Obama Seeks to Halve Deficit to Half Trillion Per Year by 2013

Republican governors reacted skeptically Sunday to news that President Obama plans to halve the record budget deficits to more than a half trillion dollars by 2013, the end of the current presidential term.

Minnesota Gov. Tim Pawlenty told "FOX News Sunday" that the markets reacted badly to the $787 billion stimulus bill signed into legislation this past week -- the market is now down more than 41 percent off its mark of one year ago -- and it's only going to get worse if the president raises taxes.

Pawlenty said if voters think raising taxes will solve the deficit, he's got "hunting land for you in northern Minnesota."

South Carolina Gov. Mark Sanford, who vehemently opposed the stimulus bill, said cutting in half the annual deficit is a drop in the bucket.

"The operational deficit is a very small component of the larger deficit this country is running," he said.

An administration official, speaking on condition of anonymity, said Saturday that the president plans to cut back the annual budget deficit to $533 billion by time he ends his current term in office. That would be down from the $1.3 trillion deficit expected in fiscal year 2009.

The president is holding a fiscal policy summit on Monday, while the governors are still in town for their National Governors Association Winter meeting.

On Tuesday, the president will give a joint address to Congress. On Thursday he plans to send an outline of his first budget request to Capitol Hill.

The official said the deficit will be shrunk by scaling back Iraq war spending, ending the temporary tax breaks enacted by the Bush administration for those making $250,000 or more a year, and streamlining government.

"We can't generate sustained growth without getting our deficits under control," Obama said in his weekly radio and Internet address that seemed to preview his intentions. He said his budget will be "sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don't, and restoring fiscal discipline."

Pennsylvania Democratic Gov. Ed Rendall said that tax increases that may be offered will do no harm to the country. He pointed to President Clinton's first term in office, when he raised taxes on the wealthy. The Clinton administration had four years of budget surpluses in its second term.

Obama's budget is expected to find ways to establish universal health care and lessen the country's reliance on foreign oil.

Obama has pledged to make deficit reduction a priority both as a candidate and a president. But he also has said economic recovery must come first.

Last week, he signed into law the stimulus measure that is meant to create jobs but certainly will add to the nation's skyrocketing national debt. He also is implementing the $700 billion financial sector rescue passed on Bush's watch; about $75 billion of which is being used toward Obama's plan to help homeowners facing foreclosure.

The Associated Press contributed to this report.