UPDATE 2-Obama seeks 5 percent cuts in some programs

* Obama asking non-security agencies to plan for cuts

* Americans concerned about growing budget deficit

* Budget chief says must tackle both jobs and deficit

(Adds more Orszag comment, G20)

By Alister Bull and Caren Bohan

WASHINGTON, June 8 (BestGrowthStock) – U.S. President Barack Obama
is demanding 5 percent budget cuts across many government
agencies, the White House said on Tuesday, as he seeks to show
fiscal discipline while keeping an economic recovery on track.

“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.”

The instruction was issued as part of the White House’s
budget guidance for the fiscal year 2012. Orszag said it would
be applied flexibly to ensure the overall target was met.

Financial markets have been battered by concerns over the
sustainability of government debt levels in Europe. The United
States has so far not suffered from similar investor doubts,
but policymakers fear that there could yet be spillovers.

In addition, Americans worry the country’s record deficit
will force tax hikes in the future. 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.

The U.S. budget deficit hit $1.4 trillion last year and is
projected at $1.6 trillion this year as the recession and the
costs of Obama’s emergency action to restart growth are felt.

A new jobs bill to renew expiring unemployment benefits was
pared back to gain support from fiscally conservative Democrats
in the House of Representatives.

The bill, which would also boost taxes on investment fund
managers and extend business and individual tax breaks, will
add $31 billion to the deficit, based on total outlays $80
billion. It is still before the Senate.

DEMAND PULL

The White House strongly backs measures to extend jobless
aid and ease the financial pain of cash-strapped states. It
has also urged Germany and other European partners in the G20
not to forsake growth as they tackle deficits. The Group of 20
industrialized powers met in South Korea earlier this month.

Obama’s White House faces a delicate task in convincing
other countries to keep pumping up demand while convincing
investors, whom the country relies upon to finance its deficit,
that the United States will get its own debts under control.

Orszag said the trade-off between boosting jobs or trimming
the deficit was a false choice, and the government must ease
unemployment while also taking steps to tackle the budget
deficit over the medium and long term.

“It is a question of timing. We have to move aggressively
to address the jobs deficit now. We have to be acting
aggressively to bring down the outyear deficits. Because if we
don’t do that, we’re going to be creating another crisis, and
no one wants that,” he said.

Obama has gathered a bi-partisan deficit commission to come
up with recommendations on how to bring down the deficit and
reverse the current projections for mounting national debt.
It’s recommendations, which are expected to combine calls for
spending cuts and tax increases, are due in December.

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 Orszag’s remarks.

Investment

(Editing by Bill Trott and Eric Beech)

UPDATE 2-Obama seeks 5 percent cuts in some programs