Obama vows budget savings to fund economic revival

By Arun Kumar, IANS,

Washington : US President-elect Barack Obama has promised budget reforms to cut out all unnecessary spending to find resources to fund the bail out of the beleagured US financial sector and the planned stimulus package to jolt the American economy out of a deepening crisis.

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Describing budget reform as an imperative and not an option, Obama Tuesday emphasised his commitment to fiscal responsibility as he announced that two budget veterans will run his White House Office of Management and Budget (OMB).

Peter Orszag, who recently headed the Congressional Budget Office that calculates the cost of legislative proposals for the House and Senate to consider in their deliberations, will lead OMB as director. Robert Nabors, staff director of the House Appropriations Committee, will be Orszag’s deputy.

In his new role, Orszag, 40, would prepare the president’s federal budget proposals for Congress and analyse the effectiveness of government programmes and policies, as well as have a big role in determining funding priorities for federal dollars.

Among his previous positions, Orszag was the deputy director of economic studies at the Brookings Institution and served in the Bill Clinton administration as a special assistant to the president for economic policy and senior economic adviser to the National Economic Council.

“In these challenging times, when we are facing both rising deficits and a sinking economy, budget reform is not an option. It is an imperative,” Obama said, introducing the two new members of his economic team at a news conference in Chicago.

But Obama didn’t provide many specifics, and he gave little sense of how he would tackle entitlement programmes like medicare and social security. Few experts believe the budget deficit can be brought under control without trimming spending on these programmes.

The deficit totalled an estimated $438 billion for fiscal 2008 ended in October, and is expected to surge in 2009 due to a $700 billion government rescue package for the financial sector, among other expenditures.

Obama has pledged to push for a stimulus package to create or save 2.5 million jobs soon after he takes office in January, but he hasn’t provided a cost.

“If we are going to make the investments we need, we also have to be willing to shed the spending that we don’t need,” Obama said.

“We cannot sustain a system that bleeds billions of taxpayer dollars on programmes that have outlived their usefulness, or exist solely because of the power of a politician, lobbyist, or interest group,” he said.

Obama said he would ask his economic team to “think anew and act anew” to meet new challenges.

“We will go through our federal budget-page by page, line by line-eliminating those programmes we don’t need, and insisting that those we do operate in a sensible cost-effective way,” he said.

The president-elect insisted that his proposed stimulus would not be “more of the same” when it comes to Washington spending.

“This isn’t about big government or small government. It’s about building a smarter government that focuses on what works. That’s why I will ask my new team to think anew and act anew to meet our new challenges,” Obama said.

Despite the problems facing his administration, Obama said he is “confident that we are going to rise to meet this challenge” if everyone works together.

“In order for us to be effective, given the scope and the scale of the challenges that we face, Republicans and Democrats are going to have to work together,” he said.