Barack Obama warns nation of sacrifice ahead

Reporting from Chicago — Amid fresh signs of economic distress, President-elect Barack Obama today moved to prepare Americans for sacrifice and tightened spending on critical federal programs even as he pushes a dramatic and expensive economic stimulus plan.

At his second Chicago news conference in as many days, Obama introduced Peter Orszag, the head of the Congressional Budget Office, as his new budget director. The incoming president also said he intends to put federal spending priorities under intense scrutiny, though he offered few details.

"If we are going to make the investments we need, we also have to be willing to shed the spending we don't need," Obama said. "Budget reform is not an option. It's a necessity."

On Monday, Obama had introduced the bulk of his economic team, including Timothy Geithner as his nominee for Treasury secretary and Lawrence Summers as chief economic advisor. He charged the team with drawing up a plan to guide the nation through the economic crisis and back to prosperity.

The one-two punch was aimed at reassuring taxpayers and jittery financial markets that Obama was set to hit the ground running once in power. It also could serve to blunt worries about his readiness to lead, one of the sharpest campaign criticisms leveled by Republican and Democratic rivals alike who complained that he lacked meaningful administrative experience.

And aides to Obama said another news conference was planned for Wednesday, though they did not reveal the subject.

Today's developments came against the backdrop of troubling data showing that economic activity slowed worse than expected in the three months ending in September and the announcement of yet another hugely expensive initiative by the Federal Reserve and Treasury Department to ease the credit crunch and calm mortgage markets.

In discussing his budget priorities, Obama said it was important to demonstrate to taxpayers that the days of "more of the same" when it came to Washington spending priorities were over.

Obama said a key component of any economic stimulus package would be spending on infrastructure projects, such as fixing roads or bridges, which could help ease the budgetary headaches now being experienced by state and local governments.

At the same time, the Chicago Democrat warned that the selection of which locally based projects to support would be based on need and not political back-scratching.