WASHINGTON — Trillion is the new billion.
No longer is it a billion here and a billion there that add up to real money. Swap "tr" for the "b" if you want a measure of what's at stake under President Barack Obama's first spending plan.
Obama charted a dramatic new course for the nation Thursday with a bold but contentious budget proposing higher taxes for the wealthy and the first steps toward guaranteed health care for all, accompanied by an astonishing $1.75 trillion federal deficit that would be nearly four times the highest in history.
Denouncing what he called the "dishonest accounting" of recent federal budgets, Obama unveiled his own $3.55 trillion blueprint for next year, a proposal that would transfer wealth from rich taxpayers to the middle class and the poor.
Congressional approval without major change is anything but sure.
The plan is filled with political land mines, including an initiative to combat global warming that would hit consumers with considerably higher utility bills.
Other proposals would take on entrenched interests such as big farming, insurance companies and drugmakers.
Obama blamed the expected federal deficit explosion on a "deep and destructive" recession and recent efforts to battle it, including the Wall Street bailout and the just-passed $787 billion stimulus plan.
The $1.75 trillion deficit estimate for this year is $250 billion more than projected just days ago because of proposed new spending for a fresh bailout for banks and other financial institutions.
As the nation digs out of the most serious economic crisis in decades, Obama said, "We will, each and every one of us, have to compromise on certain things we care about but which we simply cannot afford right now."
Signaling budget battles to come, Republicans were skeptical that Obama was doing without much at all.
"We can't tax and spend our way to prosperity," said House GOP leader John Boehner of Ohio. "The era of big government is back, and Democrats are asking you to pay for it."
Obama plans to move aggressively toward rebalancing the tax system, extending a $400 tax credit for most workers — $800 for couples — while letting expire President George Bush's tax cuts for couples making more than $250,000 a year.
That would raise the top income tax bracket from 35 percent to 39.6 percent for those taxpayers.
Thursday's 134-page budget submission, a nonbinding recommendation to Congress, said the plan would close the deficit to $533 billion after five years. That would still be higher than last year's record $455 billion deficit.
And the national debt would more than double by the end of the upcoming decade, raising worries that so much federal borrowing could drive up interest rates and erode the value of the dollar.
Also, to narrow the budget gap, Obama relies on rosier predictions of economic growth, including a 3.2 percent boost in the economy next year, than most private-sector economists foresee.
There is already resistance from Democrats who are upset with the budget's plan to curb the ability of wealthier people to reduce their tax bills through deductions for mortgage interest, charitable contributions and state and local taxes.
That tax increase would raise $318 billion over the upcoming decade toward a down payment on Obama's high-priority universal health care plan.
Cuts to the Medicare and Medicaid federal health programs would supply an additional $316 billion, but that still wouldn't provide enough money to guarantee coverage for all, and Obama wants Congress to come up with hundreds of billions of dollars in additional hard-to-raise revenues to pay for the rest.
Then there is the proposed clampdown on the Pentagon budget, which would get a 4 percent boost, to $534 billion next year, but would then get increases of 2 percent or less over the next several years.
Domestic programs favored by Democrats would, on average, receive a 7 percent boost over regularly appropriated levels, even as many agencies are already swimming in cash from the just-enacted economic stimulus plan.
Taken together, Obama's plan contains so many difficult-to-digest ideas that it's virtually certain to be significantly redrafted during debates later this year.
"It's going to be a tough row to hoe, but he has large Democratic majorities and a lot of popular support and we're in times of crisis," said Robert Reischauer, president of the Urban Institute. "So his prospects of him getting much of what he is seeking, while not good, are higher than ... we've seen in the past."
Senate Budget Committee Chairman Kent Conrad, D-N.D., predicted that Congress would pass much of the plan, though with major revisions.
BUDGET PROPOSAL HIGHLIGHTS
President Barack Obama's $3.55 trillion 2010 budget would:
• Raise taxes on households making more than $250,000 a year.
• Create a cap-and-trade auction program to tax carbon emissions and reduce greenhouse gases that would raise $645.7 billion over 8 years. It would spend $120 billion of that on clean energy technologies and the rest to fund tax cuts for households making less than $140,000 a year.
• Set aside a $634 billion reserve fund over 10 years to begin financing a national health care program. It would pay for that fund by reducing Medicare "overpayments" to private insurers, reducing Medicaid drug rebates to manufacturers and reducing the tax break for deductions taken by households with annual income over $250,000.
• Make permanent the $2,500 tax credit for college education that's contained in the federal stimulus plan.
• Phase out direct subsidies to farmers who make more than $500,000 a year.
• Spend $75.5 billion for the rest of fiscal 2009 and $130 billion for fiscal 2010 on the wars in Iraq and Afghanistan.
• Give a 2.9 percent pay raise to all uniformed military personnel and a 2 percent raise for all other federal employees.
• Increase VA spending by $25 billion over five years.
• Project a total deficit for the current fiscal year, 2009, of $1.75 trillion, 12.3 percent of the gross domestic product.
• Project annual deficits falling to 8 percent of GDP in 2010 and to 3 percent by 2013, a level it would maintain through 2019.