Obama forecasts $1.75-trillion deficit

US President Barack Obama will forecast a 2009 deficit of $1.75 trillion in a budget proposal on Thursday that sets goals of overhauling the healthcare system....

Written by Reuters | Washington | Published:February 27, 2009 1:38 am

US President Barack Obama will forecast a 2009 deficit of $1.75 trillion in a budget proposal on Thursday that sets goals of overhauling the healthcare system and shoring up the US economy.

The huge deficit would represent 12.3 per cent of US gross domestic product — the largest share since World War II.

Two senior administration officials,speaking on condition of anonymity ahead of the release of the 2010 budget,said Obama’s expensive policy goals would be offset by cuts to put the country in better fiscal shape.

Federal spending is skyrocketing as officials try to jolt the faltering economy with public-works spending and tax cuts and bail out the troubled financial industry.

Obama,a Democrat,has pledged to halve the over $1 trillion deficit he inherited from former Republican president George W Bush in four years. The budget lays out spending cuts in agriculture subsidies and other areas to meet that goal. But spending would increase to meet key objectives.

The budget sets aside $250 billion as a “placeholder” if Obama decides to ask Congress for more money to help the troubled US financial system.

No such decision has been made yet,officials said. It also includes a 10-year,$634-billion reserve fund to help pay for the president’s proposed healthcare reforms.

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