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Obama Rolls Out Spending Cuts

With Republicans demanding more budget discipline, President Barack Obama rolled out a new regimen of spending cuts Thursday, promising nearly $17 billion in savings next year – much of it at the expense of vested interests often allied with his critics.

Democrats will feel the bite at well, but the Republican tilt is stronger from military contractors to oil and nuclear interests, bankers, wealthy farmers and Dick Cheney’s old home state of Wyoming.

About half the savings will come from defense, much through the termination of billions in dollars of major aircraft programs. But other targets include oil and gas research in the Energy Department, a nuclear power demonstration program, and federal abandoned mine payments to Western coal states. With Republican Ted Stevens now gone from the Senate, his Alaska programs make for easy picking, and a proposed cut in subsidies for farmers appears to have been altered since February to now hit couples with annual sales over $1 million.

But after promising voters he would go through the budget line by line, Obama can’t mask what remains a steady, even historic, rise in spending under his administration. The twin volumes released Thursday morning capture the moment: 131 pages to describe his proposed savings, more than 1300 pages to spell out annual appropriations requests that will exceed $1.2 trillion once the added costs of wars in Iraq and Afghanistan are added to the total.

From aviation security to clean water programs, big increases are promised together with new infrastructure and education investments, building on the massive two year $787 billion stimulus bill already adopted this year. 

In passing their own budget plan last week, Democrats in Congress pledged to cut at least $10 billion from the president’s new requests in hopes of containing future deficits. And the release of the documents now sets the stage for what will be a prolonged debate over the summer as lawmakers debate the 12 annual appropriations bills that cover government operations.

The core savings outlined in documents Thursday include $11.5 billion from discretionary appropriations accounts in 2010 and another $4.13 billion from mandatory programs. A third category claims about $1.07 billion in savings from improved oversight and “program integrity” by better administering benefit programs for example.

In some cases, the administration is repackaging old ideas it has taken credit for before, such as $3.6 billion owed to already announced plans to alter the federal student loan programs. And the real battleground will be in the appropriations arena where both the savings and president’s new spending increases will be tested against one another.

“None of this is going to be easy,” said an administration official briefing reporters Wednesday night. And Wyoming senators will be up in arms if they lose an estimated $116 million—their state’s share of about $142 million in savings from changes in the federal abandoned mine payments impacting Western coal states.
The State Criminal Alien Assistance Program, now about $400 million a year, would be terminated — provoking an almost certain fight with the powerful California delegation.

Below the radar are more obscure but still important fights affecting contractors such as Raytheon, which has had a major stake in the Homeland Security Department's multibillion-dollar initiative to develop sensors to detect illicit radioactive materials entering the United States.

Begun in 2004 under the Bush administration, the so-called ASP, or advanced spectroscopic portal, technology has been questioned by Congress over the years, and now new funding is sought for 2010 as part of the department’s budget released Thursday.

For Obama, the symbolism is important as a first step toward greater efficiency in government. “It's not the end of the process” oneofficial said. “We will continue to look for additional savings and I know that congressional committees are also. So you have not heard everything that is to be said on this topic from us as we roll into -- as we have a full year.”
About two-thirds of the programs are relatively new to the chopping block. And while Republicans have gone after the Even Start early schooling program in the past, the dynamic will be different when a Democratic White House argues that the program is no longer needed, given new investments in Head Start, for example.

“We're interested in measuring programs by their outcomes, not by their intentions,” an administration official said. “There are a lot of programs that are implemented with the best of intentions; not all of them are effective. And we can't afford to carry programs that are ineffective.”

Given the vested interests behind many of the targeted programs, the battle is a real test of how much change the president can achieve. The strong temptation will be to backslide, by cutting his new spending initiatives instead of the status quo. And there is some evidence already that Democrats are resorting to such budget games in crafting a wartime spending bill now pending in Congress.