Obama Offers $3.8 Trillion Budget With Focus on Jobs

Feb. 1 (Bloomberg) -- President Barack Obama proposes a $3.8 trillion fiscal 2011 budget today that calls for $100 billion in additional stimulus spending and projects this year’s deficit will hit a record $1.6 trillion.

The plan would reduce the shortfall in part by imposing more than $800 billion in higher taxes and fees on those earning more than $250,000, banks that benefited from the financial industry bailout and the oil, gas and coal industries.

The spending blueprint being sent to Congress for the fiscal year that begins Oct. 1 reflects the administration’s struggle to boost the economy and job growth -- both top concerns of voters -- while tightening the government’s belt to reduce deficits in the years ahead.

“We’re trying to accomplish a soft landing in terms of our fiscal trajectory,” Peter Orszag, director of the White House Office of Management and Budget, said in a briefing.

The $1.6 trillion deficit forecast for the current year represents 10.6 percent of the U.S. gross domestic product, making it the biggest by that measure since World War II, according to administration figures. The deficit in 2009 was $1.4 trillion.

Deficit Projections

The White House deficit projection exceeds other forecasts. The Congressional Budget Office has forecast this year’s shortfall at $1.35 trillion. The median of 39 analysts survey by Bloomberg News is for $1.37 trillion this year and $1.10 trillion next year.

The administration’s deficit projections for 2011 and beyond are higher than the White House previously forecast because “the economic conditions were much worse” than predicted when Obama first took office, Orszag said in a Bloomberg Television interview this morning.

To address the shortfall, the administration wants to impose a three-year freeze in “discretionary” spending outside of defense and security. The freeze won’t be across-the-board. Some programs, such as education and research and development initiatives, would get as much as a 6 percent budget increase. The budget is subject to approval by Congress.

Obama’s plan also calls for creating a special debt commission to recommend steps to cut the deficit and tougher budgeting rules in Congress.

National Debt

The result would be a deficit that declines next year to $1.27 trillion and to $828 billion in 2012, according to the budget. In subsequent years, through 2020, the annual deficit would still total between $700 billion and $1 trillion. By 2020, the publicly held debt would approximately double to $18.5 trillion, according to estimates.

Orszag said the administration intends to slowly phase in its deficit-reduction plans, saying cutting too much too soon might stifle the economic recovery.

“The worst thing we could do is act too quickly and throw the economy back into recession,” Orszag said. “But we do need to be starting, and so that’s why you see this selective approach where we are beginning the process in certain components of the budget.”

Representative Paul Ryan of Wisconsin, the senior Republican on the House Budget Committee, called the budget “a plan for more of the same -- a very aggressive agenda of more government spending, more taxes, more deficits and more debt.”

Extending Stimulus

The plan calls for extending several elements of last year’s economic stimulus as part of either a new jobs package or through subsequent legislation. It proposes spending $61 billion to extend for one year the administration’s “Making Work Pay” tax credit which provided $400 to individuals and $800 to couples. It is set to expire this year.

The administration’s economic forecasts for economic growth, unemployment and inflation will be released later this morning.

Obama proposes to make permanent the Build America Bonds program, in which the federal government subsidizes infrastructure projects by picking up the tab for 35 percent of the interest costs from taxable bonds issued by local governments. It calls for reducing that subsidy to 28 percent. The budget would also spend $25 billion to provide state governments with six additional months of help paying their Medicaid bills.

Higher Taxes

The bulk of the higher taxes would come by allowing tax cuts passed under former President George W. Bush for those earning more than $250,000 to lapse at the end of this year. That would raise $678 billion, according to the administration.

A fee imposed on 50 of the biggest financial firms such as JPMorgan Chase & Co. and Bank of America Corp. would raise another $90 billion. Eliminating tax breaks for fossil-fuel industries would produce another $40 billion.

Freezing some domestic programs for three years and then holding it at the rate of inflation for the rest of the next decade would save $250 billion, the administration estimates.

That would represent an abrupt shift in priorities. Non- defense discretionary spending is projected to grow this year by 7 percent not including the costs of last year’s stimulus package, according to the CBO.

Seeking Savings

The increase totals 17 percent once the stimulus package is included, according to CBO estimates. The administration’s plan also calls for 120 program terminations, reductions and other savings it estimates would save $20 billion.

