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CHICAGO (Reuters) – President-elect Barack Obama announced his top budget officials on Tuesday and promised significant spending cuts to partially offset a costly stimulus package that aims to revive the U.S. economy.

As the top two officials at the Office of Management and Budget, Peter Orszag and Rob Nabors will closely examine federal spending to cut out wasteful programs, Obama said.

“If we are going to make the investments we need, we also have to be willing to shed the spending that we don’t need,” Obama said at his second press conference in as many days.

One obvious example: Crop subsidies to farmers who make more than $2.5 million per year, Obama said.

Though he does not take office until January 20, Obama’s team of economic advisers are already working out the details of a two-year package to save or create 2.5 million jobs that could cost several hundred million dollars.

Obama himself meanwhile has dropped his former low-profile approach and spoken directly to the American people with two news conferences this week. A third Obama press appearance is scheduled for 10:45 a.m. EST Wednesday.

Bush administration officials continue to extend massive life support efforts to the ailing U.S. financial system.

The Federal Reserve on Tuesday announced a $600 billion program to buy mortgage-related debt and securities, and a $200 billion program to increase the availability of consumer debt, such as credit cards and auto loans.

Treasury Secretary Henry Paulson urged patience and said any effort will take time to work.

Orszag now heads the Congressional Budget Office and Nabors currently serves as staff director of the House Appropriations Committee. Both previously held White House positions under President Bill Clinton.

Their announcement follows on Monday’s unveiling of New York Federal Reserve Bank President Timothy Geithner as Obama’s Treasury secretary and Lawrence Summers, a former Treasury secretary under Clinton, as director of his National Economic Council.

Obama’s aides are in contact with Bush administration officials, who said they would work closely with Geithner and other incoming officials on any new rescue plans.

The scope of the economic crisis has widened since Obama’s November 4 victory over Republican John McCain, with auto companies warning that they are short on cash, unemployment numbers rising and the government bailing out yet another gigantic financial institution, Citigroup Inc.

New figures released on Tuesday showed that the U.S. economy shrank more severely during the third quarter than previously estimated as consumers cut spending at the steepest rate in 28 years. Corporate profits and business investment fell as well.

Obama has kept a low profile until this week’s news conferences, which are intended to show the priority he places on addressing the worst economic crisis since the Great Depression.

He said on Monday he has not yet decided whether to roll back President George W. Bush’s 2001 tax cuts for the wealthy, which would provide the government with much-needed revenue, or simply allow them to expire at the end of 2010 as scheduled, a move that would avoid what would likely be a bruising fight in Congress.

Source: Reuters

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