UPDATE 1-Obama announces 'chief performance officer'

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WASHINGTON, Jan 7 (Reuters) - President-elect Barack Obama, who faces trillion-dollar government deficits stretching into coming years, named on Wednesday a former Treasury official as the first U.S. “chief performance officer” to oversee budget and spending reform.

Nancy Killefer, a director at McKinsey & Company and a former assistant Treasury secretary in the Clinton administration, will work with economic officials to increase efficiencies and eliminate waste in government spending.

“We can no longer afford to sustain the old ways when we know there are new and more efficient ways of getting the job done,” Obama told a news conference just hours after new official projections put the fiscal 2009 U.S. budget deficit at a record $1.186 trillion.

“Even in good times, Washington can’t afford to continue these bad practices. In bad times, it’s absolutely imperative that Washington stop them,” Obama said.

Obama has repeatedly promised that his administration will go “line by line” over its budgets -- a task that will now fall to Killefer and Obama’s nominee to as White House budget chief Peter Orszag.

Obama, who takes over from President George W. Bush on Jan 20, is seeking quick action from Congress on a package of spending and tax-cut measures that would total nearly $775 billion over next two years, which could add to the deficit hole. (Editing by Jackie Frank)