Obama Takes Questions On Economy, Deficit

At a new conference, President-elect Obama names Nancy Killefer as the nation's first governmental performance officer, to be assigned to the White House Office of Management and Budget.

The former Clinton Treasury Department official will head a new office that will closely follow how well federal programs are working.

The announcement came on the same morning that the Congressional Budget Office said the U.S. economy will see a budget deficit of over $1 trillion for fiscal year 2009.

Obama Sets Strategy For Dealing With Deficit

Nancy Killefer takes the podium after being named to a new White House post. i i

hide captionNancy Killefer will help the White House address "a deficit of accountability and a deficit of trust," President-elect Obama said Wednesday.

Mandel Ngan/AFP/Getty Images
Nancy Killefer takes the podium after being named to a new White House post.

Nancy Killefer will help the White House address "a deficit of accountability and a deficit of trust," President-elect Obama said Wednesday.

Mandel Ngan/AFP/Getty Images

Facing a potential record budget deficit of $1.2 trillion, President-elect Barack Obama said Wednesday that his advisers are balancing the need for a short-term stimulus while laying the groundwork for future economic growth.

At a news conference in Washington, D.C., Obama said the U.S. can't continue the pork-barrel spending that has led to the ballooning deficit. He said his economic stimulus plan will contain none of the pet projects that lawmakers traditionally add, and he is talking to congressional leaders about how to address entitlements. He said they may have a spending plan for entitlement programs — such as Social Security and Medicare — in February.

"Even in good times, Washington can't afford to continue these bad practices," he said. "The key is going to be, medium term and long term, how do we bend the curve so that we start getting these deficits down to a manageable level."

Aid To States, Tax Breaks

Obama, who returned to Washington this week ahead of the Jan. 20 inauguration ceremonies, has been on Capitol Hill this week pushing a plan to stimulate the U.S. economy and pull the country out of a deepening recession.

His plan includes new spending on infrastructure and energy projects, and he said Wednesday that he aims to include education and health care in his overall plan. In addition, the stimulus package is expected to include tax cuts of up to $300 billion for middle-income families; some businesses will also get tax relief in order to stimulate investment.

Obama also said his package would contain aid for states to help provide basic services and prevent layoffs in areas such as teaching and law enforcement.

The president-elect said he is still discussing the size of the package with congressional leaders, but it is expected to cost about $775 billion over two years and create or save up to 3 million jobs.

"I have confidence that not only are we going to be able to create jobs, but we're also going to be making a down payment on some critical areas," he said.

Adding A 'Chief Performance Officer'

Obama said part of his overall strategy is to increase government efficiency. Toward that end, he announced that he has chosen former Treasury Department official Nancy Killefer to serve as the nation's first chief performance officer. He said she will be charged with working with government officials to eliminate waste.

For example, he said one of his goals is to make federal buildings across the country more energy efficient, a plan Killefer will oversee that is projected to save billions of dollars.

Obama's strategy of looking forward at eventual deficit reduction struck a chord with some Republican lawmakers.

"We cannot borrow and spend our way back to prosperity when were already running an annual deficit of more than $1 trillion," House Republican leader John Boehner of Ohio said in a statement. "I was pleased to hear the President-elect say ... that we need to stop just talking about our national debt and actively confront it."

Speaker Nancy Pelosi warned House Democrats that failure to pass the package by mid-February would lead to more job losses.

Pelosi said in prepared remarks that lawmakers should consider the cost of inaction, rather than focusing on the price tag alone. She said the payoff of the stimulus package would be in the creation of jobs.

From NPR staff and wire reports

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