Lew: Budget plan would save $1.1 trillion

WASHINGTON - White House Budget Director Jacob Lew said the Obama administration's 2012 budget would save $1.1 trillion over the next 10 years by cutting programs to rein in a deficit that may reach a record $1.5 trillion this year.

"We have to start living within our means," Lew said Sunday on CNN's "State of the Union." "The notion that we can do this painlessly - it's not possible . . . We're going to make tough choices."

President Barack Obama sends the third budget of his presidency to Congress today. About two-thirds of the savings would come from a five-year spending freeze and cuts in domestic programs and another one-third from revenue increases, including limiting itemized tax deductions for the wealthy, an administration official said.

Some savings would be diverted to increased spending in education, research and development and technology to compete against global rivals, create jobs and reduce the 9 percent unemployment rate, Lew said.

The cuts reflect a White House shift toward the center of the political spectrum, said Phillip Swagel of the University of Maryland, a former assistant secretary for economic policy in President George W. Bush's Treasury Department.

Obama's budget may put "a little bit of action behind his words," Swagel said. "The gap between his rhetoric and his proposals is pretty broad."

Republicans say Obama's cuts won't go far enough.

"We're broke," House Speaker John Boehner said on NBC's "Meet the Press," rejecting Obama's five-year freeze on domestic spending as inadequate. "Locking in that level of spending is way too much," he said.

Boehner said he sent a letter to Obama, signed by 150 economists, calling for deeper cuts that will "help create a better environment so we can begin to create jobs in our economy."

Boehner was asked about prospects of shutting down the government if Republicans, who control the House, can't reach a compromise with Senate Democrats and Obama on this year's budget, for which spending authority expires on March 4.

"Our goal is to reduce spending, it is not to shut down the government," Boehner said.

If Boehner is "serious," Senate Majority Leader Harry Reid said, the speaker "should completely take a shutdown off the table and tell other Republicans to stop with the threats."