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Obama Pledges New Effort to Tighten Federal Budget

President-elect Barack Obama named Peter Orszag as his budget director Tuesday and pledged the rein in the federal budget. Financial experts mull his proposals and weigh in on the complex process of trimming federal programs.

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    Next, the other economic story of the day: a pledge from the president-elect to cut federal fat, even as he draws up major new spending plans.

    A day after calling on Congress to act swiftly on a significant spending plan to jolt the economy, President-elect Obama was back in front of reporters today to discuss the need to rein in wasteful spending.

    BARACK OBAMA, President-elect of the United States: 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. In these challenging times, when we're facing both rising deficits and a shrinking economy, budget reform is not an option. It's a necessity.

    We can't sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness or exist solely because of the power of politicians, lobbyists, or interest groups. We simply can't afford it.

    This isn't about big government or small government. It's about building a smarter government that focuses on what works.


    To help accomplish that goal, Mr. Obama announced two more members of his economic team.

    Peter Orszag will head the Office of Management and Budget, which reviews federal agency funding requests. He's currently director of the Congressional Budget Office.

    Orszag's deputy will be Robert Nabors, now staff director of the House Appropriations Committee.

    The president-elect was asked if there was broad support for his economic agenda.


    Given the election results, what sort of mandate do you have from the voters, do you believe? And does a large Democratic majority in Congress present an opportunity to pass your agenda or is there a danger in this environment of overreach?

    BARACK OBAMA, President-elect of the United States: Well, first of all, we had, I think, a decisive win because of the extraordinary desire for change on the part of the American people.

    But I won 53 percent of the vote. That means 46 percent or 47 percent of the country voted for John McCain.

    And it's important, as I said on election night, that we enter into the new administration with a sense of humility and a recognition that wisdom is not the monopoly of any one party.

    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.


    Mr. Obama was pressed by a Chicago-based reporter about the needs of state and local governments, like his home state of Illinois.


    Hundreds of your friends are wondering what you're going to do, because they're in desperate straits from the — from the standpoint of their budgets.


    I want to be clear: Friendship doesn't come into this. That's part of the old way of doing business.

    The new way of doing business is, let's figure out what projects, what investments are going to give the American economy the most bang for the buck, how can we protect taxpayer dollars so that this money is not wasted, restore a sense of confidence among taxpayers that, when we spend our money, it's on things that are actually going to improve their quality of life, create the jobs that are so desperately needed, help to spur on economic growth and business creation in the private sector.


    Mr. Obama was also asked if he viewed immediate economic needs differently from longer-term budget policy.


    Sir, as you inherit and add to what could be a staggering one-year deficit, maybe approaching $2 trillion, will you draw a line between temporary fixes or permanent programs, such as tax rebates versus tax cuts? And if not, how will you guard against this red ink becoming permanent?


    The short answer is, yes, we've got to distinguish between a immediate and temporary infusion that's going to be required to kick-start our economy and some of the structural spending that's been taking place in Washington that has created this huge mountain of debt.

    And part of the charge to my economic team is to find areas where we can get a twofer, where we're getting both a short-term stimulus and we're also laying the groundwork for long-term economic growth.


    One possibility Mr. Obama pointed to was health care.


    If we do a smart job of investing in health care modernization — let's just say, as an example, helping local hospitals and providers set up electronic billing and electronic medical records, that experts across the spectrum consider to be an important step towards a more efficient health care system.

    Now, somebody's got to help set those up. We've got to buy computer systems and so forth. That's an immediate boost to the economy, in some cases working with state and local governments, but it's also laying the groundwork for reducing our health care costs over the long term.

    Now, the last point I'll make on this: We're still going to have to make some tough choices. There are just going to be some programs that simply don't work, and we've got to eliminate them.