"While we must add to our deficits in the short term to provide immediate relief to families and get our economy moving, it is only by restoring fiscal discipline over the long run that we can produce sustained growth and shared prosperity. And that is precisely the purpose of the budget I'm submitting to Congress today," President Obama said in his budget announcement.
Listen to President Obama announce the budget
President Obama's budget proposal includes the costs of the wars in Iraq and Afghanistan which were left out of former President George W. Bush's budget. The 2009 budget seeks an additional $75.5 billion for Iraq and Afghanistan for the rest of the fiscal year and $130 billion for 2010.
Also included in the budget is a 10-year, $634 billion down payment on the president's plan for universal healthcare, which will be paid for by rolling back tax breaks for the wealthy and curtailing Medicare payments to insurance companies and hospitals.
"We must make it a priority to give every single American quality affordable health care," President Obama said. "With this budget, we are making an historic commitment to comprehensive health care reform... In the long term it will also help us bring down our deficit."
The 140-page outline projects a $1.75 trillion deficit for the 2009 fiscal year, or 12.3 percent of U.S. gross domestic product, the largest deficit since 1945 during World War II, the Associated Press reported.
But the president said he would cut the federal deficit to $533 billion by 2013.
"In the last 30 days alone, we have already identified $2 trillion in deficit reductions that will help cut our deficit in half by the end of my first term," Mr. Obama said.
A more detailed document will be released in April for the fiscal year that begins Oct. 1. Congress must pass budgets before they take effect.
The proposal also leaves open the possibility of requesting more money to prop up the nation's failing banking system by boosting the deficit by $250 billion, enough to add as much as $750 billion to the federal rescue plan. the AP reported. The new money would be in addition to the $700 billion bank rescue plan passed by Congress in October.
U.S. markets were trending upward more than a percentage point in mid-morning trading Thursday.
President Obama's budget proposal came the same day as a Labor Department report found a record-high number of U.S. workers receiving jobless benefits.