RPT UPDATE 2-Obama proposes cuts with $3.8 trln budget-paper

(Repeating to additional subscribers)

* Paper says Obama to propose $3.8 trillion 2011 budget

* White House outlines proposed cuts to help tame deficit
(Updates with New York Times report, adds details on cuts)

By Jeff Mason

WASHINGTON, Jan 30 (BestGrowthStock) – President Barack Obama will
propose trimming or chopping 120 government programs to help
rein in the U.S. deficit, the White House said on Saturday, in
a 2011 budget proposal that a newspaper reported would hit $3.8

Obama is slated to publish his budget proposal on Monday
for the fiscal year starting on Oct 1.

The White House declined to confirm or deny a report in the
New York Times that valued the 2011 budget at $3.8 trillion.

The newspaper said the proposal would include $25 billion
for struggling states and provide funding increases for
programs at the Energy Department, National Institutes of
Health, National Science Foundation and the Census Bureau.

An administration official confirmed to Reuters that the
budget would include a 6 percent increase in civilian research

Obama has promised to tackle record deficits with a
spending freeze on some domestic programs. The three-year
freeze, which excludes spending on national security and
defense programs as well as Social Security, Medicare and
Medicaid entitlement programs, would save $20 billion in fiscal
2011 and $250 billion by 2020.

The White House gave a preview of some of the proposed cuts
on its blog on Saturday.

“The President believes we need to be honest about what is
working and what isn’t and that making tough choices about
which programs to fund and which to reduce or terminate is part
of governing,” White House Communications Director Dan Pfeiffer
said in a statement.

The country’s 1.4 trillion budget deficit is a political
albatross for Obama, with Republicans seeking to paint the
president as a big spender while the White House emphasizes he
inherited a $1.3 trillion deficit when he took office.


One of the administration’s proposals, a repeat from last
year, would eliminate the “Advanced Earned Income Tax Credit,”
which allows eligible taxpayers with children to get a portion
of a tax credit paid out in their paychecks.

The White House said only 514,000 people — 3 percent of
those eligible — claimed the credit and the error rate for the
program was high, with 80 percent of recipients not complying
with one or more of the program’s requirements.

“This ineffective and prone-to-error program should be
eliminated,” Pfeiffer said.

Congress rejected that cut last year — a sign that it may
be hard to get through this proposal. The White House said it
would fight congressional resistance to cut wasteful programs.

Other changes would include consolidating 38 programs at
the Department of Education into 11 to clamp down on
inefficiencies and demand greater accountability from states
and school districts on grants.

The budget would again target a program originally created
to restore land with abandoned coal mines. The program had
changed from its original focus and now allowed payments to go
to states and tribes that had already cleaned up the mines.

A program related to national parks was also on the
chopping block.

The New York Times said space agency NASA’s mission to fly
back to the moon would be scrapped and some public works
projects by the Army Corps of Engineers would lose funding.

The budget would provide more funds for military programs,
including the Pentagon’s Special Operations forces, the U.S.
Army’s Black Hawk and Chinook helicopters, and the F-35 Joint
Strike Fighter, the paper reported.

The White House declined to identify what each of the
programs listed on Saturday would save individually.

Last year Obama proposed terminating or trimming 121
programs to save $17 billion in one year. Congress approved
only a portion of those cuts.

Stock Market Today
(For more on Obama’s budget challenge, see [ID:nN30164446]
(Reporting by Jeff Mason, editing by Anthony Boadle)

RPT UPDATE 2-Obama proposes cuts with $3.8 trln budget-paper