(CNN) -- President Obama on Thursday unveiled a $3 trillion-plus budget that he says will halve the federal deficit by the end of his first term.
President Obama says he can halve the deficit by the end of his first term.
The budget for fiscal year 2010 includes substantial investments in health care reform, renewable energy and education.
The budget also includes big cuts for some programs, setting the stage for major political battles as political patrons fight to save budget items in the months ahead.
Based on the proposed budget, the administration projects the deficit for fiscal year 2009 will reach $1.75 trillion, or 12.3 percent of U.S. gross domestic product. That's a record in dollar terms and is the highest as a share of GDP since World War II. Read the budget (pdf)
Congress received a 140-page summary of the budget for fiscal year 2010 Thursday morning. The full details are expected in April.
The government's fiscal year runs from October of one year to September of the next.
Peter Orszag, director of the Office of Management and Budget, outlined four ways the administration will reach their goal of reducing the deficit in half by 2013. Watch Orszag say "no tax increases" in the budget »
First, he predicted the economy would recover because of the Recovery Act and the normal business cycle. Watch: What's in the budget for you? »
Second, Orszag said the tax cuts for the wealthy will expire as scheduled at the end of 2010. That will hit families making more than $250,000 a year. The administration is also closing down some corporate tax loopholes.
Orszag also said the administration is "winding down the war," which he predicted would reduce costs over time.
Finally, the administration is "making government more efficient," Orszag said.
The president says his team has already identified $2 trillion in budget savings by scouring the federal budget. Watch as Obama introduces the budget »
Orszag emphasized Thursday that the budget presented is just an overview. He said that throughout the year, the administration would "continue to examine what works and what doesn't."
Here's a breakdown of some of the items in the budget. See a detailed breakdown of department funding
Defense: $75.5 billion in spending on Iraq and Afghanistan for the remainder of 2009, $130 billion in spending on Iraq and Afghanistan for fiscal year 2010 and $533.7 billion for Department of Defense.
Education: $46.7 billion in spending for fiscal year 2010.
Energy: $26.3 billion in projected spending for the Energy Department in fiscal year 2010.
The budget builds on funds already allotted for programs in the $787 billion stimulus package signed into law earlier this month. See how federal funds will be spent »
Obama's outline also sets aside an additional $250 billion to stabilize the financial system, on top of the $700 billion already authorized by Congress under the Troubled Asset Relief Program.
In introducing the budget, Obama slammed what he called a "dishonest accounting" of the costs of U.S. wars, and reiterated his commitment to make government "more open and transparent."
"For too long, our budget has not told the whole truth about how precious tax dollars are spent," he said.
"Large sums have been left off the books, including the true cost of fighting in Iraq and Afghanistan. And that kind of dishonest accounting is not how you run your family budgets at home; it's not how your government should run its budgets either."
He also warned that there will be "some hard choices that lie ahead."
Some of the proposed spending cuts range from outdated farm subsidy programs to pricey Pentagon weapons programs and the so-called "carried-interest" loophole on Wall Street.
The budget also cuts funding for the controversial Yucca Mountain nuclear waste storage program. Funding for the program will be scaled back while the administration works on a new strategy for nuclear waste disposal, the document says.
The Obama administration is aiming to save $9.8 billion in agricultural costs over 10 years by phasing out direct payments to farmers with sales revenues of $500,000 or more per year.
Obama is also proposing a $634 billion health care "reserve fund" aimed at reforming the system. In order to fund it, Obama will ask wealthy Americans to accept a tax increase and wealthy seniors to pay higher Medicare premiums.
The reserve fund will be used only for reforming the system by cutting costs and trying to deal with the 46 million Americans without health insurance.
The budget will leave the details of how to reform the system to be worked out by Congress, and top Obama officials are already acknowledging this is only a start -- it will take more money to get the job done.
Republicans criticized the budget as full of wasteful spending. iReport.com: What are you cutting out of your budget?
"There's been too much spending under the Republicans over the last couple of years, but if you begin to look at what's happen over the last month and what's being proposed in this budget, the president's beginning to make President Bush like a piker when it comes to spending," said Rep. John Boehner, the House minority leader.
"The era of big government is back and Democrats are asking you to pay for it," said Boehner, R-Ohio. Watch Boehner denounce Obama's plan »
Mississippi Rep. Gene Taylor, a conservative "Blue Dog" Democrat, also blasted the budget outline saying, "I don't like it ... Change is not running up even bigger deficits that George Bush did."
Taylor noted that he was still reviewing the plan, but he said he was troubled by the additional spending for many government programs on top of the funding agencies received in the economic stimulus bill. He voted against the stimulus.
Taylor pointed to Obama's inaugural address that called for Americans to make sacrifices, saying "It's certainly not reflected in his budget."
House Speaker Nancy Pelosi, however, praised the budget as "a statement of our national values."
"The budget is consistent with the president's message of accountability, fiscal responsibility, transparency from the standpoint of how we approach it. It reflects the values that he conveyed about investing in education and energy and health care; also in how we grow our economy for infrastructure and how we support our troops," said Pelosi, D-California.
CNN's Ed Henry, Kristi Keck, Mike Mount and Alan Silverleib and CNNMoney's Jeanne Sahadi contributed to this report.