White House warns Republicans on canceling stimulus

WASHINGTON Fri Nov 19, 2010 3:44pm EST

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WASHINGTON (Reuters) - The White House has warned Republicans that high-speed rail projects and a gigantic solar power complex would be imperiled if they cancel unspent federal stimulus money to try to trim the government's budget.

In a letter obtained by Reuters on Friday, President Barack Obama's acting budget director says tens of thousands of jobs would be lost if Republicans cancel the roughly $12 billion in stimulus funds that the government has not yet spent.

"In addition to bringing existing efforts to a halt midstream, the proposed recessions would negatively impact our economic strength both now and in the future," Acting Director Jeffrey Zients said in a November 17 letter to Representative Jerry Lewis, the top Republican on the House of Representatives Appropriations Committee.

Zients said several projects in Lewis's home state of California would be affected: $2 billion to build high-speed rail service between Anaheim and San Francisco; a $1.4 billion solar power complex in the Mojave Desert; and a $33 million rail-crossing upgrade to relieve congestion.

Lewis introduced legislation this week that would rescind money that remains unspent from the $814 billion stimulus package, which passed in 2009, as a first step in some $100 billion in budget cuts Republicans hope to enact when they take control of the House next year.

"It'll be tough, but sacrifices have to be made to rein in the deficit, which we absolutely have to do, and he's willing to start at home," Lewis spokeswoman Jennifer Hing said.

Lewis hopes to head the Appropriations Committee, which oversees federal spending, when Republicans take control of the House in January. At least one other Republican, Representative Hal Rogers, is vying for the post as well.

The U.S. budget deficit hit 8.9 percent of gross domestic product in the past fiscal year, one of the highest levels on record since World War Two.

Republicans have roundly criticized the economic stimulus effort, a package of tax cuts, state aid and construction spending, as ineffective even though the nonpartisan Congressional Budget Office estimates that it has put millions of people to work and raised national output by hundreds of billions of dollars.

Voters also believe that it has failed to blunt the impact of the worst recession since the 1930s.

(Reporting by Andy Sullivan; Editing by Xavier Briand)

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