WRAPUP 7-Obama sees soaring deficits, pushes big goals

*Deficit for FY2009 would represent 12.3 percent of GDP

*2010 deficit would dip to $1.17 trillion

*Budget draws quick fire from Republicans

*Obama vows to slash deficit to $533 billion by 2013

By Caren Bohan and Jeff Mason

WASHINGTON, Feb 26 (Reuters) - President Barack Obama forecast the biggest U.S. deficit since World War Two in a budget on Thursday that urges a costly overhaul of the healthcare system and would spend billions to arrest the economy's freefall.

An eye-popping $1.75 trillion deficit for the 2009 fiscal year underlined the heavy blow the deep recession has dealt to the country's finances as Obama unveiled his first budget. That is the highest ever in dollar terms, and amounts to a 12.3 percent share of the economy -- the largest since 1945. In 2010, the deficit would dip to a still-huge $1.17 trillion, Obama predicted.

With that backdrop, his budget represents a gamble that Americans are ready for the sort of change they embraced by electing him in November -- a shift of wealth through higher taxes on the rich to pay for more government attention to healthcare, education, climate change and social programs.

The coming fight with Congress -- where the Republican opposition quickly opened fire on the plan -- will show whether Americans weary of paying for a raft of expensive bailouts for banks and the car industry can get on board with more hefty doses of big government.

Obama, a Democrat, promised to get the red ink under control even as he planned new spending priorities that veered sharply away from the policies of his Republican predecessor President George W. Bush.

"I don't think that we can continue on our current course. I work for the American people, and I'm determined to bring the change that the people voted for last November," said Obama, who took office on Jan. 20.

Republicans condemned the plan as showing a dedication to "tax-and-spend" policies, presaging major political fights getting the budget passed.

"I think we just ought to admit we're broke. We can't continue to pile debt on the backs of our kids and grandkids," said John Boehner, leader of the Republicans in the House of Representatives.[ID:nN26466344]

The cost of extra borrowing to pay for the record budget deficit pushed U.S. stocks and government debt prices down on Thursday. The budget's healthcare plans delivered a hit to shares in health insurers and drugmakers. [ID:nN26287108]

WORRIES OVER SPENDING

House Speaker Nancy Pelosi, a California Democrat, praised Obama's spending priorities and chided Republicans for what she saw as their new found interest in limited government.