As expected, President Obama proposed a $3.8 trillionbudget for Fiscal 2011, including a projected record deficit of $1.6 trillion.

The budget, which would begin in October, includes about$100 billion in additional tax cuts and spending on public works projects thatthe president hopes will spur jobs.

The Obama administration said its proposed tax cuts forfamilies and businesses would total about $300 billion over the decade,including a third-year extension of the "Making Work Pay" tax creditdesigned to offset payroll taxes for 110 million lower- and middle-incomeworkers.

Also proposed is an increase in child care tax credit,eliminating capital gains taxes on new investments for small businesses, andextending through the current fiscal year a holdover from the stimulus packagethat allows small business to write off in the first year up to $250,000 inequipment investments.

The president also wants $25 billion for stategovernments hit hard by the recession to help offset Medicaid funding costs forthe poor.

Obama plans to appoint a new debt commission to come upwith recommendations on how to meet his previously announced pledge to bringthe deficit figure down to the equivalent of 3 percent of GDP by 2015.

The current budget proposal is about 10.6 percent of GDP.

However, projections state that the deficit would drop to$700 billion in 2013 and 2014, on assumptions of economic recovery, rising taxreceipts and a drop in stimulus spending.

The budget also includes a projected $20 billion insavings from ending or cutting back on some 120 programs, including NASA'sproject to return to the moon.

 

The administration added that it was proposing thelargest funding increase in the history of the Elementary and SecondaryEducation Act, a $3 billion hike to $28 billion.

 

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