UPDATE 1-Obama seeks 5 percent cuts in some programs

* Obama asking non-security agencies to plan for cuts

* Americans concerned about growing budget deficit

(Updates with Orszag remarks, reaction, background)

By Caren Bohan and Alister Bull

WASHINGTON, June 8 (BestGrowthStock) – U.S. President Barack Obama
is demanding government agencies plan for 5 percent cuts in an
array of domestic programs, the White House said on Tuesday, as
it seeks to hold down spending and show fiscal discipline.

“We are asking each agency to develop a list of their
bottom 5 percent performing discretionary programs, as measured
by their impact in furthering the agency’s mission,” White
House budget director Peter Orszag told the Center for American
Progress think tank.

“In addition, to ensure that we can meet the president’s
absolute insistence on a freeze for non-security agencies while
funding priority areas, we are asking non-security agencies to
specify how they would reduce their budgets by 5 percent,” he
said.

Financial markets have been battered by concerns over the
sustainability of government debt levels in Europe, and
although the United States has not so far suffered a similar
fate, policymakers worry there could be spillovers.

The U.S. budget deficit reached $1.4 trillion last year and
is projected to come in at $1.6 trillion this year.

In addition, Americans worry the country’s record deficit
will force tax hikes in the future and such concerns have
complicated Obama’s bid to ensure a solid recovery from the
deep U.S. recession after a global financial crisis in 2008.

A new jobs bill to renew expiring unemployment benefits,
boost taxes on investment fund managers, and extend business
and individual tax breaks, was pared back to gain support from
fiscally conservative Democrats in the House of
Representatives. It will add $31 billion to the deficit, based
on total outlays $80 billion and is still before the Senate.

The White House strongly backs measures to extend jobless
aid and ease the financial pain of cash-strapped states.

Orszag said that the trade-off between boosting jobs or
trimming the deficit was a false choice, and the government
must ease unemployment in the short term, and tackle the budget
deficit once job growth was secure.

“We face two very substantial and serious deficits. A near
term jobs deficit with an unemployment rate that is
unacceptably high. And a medium and long term (fiscal) deficit
that ultimately would cause a crisis if it were not addressed,”
he said in response to a question.

Republicans have seized on huge budget deficits to attack
Obama’s handling of the economy in a congressional election
year in which they are seeking to overturn Democratic
majorities in both houses of Congress.

“The two things that are growing fastest in this Democrat
economy are the size of the federal government and the crushing
burden of the national debt,” said Senate Republican leader
Mitch McConnell following release of Orszag’s remarks.

Stock Market Analysis

(Editing by Bill Trott and Eric Beech)

UPDATE 1-Obama seeks 5 percent cuts in some programs