Washington  - US President Barack Obama is urging states to spend the government's money wisely despite a deepening recession, ahead of his annual address to Congress Tuesday that will outline the long-term budget priorities for his administration.

Addressing a meeting of the country's governors Monday in Washington, Obama said he was relying on states to quickly implement the 787-billion-dollar stimulus package that became law last week and is aimed at halting the country's disastrous economic slide.

"We are addressing the greatest economic crisis we have seen in decades by investing unprecedented amounts of the American people's hard-earned money," Obama said. "And with that comes an unprecedented obligation to do so wisely, free from politics and personal agendas."

Vice President Joe Biden has been tasked with overseeing how the emergency funds are spent, Obama said. The administration hopes the stimulus will save or create
3.5 million jobs over the next two years. More than 3.6 million jobs have been lost since the US went into recession in December 2007.

About 15 billion dollars from the 787-billion-dollar economic recovery package will be available to states as early as Wednesday to combat serious budget shortfalls in health care, Obama said. Hundreds of billions of dollars will begin flowing over the coming months.

Most of the country's 50 states have clamoured for federal aid to plug budget holes totalling about 350 billion dollars. Unlike the national government, US states are required by law to balance their budgets, forcing many to cut government benefits just as a deepening recession has increased demand for those services.

But some Republican governors have strongly opposed Obama's rescue package and are refusing to accept a portion of the funds. They worry that a temporary extension of unemployment benefits, for example, could force them to increase taxes once the federal cash injection runs out.

Many conservatives have complained that Obama's economic policies will raise an already ballooning national budget deficit, which could rise above 10 per cent of gross domestic product this year.

Obama is hoping to assuage some of those concerns this week with a series of events focusing on the longer term challenges to cutting government spending.

A "fiscal responsibility summit" Monday will tackle costly health care and retirement benefits that are at the core of any long-term hopes to balance the budget.

On Tuesday evening, Obama will unveil his long-term budget priorities in a traditional annual address before Congress.

The president will promise to slice the federal deficit in half over the next four years through a combination of cuts in government programmes and increasing taxes on the wealthy, according to US media reports.

An overview of the government's 2010 budget will be submitted to Congress on Thursday. (dpa)