President Barack Obama is expected to release his Fiscal Year 2010 budget on Feb. 26. Details of the spending blueprint remain vague, but media reports indicate that the president's budget, unlike those of his predecessor, will hew closer to real-world situations. For example, Obama's budget will include spending on the conflicts in Iraq and Afghanistan, physician reimbursements under Medicare, costs associated with natural disasters, and lost revenues from changes in the alternative minimum tax.

The administration will use the FY 2010 budget to focus attention on federal health care programs and their effect on the long-term deficit. Specifically, the president will suggest that by making the health care system more efficient and increasing taxes, the 46 million Americans who do not have health insurance can be covered without increasing the deficit. He will also push for the elimination of several programs, including Medicare Advantage subsidies for private insurance companies and will propose a reduction in spending on defense contracts. Federal outlays will also be affected by the withdrawal of troops from Iraq and an increase in taxes on wealthy Americans. To boost revenue, the president is expected to argue that taxes on the income of hedge fund managers should be taxed at income tax rates, instead of at the capital gains rate of 15 percent.

Acknowledging trillion dollar deficits as far as the eye can see, the White House held a bipartisan "fiscal responsibility summit" the week of Feb. 23 to address the nation's growing financial burdens. After committing enormous outlays to such spending measures as the recently-enacted $787 billion stimulus bill and the Troubled Asset Relief Program (TARP), OMB Director Peter Orszag believes that the administration will begin planning to reduce the federal budget deficit. "[Obama] wants to present an honest budget, he wants to focus on health care, and he will cut the deficit by at least half by the end of his first term," said Orszag. Obama also plans to address this longer-term fiscal matter in his address to Congress tonight, Feb. 24.