An administration official said Obama was proposing to cut the deficit, which private economists project will rise to $1.5 trillion this year, through a mixture of tax increases on wealthier Americans and spending cuts.
“The deficit this administration inherited was $1.3 trillion or 9.2 percent of GDP. By 2013, the end of the president’s first term, the budget cuts the deficit to $533 billion or 3.0 per cent of GDP,” the official told Reuters news agency on condition of anonymity.
“Most of the savings will come from winding down the war in Iraq, increased [tax] revenue from those making more than $250,000 a year, and savings from making government work more efficiently and eliminating programs that do not work,” the official said.
The US spent about $190bn on the wars in Iraq and Afghanistan in 2008. Obama has pledged to withdraw US combat troops from Iraq within 16 months while ramping up the US military effort in Afghanistan.
Since being sworn into office on January 20, Obama has announced swift measures to stem mortgage foreclosures, prop up failing banks, rescue the ailing auto industry and drive his stimulus package through Democratic-led Congress.
The measures have received a mixed early reaction from gloomy financial markets uncertain whether they will succeed in arresting the downward economic spiral.
Obama told Americans in his weekly address it was vital to get “exploding deficits under control as our country begins to recover”.
“On Thursday I’ll release a budget that’s sober in its assessments, honest in its accounting, and lays out in detail my strategy for investing in what we need, cutting what we don’t and restoring fiscal discipline,” he said.
Obama will outline his ambitious goal when he hosts a summit at the White House on Monday on fiscal responsibility and later in the week when his administration presents a summary of its first budget, for the 2010 fiscal year.
Obama has invited business and union leaders, academics and lawmakers to a summit on Monday to discuss ways of cutting the deficit.
That will be followed by an address to a joint session of Congress on Tuesday in which he said he would outline “our urgent national priorities”.
Analysts expect the impact of the $787bn stimulus package and other spending to counter the economic downturn will push the national budget deficit to $1.5 trillion or more this year.
That would be more than triple the $455bn deficit recorded in 2008.
Earlier on Saturday, Obama said the US Treasury will implement tax cuts for 95 per cent of Americans enacted as part of the $897bn stimulus package, fulfilling a campaign pledge he hopes will help jolt the economy out of recession.
“I’m pleased to announce that this morning the Treasury Department began directing employers to reduce the amount of taxes withheld from paychecks, meaning that by April 1, a typical family will begin taking home at least $65 more every month,” Obama said.