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Fiscal Summit Day One Recap

President Obama named rising health care costs as the nation’s ”single most pressing fiscal challenge we face by far” as he convened a summit of domestic leaders in the White House this afternoon.

More than 100 lawmakers, economists, interest group leaders and others gathered for the Fiscal Responsibility Summit, set against the backdrop of a faltering economy and a $1.3 trillion federal deficit that Obama has vowed to cut at least in half during the next four years. Although the crowd spanned the political spectrum and included Obama’s presidential election opponent, Sen. John McCain, R-Ariz., there was widespread agreement on the need for aggressive change.

“Crises of the magnitude of the current one only end with overwhelming government action,” said McCain’s former economic adviser Mark Zandi, one of the afternoon’s first speakers.

Obama said the election showed that the American people want “a new era of responsibility in Washington—to start living within our means again, and being straight with them about where their tax dollars are going, and empowering them with the information they need to hold all of us, their representatives, accountable.”

Health care reform was clearly at the top of the summit agenda. Health care is responsible for the bulk of the nation’s deficit woes because it is rising even faster than inflation, Robert Greenstein of the Center on Budget and Policy Priorities told the group.

Peter Orszag, the White House budget czar, said that “the path to fiscal responsibility must run directly through health care.”

Interviewed after the summit, AARP chief Bill Novelli said he came away from the event feeling that there is momentum for health care reform. Spiraling health care costs affect not only the private insurance system but also Medicare and Medicaid, the two large government programs for covering older and poor Americans, respectively. Any major legislation would need to both rein in costs and expand coverage to those who don’t have insurance now, as well as improve quality, Novelli said.

“I think we have a shot, despite the complexity and the potential for this thing to go off the track,” Novelli said.

After several speakers addressed the full summit group, the participants broke into smaller sessions to talk about health care, Social Security, tax reform, the budget process and procurement. During the session on the budget process, Zandi warned that the nation must get serious about reducing the nation’s deficit and debt. He suggested a national commission, but Rep. David Obey, D-Wis., had another idea.

“I’m an old-fashioned guy,” Obey said, adding that the president should lock everyone in a room together with three bottles of gin.

“Let’s go with that plan,” said Sen. Kent Conrad, D-N.D.

In the Social Security session, administration officials indicated Social Security reform will come after the health care system is reformed. Later, Barbara Kennelly, head of the National Committee to Preserve Social Security and Medicare and a summit participant, said she was relieved to hear that the Obama administration does not consider Social Security issues in the same breath as the more troubled Medicare and Medicaid programs. She said she is “scared to death” of the treatment Social Security would receive by a commission that lumped the issues together.

The procurement session featured a few fireworks, especially over out-of-control military contracts. McCain also warned that pulling troops out of Iraq will not mean they come home because Obama likely will shift even more to Afghanistan. “And they’ll be gone for a long time. ... I think the administration’s announcement of 17,000 is only a first announcement,” McCain said.

At the taxes breakout session, the Obama proposal to let tax breaks for wealthy earners lapse drew criticism from Sen. Jon Kyl, R-Ariz. “A number of things are more important than a budget deficit,” Kyl said, “and you’ve got to ask whether or not cutting the deficit in half in a four-year period, which is going to be hard to do, conflicts with the goal of coming out of the recession and staying out of the recession. ... We are not out of the woods yet. We have to be very careful we don’t kill this recovery we are trying to nurture along."

Several participants said they were pleased that Obama had brought such diverse viewpoints together in the same room. “Everyone was talking to each other and the president has put his stamp of approval on it,” Novelli said.

Tamara Lytle was Washington bureau chief and a correspondent for the Orlando Sentinel from 1997 to 2008.

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