It would provide $33 billion in “emergency” funding this year to help pay for the administration’s troop buildup in Afghanistan. Next year, war costs would amount to $159.3 billion. The basic defense budget would amount to $549 billion, which represents a 1.8 increase adjusted for inflation. The Department of Homeland Security would get a 2 percent increase.

The budget has more than doubled from $1.9 trillion in 2001, according the OMB’s historical data.

Recovery Accelerates as Company Spending Rises Most Since 2006

Feb. 1 (Bloomberg) -- Evidence of a self-sustaining U.S. recovery is emerging on the factory floors of Texas Instruments Inc. The second-largest U.S. chipmaker will spend almost $1 billion this year to expand three factories and open a fourth to fill orders.

The need to rebuild industrial capacity after the largest decline on record in 2009 is boosting capital spending and may spur hiring. Beneficiaries are led by technology equipment- makers Intel Corp., Applied Materials Inc. and EMC Corp., as well as industrial product providers General Electric Co. and Rockwell Automation Inc.

Capital spending will increase the total productive capacity of the U.S. economy above its pre-recession level of December 2007, helping gross domestic product grow at a 2.7 percent annual rate in 2010, according to the median forecast of 67 economists in a Jan. 14 Bloomberg News survey. That would be the fastest rate since 2006.

“Our business is growing so we have to build out capacity,” Dave Pahl, Texas Instruments’ director of investor relations, said from Dallas. “Our customers are increasing what they’re building, so that’s increasing our revenue.”

Business executives say spending will increase further as profits rise -- third-quarter earnings increased 10.8 percent, according to Commerce Department figures, the most in more than five years -- and demand strengthens. Of U.S. companies followed by Morgan Stanley analysts in New York, 38 percent intend to raise capital spending over the next three months, up from a low of 3 percent in August.

‘Very Powerful Recovery’

“The groundwork has been laid for a very powerful recovery in capital spending,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York. “It won’t take much of a spark to get companies to start spending and hiring.”

GDP rose 5.7 percent in the fourth quarter as factories revived assembly lines and consumers and companies spent more, the Commerce Department reported on Jan. 29. Purchases of equipment and software increased 13.3 percent, the most since the first quarter of 2006.

Federal Reserve officials, who left the benchmark lending rate unchanged in a range between zero and 0.25 percent on Jan. 27, noted in their policy statement that “business spending on equipment and software appears to be picking up.”

Shares in companies that make those goods are poised to extend their rally, investors say. The Russell 3000 Producer Durables index and the Standard & Poor’s 500 Semiconductor Equipment Index are each up more than 29 percent over the past 12 months, exceeding the 27 percent rise in the Standard & Poor’s 500 index.

Cash Flow

“People are buying equipment,” said Mario Gabelli, chief executive officer of Gamco Investors Inc. in Rye, New York, which owns Texas Instruments and Rockwell Automation among its $20 billion under management. “As cash flow continues to improve, as companies get more confident, they need more efficient plants,” Gabelli, 67, said in an interview in New York.

Morgan Stanley’s January business conditions index survey found that 34 percent of companies plan to increase hiring, up from 8 percent in August.

“Rising jobs will provide the gains in income and confidence needed to support consumer spending,” Richard Berner, co-head of global economics at Morgan Stanley in New York, said in a telephone interview.

Payrolls rose by 13,000 jobs in January, according to the median forecast of 62 economists surveyed by Bloomberg News ahead of the Labor Department’s Feb. 5 report. That would be the second month of job creation since the recession began in December 2007. Manufacturing payrolls are forecast to have fallen by 23,000, the least since the recession’s onset.

Davos Panel

The unemployment rate is forecast to have held at 10 percent in January, the economists’ survey showed. White House economic adviser Lawrence Summers suggested during a panel discussion at the World Economic Forum in Davos, Switzerland Jan. 29, that the jobless rate may not fall quickly as companies invest in boosting productivity rather than hiring.

Non-farm productivity rose at an 8.1 percent annual rate in the third quarter of 2009, and the median forecast of 47 economists surveyed by Bloomberg News is for output per hour to have risen at a 6 percent rate in the fourth quarter. The average quarterly growth rate of productivity over the past 20 years is 2.4 percent.

The median forecast of 54 economists in a Bloomberg News survey released Jan. 14 is that it will take until the end of 2011 for the unemployment rate to fall to 9 percent.

9 Percent?

Dean Maki, chief U.S. economist for Barclays Capital Inc. in New York, says the rise in capital spending makes that forecast too pessimistic. He predicted that the nation’s unemployment rate will fall to 9 percent by the end of 2010.

