Video: Obama: Budget cuts will save $17 billion

updated 5/7/2009 1:27:43 PM ET 2009-05-07T17:27:43

President Barack Obama asked Congress on Thursday to eliminate or trim 121 federal programs for a savings of $17 billion in the coming budget year. Many of the proposed cuts have already been rejected by Obama's allies in Congress, including some programs that his predecessor, President George W. Bush, repeatedly sought to end.

Despite the relatively modest nature of the cuts, "none of this will be easy" amid the continuing deep economic slump, Obama said.

The proposed cuts amount to less than one-half of 1 percent of his $3.6 trillion federal budget outline.

Republicans immediately denounced his proposed reductions as too small. "The resulting savings are relatively minor compared with the government's fiscal woes," said House Republican Leader John Boehner, R-Ohio.

'That's still a lot of money'
Answering criticism that his cuts were but a drop in a multi-trillion-dollar spending bucket, Obama said: "Some of the cuts we're putting forward today are more painful than others. Some are larger than others. In fact a few of the programs we eliminate will produce less than a million dollars in savings. Outside of Washington, that's still a lot of money."

Obama said that Americans are tightening their belts in these difficult times and want to know if Washington "is prepared to act with the same sense of responsibility."

"I believe we can and must do exactly that," Obama said in a statement he delivered before cameras at the White House.

The spending cuts for the budget year that begins Oct. 1 were detailed in a supplement to the broader 2010 budget outline that the president proposed in February and which Congress has already acted on.

White House budget director Peter Orszag said the president's plan for program cuts is just a start and that a lot more needs to be done to dig the government out of its fiscal hole, especially curbing the growth of the Medicare and Medicaid health care programs for the elderly and the poor.

"But $17 billion a year is not chump change by anyone's accounting," he said.

Those savings are far exceeded by a 2 1/2-inch thick volume detailing Obama's generous increases for domestic programs. And instead of devoting the savings to defray record deficits, the White House is funneling them back into other programs.

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Despite redoubling its efforts to portray itself as tough on waste and spending, it's undeniable that the adminstration and the Democratic-controlled Congress has taken the nation on a steady course of higher budgets in appropriated accounts. In rapid succession has come passage of a $787 billion economic recovery bill, a $410 billion omnibus appropriations bill and Congress' $3.4 trillion budget, which calls for increases of almost 10 percent over current funding for non-defense agency budgets.

Even as Obama spoke, a key House panel was adding $9 billion to his war request.

Most of the major elements of Obama's budget for next year were released in February. Additional details, including an increase in fees on airline travel to fund airport security programs, come next week.

Tough cuts
The roster of cuts won't be easy for Congress to swallow. Lawmakers from the potent California, New York and Florida delegations are sure to fight the elimination of the State Criminal Alien Assistance Program, which gives money to states to help defray the cost of incarcerating illegal immigrants who commit crimes. President George W. Bush tried and failed to kill the $400 million program several times.

And the oil and gas industry is certain to fight to preserve $26 billion in tax breaks, even though Obama calls them "unjustifiable loopholes" in the tax system that other companies do not get.

Obama is also claiming savings from eliminating a host of accounts typically earmarked by members of Congress such as a $10 million West Virginia highway project obtained by Sen. Robert Byrd, D-W.Va., and $15 million obtained by Dianne Feinstein, D-Calif., for diesel emissions reduction grants.

Obama is also proposing $145 million in savings from a clean water program administered by the Environmental Protection Agency which bankrolled 301 earmarks this year.

But Obama is not actually proposing to kill any of the thousands of earmarks funded in the $410 billion catchall spending bill passed in March.

Left untouched is a favorite of some lawmakers, a $9 million program to promote whaling and trading history at museums in Alaska, Hawaii, Massachusetts and Mississippi — a collection of states represented by Obama ally Edward Kennedy, D-Mass., and a handful of senior appropriators.

In fact, some of the cuts, like terminating production of C-17 cargo aircraft and phasing out direct payments to farmers with sales exceeding $500,000 annually, have already been rejected by Obama's allies in Congress. A key House panel is proposing adding $2.2 billion for 8 C-17s to Obama's pending war request, while a congressional budget plan passed last week protects the farm payments targeted by Obama.

Defense cuts
About half the budget savings would come from an effort by Defense Secretary Robert Gates to curb defense programs, including ending production of the F-22 fighter and killing a much-maligned replacement helicopter fleet for the president that's way over budget.

Obama singled out a $465 million program to build an alternate engine for the Joint Strike Fighter, but noted that Congress continues to fund it even though the Bush administration has tried to kill it for the last two years.

Obama also is fleshing out the details of the $1.3 trillion portion of the budget that he requested Congress pass through appropriations bills for the upcoming budget year.

The administration is also proposing curbing subsidies for crop insurance to save $5.2 billion over 10 years and killing a $25 million program that funds the relocation of rail lines.

And just as Congress is beginning work on a new war bill to fund military operations in Iraq and Afghanistan into the fall, Obama is sending up a $130 billion request to fund them next year. That figure may not be adequate considering the increase in the tempo of operations in Afghanistan.

Obama has said repeatedly his administration will go through the budget "line by line" to eliminate waste. But the resulting savings are relatively minor compared with the government's fiscal woes, especially a deficit that's likely to exceed $1.5 trillion this year, the latest installment in a national debt now at about $10.7 trillion.

Many of the cuts mirror those proposed previously by Bush but largely rejected by Congresses controlled by both Republicans and Democrats. In fact, Democrats already have pared about $10 billion from Obama's appropriations requests in passing the $3.4 trillion congressional budget plan last month.

In a preview, administration officials named a few examples Thursday which mostly represented easy-to-pluck targets, like ending the Education Department's attache in Paris, at a savings of $632,000 a year. Another example: the obsolete LORAN-C marine navigation system, which still gets $35 million a year despite being made obsolete by the satellite-based Global Positioning System.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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