Obama's growth forecasts key part of budget pitch

WASHINGTON (Reuters) - The economic forecasts underpinning President Barack Obama's budget proposal released on Monday boil down to a pitch that heavy government spending will help the battered economy.

Obama's budget plan, which comes as he faces a reelection battle in which the economy is voters' top concern, projects the economy will grow 2.7 percent this year and 3.0 percent in 2013 if Congress passes his plan.

That is much faster growth than forecast by many private sector economists, who have doubts that some measures that Obama is counting on - including an extension of jobless benefits and higher taxes on the rich - will pass in Congress.

"The administration expects more growth than the other forecasters, mainly because the forecast assumes that all of the budget proposals will be enacted," the White House said.

In other words, the White House contends that if Congress were to permit the increase in spending that the president wants and higher taxes for some people, the economy would grow more quickly. Many Republicans disagree.

Republicans are calling for fiscal austerity, while the president is pushing for more measures to protect Americans from a harsh economic backdrop.

The U.S. economy has a long way to go to make up the ground lost in the 2007-2009 recession, and January's 8.3 percent jobless rate - while a near three-year low - is well above the roughly 5 percent to 6 percent range considered to be healthy.

The White House says its budget would help get things back on track.

Its forecast for growth this year stands in stark contrast to the 2.2 percent expansion analysts projected when polled by Reuters in January. The contrast is even more stark when considering that in November, when the administration drew up its forecasts, a Reuters poll showed expectations for growth of just 2.1 percent this year.

Obama's proposals face an uphill battle in Congress, which will write its own plan.

While many Republicans are keen to cut spending, Obama proposes boosting federal outlays during fiscal year 2013 to $3.803 trillion from $3.796 trillion in the current fiscal year.

The plan also envisions higher revenues - both because of higher growth and higher taxes on some rich people - which would bring the federal deficit down to $901 billion from an estimated $1.327 trillion in the current fiscal year, which began in October.

The Obama proposal also sees unemployment falling to 8.6 percent this year and 7.5 percent in 2013, although the White House said last week its budget projections for unemployment - made in mid-November - were already "stale" and should be revised downward.

(Reporting by Jason Lange; Editing by Leslie Adler)