"One of the challenges that President Obama has now is that he's got so many things on the table, and these are issues that American people find important, health care and so many other issues," he said in an interview that aired Sunday.
"I think one of the cautions that has to be given to the president -- and I've talked to some of his people about this -- is that you can't have so many things on the table that you can't absorb it all. And we can't pay for it all," he said.
Powell, a Republican, endorsed Obama last year in the presidential race but has been a longtime advocate of small government and said on CNN's "State of the Union" that big government is too costly.
"Keep it as small as possible," he said. "Keep the tax burden on the American people as small as possible, but at the same time, have government that is solving the problems of the people."
Powell said Obama "has to start really taking a very, very hard look at what the cost of all this is. And how much additional bureaucracy and will it be effective bureaucracy."
The nation's former top diplomat said Obama's overhaul of the health care system while simultaneously tackling climate change and leading the country out of a recession may be too much to handle.
Powell said he was "concerned" about Obama's agenda.
"I'm concerned at the number of programs that are being presented, the bills associated with these programs and the additional government that will be needed to execute them," he said.