Obama's budget includes record deficit

U.S. President Barack Obama unveiled a nearly $4-trillion-US budget on Monday that includes a spending freezeon someprograms but willleave the government with a record-breaking deficit.

The proposed budget, whichneedsapproval from Congress, would providebillions of dollars for job-creation measures and tax breaks, partly offset bytax hikes on high-income earners.

According to the proposed $3.83-trillion budget,the U.S. deficit will swellto $1.56 trillion this year, surpassing last year's deficit of $1.41 trillion, and America will besaddled with trillion-dollar-plus deficitsfor three years.

This followsthe $787-billion stimulus passed in February 2009 and a decrease intax revenues because of the economic downturn.

'We cant simply move beyond this crisis. We have to address the irresponsibility that led to it.' President Barack Obama

Obama blamed the previous administration and Congress for fiscal mismanagement, saying that on theday he entered office he was already contending with a $1.3-trilliondeficit.

As well, hefaced an economic crisis and had to takesteps that carried"significant costs" and added to the deficit.

'Save where we can'

"We cant simply move beyond this crisis. We have to address the irresponsibility that led to it, and that includes the failure to rein in spending, as well as reliance on borrowing," Obama said. "We have to do what families across America are doing save where we can so that we can afford what we need."

To tackle the deficit, Obama proposed athree-year freeze on spending for many domestic government agencies beginning in 2011. Hestressed that thiswon't apply to national security spending andtoSocial Security, Medicaid or Medicare benefits.

Obama said his administration has so faridentified $20 billion incuts an amount critics have dismissed, considering the size of the overallbudget.

The budget would see spending increase by 5.7 per cent this year, with forecasts of athree per cent increase in2011.

Obama'sbudgetincludes a $100-billionplan toboost jobswith tax breaks for small businessesand increased spending on infrastructure and energy projects.

While middle-class taxbreaks would be extended, tax cuts for oil companies, investment fund managers and individuals earning over $250,000 a year will not be continued, Obama said.

The president has endorsed a pay-as-you-go proposal that passed the Senate last week. It would require any new tax cuts or entitlement spendingto be paid for, and he has promised to create a bipartisan commission to recommend ways to trim the deficit.