“Businesses are starting to spend on goods; that means they’ll also start spending on employment,” Maki said in an interview on Bloomberg Television after the GDP report. “The first quarter as a whole will show substantial job growth.”

Business-led job growth would be good news for President Barack Obama. A survey released Jan. 13 by Hamden, Connecticut- based Quinnipiac Polling Institute found 54 percent said they disapproved of the way Obama was handling the economy. The survey of 1,767 registered voters had a margin of error of plus or minus 2.3 percentage points.

Tax Breaks

In his Jan. 27 State of the Union address, the president proposed extending through 2010 a temporary tax incentive that encourages businesses to accelerate purchases of equipment. The 50 percent write-off may give a boost to capital expenditures if approved by Congress.

“It will help companies to make capital investments, which is what you need in a weak economy,” Monica McGuire, senior policy director of taxation for the National Association of Manufacturers in Washington, said in a telephone interview.

Slack remains in the economy. About 68.6 percent of U.S. manufacturing capacity was in use in December, compared with an average of 81 percent since records began in 1948.

Technology stocks have been rising for 10 months in anticipation of a capital expenditure rebound, and gains have slowed for many companies, said Craig Berger, a technology analyst at FBR Capital Markets in New York. Texas Instruments shares, which are up 51 percent over the past 12 months, are more expensive on a relative-value basis than 61 percent of the companies in the S&P 500.

‘So Far, So Fast’

“Investors are willing to bet we’ve got to start spending on capex after cutting back,” Berger said. “But there’s a lot of push and pull in the markets because we’ve come up so far, so fast.

Small businesses, generally those with fewer than 500 employees, and with less cash or access to financing, will limit their investments this year, according to the National Federation of Independent Business. A near-record low of 18 percent said they plan to make capital expenditures over the next three to six months, according to the industry group’s January survey.

“Capital spending is on the sidelines,” said William Dunkelberg, NFIB chief economist in Philadelphia, in a telephone interview.

By contrast, Seagate Technology, the world’s largest maker of hard-disk drives, raised its 2010 sales forecast on Jan. 21 after reporting it sold a record 49.9 million drives in the most recent quarter. While Seagate expected business buyers to resume purchasing, it didn’t predict such a quick rebound, Steve Luczo, the company’s chief executive officer, said in an interview.

Real Signals

“As we get further and further away from the implosion we all felt at the end of 2008, you have more confidence that the signals you’re seeing are real,” said Luczo, 52, whose company is based in the Cayman Islands and run from Scotts Valley, California.

Dallas-based Texas Instruments is hiring 250 workers to open a new chip-manufacturing plant in Richardson, Texas, that will eventually employ 1,000. It’s also expanding three other plants in the state. The company forecast Jan. 25 that first- quarter profit of 44 cents to 52 cents a share would beat analysts’ estimates.

Santa Clara, California-based Intel, the world’s largest chipmaker, is also raising capital spending, Chief Financial Officer Stacy Smith, 47, said in a Jan. 15 interview. Intel shares are up 45 percent over the past year, and of the 49 analysts who cover the company, 36 maintain a “buy” rating.

This “will be the first year in about five years where we are going to grow the employment in the company and make some critical R&D bets,” Smith said.

Chip Equipment

Increased capital spending bodes well for companies such as Santa Clara, California-based Applied Materials, which supplies chip-making equipment to Texas Instruments and Intel, chief executive Michael Splinter, 59, said.

“During 2008 and 2009 a lot of capacity came off line in the semiconductor industry. That has to be replaced,” he said. “In the next six to nine months I think we’re going to see increased spending on new capacity.”

EMC, the world’s biggest maker of storage computers, said on Jan. 26 that sales would be $16 billion this year, exceeding the $15.4 billion average estimate of analysts in a Bloomberg survey and a 14 percent increase from 2009.

David Goulden, chief financial officer of Hopkinton, Massachusetts-based EMC, forecasts a 3 percent to 5 percent increase in spending on information technology this year.

“We’re seeing interest in investments for growth, new opportunities and integrations, as opposed to what used to be mostly focus on cost-cutting,” he said on a Jan. 26 conference call with analysts.

Spending Plans

Surveys of corporate spending plans show increasing optimism. The Philadelphia Federal Reserve Bank’s monthly index of manufacturing capital spending plans over the next six months rose to 24.5 in January, the highest since September 2008. Similar indicators produced by the Dallas, Richmond, and New York Federal Reserve banks show the same trend. The New York capital expenditure index rose to 33.33 last month, the highest since May 2007.

