President-elect Barack Obama vowed on Tuesday to cut billions of dollars from wasteful government programs as he sought to reassure Americans anxious about a growing mountain of debt and a faltering economy.
Obama held a second news conference in Chicago in two days, and planned a third for 10:45 a.m. EST (1545 GMT) Wednesday, seeking to calm see-sawing financial markets looking for signs that his incoming administration has a viable plan to tackle the worst economic crisis in decades.
He was expected to move away from the economy by early next week and announce some national security choices. They were reported to include making Sen. Hillary Clinton secretary of state and asking current Defense Secretary Robert Gates to continue in his post.
In his news conference on Tuesday Obama vowed to run a cost-effective and efficient government. "If we're going to make the investments we need, we must also be willing to shed the spending we don't."
"We cannot sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness or exist solely because of the power of a politician, lobbyist or interest group," he said.
An obvious example, Obama said, were reports of crop subsidies to farmers who make more than $2.5 million per year. He did not say what other programs he was eyeing.
Obama named Peter Orszag and Rob Nabors as the top two officials at the Office of Management and Budget, charging them with examining federal spending to cut wasteful programs.
Orszag immediately resigned as head of the Congressional Budget Office. Nabors serves as staff director of the House Appropriations Committee. Both held White House positions under President Bill Clinton.
The two join a growing economic team which is already designing a stimulus package to jolt the U.S. economy back into growth -- a proposal Obama has said will be costly.
"Given the extraordinary circumstances we find ourselves in ... it is important for the American people to understand that we are putting together a first-class team and that we don't intend to stumble into the next administration," he said.
NEXT, NATIONAL SECURITY
Obama was next expected to announce the top national security jobs.
A senior Democratic source said Gates, who was appointed by Republican President George W. Bush in 2006, had agreed to stay on as defense secretary. The Politico news website also reported that retired Marine Gen. James Jones would be named as Obama's national security adviser.
Quoting officials in both Democratic and Republican parties, Politico said the announcements would be made early next week when Obama would also confirm his choice of Clinton.
Officials at Obama's transition office had no immediate comment on the report while a spokesman at the Pentagon said he had no information.
For the moment, however, Obama kept the focus on the economy, which was also expected to be the subject of Wednesday's news conference.
New figures have shown that the U.S. economy shrank more severely during the third quarter than previously estimated as consumers cut spending at the steepest rate in 28 years.
The Federal Reserve announced two new programs aimed at making it easier for Americans to obtain loans for homes, cars and on credit cards -- a $600 billion program to buy mortgage-related debt and securities, and a $200 billion program to increase the availability of consumer debt.
Markets initially cheered the launch of the programs, with the Dow Jones industrial average rising more than 100 points, or about 1.3 percent, within minutes of its opening, but later pared their gains.
The Bush administration and Fed have committed trillions of dollars to try to avert a financial meltdown. That will push the national debt well above $11 trillion.
Obama acknowledged that structural spending had created a "huge mountain of debt" but said addressing the ballooning deficit would have to wait until the economy was well on the road to recovery.
"The immediate needs of the economy and the long-term concerns are not necessarily incompatible," said Obama, who formally takes office on January 20.
(Writing by Ross Colvin in Chicago and Andy Sullivan and Deborah Charles in Washington; editing by David Storey)
