President Barack Obama will forecast the biggest US deficit since World War Two in a budget on Thursday that urges a costly overhaul of the healthcare system and would spend billions to arrest the economy's freefall. An eye-popping $1.75 trillion deficit for the 2009 fiscal year is projected in Obama's first budget, according to US officials who briefed reporters on the numbers. The deficit forecast for this year reflects shortfalls accumulated under former President George W. Bush as well as new spending proposals under the $787 billion economic stimulus package. “While we must add to our deficits in the short term to provide immediate relief to families and get our economy moving, it is only by restoring fiscal discipline that we can produce sustained growth and shared prosperity,” Obama said at the White House. The document provides the broad outlines of a more detailed one to be released in April. The budget includes a 10-year, $634 billion reserve fund to help pay for the president's proposed healthcare reforms. Also included are billions in revenues, starting in 2012, from a greenhouse gas emissions trading system, one of Obama's key proposals to fight global warming. The budget sets aside $250 billion if Obama decides to ask Congress for more money to help the ailing US financial system. No such decision has been made yet, officials said. The officials said that if the government were to spend $250 billion to inject money into the banking system, that would finance about $750 billion in asset purchases. The budget, for the fiscal year that begins on Oct. 1, 2009, requires passage by Congress to take effect. While Obama has broad support with both chambers in Congress controlled by his party, he could face a fight as the sticker shock of huge deficits lead to wariness about more spending for goals such as the healthcare overhaul. The budget projects the costs of the Iraq and Afghanistan wars totaling just over $140 billion this year and $130 billion in the 2010 fiscal year. But annual costs will drop after that to $50 billion annually. Washington spent about $190 billion on the wars in 2008. Obama looks likely to order US combat troops to withdraw from Iraq over about 18 months, according to US officials. At the same time, he is ramping up the US military effort in Afghanistan. Obama's budget proposal lays out spending cuts in agriculture subsidies and other areas to meet the deficit
