Washington  - US President Barack Obama's first national budget outline mirrors an ambitious agenda he has been slowly detailing over his first month in office, and includes plans to tackle some of the thorniest issues in US politics.

The administration's 2010 budget and projections over the next 10 years, which was handed over to Congress on Thursday, largely reflected Obama's presidential campaign promises and many Democratic Party priorities.

Obama plans to widen the federal budget deficit this year to 1.75 trillion dollars, or 12.6 per cent of gross domestic product, in an effort to stabilize the US economy. But he pledged to slash the deficit back to 533 billion dollars by the end of his first term in 2013.

"While we must add to our deficits in the short term to provide immediate relief to families and get our economy moving," Obama said, "it is only by restoring fiscal discipline over the long run that we can produce sustained growth and shared prosperity."

The budget reflected many of the priorities Obama laid out during a speech before a joint session of Congress Tuesday night, including significant spending increases for health care, education and renewable energy.

But while Obama's speech was mostly applauded for its laudable goals, the details offered in the administration's budget outline provoked a bitter partisan reaction.

Republicans portrayed the bill as one that is typical of the left- wing Democrats' tax-and-spend mentality. The US Chamber of Commerce, while it supported Obama's
787-billion-dollar economic stimulus package, slammed the administration's budget for imposing an unnecessary burden on business.

"The era of big government is back, and Democrats are asking you to pay for it," said John Boehner, the top Republican in the House of Representatives. "The administration's plan, I think, it's a job killer, plain and simple."

Labour unions like the AFL-CIO by contrast welcomed the budget's commitment to equality and middle-class workers. Democratic Speaker of the House Nancy Pelosi called it a "statement of our national values."

The opposing reactions foreshadowed Obama's key difficulty going forward: Much of his ambitious agenda relies on overcoming sharp ideological differences that have frustrated many previous administrations.

The proposals include a permanent tax cut for the middle and low- income workers that make up 95 per cent of the workforce. By contrast, tax cuts for those earning 250,000 dollars per year, approved in former president George W Bush's term, will be allowed to expire after 2010.

Both tax positions fulfil key promises by Obama during last year's election, but the latter falls among a series of potentially bruising upcoming battles with Republicans in Congress.

"There are no real surprises in what's proposed in taxes," Roberton Williams of the non-partisan Tax Policy Centre said in an interview. "I don't see much that's really bipartisan."

The effective tax increase on the wealthy will be used to cut the deficit and fund a massive "downpayment" of more than 600 billion dollars on Obama's plans for health care reform - one of the country's most urgent and intractable issues.

While conservatives have promised to work with the president to reform the health care system, one of the costliest in the world, Republican legislators viewed the new downpayment as a pretext for a government-run system they strongly oppose.

Another landmine is energy and how to tackle global warming. Obama factored into his budget projections a cap-and-trade programme by 2012 that would force polluting companies to pay for their emissions.

It is the centrepiece of another key promise from Obama's campaign: Cutting greenhouse-gas emissions blamed for global warming by 80 per cent by 2050. The administration hopes to get about 80 billion dollars in "climate revenues" per year.

But the legislation failed in Congress last year and many conservatives have vowed to kill a revised version slowly making its way through the legislative process.

Obama is also setting himself up for battles he likely never intended when he ran for president. His budget includes an additional 750-billion-dollar bail-out for the nation's banking industry, on top of a 700-billion-dollar rescue approved by Congress in October.

US financial institutions have lost hundreds of billions of dollars in connection with dodgy mortgage loans that brought down the US housing market. The bank bail-out is wildly unpopular with voters who view it as a reward for bad practices.

Obama has said he understands the fury, but his administration believes it might be the only way to avoid a collapse of Wall Street that would be devastating to the economy at large. (dpa)