President Barack Obama predits that the United States budget deficit will reach a fresh record this year, before easing.
Issuing the White House's budget proposal on Monday, President Obama urged fiscal responsibility at a time of double-digit unemployment.
He said the United States must learn to live within its means and the country could not go on spending as if deficits and waste don't matter.
The $US3.8 trillion budget envisages the US deficit rising to a record $US1.56 trillion this year - equal to 10.6% of the economy.
The president has scrapped plans to send astronauts back to the Moon, and will seek to save $US250 billion by capping a range of domestic programmes for three years. About 120 government programmes are being cut.
Congress must approve the budget for the financial year starting on 1 October.
The BBC reports the deficit has been affected by a drop in tax revenue from the 7.2 million people who have lost jobs since the recession began. Unemployment is now at 10%.
The economic stimulus package of $US787 billion announced in February 2009 has also had an impact on the deficit.
The president is under pressure to convince investors and big creditors like China that he has a credible plan to control the country's deficit and debt over time.
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