Feb 25 (Reuters) - U.S. President Barack Obama plans on Thursday to release an outline of his budget that will detail his spending and revenue proposals for next year and set out a goal of cutting the ballooning budget deficit in half by 2013.
Here are some details of what he is expected to propose:
In early January, just a few weeks before Obama took office, the nonpartisan Congressional Budget Office projected that the budget deficit would soar to $1.2 trillion for the current 2009 fiscal year that ends Sept. 30.
The deficit totaled $455 billion in 2008.
Obama’s budget for the 2010 fiscal year would set a goal of cutting the deficit to about $533 billion, or 3 percent of gross domestic product.
The CBO figure projecting a $1.2 trillion deficit for this year did not include the effects of the $787 billion two-year fiscal stimulus package that Obama signed on Feb. 17.
Many private economists believe that, with the stimulus included, the deficit will reach more than $1.5 trillion this year. A number in that range would exceed 10 percent of U.S. gross domestic product.
A rise in taxes on the wealthiest Americans would help reduce the deficit under the Obama plan, according to an administration official.
Obama will propose boosting tax collection from about 16 percent of the economy this year to 19 percent in 2013.
Obama would allow some of the 2001 and 2003 tax cuts enacted under his predecessor George W. Bush to expire on schedule for those making more than $250,000 a year. That would include allowing the highest U.S. income tax bracket to rise from 35 percent to more than 39 percent.
Obama’s budget would assume a decline in spending from about 26 percent of the economy to 22 percent in 2013.
U.S. officials said the savings would come from winding down the war in Iraq and finding efficiencies in government programs.
The United States spent about $190 billion on the wars in Iraq and Afghanistan in 2008. Obama has pledged to withdraw U.S. combat troops from Iraq within 16 months while ramping up the U.S. military effort in Afghanistan.
A senior Democrat in the House, Representative John Murtha, told Reuters the proposal would also detail robust $537 billion U.S. military budget for next year although he wasn’t sure if that included money to pay for the wars in Iraq and Afghanistan next year — two major expense items.
Obama’s budget will includes a 10-year, $634-billion reserve fund to help pay for his proposed healthcare reforms, a White House official said on Wednesday.
Half of the reserve would be paid for with new revenues and the other half would be funded by making the current system more efficient, for example by requiring competitive bidding in some areas of the Medicare program for the elderly, the official said.
The 10-year reserve fund would help finance Obama’s promised expansion of U.S. healthcare — one of his major campaign promises but would not fully cover the final expense of the reforms, said the official, who spoke on condition of anonymity.
Editing by Cynthia Osterman