U.S. President-elect Barack Obama picked an official to manage the huge government budget Tuesday, while top Bush administration officials outlined yet another program to boost the battered economy.
Mr. Obama named Peter Orszag to head the Office of Management and Budget, (OMB), and ordered him to scour government spending and save billions of dollars by getting rid of programs that have outlived their usefulness. The president-elect said budget reform is vital at a time when the economy is slumping and deficits are rising. Mr. Obama's proposals to stimulate the economy may increase that deficit.
Earlier, Bush administration officials announced new help for the troubled U.S. housing market, which helped spark the current economic meltdown. The government will buy up hundreds of billions of dollars in mortgage-backed securities in an effort to make more loan money available to prospective home buyers.
U.S. Treasury Secretary Henry Paulson said the program also is intended to boost faltering consumer spending, with a new loan program to help companies that issue credit cards, make student loans, or finance automobile purchases.
New economic reports painted a mixed picture of the world's largest economy Tuesday. A measure of all the goods and services produced in the United States shrank half of one percent between July and September, which is significantly more than first thought. Economists say the GDP shrank because consumer spending fell at the steepest rate in decades.
That is a problem because consumer demand drives about two-thirds of U.S. economic activity. A separate report said U.S. consumer confidence improved in November, but was still at a very low level. Meanwhile, a closely-watched index of home prices fell at a record rate in September. The report (the S & P/Case Schiller U.S. National Home Price Index) says home prices in the 20 largest U.S. cities fell more than 17 percent in September compared to a year earlier.