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President Plans to Layout Proposal to Freeze Federal Spending

Posted on 26 Jan 2010

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This Wednesday during his State of the Union address to Congress, President Barack Obama will propose a three-year freeze on federal spending outside of national security to save an estimated $250 billion over a decade as part of an effort to rein in record deficits. The limit on discretionary spending would reduce the deficit by $10 billion to $15 billion in 2011, according to the officials, who briefed reporters on the plan. Last year's budget shortfall was a record $1.4 trillion.

The Environmental Protection Agency and the Commerce, Interior and Justice Departments are among the executive branch agencies subject to the freeze, officials said, while the Defense Department, Department of Homeland Security, Veterans Affairs and unspecified international affairs programs would be exempt.

Obama is using his first formal State of the Union speech to emphasize his focus on spurring economic growth, job creation and imposing fiscal discipline on the federal government. With midterm elections to determine control of Congress in November, the president is confronting voter anger over taxpayer bailouts, government debt and a sluggish economy with 10 percent unemployment nationwide.

Earlier today, he and Vice President Joe Biden announced proposals for a package of tax cuts aimed at middle-income Americans that include an increased tax credit for child care and an expansion of tax credits to match retirement savings.