American industrial capacity -- the number of plants and amount of equipment available to produce goods, mine raw materials, and generate power -- fell by 1 percent last year, the largest decline on record.

“We’re seeing a pretty good bounce back,” Jeffrey Immelt, chief executive of Fairfield, Connecticut-based General Electric, told analysts Jan. 22. “We think equipment orders should be positive for the year.” GE shares have risen 26 percent in the past year.

Purchasing Management

Smaller suppliers are also seeing the benefits. The National Association of Purchasing Management-Milwaukee reported its capital equipment index was at 60 in January, the highest since August 2008.

Milwaukee-based Rockwell Automation, which makes industrial automation and power controls, raised its 2010 forecast after reporting Jan. 27 it made a profit of 54 cents a share in the most recent quarter, topping the 36-cent average analyst estimate.

“We believe we’re at the early stage of a recovery,” CEO Keith Nosbusch said in an interview. Companies “de-stocked to the point where any need had to be filled immediately, one to one, as opposed to before where they were able to take it out of their inventory supply chain.”

Rockwell Automation shares are up 77 percent over the past 12 months. “That’s a stock we like,” Gabelli said.

LaVorgna sees capital expenditures rising 14.3 percent from the fourth quarter of 2010 to the fourth quarter of 2009, largely in the second half of the year, and 10 percent over the same period in 2011. He pointed to the level of new orders in the December ISM factory index, a leading indicator of capital spending, which rose to 64.8, the highest in five years.

“Capital spending has already improved despite low capacity use,” LaVorgna said. “You had a massive collapse in capex, and those are almost always followed by massive recoveries.”

Consumer Spending in U.S. Increases for Third Month

Feb. 1 (Bloomberg) -- Spending by U.S. consumers increased in December for a third consecutive month, signaling the biggest part of the economy will contribute more to growth in coming months.

The 0.2 percent increase in purchases was less than anticipated and followed a 0.7 percent gain in November that was larger than previously estimated, Commerce Department figures showed today in Washington. Incomes climbed 0.4 percent, exceeding expectations.

Retailers such as Amazon.com Inc. are posting profits on increased sales as Americans spent more this past holiday season than the year before. Employment is key to propelling bigger gains in spending, one reason the Obama administration is proposing a fiscal 2011 budget today that calls for $100 billion in additional stimulus focusing on jobs.

“Consumers have the wherewithal to support good spending, however they are going to be reticent until they see a few good months of job gains,” said Craig Thomas, a senior economist at PNC Financial Services Group Inc. in Pittsburgh, who correctly forecast the gain in spending. “2010 is lined up to be a moderately good year.”

Stock-index futures held earlier gains following the report. The contract on the Standard & Poor’s 500 Index rose 0.6 percent to 1,076.5 at 9:10 a.m. in New York. Treasury securities fell.

The median estimate of 65 economists surveyed called for a 0.3 percent increase in spending, after an originally reported gain of 0.5 percent the prior month. Projections ranged from no change to 0.7 percent.

Income Gains

The gain in incomes followed a 0.5 percent increase in November and exceeded the 0.3 percent median estimate in the Bloomberg survey. Wages and salaries climbed 0.1 percent in December after increasing 0.4 percent the prior month.

Today’s report showed prices were stabilizing. The inflation gauge tied to spending patterns rose 2.1 percent from December 2008, less than the survey median forecast.

The Fed’s preferred price measure, which excludes food and fuel, climbed 0.1 percent in December from the previous month and was up 1.5 percent from a year earlier.

Adjusted for inflation, spending climbed 0.1 percent following a 0.4 percent rise the prior month.

Because the increase in spending was smaller than the gain in incomes, the savings rate rose to 4.8 percent from 4.5 percent the prior month.

Disposable income, or the money left over after taxes, increased 0.4 percent.

Better Sales

Amazon, the world’s largest Internet retailer, posted profit and sales that beat analysts’ estimates and said revenue growth may accelerate this quarter as consumers start spending more following the recession. Sales may rise as much as 43 percent to $7 billion in the first quarter, more than last year’s 18 percent growth, the Seattle-based company said last week in a statement. Analysts surveyed by Bloomberg had estimated sales of $6.42 billion.

Inflation-adjusted spending on durable goods, such as autos, furniture, and other long-lasting items, climbed 0.2 percent in December after rising 2.3 percent the prior month.

