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Obama Announces $17 Billion in Budget Cuts

President Obama outlined his $3.6 trillion budget for 2010 today and addressed that his administration has found 121 programs that can be reduced or eliminated to save American taxpayers nearly $17 billion next year alone.

"All across this country, Americans are responding to difficult economic times by tightening their belts and making tough decisions about where they need to spend and where they need to save," the president said. "The question the American people are asking is whether Washington is prepared to act with the same sense of responsibility."

Obama said, "We're doing everything that we can to create jobs and to get our economy moving while building a new foundation for lasting prosperity - a foundation that invests in quality education, lowers health care costs, and develops new sources of energy powered by new jobs and industries.

"But one of the pillars of this foundation is fiscal responsibility. We can no longer afford to spend as if deficits don't matter and waste is not our problem. We can no longer afford to leave the hard choices for the next budget, the next administration - or the next generation."

The Office of Management and Budget (OMB), led by Peter Orszag and Rob Nabors, went through the budget line by line to assess where it is possible to cut expenses. Obama said that "a lot of money is being spent inefficiently, ineffectively, and in some cases, in ways that are actually pretty stunning."

"Some programs may have made sense in the past, but are no longer needed in the present. Other programs never made any sense - the end result of special interests' successful lobbying campaigns. Still other programs perform functions that can be conducted more efficiently or are already carried out more effectively elsewhere in the government."

Obama gave several examples of programs to be cut:
  • A long-range radio navigation system (LORAN-C) - now obsolete in the wake of satellites and GPS technology. This program is still being funded while no longer being used by the government, and actually only used by very few people at all - at a taxpayer cost of $35 million per year.
  • The National Institute for Literacy program that spent over half its $6 million budget on overhead. Obama said, "Now I strongly support programs to promote literacy - it's critical - but I oppose programs that do it badly." The plan is to redirect that money to the Department of Education, which uses tax dollars more efficiently and effectively.
  • A Department of Education office in Paris that employs one person as a representative to United Nations Educational, Scientific and Cultural Organization, or UNESCO, at an annual cost of $632,000 to taxpayers. The plan is to maintain a presence with UNESCO through email, teleconferencing, and occasional trips abroad.
  • $465 million to build an alternative engine for Joint Strike Fighter that the Department of Defense doesn't plan to use or even want. The Pentagon stopped requesting funding for this engine two years ago, but the program continues to be funded.
The president said that some of the programs to be cut are relatively small, and some cuts may only amount less than $1 million. He said, "And in Washington, I guess that's considered trivial. Outside of Washington, that's still considered a lot of money." He also said that every little bit adds up.

The Pentagon was largely targeted; 56% of the cuts were in defense. Obama said Congress is currently working on the proposal by Defense Secretary Robert Gates for the "elimination of expensive weapons systems ill-suited for the threats of the 21st century -- and a sweeping overhaul of a defense contracting system which has been riddled with hundreds of billions of dollars in waste and cost overruns."

Obama said he also signed a presidential memorandum to end unnecessary no-bid government contracts "to dramatically reform the way government contracts are awarded - reform that will save the American people up to $40 billion each year."

The presidents has also asked Congress to restore the "pay as you go" rule, meaning in order to spend a dollar, they'll have to cut a dollar somewhere else. "This is the principle that guides responsible families managing a budget," Obama said. "This is the principle that helped transform large deficits into surpluses in the 1990s."

Other cuts outlined by OMB Director Orszag include $142 million to clean up abandoned mines that have already been cleaned up, $125 million for the Advanced Earned Income Tax Credit - in which 80% of recipients actually do not even qualify to take, and $7 million for the Javits Gifted and Talented Educational Program - which only goes to 15 school districts nationwide.

Obama said that his proposed budget cuts will reduce the deficit by over half over the rest of his presidential term.

But not everybody is convinced that these budget-cutting efforts will be effective - just months after Obama signed a $787 billion economic stimulus package and a $410 billion spending bill to complete the 2009 budget.

"It's like taking a teaspoon of water out of a bathtub while you keep the spigot on at full speed, and the bathtub continues to fill up," said Sen. Judd Gregg, R-N.H., who Obama tried earlier this year to nominate as Commerce secretary.



Sources:
The White House
USAToday.com
Bernanke: Recovery Later This Year
Tax Havens Targeted by Obama
 

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Wednesday, 20 February 2019