Obama Proposes $3.8 Trillion Budget

Barack Obama (file photo)

U.S. President Barack Obama has submitted a $3.8 trillion budget to Congress that he says focuses on creating jobs and cutting long-term deficits.

The president said Monday the budget for fiscal year 2011 lays a new foundation for lasting growth, and includes investments in education and boosting employment.

The budget forecasts a record deficit of about $1.6 trillion for the current fiscal year, which ends September 30.

The White House says the budget makes "critical investments" in education, clean energy, infrastructure, and innovation, in an effort to reverse the economic decline Americans have faced over the past decade.

But opposition Republicans slammed the proposal, saying the president has failed to control spending. The chair of the Republican National Committee, Michael Steele, said the budget will increase the deficit by record proportions and kill jobs by raising taxes on small businesses.

In his State of the Union speech last week, Mr. Obama said it is critical to control budget deficits. The government estimated that the overall U.S. budget deficit at the end of 2009 was more than $1.41 trillion.

The Obama administration envisions the 2011 fiscal year deficit at about $1.3 trillion, with deficits continuing to decrease over the next several years.

The budget plan predicts that deficits over the rest of the decade will average 4.5 percent of the U.S. economy, a level many economists consider unsustainable, because large deficits hurt economic growth by pushing up interest rates.

Congress must approve the proposal.

Officials say the proposed budget also includes clauses that would end plans to send U.S. astronauts back to the moon, and phase out fossil fuel subsidies for oil, gas and coal companies.