By Michael A. Fletcher
Washington Post Staff Writer
Monday, April 20, 2009
President Obama plans to convene his Cabinet for the first time today, and he will order its members to identify a combined $100 million in budget cuts over the next 90 days, according to a senior administration official.
Although the budget cuts would amount to a minuscule portion of federal spending, they are intended to signal the president's determination to cut spending and reform government, the official said.
Obama's order comes as he is under increasing pressure to show momentum toward his goal of eventually reducing the federal deficit, even as he goes about increasing spending in the short run to prop up the economy and support his priorities.
Earlier this month, both chambers of Congress passed Obama's $3.5 trillion budget outline for 2010, which includes unprecedented new investments in health care, education and energy. But the huge budget, which contemplates a $1.2 trillion deficit, has drawn the ire of small-government conservatives, who say that such high deficits jeopardize the nation's economic future.
Last week, conservative activists organized "tea parties" to protest Obama's budget, which House Minority Leader John A. Boehner (R-Ohio) says "spends too much, taxes too much, and borrows too much from our children and grandchildren."
Obama will shift his attention back to the budget this week, as his administration has begun speaking more openly about tentative signs of improvement in the economy. But even as glimmers of improvement emerge, it is likely that some of the nation's largest banks will need additional help, which the administration should be able to provide without returning to an increasingly skeptical Congress for more money, top White House officials said.
The Obama administration is moving closer to releasing some results of the "stress tests" aimed at projecting how the nation's 19 largest banks would withstand further deterioration in the economic condition.
"We're confident that, yes, some are going to have very serious problems, but we feel that the tools are available to address these problems," Obama senior adviser David Axelrod said yesterday on CBS's "Face the Nation."
The administration plans to release guidelines for the stress tests this week, and it hopes to make results available in early May. "It's important that there is disclosure," Axelrod said. "And I think the banks are going to want that because they're going to want the markets and the country and the world to know exactly what their condition is."
Obama yesterday wrapped up a visit to Mexico and Trinidad and Tobago, where he attended a summit of Caribbean and Latin American leaders.
Chief economic adviser Lawrence H. Summers said Obama would back efforts to tighten regulation of credit card companies. Executives from the nation's largest credit card firms have been summoned to the White House for a meeting with administration officials later this week. Meanwhile, members of Congress are pushing legislation to limit the ability of credit card companies to raise interest rates on existing balances and to require clearer disclosure of loan terms.
"He's going to be very focused in the very near term on a whole set of issues having to do with credit card abuses, having to do with the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into," Summers said on NBC's "Meet the Press."
While officials talked cautiously about the obstacles that stand in the way of a turnaround in an economy that has been shedding more than 600,000 jobs a month and has seen a steady rise in home foreclosures, they also pointed to some improvements.
Some major banks have reported profits recently, and there are signs of credit thawing in some corners of the economy, officials have said.