Purchases of non-durable goods decreased 0.8 percent, and spending on services, which account for almost 60 percent of all outlays, increased 0.4 percent.

The economy grew at a 5.7 percent annual rate in the fourth quarter, exceeding the median forecast of economists surveyed, figures from the Commerce Department showed last week. Consumer spending, which accounts for 70 percent of the economy, climbed at a 2 percent pace, also exceeding expectations.

U.S. Stock Futures Rise, Treasuries Fall on Economy; Euro Gains

Feb. 1 (Bloomberg) -- U.S. stock futures rose, Treasuries fell and the euro snapped a four-day decline versus the dollar on speculation manufacturing is recovering around the world.

Standard & Poor’s 500 Index futures expiring in March rose 0.5 percent at 9:02 a.m. in New York as Exxon Mobil Corp. advanced. The euro strengthened 0.5 percent against the dollar and 0.4 percent versus the yen. The zloty climbed as much as 1.5 percent to its highest in a year against the euro and the rand gained 0.7 percent against the dollar as factory production rose in Poland and South Africa.

U.S. manufacturing probably expanded in January for a sixth month, the Institute for Supply Management may say today, adding to evidence the recovery in the world’s biggest economy is gaining momentum. Indexes of manufacturing in the euro region and the U.K. rose more than economists forecast.

“We look for a further leg up in equities, which could be driven by positive economic and earnings news,” JPMorgan Asset Management strategists David Shairp and Rekha Sharma wrote in a report today. The prospect of central banks withdrawing stimulus may mean that “markets will be periodically challenged and volatility will be on the rise,” they wrote.

The MSCI World Index of 23 developed nations’ stocks slipped less than 0.1 percent as Asian stocks dropped on concern China will take more steps to prevent its economy from overheating. Toshiba Corp. declined 6 percent in Tokyo after cutting its revenue forecast. Honda Motor Co. slid 2.5 after saying it’s recalling some cars in North America and the U.K.

European Movers

Europe’s Dow Jones Stoxx 600 Index fell 0.2 percent, paring earlier losses of as much as 0.8 percent. Vivendi SA, the owner of the world’s largest music company, slid 3.3 percent in Paris after a U.S. jury ruled it misled investors. Ryanair Holdings Plc advanced 5.7 percent in Dublin after Europe’s biggest discount airline raised its profit forecast.

Northumbrian Water Group Plc led shares of utility companies higher, jumping as much as 13 percent in London, after the Sunday Times reported that Ontario Teachers’ Pension Plan may bid 1.7 billion pounds ($2.7 billion) for the company.

The gain in U.S. futures indicated the S&P 500 may rebound from a three-month low. The U.S. Institute for Supply Management’s factory index, due at 10 a.m. in New York, rose to 55.5 last month from 54.9 in December, according to the median forecast of 62 economists surveyed by Bloomberg News. Readings greater than 50 signal expansion. Commerce Department data showed Americans’ income rose more than estimated in December.

Earnings Rebound

A record nine-quarter earnings slump for S&P 500 companies is projected to have ended in the final three months of 2009 with a 76 percent increase in profits. Almost 80 percent of the results released since Jan. 11 topped the average forecasts of Wall Street estimates, data compiled by Bloomberg show.

Exxon added 1.8 percent after posting a smaller decline in fourth-quarter profit than analysts estimated as gains in oil prices and output cushioned the impact of slumping demand for diesel and gasoline.

The Dubai Financial Market General Index climbed 2.2 percent after Aabar Investments PJSC, the Abu Dhabi fund that’s the biggest shareholder in Daimler AG, said full-year profit more than doubled. The MSCI Emerging Markets Index fell 0.6 percent, extending its drop since Jan. 11 to as much as 10 percent.

Lower Home Prices

The euro advanced against 12 of its 16 most-traded counterparts, rising most versus the South Korean won with a 1 percent gain. The pound fell after reports showing a decline in U.K. house prices and a drop in mortgage approvals. The U.K. currency lost 0.4 percent against the dollar and 0.8 percent versus the euro.

The Dollar Index, which tracks the U.S. currency against those of six major trading partners, ended a four-day advance, dropping 0.2 percent. Treasuries fell for the first time in three days, with the yield on the 10-year note rising 4 basis points to 3.63 percent.

