US President Barack Obama has announced a 3.8-trillion-dollar budget for 2011.

He predicted the budget deficit would reach a record 1.56 trillion this year, or 10.6 percent of GDP. The president's budget includes increased spending for job creation and education while introducing caps a range of domestic spending programmes for three years.

Mr Obama wants to spend 100 million dollars on tax cuts to induce companies to hire workers but the 2011 budget also includes higher taxes on wealthy Americans earning more than $250,000 a year.

The president's plans are to result in a serious reduction of the budget deficit in the next few years. He said the country could not continue to pretend budget deficits are irrelevant. The US is facing serious pressure from China, a major investor in US government bonds, to keep its budget deficit under control. Congress must approve the budget for the financial year starting on 1 October for it to take effect.

Photo:US President Barack Obama (ANP)