Obama unveils $3.8 trillion budget
US president says 2011 will see $1.56 trillion deficit as he tackles recession aftermath.
Last Modified: 02 Feb 2010 08:09 GMT
 The budget aims to boost healthcare and education while cutting 120 government projects [EPA]

The US president has vowed to tackle the aftermath of the financial crisis in his new budget, which projects a record deficit of $1.56 trillion this year.

Barack Obama said on Monday that his $3.8 trillion budget "reflects the serious challenges facing the country", including debt and unemployment.

"We will continue, for example, to do what it takes to create jobs. That is reflected in my budget. It is essential," he said.

'More spending'

Judd Gregg, the Senate Budget Committee's top Republican, said the budget, which "claims to be fiscally responsible", would in reality see "more spending, more borrowing and more taxes".

"After a year in office that has put us on a pace to double the debt by 2013, the president should have a tougher plan to address our fiscal crisis, because this budget will solve nothing," he said.

Obama has blamed his predecessor, George Bush, for the country's financial mess, and said the rise in national debt was partly due to the $787bn stimulus package pushed through Congress last year to fight the recession.

His budget, which remains subject to change by the US Congress, attempts to save money by curbing 120 projects, including a space mission to the moon.

The plans see more money invested in education, research and job creation, with $100bn earmarked for measures to help tackle unemployment, which is expected to edge towards 8.2 per cent in 2012 from 10 per cent in 2010.

Defence spending

Obama asked congress to approve a record $708bn in defence spending for fiscal 2011, but vowed to continue his drive to eliminate unnecessary weapons programmes.

The budget calls for a 3.4 per cent increase in the Pentagon's base budget to $549bn plus $159bn to fund US military missions in Iraq, Afghanistan and Pakistan.

Budget highlights

$33bn in tax credits for small businesses which hire more workers or increase payrolls

$6bn investment in clean energy

$33bn to cover deployment of more troops to Afghanistan

$159bn to support ongoing foreign operations including Afghanistan, Iraq and Pakistan

$73m to transfer, prosecute and incarcerate detainees held at Guantanamo Bay

$734m to install full body scanners at airports 

However, Obama said: "Even though the department of defence is exempt from the budget freeze, it's not exempt from budget common sense."

He said the fiscal 2011 budget proposal included cuts of "unnecessary defence programmes that do nothing to keep us safe."

These include an annual spending of $2.5bn for C-17 transport planes that has been added to the federal budget by congress in each of the past four years.

"It's waste, pure and simple," Obama said.

Rosiland Jordan, Al Jazeera's correspondent in Washington, said it is very difficult for any administration to cut back on defence spending.

"Many members of Congress have defence contractors in their district, or within their state. They want to keep those businesses happy - to keep federal dollars flowing to them," she said.

"They are going to come back almost certainly and try to put in some additional funding for things they will argue are essential for maintaining the US's national security posture.

"Obama says he has the backing of the defence secretary and of the military leadership at the Pentagon, but Congress will probably try to force the president's hand and send it back to him."

Healthcare reforms

The Obama administration also backed limited steps to lower costs for the massive Medicare insurance programme.

The US president said he was "fighting to reform our nation's broken health insurance system" and that his plan "includes funds to lay the groundwork for these reforms".

His plan includes so-called "demonstration" programmes aimed at finding ways to reform payments under the Medicare insurance programme for the elderly and disabled, especially for those with chronic diseases that are expensive to treat.

Obama's budget also calls for $268m to expand efforts to compare various medical treatments as well as $110m for additional investments into health information technology.

The budget proposal reflects pressure on Obama ahead of the November congressional elections to cut unprecedented growth in the US debt, after the surprising loss of a Massachusetts senate seat.

Al Jazeera and agencies
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