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Obama unveils US$3.8T budget

Published:Tuesday | February 2, 2010 | 12:00 AM

United States President Barack Obama sent Congress a US$3.83 trillion budget on Monday that would pour more money into the fight against high unemployment, boost taxes on the wealthy and freeze spending for a wide swath of government programmes.

The deficit for this year would surge to a record-breaking US$1.56 trillion, topping last year's then unprecedented US$1.41-trillion gap.

The deficit would remain above US$1 trillion in 2011, although the president proposed to institute a three-year budget freeze on a variety of programmes outside of the military and homeland security as well as increasing taxes on energy producers and families making more than US$250,000.

The budget proposal reflects the competing pressure on Obama, ahead of the November congressional elections to cut the deficit while pulling the country out of a deep recession - a step that normally requires more rather than less government spending.

Obama and the Democrats are trying to regain their political footing after the surprising loss of a Massachusetts Senate seat long held by the late Senator Edward M. Kennedy.

That vote cost them their supermajority needed to pass major legislation and has given momentum to Republicans.

With his plans to overhaul health care now unlikely to move forward soon, Obama pledged in his State of the Union address last week to make job creation his top priority.

Following up on the pledge, Obama put forward a budget that included a US$100-billion jobs measure that would provide tax breaks to encourage businesses to boost hiring as well as increased government spending on infrastructure and energy projects.

He called for fast congressional action to speed relief to millions left unemployed in the worst recession since the 1930s.

Obama's job proposals would push government spending in 2010 to US$3.72 trillion, up 5.7 per cent from last year.

Obama's blueprint for the 2011 budget year, which begins October 1, would increase spending further to US$3.83 trillion, 3.0 per cent higher than projected for this year.

-AP