UPDATE 1-Obama vows to spend stimulus money wisely

Fri Feb 20, 2009 9:19pm GMT

(Adds comment from Trenton mayor, more details)

By Caren Bohan and Lisa Lambert

WASHINGTON Feb 20 (Reuters) - U.S. President Barack Obama vowed strict oversight on Friday of his $787 billion stimulus plan, pushing back against Republicans who have labeled the centerpiece of his economic agenda fiscally irresponsible.

Obama said he would name a team of managers to ensure that billions of dollars slated for infrastructure projects would be spent wisely.

"The American people are watching. They need this plan to work," Obama said at a gathering at the White House with dozens of the nation's mayors.

"And they expect to see the money they worked so hard to earn spent in its intended purpose without waste, inefficiency, or fraud."

After taking office last month amid a deepening recession, Obama made his top priority the passage of the stimulus plan. He said the measure was crucial to jump-start growth and prevent the unemployment rate from surging into double digits.

The signing this week of the bill -- the most expensive in history -- marked a big victory for Obama and his Democratic allies in Congress.

But Republicans, most of whom refused to support the stimulus plan, criticized the bill as laden with wasteful spending and said it would do little to revive the economy.

Obama and other Democrats have bristled at Republican attempts to characterize their plans as fiscally irresponsible. They note the federal budget shifted from surplus to huge deficits during Republican President George W. Bush's administration.

Republicans controlled Congress during much of the Bush administration.

In addition to the infrastructure spending, the bill includes tax cuts and spending to bolster social safety net programs like unemployment insurance.

At the event with the mayors, Obama said the stimulus plan would not only create jobs but put the economy on a sounder footing in the long term through spending on infrastructure such as roads and bridges, mass transit and the expansion of broadband networks.

TARGETING WASTE

He also emphasized his intent to prevent any wasteful uses of the money.

"If a federal agency proposes a project that will waste that money, I will not hesitate to call them out on it, and put a stop to it," Obama said.

"I want everyone here to be on notice that if a local government does the same, I will call them out on it as well, and use the full power of my office and our administration to stop it," he added.

After asking for economic help from the federal government for more than a year, mayors of both political parties are among the strongest supporters of Obama's stimulus package.

Several mayors who attended the event told reporters later they supported Obama's call for accountability, not only for the federal government but for cities as well.

"We don't mind getting called out. ... We welcome that kind of accountability. We're going to help get the job done," said Trenton, New Jersey, Mayor Douglas Palmer.

Obama's pledge to spend the stimulus money efficiently came before events planned next week in which he and his aides will emphasize their commitment to rein in the budget deficit, which private economists say will likely balloon to about $1.5 trillion this year. That figure includes the $700 billion from the bank rescue plan but not the stimulus plan signed by Obama.

The deficit in the previous fiscal year was a record-high $455 billion.

On Monday, Obama is hosting lawmakers, economists and representatives of business and labor groups at the White House for a "Fiscal Responsibility Summit."

The White House is expected to unveil its budget proposal on Thursday.

Some fiscal issues will also likely be highlighted in an address Obama will deliver to Congress on Tuesday night.

At the fiscal summit, which will be attended by top Democrats as well as leading Republicans, Obama is expected to underscore his commitment to tackle long-term budget challenges, such as the cost of health and retirement entitlement programs.

"The president felt that we have to start doing this now. For too long, there has been an irresponsibility among people in the Beltway who were unwilling to make the tough choices," said Kenneth Baer, a spokesman for the White House budget office.

"This will be the beginning of that process," Baer said. (Additional reporting by Thomas Ferraro; Editing by Peter Cooney)

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