Obama to announce 'spending freeze'

Officials say the US president will propose a three-year freeze on domestic spending.

    The freeze to be proposed would exclude spending on defence and international affairs [AFP]

    "The savings from the three-year freeze will amount to $250bn over the next decade," the official said.

    Second Obama budget

    Details of the spending hold-down will be spelt out in detail on February 1, when Obama unveils his second budget since taking office.

    Agencies that could feel the pinch include the commerce, interior, justice and labour departments, as well as the environmental protection agency.

    Obama's proposed budget savings will need to be approved by Congress.

    The US government closed its 2009 fiscal year with a record $1.4 trillion budget deficit and the White House forecasts an even bigger gap of $1.5 trillion in fiscal 2010.

    The proposed freeze would cut the deficit by between $10bn and $15bn in fiscal 2011.

    Republicans dismissed the move as window-dressing by Obama's Democrats after an "unprecedented spending binge."

    "This is like announcing you're going on a diet after winning a pie-eating contest," Michael Steel, spokesman for John Boehner, the House of Representatives Republican leader, said.

    Bernanke nomination

    In other US economic news, senators are hesitating to approve Ben Bernanke, the federal reserve chairman, for a second term.

    A poll by Reuters news agency showed 38 senators were either committed to approving the nomination or leaning that way, while 17 were outright opposed or inclined that way.

    Obama said on Monday that Bernanke had his "strongest support".

    "He has my strongest support. I think he's done a good job," Obama said in an interview with ABC News.

    "What we need is somebody at the Federal Reserve who can make sure that the progress that we've made in stabilising the economy continues, and I think Bernanke's the best person for that job."

    SOURCE: Agencies


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