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Obama names Nancy Killefer 'chief performance officer'

Killefer, a former Treasury official, will be in charge of eliminating unnecessary government spending and curbing inefficiency. Obama concedes that his stimulus plan will add to deficit.

January 08, 2009|Peter Nicholas and Maura Reynolds

WASHINGTON — Pressing his bid for a fresh burst of government spending, President-elect Barack Obama on Wednesday announced he was creating a position -- a "chief performance officer" -- to kill off dubious government programs and ensure that taxpayer money was not wasted.

Obama's selection of Nancy Killefer to head the office is part of his campaign to pass an economic stimulus package estimated to be as much as $775 billion.

By sending a message that he won't tolerate inefficiency, Obama wants to win over Republican members of Congress who have warned that the bill should not be larded with unnecessary projects.

"I intend to make sure we have unprecedented measures to ensure that taxpayers keep track of how this money is spent," Obama told reporters at a news conference.

The president-elect has devoted most of his first full week in Washington to a two-track effort to pass his massive stimulus plan.

Behind the scenes, he and his advisors have been speaking with members of Congress about the exact size of the package and where the money will go.

He also had been trying to build a groundswell of support for the first major legislative initiative of his presidency, launching a public relations push that moves today to George Mason University in suburban Virginia, where Obama will deliver a speech calling for passage of the package.

Obama contends that injecting hundreds of billions of dollars into the economy is necessary to reverse a recession punctuated by a contracting economy, falling housing prices and rising unemployment.

He has conceded that his program will inflate the federal budget deficit. But doing nothing, he said, risks "red ink as far as the eye can see."

Bolstering the argument that the economy is in a tailspin, the Congressional Budget Office released a report Wednesday showing that the combination of falling tax revenue and government bailouts has created a projected deficit of $1.2 trillion, more than twice last year's all-time record of $455 billion.

The budget office also said the economy's nosedive would last for months, with unemployment topping 9% early next year.

Housing prices will drop by another 14% nationwide, the office projected, and the tide of mortgage foreclosures will not abate until the financial markets stabilize.

Nigel Gault, chief U.S. economist at IHS Global Insight, an economic consulting firm in Lexington, Mass., noted that the $1.2-trillion projection is roughly 8% of the gross domestic product -- a magnitude that is "off the charts."

As a percentage of GDP, the projected deficit would be the worst since World War II, outstripping the record of 6% set in 1983.

To assuage fears that his stimulus plan would only drive the nation deeper into debt, Obama promised a rigorous commitment to rein in costs by setting up the performance office.

It will be led by Killefer, a partner at the management consulting firm McKinsey and Co. and a former Treasury Department official in the Clinton administration.

But Obama also has pledged to take political risks that past presidents have avoided. Asked if he would consider cuts in two popular but costly programs -- Medicare and Social Security -- Obama said he would evaluate both as he tried to reduce the deficit.

He said announcements about his plans for those programs might come in February.

"We are beginning consultations with members of Congress around how we expect to approach the deficit," Obama said. "We expect that the discussions around entitlements will be a central part of those plans."

Politicians don't ordinarily like to associate themselves with bad news. But in this case, the nation's dismal economic performance underpins Obama's case.

"We know [the stimulus] plan will necessarily add" to the deficit, he said. "My own economic and budget team projects that unless we take decisive action, even after our economy pulls out of its slide, trillion-dollar deficits will be a reality for years to come."

After his news conference, Obama went to the White House for lunch with President Bush and the three living former presidents: Jimmy Carter, George H.W. Bush and Bill Clinton.

The White House was hoping for a Rose Garden photograph of the president, his predecessors and his successor. But rain drove them inside. The five posed in the Oval Office before a luncheon in the private dining room.

"How are you guys? Good to see you," Obama said in greeting the group.

President Bush told Obama: "One message that I have, and I think we all share, is that we want you to succeed. . . . Whether we're Democrat or Republican, we care deeply about this country."

The president-elect called the gathering "extraordinary," and he said his luncheon companions all "understand both the pressures and possibilities of this office, and for me to have the opportunity to get advice, good counsel and fellowship with these individuals . . . I'm very grateful to all of them."

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peter.nicholas@latimes.com

maura.reynolds@latimes.com

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Christi Parsons in the Washington bureau contributed to this report.

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