Wednesday, May 6, 2009

The White House will on Thursday detail $17bn of proposed budget reductions

TO BE NOTED: From the FT:

Obama’s budget knife set to cut $17bn

By Tom Braithwaite in Washington

Published: May 7 2009 01:32 | Last updated: May 7 2009 01:32

The White House will on Thursday detail $17bn of proposed budget reductions as the US administration attempts to boost its deficit-cutting credentials at a time of hugely increased government spending.

A Paris-based education attaché, an obsolete navigation system and paying states to clean up mines that were cleaned long ago are among programmes expected to have federal funding cut off.

Reductions in defence spending already announced by Robert Gates, defence secretary, make up about half of the reductions, but in total the administration plans to detail 121 cuts – of which 80 are new on the chopping block – with a claimed saving of $17bn (€13bn, £11.3bn) in 2010 and more in the future.

The administration inherited a $1,300bn budget deficit, which will rise to $1,750bn this year with the increased spending designed to combat the effects of the recession. But Barack Obama, US president, has said he plans to bring the deficit down to $533bn by 2013.

“In many cases we have multiple programmes that are doing the same thing and that drives up administrative costs unnecessarily – so duplication can be the enemy of efficiency,” said a senior administration official on Wednesday. “Another big problem is that we often don’t measure and evaluate what works.”

Among what does not work, according to the administration, is a long-range radio navigation system that costs $35m a year and has been made obsolete by the satellite-based global positioning system. Stopping payments to states to clean up abandoned mines when cleaning has already finished is designed to save $142m a year.

“The department of education . . . does not need a full-time representative in Paris, France,” the official added. Removing the attaché would save $632,000 a year, he said.

Some of the proposals are likely to be more controversial. The administration is planning to cut the Even Start education programme, which it says is failing to meet its goal of improving literacy.

But that programme was also a budget reduction target of the previous administration, before the cut was defeated in Congress.

“Clearly a key thing is congressional support for these changes,” said the official. “None of this is going to be easy. No one ever pretended that it would be. But we’re trying to do the right thing here and I think the context has significantly changed.”

A second senior administration official said: “There’s an overriding national need here and we intend to meet that responsibility.”

Nancy Pelosi, speaker of the House of Representatives, has asked the chairmen of congressional committees to report back in June with more suggestions for cuts."

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