(Reuters) - President Barack Obama on Thursday filled in details of his U.S. budget plan for fiscal year 2010 that begins on October 1, announcing $17 billion in cuts to a budget that weighs in at around $3.5 trillion.
Here are some of the details of that budget that already has been reviewed by Congress, which has approved its own version that is similar to Obama’s:
Obama has forecast a budget deficit of $1.75 trillion in the current fiscal year 2009, but the Congressional Budget Office projected it would be higher, nearly $1.85 trillion.
That is equivalent to 12.3 percent of gross domestic product, making it the highest deficit as a share of the economy since World War Two.
The deficit totaled $455 billion in 2008, which was an all-time high in dollar terms.
Obama inherited a more than $1 trillion deficit when he took office in January. A two-year $787 billion economic stimulus package Obama pushed through Congress combined with potential added costs to address the turmoil in the U.S. banking sector contributed to the higher deficits.
The Obama administration’s forecast for the 2009 deficit is roughly in line with those of many private economists.
Obama sets a goal in his budget of reducing the deficit to $533 billion, or 3 percent of GDP, by 2013.
Obama proposes boosting tax collection to 19 percent of the economy in 2013 from about 16 percent this year.
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 to more than 39 percent from 35 percent.
The budget also assumes a tightening of enforcement of the tax code to crack down on people who use loopholes and other measures to avoid taxes.
Obama’s budget assumes a decline in government spending to 22 percent of the economy in 2013 from about 26 percent.
U.S. officials said the savings would come from winding down the war in Iraq and finding efficiencies in government programs. Obama proposes wringing some savings out of the defense budget by reforming government procurement.
WARS IN IRAQ AND AFGHANISTAN
Obama expects the costs of the Iraq and Afghanistan wars to total just over $140 billion this year. The costs for the two wars will decline to $130 billion in the 2010 fiscal year.
Congress already has appropriated about half of the money the Obama administration says it will need for Iraq and Afghanistan for fiscal 2009, which ends September 30.
Obama has made a “supplemental” spending request to Congress for an additional $84.3 billion to cover war costs, foreign aid and other projects in the current fiscal year, but Democrats in the House of Representatives have pushed that to $94.2 billion.
The United States spent about $190 billion on the wars in Iraq and Afghanistan in 2008. Obama wants to order U.S. combat troops to withdraw from Iraq over about 18 months, according to U.S. officials. At the same time, he is ramping up the U.S. military effort in Afghanistan.
Obama’s budget had penciled in the possibility he may request an additional $250 billion to help fix the troubled U.S. financial system. The House and Senate rejected including that in the 2010 budget blueprint they approved.
Any additional request to Congress would come on top of the $700 billion financial bailout program enacted last year.
One official said the $250 billion was put in the budget in the interests of “honest accounting” and is “nothing other than a placeholder” should legislative action be necessary.
Obama’s budget included a 10-year, $634 billion reserve fund to help pay for his proposed healthcare system overhaul. The budget plan Congress approved included a way for Democrats to fast-track the legislation through Congress.
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 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.
Obama’s budget includes hundreds of billions of dollars in revenues starting in 2012 and spread out over many years from a greenhouse gas emissions trading system.
Obama wants to help fight climate change by capping emissions of greenhouse gases such as carbon dioxide, or CO2, from big industries and allowing them to trade rights to pollute. Such systems are commonly called “cap and trade.”
Reporting by Caren Bohan and Jeff Mason in Washington; Editing by Will Dunham
Our Standards: The Thomson Reuters Trust Principles.