Copper for delivery in three months fell as much as 2.2 percent to $6,600 a metric ton in London, the lowest compared with intraday prices since Nov. 16. Tin retreated 5.5 percent to $16,250 a ton. Gold for immediate delivery added 0.5 percent to $1,086.32 an ounce in London and crude oil added 0.6 percent to $73.34 a barrel in New York.

Obama Budget Said to Forecast $1.6 Trillion Deficit for 2010

Feb. 1 (Bloomberg) -- The budget plan President Barack Obama is set to release today forecasts the deficit will hit a record $1.6 trillion this year before beginning to decline in 2011, a congressional aide said.

Obama will send Congress a $3.8 trillion spending blueprint that includes a mix of tax cuts and spending to boost the economy as well as aid to states. It also takes steps to rein in the deficit, which has widened as the recession cut tax revenue and the government took measures to stimulate the economy.

The administration forecasts the shortfall will decline from $1.6 trillion in the fiscal year ending Sept. 30 to $1.3 trillion in fiscal 2011, said the aide, who spoke on condition of anonymity because the figures haven’t been officially released.

Obama is putting emphasis on boosting the U.S. economy, which hasn’t recovered the more than 7 million jobs lost since the recession began in December 2007. Following up the stimulus legislation enacted last year, the president is seeking more spending on infrastructure projects and $33 billion in tax breaks and incentives to encourage small businesses to hire more workers and raise wages.

The measures to add jobs will be “probably somewhere in the $100 billion range,” spokesman Robert Gibbs said yesterday on CNN’s “State of the Union” program. Last year’s stimulus amounted to $862 billion, the Congressional Budget Office says. The House in December passed job legislation of more that $150 billion.

Economy and Deficit

The budget reflects the administration’s struggle to confront voter anxiety about a 10 percent jobless rate and the national debt surging toward $13 trillion. The result is a plan that tries to step up spending in some areas for an economic boost while slowing it over a longer period.

“To many people, they think it’s double-talk but it’s perfectly logical and consistent with economic theory,” said James Horney, a former Senate Budget Committee analyst now at the Center on Budget Policy and Priorities, a research organization in Washington.

The White House deficit projection exceeds other forecasts. The CBO has forecast this year’s shortfall at $1.35 trillion. The median of 39 analysts survey by Bloomberg News is for $1.37 trillion this year and $1.10 trillion next year.

Obama has promised to cut the deficit in half from $1.3 trillion by the end of his first term and “the president is committed to keeping that goal,” Gibbs said.

Increased Outlays

Defense and education are set to get increased funding in Obama’s 2011 budget plan while spending on some domestic programs will be frozen over three years, according to congressional and administration officials and previous announcements from the White House. The budget is subject to approval -- and modification -- by Congress.

On taxes, Obama said in his State of the Union address last week that some of the tax cuts passed under former President George W. Bush in 2001 and 2003 would be extended. “We will not continue tax cuts for oil companies, investment fund managers and for those making over $250,000 a year,” he said.

The White House wants lawmakers to give small businesses tax credits of up to $5,000 for each new worker hired as part of a $33 billion package of incentives. This would be folded into a stimulus program that would “add infrastructure spending,” Gibbs said.

In an extension of last year’s stimulus, the administration proposes making permanent the Build America Bonds program. The federal government would pick up the tab for 28 percent of the interest costs from taxable bonds issued by state and local governments, according to a Treasury Department official.

Aid to States

The budget also will call for spending $25 billion to provide states with an additional six months worth of funding to help pay for the government’s Medicaid health insurance program for the poor.

On energy, the administration supports expanding nuclear power by tripling loan guarantees for new reactors to more than $54 billion, an administration official said. The 2011 budget will add $36 billion to the $18.5 billion already approved for nuclear-power plant loan guarantees.

Obama will propose a defense budget of about $708 billion that includes $159 billion for the wars in Iraq and Afghanistan, four officials said on Jan. 22. The administration has said it plans to spend $161 billion on the wars this year.

While spending would rise in many areas of the federal catalog, the administration has announced it would seek a three- year freeze on most spending for domestic programs that Congress enacts each year, for a savings of as much as $15 billion in the first year and an estimated $250 billion over 10 years.

Non-defense discretionary spending, about 17 percent of the budget last year, is projected to grow this year by 7 percent, excluding the costs of last year’s stimulus package, according to the CBO.

In 2009, those expenditures grew by 5 percent, according to the agency. The increases are much higher if the stimulus package is included, with this year’s hike totaling 17 percent and last year’s increase, 11 percent.