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The Obama administration is alerting domestic agencies to expect their budgets will be frozen or even cut by 5 percent, part of an election-year push to rein in record deficits that threaten the economy and Democrats' political prospects next fall.
The warning to agencies comes as President Barack Obama traveled to Asia where several nations, especially China, have expressed concerns about the size of U.S. deficits.
China is the largest foreign holder of U.S. Treasury securities and policymakers worry that alarm over deficits could push foreigners into cutting back on their purchases of Treasury debt.
White House budget director Peter Orszag said Friday that it is imperative to start curbing the flow of red ink in coming years so as not to erode the fledgling economic recovery. But he called it a balancing act and said acting too fast could undercut the recovery.
Orszag wouldn't comment on the specifics of the upcoming Obama budget, which will be unveiled in February.
Democratic officials in the White House and on Capitol Hill say options for locking in budget savings include caps on the amount of money Congress gets to distribute each year for agency operating budgets. The officials spoke on condition of anonymity to frankly discuss internal deliberations.
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