Moon programme loses in Obama's 3.8-trillion-dollar budget (1st Lead)

Feb 1, 2010, 16:35 GMT

Washington - US President Barack Obama on Monday offered up a 3.8-trillion-dollar government budget for 2011 designed to revive a struggling labour market and start tackling a skyrocketing budget deficit.

The budget shows an ongoing focus on economic recovery and job creation, as well as efforts to trim spending with a three-year freeze on non-security discretionary spending, which makes up just under a third of all spending, officials said.

'We will continue to do what it takes to create jobs,' Obama said. At the same time, the administration was working to 'save what we can so that we can afford what we need.'

Perhaps the most high-profile victim of Obama's money-saving efforts is NASA's effort to return astronauts to the moon, one of more than 120 spending programmes being axed.

The budget would eliminate the Constellation programme that has been working to design a spacecraft to replace the ageing space shuttle and instead offers up a competition for private space flight. The proposal to kill a programme that is seen as a point of national pride could hit strong resistance in Congress.

Obama's plans include 100 billion dollars for job creation, including 33 billion dollars in tax cuts for small businesses and infrastructure and clean energy investments. In total the budget includes some 300 billion dollars in tax cuts.

It also includes 159.3 billion dollars for the wars in Iraq and Afghanistan and an additional request for 33 billion dollars this year.

The federal budget deficit is expected to reach 1.6 trillion dollars, or 10.6 per cent of gross domestic product (GDP), this year, and decline slightly to 1.3 trillion dollars, or 8.3 per cent of GDP, in 2011.

While the budget includes some measures to reduce the country's massive debt levels, Obama said it would take a bipartisan effort to go the rest of the distance.

Obama urged Republicans to 'fully embrace' his plan to create a fiscal commission that would make recommendations on where to cut spending in the coming years.

Lawmakers from both parties expressed concerns, with Obama's fellow Democrats concerned about spending cuts that could strangle the recovery and Republicans complaining it does not do enough to bring the country's fiscal house in order.

'I'm worried that you'll have just enough policy to allow rhetoric of fiscal responsibility, but the substance won't be about fiscal responsibility,' said congressman Paul Ryan, the top Republican on the budget committee in the House of Representatives.

Obama will also use the power of the purse to tax banks that benefited from the unpopular 700-billion-dollar government bail-out with a 'financial crisis responsibility fee' designed to raise 90 billion dollars over 10 years.

Spending for anti-terrorism efforts in the Department of Homeland Security includes 734 million dollars for 1,000 advanced screening machines for airports.