President issues call for 'leaner' government

White House won’t rule out future cuts in spending on federal pay and benefits in the name of deficit reduction.

President Obama on Wednesday unveiled the general outlines of a plan for $4 trillion in deficit reduction, saying it would require finding savings in major federal programs such as Medicare and Medicaid, along with ending tax cuts and cutting overall government spending.

"If we believe that government can make a difference in people's lives, we have the obligation to prove that it works -- by making government smarter, leaner and more effective," Obama said.

"The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week -- a step that will save us about $750 billion over twelve years," Obama said. "We will make the tough cuts necessary to achieve these savings, including in programs I care about, but I will not sacrifice the core investments we need to grow and create jobs."

Before the speech a senior administration official said there are "no specific policy proposals at this time" that would affect federal employees' salaries and benefits. But the official did not rule out revisiting the issue. "The president does recognize that we will have to do savings in some of the non-health mandatory spending programs. That category includes [pay and benefits]."

Obama also pledged to find additional cuts in defense spending. In the past two years, he said, Defense Secretary Robert Gates "has courageously taken on wasteful spending, saving $400 billion in current and future spending. I believe we can do that again. We need to not only eliminate waste and improve efficiency and effectiveness, but conduct a fundamental review of America's missions, capabilities, and our role in a changing world."

In the speech, Obama acknowledged the country was grappling with the contentious issue of what Americans expect from their government. "This larger debate we're having, about the size and role of government, has been with us since our founding days," he said. "And during moments of great challenge and change, like the one we're living through now, the debate gets sharper and more vigorous. That's a good thing. As a country that prizes both our individual freedom and our obligations to one another, this is one of the most important debates we can have. "