Obama Zeroes In On The Federal Budget

Barack Obama's on board for the economic stimulus package but he's also in favor of reducing the federal budget deficit – just not right away. "We are going to have to jump-start the economy," said the president-elect, as the markets reacted to steep declines in housing prices and the gross domestic product's worst dip in 28 years. "As soon as the recovery is well under way, we need to set up a long-term plan to reduce the structural deficit and make sure we are not leaving a mountain of debt for the next generation."

In the meantime, says Obama, he's told his budget director – Peter Orszag, currently director of the Congressional Budget Office, and described by his new boss as knowing "where the bodies are buried" - to cut the programs we don't need and insist that "those we do need operate in a cost-efficient way."

To illustrate his point, the president-elect pointed to a government program for farmers which made payments to over 2,700 millionaires in the past six years – even though they might not have been eligible for the boost from Uncle Sam. That program, said Obama, needs review.

Most of the budget cuts won't be that easy. Similarly, the administrators of the Wall Street bailout are having a hard time winning cheers in all quarters. Their latest move, to buy more bad mortgages and boost consumer credit, comes of the heels of the Citigroup bailout which has sparked concern about what effect it may have on other banks, which are now experiencing an increase in foreclosures and delinquencies among borrowers with previously solid credit ratings.

Obama, both in his comments on the federal budget and at his news conference Monday announcing the names of the men and women he's nominating to steer the nation out of the economic crisis, struck a bipartisan note in saying he'll consult the Republicans on economic reforms and will "honor the commitments made by the current administration" on parceling out bailout dollars.

But some of the decisions on who should be bailed out and what kinds of strings should be attached are drawing fire, in serious debate by policymakers and comments from citizens on through to comedy routines on late night television only a few degrees removed from questions being asked on Capitol Hill.

The nation, said Obama as he urged Congress to pass a stimulus and jobs creation package he can sign as soon as he's inaugurated, will weather this crisis "because we've done it before." But he's not high on writing the red ink-mired automakers the $25 billion rescue package they're seeking – not until, that is, he sees a detailed plan for how they plan to do better in the future.

A Gallup poll done days after the presidential election suggests many Americans would agree with this approach to the auto industry, even though unemployment has continued to rise and is straining national resources. Six in ten Americans surveyed by Gallup said "passing new, stricter regulations on financial institutions" is critical or very important for Obama to do as president, but only one in five said Obama should help bail out large financial institutions or provide financial assistance to the auto industry.

Fifty-one percent cited "helping homeowners in danger of losing their homes" as critical or very important for the new administration to do to improve the economy, and almost as many – 49 percent – cited "passing a tax cut for the middle class" as critical or very important.

One thing that notably didn't get much support in the Gallup poll was efforts to fight the spectacularly escalating federal budget. Asked what Obama's top priority as president should be, 64 percent said the economy, 11 percent said Iraq and Afghanistan, 7 percent said the federal budget deficit, 6 percent pointed to energy policy, and 5 percent said health care.

For more on decisions we face on the economy and the federal budget deficit, check out our Citizen's Survival Kit and FacingUp.org.