Obama Calls for $17 Billion in Budget Cuts, Resistance Likely

May 7 (Bloomberg) -- President Barack Obama proposes to cut or eliminate 121 federal programs to save almost $17 billion, a budget plan that almost certainly will face obstacles in Congress and resistance from interest groups.

The president today is sending lawmakers a package of proposed reductions for the fiscal year that begins Oct. 1 as he begins to fill out details of a $3.55 trillion budget outline approved by lawmakers last week. He wants to cut or end scores of programs that he deems wasteful or ineffective to help bring spending under control.

“The administration is unlikely to get even the majority of the cuts it’s asking for,” said Marc Goldwein, policy director of the bipartisan Committee for a Responsible Budget, a Washington-based research group. “More serious efforts at deficit reduction are going to require entitlement and tax reform -- that’s where most of the money is.”

White House officials yesterday cited some examples of programs to be reduced or eliminated as part of the administration’s line-by-line review of the budget. Targeted programs include one that paid states to clean up abandoned mine sites, for a savings of $142 million; a Defense Department radio navigation system made obsolete by global-positioning devices, to save $35 million, and Even Start, an early childhood Education Department program, for a savings of $66 million.

The total savings, if accepted by Congress, would represent 0.4 percent of Obama’s $3.55 trillion budget.

‘Positive Step’

Representative Dennis Cardoza, a California Democrat, called the administration’s plan a “positive step” to try to “bring this whole thing into some kind of fiscal balance.” He and other Democratic leaders were briefed yesterday by White House budget director Peter Orszag.

“I am not going to agree with all of it,” said Cardoza, a member of his party’s fiscally conservative Blue Dog coalition. “I certainly applaud their looking at government waste and trying to eliminate” unnecessary spending.

House Majority Leader Steny Hoyer, a Maryland Democrat, and House Appropriations Committee Chairman David Obey, a Wisconsin Democrat, declined to discuss details of the proposal.

The administration’s budget-cutting efforts aren’t new and often aren’t successful. In 2008, then-President George W. Bush, working with a Democratic Congress, proposed ending or reducing 141 federal programs. Of those, 29 were terminated or trimmed for a savings of about $1.6 billion, the White House budget office said.

“Every government program -- no matter how wasteful -- will be defended by its recipients and congressional champions,” said Brian Riedl, a budget expert at the Heritage Foundation, a Washington-based research group. “Unless Obama puts the weight of the White House behind his spending cuts, Congress will ignore them.”

Budget Outline

Lawmakers on April 29 adopted a $3.55 trillion outline for the 2010 budget that embraces Obama’s top agenda items, including a health-care overhaul, a push for renewable, clean- energy sources and changes in education funding.

White House officials, who briefed reporters on a conference call, said yesterday about half the program cuts or eliminations called for in the administration’s detailed proposal are in defense and the rest are spread throughout the government. Some programs to be reduced or ended were previously announced by Defense Secretary Robert Gates, though about 80 weren’t disclosed before, an administration official said.

The official said the White House doesn’t expect the belt- tightening effort to be easy.

Think Bigger

“To really get the deficit under control, we’re going to have to start thinking bigger,” said Goldwein, of the Committee for a Responsible Budget. “That means paying for any tax cut or spending program” and “addressing Social Security and Medicare before they become unaffordable.”

Those two programs account for more than 40 percent of government spending.

Representative John Larson, a Connecticut Democrat, said Congress “may have a slightly different point of view on areas” where Obama is proposing cuts. Still, he said Congress and the president “will both get to the same goal” of improving the economy and reducing the budget deficit.

House Speaker Nancy Pelosi, a California Democrat, has asked lawmakers to compile their own list of potential program terminations or cuts, an administration official said.

The Congressional Budget Office projects the deficit will be $1.85 trillion this year, about four times the previous record, and $1.38 trillion in fiscal 2010.

Asked whether cuts of less than $20 billion will make a dent in the deficit, Larson said, “It depends on what it means over the scope of five and 10 years.” From the “deep, cavernous hole where we have been left, we’re looking a long way up but it’s a steady climb” under the budget plan agreed to by Obama and Congress, he said.

Representative Jim Clyburn of South Carolina, the House’s third-ranking Democrat, said he will “reserve judgment” on the proposed cuts until he has a chance to read the proposal.