WASHINGTON (AFP) - US President Barack Obama unveiled a 3.606 trillion dollar budget Thursday that outlines aggressive plans to boost the recession-stricken US economy and overhaul its health care system. The fiscal 2010 spending plan encompasses Obama's efforts to pull the country out of its worst economic crisis since the Great Depression of the 1930s. "The time has come to usher in a new era " a new era of responsibility in which we act not only to save and create new jobs, but also to lay a new foundation of growth upon which we can renew the promise of America," Obama said in his budget message. "This budget is a first step in that journey." The spending would mark a decline from the 3.724 trillion dollars projected for the current fiscal year, which ends September 30. In the current fiscal year, begun under former president George W. Bush, the new budget projects a deficit of 1.750 trillion dollars. That amounts to 12.3pc of gross domestic product, the biggest since World War II. In fiscal year 2010 which starts Oct 1, the budget forecasts a deficit declining to $1.171 trillion. The projected spending would include some 200 billion dollars to fight wars in Iraq and Afghanistan over the next 18 months, and a huge 634 billion dollar, 10-year fund to pay for health care reforms, a key plank of Obama's election campaign. Overall, the president is seeking 663.7 billion dollars in defense spending for fiscal 2010 that includes the costs of wars in Iraq and Afghanistan, an increase of roughly 1.5 percent. Obama has also asked for 250 billion dollars to be set aside if needed to bailout the US financial industry, on top of the 700 billion dollars already committed to the effort. The Obama administration currently has no plans to use the extra bailout money, but wants the funds included as an "overly conservative" placeholder just in case, a senior administration official said. The budget is due to set the stage for a fierce battle in Congress, with many Republicans angered by plans to raise taxes on the country's wealthiest, seen as one of the ways of increasing revenues. Only three Republican senators rallied behind Obama's 787-billion-dollar stimulus plan to revitalize the ailing US economy. The budget attempts to fulfill a campaign pledge to raise taxes on Americans earning more than 250,000 dollars a year from 35pc to just under 40pc, yielding some two trillion dollars in 10 years. Major savings are expected by winding down US military efforts in Iraq, which currently soaks up some 170 billion dollars a year. Obama's request includes 75.5 billion dollars for this year to send more US troops to Afghanistan, officials said. The president also seeks 130 billion dollars for Iraq and Afghanistan for the 2010 budget and set operations in those countries at 50 billion dollars annually in the next several years. An Obama administration official, speaking on condition of anonymity, said the massive health care fund would be financed by raising taxes on highest earning Americans and by savings from existing health care programs. The size of the figure was the latest indication of the new president's intent to push for health care reform, a polarizing political issue that has bedeviled Democratic presidents for decades. Over 45 million Americans have no health care whatsoever. Another expensive priority is the president's intention to provide each US child with a "complete and competitive education," and to broaden access to expensive higher learning institutions. The budget projects an economic contraction of 1.2 percent in calendar 2009 and growth of 3.2 percent in 2010. The plan anticipates an acceleration of growth to 4.0 percent in 2011 and 4.6 percent in 2012. The assumptions are more optimistic than the projection of the Congressional Budget office of a 2.2 percent decline in gross domestic product in 2009 and 1.5 percent growth in 2010. The Obama budget also expects 2009 average unemployment rate at 8.1 percent, compared with the CBO projection of 8.3pc. "This budget is an honest accounting of where we are and where we intend to go," Obama said at the White House, but he warned: "There are some hard choices that lie ahead."