Feb 26 (Reuters) - President Barack Obama on Thursday released an outline of his budget for fiscal year 2010 that begins Oct. 1. The budget is a summary version of a more detailed proposal he will release in April.
Here are some details:
DEFICIT
Obama forecast a budget deficit of $1.75 trillion in the current fiscal year 2009.
That is equivalent to 12.3 percent of gross domestic product (GDP), making it the highest deficit as a share of the economy since World War Two.
The deficit totaled $455 billion in 2008, which was an all-time high in dollar terms.
Obama inherited a more-than $1 trillion deficit when he took office. A two-year $787 billion stimulus package Obama pushed through Congress combined with potential added costs to address the turmoil in U.S. banking are expected to help push the deficit up to $1.75 trillion.
The Obama administration's forecast for the 2009 deficit is roughly in line with those of many private economists.
The budget projected the deficit to hit $1.17 trillion in 2010 and Obama has set a goal of reducing the deficit to $533 billion, or 3 percent of GDP, by 2013.
TAXES
An increase in taxes on the wealthiest Americans would help reduce the deficit under the Obama plan.
Obama proposed boosting tax collection from about 16 percent of the economy this year to 19 percent in 2013.
Obama would allow some of the 2001 and 2003 tax cuts enacted under his predecessor George W. Bush to expire on schedule for those making more than $250,000 a year. That would include allowing the highest U.S. income tax bracket to rise from 35 percent to more than 39 percent.
The budget also assumes a tightening of enforcement of the tax code to crack down on people who use loopholes and other measures to avoid paying.
SPENDING
Obama's budget would assume a decline in spending from about 26 percent of the U.S. economy to 22 percent in 2013.
The savings would likely come from winding down the war in Iraq and finding efficiencies in government programs.
Obama proposed wringing some savings out of the defense budget by changing government procurement.
IRAQI AND AFGHAN WARS
Obama expects that the costs of the Iraq and Afghanistan wars will total just over $140 billion this year. The costs for the two wars will decline to $130 billion in the 2010 fiscal year. Spending on the wars is expected to drop sharply after that.
Congress has already appropriated about half of the money that the Obama administration says it will need for Iraq and Afghanistan this year.
Obama plans to make a "supplemental" budget request to Congress for an additional $75.5 billion to cover war costs in the current 2009 fiscal year.
The United States spent about $190 billion on the wars in Iraq and Afghanistan in 2008. Obama looks likely to order U.S. combat troops to withdraw from Iraq over about 18 months, according to U.S. officials. At the same time, he is ramping up the U.S. military effort in Afghanistan.
FINANCIAL RESCUE
Obama's budget pencils in the possibility that he may request an additional $250 billion to help fix the troubled U.S. financial system.
Any additional request to Congress would come on top of the $700 billion financial bailout program enacted last year.
U.S. officials emphasized that no decision has been made on whether to make a formal request to Congress for more money or the amount of money that might be sought.
One official said the $250 billion was put in the budget in the interests of "honest accounting" and is "nothing other than a placeholder" should legislative action be necessary.
HEALTHCARE
Obama's budget includes a 10-year, $634 billion reserve fund to help pay for his proposed healthcare reforms.
Half the reserve would be paid for with new revenues and the other half would be funded by making the current system more efficient, for example by requiring competitive bidding in some areas of the Medicare health insurance program for the elderly.
The 10-year reserve fund would help finance Obama's promised expansion of U.S. healthcare, one of his major campaign promises, but would not fully cover the final expense of the reforms.
CLIMATE CHANGE
Obama's budget includes hundreds of billions of dollars in revenues starting in 2012 and spread out over many years from a greenhouse gas emissions trading system.
Obama wants to help fight climate change by capping emissions of greenhouse gases such as carbon dioxide, or CO2, from big industries and allowing them to trade rights to pollute. Such systems are commonly called "cap and trade."
The revenue from the cap and trade system would be used to fund the development of clean energy technologies and help individuals and business pay for the transition to such technologies. (Reporting by Caren Bohan and Jeff Mason; editing by David Wiessler)