Obama pledges to tackle government spending

The congressional panel heard from a handful of economists, including former Labor Secretary Robert Reich, Harvard's Martin Feldstein and Mark Zandi, chief economist at Moody's Economy.com and a former informal adviser to Republican presidential candidate John McCain. They all endorsed the need for a big, short-term spending package to jolt the economy out of its downward spiral.

Acknowledging the risk of deficits, however, Feldstein noted: "There should be an exit strategy. The spending should not create a political dynamic that makes it hard to stop."

Pelosi's call for passage by mid-February represents a slight adjustment in the Democrats' anticipated schedule for the legislation. Just on Monday, Obama had said he hoped for passage at the end of January or the first week in February.

Budget-conscious lawmakers have been pressing Obama to embrace deficit-reduction goals, even before the budget office's grim assessment Wednesday.

"Part of the discussion that needs to happen right now is not what we do just right now, but what we look to in the future — about how we get back to a balanced budget and then start to deal with this horrible, horrible national debt that we have," said Rep. Dennis Moore of Kansas, a member of the congressional Blue Dogs, a coalition of conservative and moderate Democrats.

With Democrats in control of both chambers in Congress, Obama's reassurances to budget hawks from both parties already appear to be making a stimulus package more palatable. Republican leaders sounded a cautionary note, however.

"We cannot borrow and spend our way back to prosperity when were already running an annual deficit of more than one trillion dollars," House Republican leader John Boehner of Ohio said in a statement. "I was pleased to hear the President-elect say yesterday that we need to stop just talking about our national debt and actively confront it."

Obama administration faults Senate bank bill The Obama administration on Friday pushed back against a proposal in the U.S. Senate to create a single bank super-regulator and strip the Federal Reserve of its supervisory powers. Warren Buffett: Financial panic is over Pay czar concerned firms could lose talent U.S. banks to prepay $45 billion to FDIC Geithner encouraged by policies in Asia

Obama has not detailed solutions for vexing problems such as growing demands on Social Security and Medicare. His prescriptions to make government accountable could easily run aground, much like those of predecessors who vowed to tackle government waste, fraud and abuse.

But lawmakers are not short on ideas. Conrad and the Budget Committee's top Republican, New Hampshire Sen. Judd Gregg, have proposed a bipartisan fiscal task force of lawmakers and administration officials that would create a plan to reduce budget deficits and lower the national debt.

Blue Dog Democrats would like to see legislation that would force Congress to pay for spending proposals with equal spending cuts or with new revenue. House Democrats this week plan to consider legislation that would require all federal agencies to undergo new audits and would call for congressional hearings when agency inspectors general find evidence of waste or fraud.

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