U.S. budget

WASHINGTON, Feb. 1 (UPI) -- The $3.8 trillion budget sent Monday by U.S. President Barack Obama to Congress assumes a working deficit of $1.3 trillion.

The White House estimated the fiscal 2010 deficit would reach $1.6 trillion but said the Obama administration's policies would lower the amount of federal red ink in ensuing years -- provided the U.S. economy stages a strong comeback from the recent recession. However, deficits would resume increasing after 10 years.

A fiscal 2011 deficit of $1.3 trillion represents more than 8 percent of gross domestic product.

Obama last week said he was freezing discretionary spending for three years, beginning with the 2011 budget, which goes into effect Oct. 1. That plan is expected to save about $250 billion. The administration is hoping to reap another $800 billion through increased fees on banks that received financial bailouts and energy companies and higher taxes on people earning more than $250,000 a year.

The administration, with an eye on an unemployment rate of around 10 percent, is trying to spur job growth -- adding employment increases both personal and corporate tax revenues. To that end, Obama is proposing an additional $100 billion for stimulus to the economy. Congress passed a $787 billion stimulus bill at the White House's urging a year ago.

Part of Obama's plan to work on the deficit issue is to create a bipartisan commission that would come up with a plan for a balanced budget by 2015. However, since Congress hasn't approved such a body, any of its suggestions would be non-binding.