Obama seeks to trim 2010 budget by $17 billion

By Richard Cowan and Jeff Mason

WASHINGTON (Reuters) - President Barack Obama, facing criticism from Republicans as well as fellow Democrats over huge budget deficits, will propose on Thursday shaving $17 billion from a 2010 budget that will still hover around $3.5 trillion, an administration official said on Wednesday.

Even with the proposed spending cuts, the White House's own estimates suggest the deficit will be $1.17 trillion next year. Congressional analysts believe the gap could be $1.4 trillion.

The administration official, who asked not to be identified, did not detail where the $17 billion in reductions would be sought for the fiscal year that starts on October 1.

Obama, who has vowed to cut the country's ballooning deficit in half by 2013, was widely panned last month when he challenged agencies to find $100 million in savings. Critics pointed out that was about equal to what the government spends in 13 minutes.

Congress has already passed a $3.4 trillion budget blueprint that will guide tax policy and government spending for the upcoming fiscal year. It embraces many of Obama's top priorities.

But the budget details the White House will release on Thursday, which build on a bare-bones outline the new president submitted to Congress on February 26, could have an impact on those individual spending bills that will wind their way through Congress in coming months.

Asked by Reuters whether the budget document would contain other major new policy initiatives, the official said the $17 billion was "pretty much the news."

Congressional Republicans, who are a minority in the House of Representatives and Senate, gave tepid praise for the new round of proposed funding reductions.