WASHINGTON — For Barack Obama, winning a giant economic revival bill in Congress should be the easy part.

Taming the nation's rising deficits and debt and bringing entitlement programs to heel? Good luck.

Social Security, Medicare and Medicaid make up 42 percent of the federal budget, providing a vital baseline of income and health security to millions of Americans. They are the symbols of government's social compact with its citizens. But a retiring baby boom generation and steady increases in health care costs are placing the programs on a potentially unsustainable course.

If Obama wants to curtail government spending by tampering with entitlements, he will be venturing into one of Washington's most vexing political problems.

The choices for reining entitlement costs are limited and politically unpalatable — any solution would ultimately require higher taxes, reduced benefits or both.

Obama has sought to reassure the public and Congress that he is wary of the government's long-term fiscal outlook — one driven home with stark reality this week when the Congressional Budget Office projected a whopping, record-stomping $1.2 trillion deficit for the 2009 budget year.

Unlike the stimulus, which is addressing a crisis that is apparent daily to most Americans, the need to overhaul entitlement programs is designed precisely to avoid a crisis. Politicians have been unable to create the sense of urgency over Social Security or Medicare that now exists in the midst of foreclosures, frozen credit, massive layoffs and depleted savings.

"President Obama is walking into a fiscal disaster of stunning proportion, coupled with an economic downturn of unknown duration and depth, but one that I think we can already forecast will be longer than any other downturn since the Great Depression and not exceeded in severity since the Great Depression," Senate Budget Committee Chairman Kent Conrad, D-N.D., warned Thursday. "The combination of the retiring baby boom generation, rising health care costs and inadequate revenues will explode deficits to clearly unsustainable levels."

One Obama economic official said the president-elect will confront rising entitlement costs first by attempting to control health care spending — the premier factor driving increases in Medicare and Medicaid. Health care was a significant campaign issue, especially during the Democratic Party primaries. Obama has proposed a $50 billion to $65 billion health care plan that would be paid by rolling back tax cuts for taxpayers who make more than $250,000 a year. He has put former Senate Democratic leader Tom Daschle in charge, giving him dual responsibility as secretary of health and human services and director of a new White House office on health reform.

For now, Obama's main attempt to present himself as the harbinger of fiscal restraint is to demand that his stimulus package be subject to strict oversight, to reject congressional pet projects and assign a performance officer to ride herd on federal agencies.




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