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Obama unveils a $3.8tn US budget Obama unveils $3.8tn budget plans
(40 minutes later)
US President Barack Obama has announced a $3.8tn (£2.4tn) 2011 budget plan which includes increased spending for job schemes, but cuts in other areas. US President Barack Obama has announced a $3.8tn (£2.4tn) budget plan for 2011, which includes increased spending for job creation, but cuts in other areas.
He also forecast the US deficit would rise to a record $1.56tn this year.He also forecast the US deficit would rise to a record $1.56tn this year.
He scrapped plans to send astronauts back to the Moon, and will seek to save $250bn by capping a range of domestic programmes for three years. He scrapped plans to send astronauts back to the Moon and will seek to save $250bn by capping a range of domestic spending programmes for three years.
Congress must approve the budget for the financial year that starts on 1 October for it to take effect. Congress must approve the budget for the financial year starting on 1 October for it to take effect.
Mr Obama urged lawmakers to follow his lead on reducing "waste in programmes I care about". Mr Obama blamed the huge deficit on the decisions of President George W Bush, previous Congresses and his administration's moves to prevent an economic collapse.
He said that in normal circumstances he would have worked to cut the deficit immediately, but expensive steps were need to help the economy.
Mr Obama urged lawmakers to follow his lead on reducing "waste in programmes I care about" and avoid "grandstanding".
He added: "We cannot continue to spend as if deficits do not matter."He added: "We cannot continue to spend as if deficits do not matter."
Mr Obama cancelled the Constellation programme launched by his predecessor, George W Bush, that envisaged putting astronauts on the Moon's surface by 2020. The budget includes about $100bn of tax incentives designed to lower double-digit unemployment, including inducements for companies to hire workers.
This will be partially offset by higher taxes on wealthy Americans earning more than $250,000 a year.
The budget also includes more money for education, scientific research and defence programmes.
'Quagmire' of debt
But Mr Obama also plans an overall three-year freeze on the portion of government spending that excludes commitments on welfare benefits, healthcare for the elderly, defence and homeland security.
And he cancelled the Constellation programme launched by his predecessor that envisaged putting astronauts on the Moon's surface by 2020.
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In his federal budget request, Mr Obama described the project as "over budget, behind schedule, and lacking in innovation", adding that it was draining resources from other Nasa activities.In his federal budget request, Mr Obama described the project as "over budget, behind schedule, and lacking in innovation", adding that it was draining resources from other Nasa activities.
Under Mr Obama's budget plans, Nasa would get funding to encourage private companies to build, launch and operate their own spacecraft, which could be used to carry astronauts to the International Space Station.Under Mr Obama's budget plans, Nasa would get funding to encourage private companies to build, launch and operate their own spacecraft, which could be used to carry astronauts to the International Space Station.
Having pledged in last week's State of the Union address to make job creation his top priority, Mr Obama proposed $100bn for tax breaks to encourage businesses to hire staff. Republicans attacked Mr Obama's proposed tax increases and said the large projected deficits showed he had failed to get government spending under control.
The deficit has been affected by a drop in tax revenue from the 7.2 million people who have lost jobs since the recession began. Unemployment now stands at 10%. Senator Judd Gregg, the top Republican on the Senate Budget Committee, said the US was sinking into a "quagmire" of debt and that Mr Obama's stimulus plan had failed to create jobs.
The economic stimulus package of $787bn announced in February 2009 has also had an impact on the deficit. "These circumstances call for a bold, game-changing budget that will turn things around, put in place a plan to restrain spending, reduce the debt and tackle the big entitlement programmes that are growing out of control," he said.
There is a real tension in what the White House is trying to do with next year's budget, the BBC's Richard Lister in Washington reports. "Instead, the president has sent us more of the same."
HOW BIG IS ONE TRILLION? Big numbers explained
On the one hand, the Obama administration wants to spend more money on things like green technology to create jobs, while on the other it is trying to scale back spending to shrink the deficit, our correspondent says.
In all, about 120 government programmes are being cut back.
Mr Obama has confirmed a three-year cap on some domestic spending.
But education will see record investment and defence spending would also increase.
The Democrats - who refused to pass many of the president's cost-cutting measures last year - are also sceptical about some of the planned savings this year, our correspondent reports.
He adds that the Republicans say the proposals do not go nearly far enough.