WASHINGTON (AFP) – US President Barack Obama, after a weekend at the Americas summit in Trinidad, warned of "significant" risk to the US economy ahead of his first full cabinet meeting Monday to hash out plans to cut spending.
At the White House meeting, three months to the day after his inauguration, Obama plans to ask for specific proposals from his cabinet members to cutgovernment spending and "restore a sense of responsibility and accountability" to the US federal budget.
Faced with mushrooming budget deficits, Obama Sunday called for "aggressive action" to counter the persistent credit jam that still clogs the financial system.
"While there have been some encouraging signs that our economy may be stabilizing, the risks remain real and significant," Obama said in an interview published inFortune magazine Sunday.
"History has shown repeatedly that when nations do not take early and aggressive action to get credit flowing again, they have crises that last for many years instead of many months," he said.
The cabinet meeting comes on the heels of a whirlwind weekend of diplomacy on the Caribbean island of Trinidad at the Summit of the Americas where, by the end, Obama tempered speculation that a historic thaw in relations between the United States and Cuba was around the corner.
Back in Washington, however, domestic priorities are set to shape the agenda in coming weeks, as the Obama administration keeps up its efforts to reshape the economic outlook.
The non-partisan Congressional Budget Office (CBO) forecast last month the budget deficit could hit 1.845 trillion dollars for the whole year, based on Obama's 3.5-trillion-dollar budget plan approved by Congress.
The CBO said its budget deficit estimate for fiscal 2009, which ends on September 30, would be four times the 2008 record shortfall and amount to 13.1 percent of the country's total economic output.
The Obama budget forecasts a 1.750 trillion dollar deficit in fiscal 2009.
The United States, Obama told Fortune, needs a revision of its economic priorities to "reward drive and innovation instead of shortcuts and abuse."
The latest government figures showed the economy contracted by 6.3 percent in the last quarter of 2008, following a home-mortgage meltdown that triggeredfinancial turmoil and slammed the brakes on economic growth.
A modest return to growth is not expected by economists until the third quarter of 2009.
In his weekly address on Saturday, Obama said the process of finding ways to cut government spending had already begun, with his administration scouring the budget line by line for programs that do not work and can be replaced with more efficient ones.
Obama praised Homeland Security Secretary Janet Napolitano for ending contracts to create new seals and logos for her department that would have cost the Treasury three million dollars, as well as Defense Secretary Robert Gates for finding ways to eliminate hundreds of billions of dollars in spending.
Obama's top economic aide meanwhile said Sunday the administration was backing Democratic lawmakers who plan to crack down on credit card companiesaccused of imposing abusive interest rates on unsuspecting consumers.
In an interview with NBC's Meet the Press, Larry Summers said Obama was concerned "with the way people have been deceived into paying extraordinarily high rates that they wouldn't have paid if they knew what they were getting themselves into."
The US leader, Summers added, was "pushing very hard for a strong program of regulation" aimed at preventing a repeat of the current financial crisis.
Fortune reported in its latest edition that 2008 was the worst year ever for the 500 largest corporations tracked by the business magazine, with a massive 84.7 percent earnings drop -- the largest ever one-year decline.