Obama to Order Cabinet to Quickly Cut $100 Million From Department Budgets



Obama's order comes as he is under increasing pressure to show momentum toward his goal of eventually reducing the federal deficit, even as he goes about increasing spending in the short run to prop up the economy and support his priorities.

Earlier this month, both chambers of Congress passed Obama's $3.5 trillion budget outline for 2010, which includes unprecedented new investments in health care, education and energy. But the huge budget, which contemplates a $1.2 trillion deficit, has drawn the ire of small-government conservatives who say that the deficits jeopardize the nation's economic future.

Last week, conservative activists organized tea parties to protest Obama's budget which they say "spends too much, taxes too much, and borrows too much from our children and grandchildren," according to House Minority Leader John Boehner (R-Ohio).

"They're really concerned about the amount of spending that's going on in Washington and the amount of debt that is being piled up," Boehner said yesterday on ABC's "This Week." "They know that you can't have trillion dollar deficits for as far as the eye can see without imprisoning the future for our kids and theirs."

In his radio and Internet address Saturday, Obama repeated his vow for his administration to scour the federal budget "line by line" to reduce spending. During an address to Congress in February, Obama said his administration has identified $2 trillion in deficit reduction over the next decade.

That savings projection, however, rests on a dubious baseline, including assuming that the United States would have retained its current troop level in Iraq for the next decade. The reduction also contemplates expiration of tax cuts for the nation's highest income earners.

Still, Obama said he is serious about reining in deficits over the long term, and some agencies are already moving in that direction, the administration said.

Veterans Affairs has canceled or delayed 26 conferences, opting for less costly alternatives such as video conferencing, saving nearly $17.8 million. The Agriculture Department is working to combine 1,500 employees from seven office locations into one facility in 2011, which the agency said would save $62 million over a 15-year lease term. Also, Homeland Security projects that it can save up to $52 million over five years by buying office supplies in bulk, officials said.

The Cabinet meeting comes as the Obama administration has begun speaking more openly about tentative signs of improvement in the economy. But even as glimmers of improvement emerge, it is likely that some of the nation's largest banks will need additional help, which the administration should be able to provide without asking Congress for more money, top White House officials said.

The Obama administration is moving closer to releasing some results of the "stress tests" aimed at projecting how the nation's largest 19 banks would withstand further deterioration in the nation's economic condition.

"We're confident that, yes, some are going to have very serious problems, but we feel that the tools are available to address these problems," David Axelrod, a senior adviser to the president, said yesterday on CBS's "Face the Nation."

Officials said that the administration should be able to provide additional bailout money if necessary without returning to an increasingly skeptical Congress for further authorizations.

The administration plans to release guidelines for the stress tests this week, and it hopes to make results available in early May. "It's important that there is disclosure," Axelrod said. "And I think the banks are going to want that because they're going to want the markets and the country and the world to know exactly what their condition is," he added.

Obama yesterday wrapped up a visit to Mexico and the island nation of Trinidad and Tobago, where he attended a summit of Caribbean and Latin American leaders. He then will turn his attention back to domestic issues, aides said.

Chief economic adviser Lawrence H. Summers said Obama would back efforts to tighten regulation for credit card companies. Executives from the nation's largest credit card firms have been summoned to the White House for a meeting with administration officials later this week. Meanwhile, members are Congress are pushing legislation to limit the ability of credit card companies to raise interest rates on existing balances, while requiring clearer disclosure of loan terms.

"He's going to be very focused in the very near term on a whole set of issues having to do with credit card abuses, having to do with the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into," Summers said on NBC's "Meet the Press."

While officials talked cautiously about the obstacles that stand in the way of a turnaround in an economy that is still shedding more than 600,000 jobs a month and is seeing continued spikes in home foreclosures, they also pointed to some improvements.

Some major banks have reported profits recently, and there are signs of credit thawing in some corners of the economy, officials have said.

"No one is in any position to declare any kind of victory here," Summers said. "But the fact that no one can declare victory doesn't mean that we shouldn't take note of developments as they unfold. And the developments, as I say, are more, are more mixed now."

In the long run, Summers said, the nation's economy is going to have to become less reliant on borrowing and consumption, even if that is what is needed now to prevent the recession from worsening.

"We're going to need a less leveraged economy," he said. " . . . Individuals are going to have to save more." In addition, he said, government is going to have to pivot into a position where it is "a contributor of savings to the economy, rather than a drain," said Summers.

Speaking on ABC, White House Chief of Staff Rahm Emanuel pointed to recent quarterly reports from several major banks that they were turning healthy profits as a bright spot, but he cautioned against reading too much into them.

"That doesn't take away that some are going to need resources," Emanuel said. "We believe we have those resources available in the government as the final backstop to make sure that the 19 are financially viable and effective."


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