Obama names budget director, promotes restraint

President-elect Barack Obama expanded his economic team on Tuesday and vowed to conduct a thorough review of federal spending programs as he promotes a rescue package that would worsen an already swollen U.S. deficit.

With the economy in crisis, Obama said, "Budget reform is not an option. It's a necessity."

Obama's comments on careful federal spending came a day after he declared that restoring the economy's health took priority over the budget deficit. He called on Congress to prepare an economic stimulus program for him to sign as soon after Inauguration day as possible. Estimates of the measure range from $500 billion to $700 billion over two years.

The president-elect has acknowledged that the price tag of his rescue package will be far higher than the $175 billion economic aid plan he advocated while he was campaigning for the White House.

"We are going to have to jump-start the economy ... but we have to make sure that those investments are wise. We have to make sure we are not wasting money in every area," he said Tuesday, defining the two objectives that will guide his economic program.

Obama named Peter Orszag his budget director, saying he had chosen a man who "knows where the bodies are buried." Orszag is the director of the Congressional Budget Office.

Elected in a state-by-state landslide, Obama claimed "a mandate to move the country in a new direction and not continue the same old practices that have gotten us into the fix we are in."

At the same time, he said, after gaining only 53 percent of the popular vote," we enter into the administration with a sense of humility and a recognition that wisdom is not the monopoly of any political party."

The U.S. presidency is decided not by a nationwide popular vote, but by a state-by-state tally of electoral votes.

He added: "I think what the American people want more than anything is just commonsense, smart government. They don't want ideology, they don't want bickering."

Along with Orszag, Obama named Robert Nabors as deputy budget director. Nabors has been the top staff aide on the House Appropriations Committee, which prepares spending legislation.

The president-elect said he would have additional appointments to his economic team in the coming days.

At first glance, his roster of economic officials so far embodies what seem to be mutually exclusive goals. Timothy Geithner, Obama's choice for treasury secretary, Lawrence Summers, who will head the National Economic Council, and Orszag all have links to Robert Rubin, who as President Bill Clinton's treasury secretary pushed for a balanced budget.

But all three will also be part of an administration that will drive deficits to new heights with an economic plan designed to save or create 2.5 million jobs and redirect the economy over the next two years. Economists from across the political spectrum, including some who have served as informal advisers to Obama, have put the size of an economic recovery package as high as $700 billion over those two years.

Obama summed up the challenge Monday.

"The way to think about it is short term, we've got to focus on boosting the economy and creating 2.5 million jobs, but part and parcel of that is a plan for a sustainable fiscal situation long-term, and that's going to require some reforms in Washington," he said during a news conference in Chicago to introduce Geithner and Summers.

"To make the investments we need," he said at another point, "we'll have to scour our federal budget, line by line, and make meaningful cuts and sacrifices, as well, something I'll be discussing further tomorrow."

Obama is already starting in the red. The federal government reported a record deficit of $237.2 billion in October, which reflected only a portion of the $700 billion Congress approved last month to rescue the financial markets. The government's red ink has been rising over the past eight years, reversing a surplus achieved during the Clinton administration.

Leonard Burman, director of the nonpartisan Tax Policy Center, said Geithner and Summers reflect both the need for a large-scale stimulus to the economy and for fiscal restraint once the economy shows signs of improvement.

"What's good about the appointments that Obama has made is that it suggests, in ways that his campaign never did, that he really understands this," Burman said.