One of Barack Obama’s longstanding mentors and oldest friends said yesterday that he believes Bill Clinton will be a complicating factor for the new president and that his list of foreign donors could prove embarrassing.

Abner Mikva, a former federal judge who was Mr Clinton’s White House counsel – and an early supporter and close friend of Mr Obama – told The Times that the choice of Hillary Clinton as Secretary of State worried him because of her husband.

Although not a member of the White House transition team, Mr Mikva was once one of Mr Obama’s most powerful patrons in Chicago, and is the first person with ties to the President-elect to express misgivings publicly about Mr Clinton’s impact on the new administration.

“I worry about the difficulty not that she brings, but that her husband brings,” he said over breakfast at the University of Chicago, where he recently retired as a law professor. “His entire career since leaving the White House has involved foreign contacts, foreign speeches and foreign contributions,” Mr Mikva, also a former US congressman, said.

“I don’t know how you separate her activities from his – how you vet those. As far as I’m concerned they will all have to be made public. I think that will be very embarrassing to President Clinton and to the donors.”

One of the main stumbling blocks to Mrs Clinton’s nomination as Mr Obama’s Secretary of State – which will be announced formally next week – was Mr Clinton’s financial ties to foreign governments, and the list of donors to his philanthropic foundation and presidential library.

After negotiations between both camps last week, Mr Clinton agreed to hand over the names of more than 200,000 donors to the Obama White House transition team, and to have future foreign speeches and engagements vetted so as to avoid any potential conflicts of interest with his wife.

Mr Mikva added: “I’m not saying there is anything illegal. But it causes complications trying to make clear that what they do in private has nothing to do with our foreign policy.”

Mr Mikva, 82, said he had a “tremendous amount of confidence” in Mr Obama’s ability to confront the challenges he faces. “It transcends the confidence I’ve had in any other political figure, and I’ve been around.”

Yet he said he was worried that the expectations for him were too great, and that some of the biggest problems that Mr Obama will face will be from within his own party, particularly as the President-elect is going to “be doing some unpopular things”.

He spoke an hour before Mr Obama told Democrats and Republicans that “the old way of doing business” was over.

He declared his intention to pour over the federal budget “page by page, line by line”, to cut wasteful spending programmes.

Having announced a huge economic spending package on Monday to “jolt the economy back into shape” – it could reach at least $700 billion – Mr Obama said: “If we’re going to make the investments we need, we must also be willing to shed the spending we don’t.” Mr Obama wants to forge an economic policy combining massive spending, which will lead to a ballooning federal deficit, with a targeted and disciplined spending strategy.

He will take office with the US Government already awash in red ink. A record deficit of $237.2 billion was reported in October, which reflected only a portion of the $700 billion (£542 billion) financial rescue package passed by Congress last month.

“In these challenging times, when we are facing both rising deficits and a sinking economy, budget reform is not an option,” Mr Obama said. “It is an imperative. We cannot sustain a system that bleeds billions of taxpayer dollars on programmes that have outlived their usefulness, or exist solely because of the power of a politician, lobbyist or interest group. We simply cannot afford it.”

Mr Obama introduced Peter Orszag as his choice for director of the Office of Management and Budget, who will be responsible for overseeing the federal budget and cutting spending.

Mr Orszag is currently director of the Congressional Budget Office. “He doesn’t need a map to see where the bodies are buried in the budget,” Mr Obama said. “He knows what works, and what doesn’t.”

Mr Obama also chose Robert Nabors to be Mr Orszag’s deputy. Mr Nabors has been a top staff aide on the House Appropriations Committee, from where spending Bills initiate.

Echoing Abraham Lincoln once again, Mr Obama said that his new economic team will have to “think anew and act anew”. They will.

His chief economic advisers Larry Summers and Timothy Geithner, as well as Mr Orszag, all have ties to Robert Rubin, Mr Clinton’s Treasury Secretary. His mantra was balanced budgets. They are about to plunge America even further into debt.

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