Obama vows line-by-line budget review

President-elect Barack Obama vowed today to get rid of federal programs that no longer make sense and run others in a more frugal way to make Washington work in tough economic times.

Obama said that to make the needed investments to create jobs, "we also have to shed the spending we don't need."

"In these challenging times, when we are facing both rising deficits and a sinking economy, budget reform is not an option. It is an imperative," Obama said. "We cannot sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness, or exist solely because of the power of a politicians, lobbyists, or interest groups. We simply cannot afford it. This isn’t about big government or small government. It’s about building a smarter government that focuses on what works. That is why I will ask my new team to think anew and act anew to meet our new challenges.... We will go through our federal budget – page by page, line by line – eliminating those programs we don’t need, and insisting that those we do operate in a sensible cost-effective way."

He introduced the man who will be largely responsible for the budget, Peter Orszag, who will be director of the Office of Management and Budget and is now director of the Congressional Budget Office.

Obama said that Orszag "knows where the bodies are buried. "He knows what works, and what doesn't," he said.

As OMB deputy director, Obama named Rob Nabors, who is now staff director of the powerful House Appropriations Committee.

Obama repeated that there is only one president at a time, but declared that under the "extraordinary circumstances" it is important for him to reassure Americans that he is putting together a "first class team" and coming up with aggressive plans to jump start the economy.

"We don't intend to stumble into the next administration. We are going to hit the ground running," he said.

But while pushing through the stimulus plan quickly, his administration will not waste money, Obama said.

"We are not going back to business as usual when it comes to the budget," he said.

Spending restraint is even more important with the federal deficit expected to top $1 trillion in 2009 -- more than double the previous record. And that's before an economic stimulus package that could cost upwards of $500 billion over two years.

During the campaign, Obama pronounced that all his programs were paid for, but did not provide details of how he would slice spending to come up with money.

Also during the campaign, he objected to Republican rival John McCain's call for an across-the-board spending freeze (except for defense, veterans care, and entitlements).

"That's an example of an unfair burden sharing. That's using a hatchet to cut the federal budget," Obama said during their second debate. "I want to use a scalpel so that people who need help are getting help and those of us, like myself and Sen. McCain, who don't need help, aren't getting it."

During the press conference in Chicago, Obama declined again to go into much detail about spending cuts, though he mentioned subsidies to affluent farmers.

Asked about the mushrooming deficit, Obama said he would draw a line between immediate stimulus that is needed and longer-term programs that could add to the national debt.

He said his economic team will seek to find "two-fers" that will provide immediate and long-term benefit. He said tax cuts for the working class fits into that category, as do investments in medical technology that could reduce healthcare costs in the long term.