Obama will slice budget by $17 billion

White House will propose cutting or reducing funding for more than 100 federal programs in latest salvo in 2010 budget fight.

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By Jeanne Sahadi, CNNMoney.com senior writer

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NEW YORK (CNNMoney.com) -- The White House on Thursday will detail a proposal to save $17 billion next year by eliminating or reducing 121 federal programs, according to a senior administration official.

Roughly $11.5 billion of the savings would come from the discretionary side of the fiscal 2010 budget -- that is, for programs whose funding is not automatic. And roughly half of the savings would come from non-defense programs, the official said Wednesday.

"In many cases we have multiple programs that do the same things," the official said in a briefing call with reporters. "Duplication can be the enemy of efficiency."

In other cases, the results of the targeted programs didn't justify the expense, the official said.

Among the programs on the president's chopping block:

  • A long-range navigation system now made obsolete by the GPS. Cost: $35 million.
  • An early education program called Even Start, the performance of which had been poor. Cost: $66 million.
  • A Department of Education attaché position in Paris. Cost: $632,000.
  • The Christopher Columbus Fellowship Foundation, which only pays out 20% of its funds in awards every year. Cost: $1 million.
  • A program that pays states to clean out abandoned mines even after the mines have been cleaned out. Cost: $142 million.

The proposed program eliminations and reductions will be part of the release Thursday of the president's 2010 budget request.

The cuts are likely to be the first of many to come, the official said. "This is an important step, but it's just the first step. We will continue to search for additional savings and efficiencies."

A few weeks ago, the president announced that he had asked his cabinet members to cut $100 million from their agencies' expenses, a number budget analysts characterized as symbolic at best.

Whether or not lawmakers adopt the president's recommended cuts is unclear. They are likely, however, to come up with their own cost-saving proposals. House Speaker Nancy Pelosi, D-Calif., for instance, has given her House committee chairmen until June 2 to provide a list of ways they can reduce expenses.

Deficit on the horizon

Fiscal discipline is among the pillars of the new economic foundation Obama has said he wants to build.

But it was unclear Wednesday whether the $17 billion in savings in 2010 would be used to fund other federal programs or to reduce the country's growing deficit.

The House and Senate have agreed to amore than $3.5 trillion budget outline for fiscal 2010, which begins Oct. 1. That's roughly the size of the president's budget request. The proposals Congress and the president are making, however, would push long-term deficits significantly higher.

While few suggest the government retract its spending largesse while the economy is still struggling, deficit hawks caution that lawmakers must do more than pay lip service to the long-term debts situation.

Thanks to the financial crisis, tax receipts are down sharply this year while spending demands have grown to record levels. Forecasts of a slow recovery and estimates of a large price tag for Obama's proposed health care, energy and education initiatives have worsened somewhat the already tough fiscal outlook.

The Government Accountability Office estimates that all federal revenue will be eaten up by government costs for Medicare, Medicaid, Social Security and public debt interest by 2025. Last year, the estimate was 2030, said Charles Konigsberg, an expert on the federal budget at deficit watchdog group the Concord Coalition.

The official reiterated the administration's position that the biggest deficit-cutting efforts will come from curbing the growth in health care costs.

The White House budget office's cost-saving proposals are part of a two-stage release on the final details of Obama's budget request. Next week, the OMB will release more analysis on the country's fiscal policies, along with "minor updates and changes" to the administration's summary tables of budget forecasts, first put out in February. To top of page

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