President Barack Obama has pulled out his most potent weapon -- the dry federal budget -- to try to carry out his promise of change, including winding down the Iraq war, expanding health care and tackling global warming.

But in proposing a record $3.55 trillion federal budget for next year, Obama's gambit is full of political and financial risks that Congress will have to weigh when it debates his proposals and writes its own budget blueprint in coming weeks.

The popular president, who came to office on January 20 with a vow of bipartisanship, is not expected to attract much support from opposition Republicans for a document that is packed with ever-rising domestic spending and tax increases on the wealthy. And even some of Obama's Democrats, who control both chambers, might have a hard time swallowing new spending and cuts in some sacred programs such as agriculture.

More importantly, his fiscal plan envisions huge budget deficits -- and government borrowing that goes with that -- to continue throughout his four-year term. And for some budget experts that is a terrifying prospect given the $10.8 trillion national debt already being carried by Washington.

We're putting at risk our currency and our ability to sell debt with sustained, gigantic budget deficits, said Senator Judd Gregg, the top Republican on the Senate Budget Committee.

With a $1.75 trillion deficit expected this year, some 12.3 percent of gross domestic product, Obama's budget would leave deficits of about 3 percent of GDP in 2013. This is not viable, you can't sustain that, Gregg added.

The bigger longer-term problem is that the United States faces what many are seeing as a fiscal tsunami in the next decade when Social Security retirement costs and health care for the elderly and poor spiral out of control as the nation's population ages.

Obama hopes to tackle those problems, but for now, Washington policymakers are trying to digest the staggering deficit numbers. At 12.3 percent of GDP, this year's deficit is the biggest since 1945, when World War Two contributed to a deficit that was 21.5 percent of GDP.


Democrats point out that about $1.2 trillion of that deficit was inherited from his predecessor and that some of the rest is from stimulus measures taken to try to jump-start a failing economy.

President Obama has inherited a colossal mess, said Senate Budget Committee Chairman Kent Conrad, praising the administration's attempts to cut the deficit by 2013.

Throughout Obama's budget lies hard evidence of the differences between this administration and eight years of rule by former President George W. Bush, a Republican.

Whereas Bush proposed some modest changes to national health care policy, Obama wants to kick off a broad expansion of health insurance for those who can't afford it with a $634 billion reserve fund over 10 years.

In his last budget proposal, Bush proposed freezing most education programs and eliminating others; Obama wants to expand overall education spending, including more money for early childhood education.

Bush last year proposed reducing a clean water fund and other environmental programs, while Obama wants Congress to approve a whopping 34 percent increase for the Environmental Protection Agency. At the same time, he would start a greenhouse gas emissions trading system aimed at lowering pollutants that scientists think contribute to global warming.

And while the pace of Bush's huge defense buildup would not be sustained, Obama's budget envisions slowly rising military spending while drastically cutting the cost of the Iraq war as he withdraws troops from Iraq -- a major campaign promise.

Domestically, U.S. law enforcement agencies would get more money under Obama to hire cops. Internationally, U.S. foreign aid would be beefed up in an attempt to reverse a sagging image of America abroad.

And while the wealthiest in the United States would see their Bush tax cuts evaporate in an Obama budget that's entitled A New Era of Responsibility, the middle-class would continue to enjoy tax cuts.

Republicans no doubt will focus on the overall rise in tax collections under Obama, from about 16 percent of the economy now to 19 percent in 2013.

(Editing by Jackie Frank)