In switch, Obama emphasizes belt-tightening

Once the economy starts growing again, he wants to cut programs that have 'outlived their usefulness.'

President-elect Obama wants America to know he is not just about spending money.

Once the economy starts growing again – his first priority – he will get out the knife and start to cut programs that have "outlived their usefulness." In short, he wants to also be known as a budget reformer.

In a press conference Tuesday, Mr. Obama characterized trimming federal programs as "not an option; it's a necessity." He promised that Peter Orszag, whom he has picked to run the Office of Management and Budget, will go through the $2.9 trillion US budget line by line, page by page, looking for better and less expensive ways to do things.

Obama's focus on belt-tightening followed his press conference Monday, in which he talked about his desire for a new economic stimulus package that could add anywhere from $500 billion to $700 billion to the deficit. He plans on spending for infrastructure programs, alternative-energy programs, and lower- to middle-income tax cuts. He says his goal is to create 2.5 million jobs over several years.

If Obama is successful at reinvigorating the flagging economy, he will have the political capital to make budget cuts, says Stanley Collender, a budget expert at Qorvis Communications in Washington.

"He's saying we'll pay attention to the deficit when we can, and until then, we're focused on the economy," he says.

The budget deficit for fiscal year 2009 is now expected to be anywhere from $800 billion to $1.5 trillion, depending on the size of the economic stimulus package. Obama says he would like to distinguish between short-term stimulus spending and longer-term obligations, which become part of the deficit in later years.

On Tuesday, he cited the need for a tax cut for 95 percent of the US public and described it as something that would help the economy over both the short term and long term. News reports have indicated that Obama's advisers have decided not to try to cut President Bush's tax cuts, which also help upper-income families. Instead, the cuts would just expire at the end of 2010.

Although Obama has not been very explicit in terms of possible program cuts, on Tuesday he specifically mentioned a farm subsidy program that he claimed sent $49 million in crop subsidies to "millionaire" farmers, despite them earning more than the $2.5 million cutoff. Apparently, the source of the information was a report issued Monday by the Government Accountability Office (GAO).

"No doubt, the farm community will be up in arms," Mr. Collender says.

Actually, American Farm Bureau, which lobbies for farmers in Washington, says that giving rich farmers $49 million was wrong. "That just shouldn't happen," says Tara Smith, director of congressional relations for the bureau in Washington.

The eligibility rules were tightened six months ago in the farm bill for fiscal year 2009, she points out. "The GAO report does not mention the new rules, and we don't think it should be used as an excuse to tighten the limits further, which they will try to do," she says.

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