Obama to present budget

February 26, 2009
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, WASHINGTON, Feb 26 – US President Barack Obama will Thursday ask Congress for $634 billion to fund healthcare reform in his 2010 budget, which must reconcile a costly agenda with a vow to slash a gaping deficit.

The document will formally set down a long list of campaign promises and will be the best evidence yet of Obama\’s argument that times of dark economic crisis can be a catalyst for sweeping political reform.

The president is expected to ask Congress to finance education, energy and environmental reforms, setting up a new tug of war with Republicans after fierce clashes over his just-passed stimulus plan.

Obama is also expected to fulfill a campaign pledge to raise taxes on Americans earning more than $250,000 a year from 35 percent to just under 40 percent, a move likely to enflame political debate.

The budget will represent Obama\’s latest attempt to take on the multi-fronted economic meltdown, which he says will balloon the deficit in the short-term but insists must end debt-fueled government spending.

An Obama administration official, speaking on condition of anonymity, said that the massive healthcare fund would be financed by raising taxes on highest earning Americans and by savings made in existing healthcare programs.

"So often, we\’ve come to view these documents as simply numbers on a page or a laundry list of programs," Obama told lawmakers in his debut address to a joint session of Congress on Tuesday.

"I see this document differently, I see it as a vision for America – as a blueprint for our future."

The size of the figure was the latest indication of the new president\’s intent to push for healthcare reform, a polarising political issue which has bedeviled Democratic presidents for decades.

It was not clear how much money Obama would request for total healthcare spending in his 2010 budget.

In his last budget in 2009, former president George W. Bush allocated an estimated $736 billion for the Department of Health and Human Services, according to government figures.

That allocation was spread across areas including care for low income and elderly patients and preventative medicine and scientific research.

Another priority which will not come cheap is the president\’s intention to provide each US child with a "complete and competitive education," and to broaden access to expensive higher learning institutions.

The budget, the 2009 version of which topped $3.5 trillion, will also include the first in-depth details of Obama administration tax policy and defense and social spending.

Despite an aggressive political agenda, Obama is also promising to trim unnecessary spending and to seek efficiencies as part of a new attempt to keep government living within its means.

"My budget does not attempt to solve every problem or address every issue. It reflects the stark reality of what we\’ve inherited – a trillion-dollar deficit, a financial crisis, and a costly recession," he said on Tuesday.

"Given these realities, everyone in this chamber – Democrats and Republicans – will have to sacrifice some worthy priorities for which there are no dollars. And that includes me."

White House press secretary Robert Gibbs on Wednesday hinted that the budget would also include a request for more money to save the US finance industry.

Congress has already approved a $700 billion, two-stage rescue plan, which has so far done little to repair the foundations under the crippled sector, which is stuck with huge stocks of bad loans.

The success or failure of White House number crunchers in keeping the budget lean will play a vital role in Obama\’s campaign to cut the deficit, currently forecast to hit $1.3 trillion, in half by 2013.

Obama\’s promise could prove a political liability if his targets are missed when he seeks reelection in 2012.

Obama has also included the costs of the wars in Afghanistan and Iraq in the main budget. The previous administration funded the conflicts with regular emergency budgets.

"For seven years, we have been a nation at war. No longer will we hide its price," Obama said on Tuesday.

Obama\’s budget will also likely provoke nervous moments at the Pentagon and among defense contractors.

He has promised to recruit more soldiers and marines, but also warned on Tuesday he would end spending on Cold War weapons systems that do not work.

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