Obama to order 5% budget cuts for some federal agencies

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President Obama will order some federal agencies to reduce their fiscal 2012 budget requests by 5% to help reduce the deficit, White House Budget Director Peter Orszag said today.

Orszag said in a speech at the Center for American Progress, a Washington research group with close ties to the Obama administration, that ‘as stewards of the American people’s tax dollars, we cannot afford to waste money on programs that do not work, that are outdated or that are duplicative of one another.’

Responding to reporters’ questions after the speech, Orszag said the White House is maintaining a goal set by Obama to freeze annual appropriations outside of defense and national-security programs for three years. Information from the budget exercise will be used to trim some agencies’ budgets in order to make room for increases in other agencies’ budgets, he said.

The Obama administration used a similar process, also asking agency leaders to submit a hypothetical budget reduced by 5%, to prepare the spending plan it proposed in February for the federal fiscal year that begins Oct. 1, Orszag said.

The order for reduced budget requests comes at a time when many voters are concerned about a projected record deficit of $1.55 trillion this year and forecasts for red ink into next year. U.S. debt is projected to rise from 53% of the economy to about 90% in 2020, according to the nonpartisan Congressional Budget Office.

-- Bloomberg