And we will continue making these tough choices in the months and years ahead so that as our economy recovers, we do what we must to bring this deficit down."

The comments came as Congress was poised to launch debate next week on the 3.55-trillion-dollar multiyear budget unveiled by Obama's administration last month.

But the nonpartisan Congressional Budget Office CBO forecast Friday the deficit could hit 1.845 trillion dollars this year under the Obama proposal, quadrupling the 2008 record shortfall.

The CBO said its latest budget deficit estimate for fiscal 2009, which ends on September 30, would amount to 13.1 percent of the country's total economic output.

Since its early January estimate of a 1.2-trillion-dollar gap, the CBO said the enactment of the 787-billion-dollar stimulus plan, other measures to revive the economy and additional factors had hiked deficit projections for 2009 and 2010 by over 400 billion dollars.

Republicans immediately seized on the report to blast Obama's economic policies. "It's worse than even the most pessimistic predictions for this budget," said Senate Republican Leader Mitch McConnell.

But Obama moved swiftly to rebut his critics, arguing that his economic proposals offered a long-term solution to US structural problems and not "a wish list of priorities that I picked out of thin air.

"They are a central part of a comprehensive strategy to grow this economy by attacking the very problems that have dragged it down for too long: the high cost of health care and our dependence on foreign oil; our education deficit and our fiscal deficit," the president noted.

Obama told CBS he acknowledged public frustration with continued economic woes, despite his administration's ambitious plans to revive the battered US economy.

"It's going to take a little bit more time than we would like to make sure that we get this plan just right. Of course, then we'd still be subject to criticism," he said.

"What's taken so long? You've been in office a whole 40 days and you haven't solved the greatest financial crisis since the Great Depression," he quipped.

"If there was ever any doubt that the administration's budget spends too much, taxes too much and borrows too much, it's gone," said McConnell.







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