Obama to cut services to poor urban Americans, budget director notes

WASHINGTON – The White House budget director offered clues on Sunday to some cuts that President Barack Obama will offer in his fiscal 2012 budget proposal to answer Republican demands for deep spending reductions.

Obama is under strong pressure to cut spending and the U.S. budget deficit after Republicans routed Democrats in last November's congressional elections by pressing for spending cuts.

White House Office of Management and Budget Director Jacob "Jack" Lew wrote in an opinion article for The New York Times that Obama is willing to cut financing in half, saving $350 million, for community service block grants that cities and towns that allocate to grassroots groups for them to provide basic necessities for poor people.

This is the kind of work Obama did as a community organizer at the outset of his political career, so "this cut is not easy for him," Lew wrote.

"Yet for the past 30 years, these grants have been allocated using a formula that does not consider how good a job the recipients are doing," Lew said.

He said Obama would propose reforming the remaining half of the block grant program to allow communities to compete for the funds, so the money goes to the most needy.

Obama will also propose cutting by a quarter, or $125 million, the Great Lakes Restoration Initiative which supports environmental cleanup and protection in those giants lakes.

Lew told Reuters last week the U.S. budget deficit would grow this year and next year because of tax cut extensions, but that Obama would lay out a credible plan to reduce the funding gap.

Obama will offer his fiscal 2012 budget proposal next week, and has already proposed a five-year freeze in some domestic spending, which Republicans declared insufficient.