Deficit might shift priorities in short term, Obama says

Wants to fix Social Security and Medicare

President-elect Barack Obama addressed the economy Thursday at George Mason University in Fairfax, Va. (AP Photo/Charles Dharapak)

WASHINGTON - President-elect Barack Obama said yesterday that the $1 trillion-plus deficit and ailing economy would force him to move slowly and scale back on his priorities in the short term, and that getting the country back in strong financial shape will require sacrifices from all Americans.

Obama vowed to eventually get the deficit under control and make significant adjustments to expensive entitlement programs such as Social Security and Medicare, which will cost trillions as the baby boomer generations retire, though he did not offer any specific proposals.

"Everybody is going to have to give," he told host George Stephanopoulos in an interview yesterday on ABC's "This Week." "Everybody is going to have to have some skin in the game."

In the wide-ranging interview, taped Saturday at the Newseum in downtown Washington, Obama also sounded a cautionary note on how the first $350 billion of the financial rescue package had been spent and monitored, and he reiterated his pledge to close Guantanamo Bay but warned it would probably not happen in the first 100 days.

The president-elect also defended his silence on Israel's attacks on Gaza, saying the volatility of the situation underscored the importance of having only one president speaking for the United States at a time.

When Stephanopoulos remarked that some in the Arab world saw Obama's silence as callousness, Obama offered a passing word of sympathy and emphasized his commitment to brokering a Middle East peace settlement.

When "you see civilians, whether when Palestinian or Israeli, harmed . . . it's heartbreaking," he said. "And obviously what that does is it makes me much more determined to try to break a deadlock that has gone on for decades now."

Obama offered no clues about what specific changes he would make to the vast entitlement programs with future obligations - particularly in Medicare - that threaten to place enormous financial constraints on future generations.

He said his immediate priority was getting the stimulus package through Congress, a seemingly straightforward ambition that has looked increasingly challenging in recent days, as Obama has encountered complaints and surprisingly sharp criticism from within his own party over tax cuts he included in the package.

Obama sounded a conciliatory note on the overall package, insisting he had no "pride of authorship" and wanted cooperation: "We're not trying to jam anything down people's throats." But he also said the money must be spent wisely and that while it would inevitably contain some pet projects for some members of Congress, it must not be frittered away on such earmarks. And he said Congress cannot wait long.

"We can't afford three, four, five, six more months where we're losing half a million jobs per month," he said.

Obama also said he was disappointed with the way the Treasury Department spent and monitored the first $350 billion of the financial rescue package that Congress approved in October. He said he had ordered his team to come up with a more transparent way to track the money and that he plans to spend some of it on helping ordinary people facing foreclosure.

Obama emphasized his intent to close Guantanamo, which has become an international symbol of the Bush administration's perceived disregard for civil liberties in the war on terror, saying: "We will send a message to the world that we are serious about our values." But he said it would take time to determine where to put the detainees, particularly those who are dangerous but difficult to convict in court.

"Some of the evidence against them may be tainted, even though it's true," he said, adding that his challenge will be figuring out "how to balance creating a process that adheres to rule of law. . . . [but] doing it in a way that doesn't result in releasing people who are intent on blowing us up."

Iran, Obama said, will be one of his administration's most serious and immediate challenges because of its support of Hamas and Hezbollah and its pursuit of nuclear weapons. Obama, who was criticized by his rivals in the presidential race for advocating engagement with rogue nations, including Iran, said he would move quickly to articulate a policy that would place "new emphasis on respect and a new emphasis on being willing to talk but also a clarity about what our bottom lines are."

Saturday marked the end of the first week Obama and his family spent in Washington since the election. They are temporarily staying at the Hay-Adams Hotel. He made headlines on Saturday when he went out for a hot dog at Ben's Chili Bowl, a beloved neighborhood landmark, with Washington Mayor Adrian Fenty, and later visited the Lincoln Memorial with his family.

Yesterday he marveled at how well his two girls were adjusting to their new school, Sidwell Friends. And he said that after considerable debate the family had decided to adopt either a Labradoodle or a Portuguese water dog from a shelter.

On the First Dog issue, he remarked with a smile, "This has been tougher than finding a commerce secretary."