Obama Pledges Entitlement Reform to Curb Spending

President-elect Barack Obama said Wednesday that reforming massive government entitlement programs—such as Social Security and Medicare—would be "a central part" of his effort to control federal spending.

Obama made the pledge but provided few details as he named Nancy Killefer as his administration's chief performance officer, creating a new White House position aimed at eliminating government waste and improving efficiency.

J. Scott Applewhite / AP

Noting that the Congressional Budget Office had just estimated he would inherit a $1.2 trillion federal deficit for fiscal 2009, Obama promised to cut unnecessary spending.

"We expect that discussion around entitlements will be a part, a central part of those plans," Obama said at a news conference. "And I would expect that by February in line with the announcement of at least a rough budget outline we will have more to say about how we're going to approach entitlement spending."

Meanwhile, Sheila Bair, the chair of the Federal Deposit Insurance Corporation, will remain in her post under the Obama Administration, The Wall Street Journal reported Wednesday, citing Democratic officials.

Bair, a Republican, was appointed to the post by President George W. Bush in 2006.

Obama also told reporters he was still talking to congressional leaders about his economic stimulus package and that the final pricetag would likely be at the high end of estimates.

"We expect that it will be on the high end of our estimates but will not be as high as some economists have recommended because of the constraints and concerns we have about the existing deficit," Obama said.

House Speaker Nancy Pelosi said that failure to act on a stimulus package will lead to more U.S. job losses and broader economic pain.

Opening a Democratic-sponsored forum on suggested approaches for a recovery plan, Pelosi said Congress must approve legislation by mid-February to ensure any response has a rapid and meaningful impact on the reeling economy.

"We need action," Pelosi said. "Failure to act quickly will only lead to more job losses and more economic pain for America."

Democrats have talked about spending about $775 billion over two years to invest in public works projects, expand aid to cash-starved state governments and give more help to the poor and unemployed who have been hit hard by the year-long recession.

(Obama appoints Killefe as chief performance officer and discusses the financial crisis and the situation in the Middle East. Watch the accompanying video for more...)

Obama plans to propose $310 billion in tax cuts for the middle class and businesses. Some U.S. governors and economists are pushing for a larger package—around $1 trillion. Many Republicans want a more modest bill, possibly in the range of $500 billion.

Pelosi said the stimulus bill would include measures to strengthen high-tech infrastructure, promote cleaner energy, rebuild bridges and modernize schools.

"This is not your grandfather's public works bill," Pelosi said, referring to job-creation programs during the Great Depression of the 1930s.

Democrats had hoped to present Obama with a recovery plan on his first day in office, but the informal target has now slipped by at least a month as the political realities begin to take hold.

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