Obama pushes jobs plan, warns on deficit

Representative Paul Ryan, the top Republican on the House Budget Committee, outlined a rival budget proposal that would restructure entitlement programs like Medicare, the healthcare program for the elderly, and Social Security to balance the budget. Democrats said his proposal would dismantle those popular programs.

BAILOUT 'PIGGYBANK'

New Hampshire Republican Senator Judd Gregg blasted the small-business lending idea in a contentious Senate in which he demanded the money be used instead to bring down the deficit.

"It's become a piggybank that adds to our deficit, adds to our debt and gets put on our children's backs," Gregg told Peter Orszag, the White House's top budget official.

The Obama administration is prepared to impose fees on financial firms for as long as necessary to ensure that every cent spent on bailing out banks is repaid, Treasury Secretary Timothy Geithner told the Senate Finance Committee.

White House economic adviser Paul Volcker urged lawmakers to rein in risky trading by big banks to prevent them from becoming "too big to fail."

The White House projects that the deficit for the fiscal year ending September 30 will amount to 10.6 percent of gross domestic product, the highest level since World War Two.

The White House predicts deficits will fall to 3.9 percent by 2014, still above the 3 percent of GDP that economists consider sustainable.

Orszag said Congress would have to do two things to close that gap: pass healthcare reform and cooperate with a proposed bipartisan deficit-reducing commission.

Both those could be difficult. The Senate and the House have passed healthcare reform bills that the White House believes would bring skyrocketing medical costs under control.