[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2008/images/11/25/art.chicago1125.ap.jpg caption="Obama tapped Orszag to lead OMB with Nabors as his deputy."]CHICAGO, Illinois (CNN) - President-elect Barack Obama pledged Tuesday to go through the federal budget "page by page, line by line" to eliminate excessive spending and get the economy back on track.
"If we are going to make the investments we need, we also have to be willing to shed the spending that we don't need," Obama said at a news conference in Chicago, Illinois.
"In these challenging times, when we're facing both rising deficits and a sinking economy, budget reform is not an option. It's a necessity," he said.
Watch Obama call for 'smarter' government
Obama said that he has selected Peter Orszag as his nominee for director of the Office of Management and Budget.
Orszag, the head of the Congressional Budget Office, is an expert on health care, pensions and Social Security policy. He worked at the Clinton White House as special assistant to the president at the National Economic Council and served on the Council of Economic Advisers.
The move comes a day after the president-elect announced key members of his economic team, including New York Federal Reserve President Tim Geithner as his choice for treasury secretary and former Treasury Secretary Larry Summers as his selection for chief of the National Economic Council.
Obama said Tuesday that there will be more announcements as he fleshes out the rest of his economic team.
Those named to Obama's economic team already have started working on crafting an economic recovery plan. Obama's team also must figure out how best to allocate the rest of the $700 billion bailout that Congress passed in October.
Obama said he hopes the new Congress will begin work on an aggressive economic recovery plan when it convenes in January so his administration can "hit the ground running."
An economic stimulus package is central to Obama's plan. Obama on Monday declined to speculate how big the stimulus would need to be, saying, "We are going to do what's required to jolt this economy back into shape."
Estimates for how much might be spent on a multiple-year stimulus package range as high as $500 billion to $700 billion. At the center of the plan are investments in the nation's roads, bridges, schools and alternative-energy infrastructure. Obama has said his plan will lead to the creation of 2.5
"At this moment, we need to restore both confidence in the markets and restore confidence of middle-class families, who find themselves working harder, earning less and falling further and further behind," he said Monday.
Obama said that the recovery will not happen immediately and predicted that the economy likely would get worse before it gets better.
"To make the investments we need, we'll have to scour our federal budget, line by line, and make meaningful cuts and sacrifices," he said.
Despite the problems facing his administration, Obama said Monday that he is "hopeful about the future."
"I have full confidence in the wisdom and ingenuity of my economic team and in the hard work, courage and sacrifice of the American people," he said.
Obama also is expected to give key Cabinet positions to two of his former presidential rivals, but those announcements are not expected Tuesday.
New Mexico Gov. Bill Richardson is expected to be named secretary of commerce, and Obama aides also have said that Obama is "on track" to nominate Sen. Hillary Clinton of New York as his secretary of state after Thanksgiving.
(Updated 12:30 p.m.)