Obama hammers working poor and middle classes to cut deficit by $1.1 TRILLION

Barack Obama today unveiled a budget that hits the poor and middle classes hard, with student loans and grants for heating and community organisations targeted for cuts.

Hundreds of federal programmes face the axe or drastic cuts as part of measures designed to reduce the deficit by $1.1trillion over the next ten years.

But getting the budget through Congress and the Senate could be Obama's toughest challenge yet - as Republicans insist he needs to cut more spending.

The total budget for the year is $3.5trillion after the $100billion of spending cuts introduced by Obama , but the deficit is expected to hit a record $1.1trillion.

The increase  in the deficit – up from $1.29 trillion in 2010 – comes after Mr Obama pushed through as massive package of tax cuts and spending on unemployment benefits at the end of last year.

Announcement: Barack Obama visited Parkville Middle School and Center of Technology in Parkville, Maryland to announce his budget today

Meet and greet: The President is facing his toughest challenge yet to force the spending cuts through

Measures include by introducing interest on graduate loans while students are still in school, cutting community service grants and reducing funding for energy assistance programmes that help the poor heat their homes.

Unveiling the budget, Obama said today: ' The fiscal realities we face require hard choices.

'A decade of deficits, compounded by the effects of the recession and the steps we had to take to break it ... has put us on an unsustainable course. That's why my budget lays out a path for how we pay down these debts.'

Obama proposed cancelling or cutting the funding of  more than 200 programs at an estimated savings of $33 billion in 2012.

Schemes targeted for large cuts included Community Development Block Grants, trimmed by $300 million, while a program that helps pay heating bills for low-income families would be cut in half for a savings of $2.5 billion while a program supporting environmental restoration of the Great Lakes would be reduced by one-fourth for $125 million in savings.

Obama said the budget was a 'downpayment' on what was needed to get the United States on a strong fiscal path, saying Democrats and Republicans must work together to do more.

However his deal last year to extend George W. Bush's tax cuts extended the deficit by $858billion.

Obama claims the budget will make him the stingiest president since Dwight Eisenhower, claiming his administration’s level of spending ‘is lower than it was under the last three presidents and lower than it was under Ronald Reagan, ’

‘If you want to walk the walk in financial discipline then these sorts of cuts are necessary,’ he said. ‘The only way to truly tackle our deficit is to cut our excess spending wherever we find it,’ he added.

The new budget came under fire immediately from Republicans who claimed the president hadn’t gone far enough to stop the country haemorrhaging money.

Republican House Speaker John Boehner said yesterday that Mr Obama's proposed $1.1 trillion spending cuts over the next decade fell way short of what is required.

'Everything is on the table. We're broke. Let's be honest with ourselves,' he added.

According to figures in the budget Mr Obama is sending to Congress, the US deficit will hit a record $1.65 trillion this year, or 10.9% of gross domestic product.

The increase – up from $1.29 trillion in 2010 – comes after Mr Obama pushed through as massive package of tax cuts and spending on unemployment benefits at the end of last year.

By raising the names of two of the moist celebrated Republican presidents Ronald Reagan and Dwight Eisenhower – who served two terms between 1953 and 1961 – Mr Obama was hoping to offset opposition critics.

Heavyweight: Copies of President Obama's 2012 budget are delivered to the Senate Budget Committee

The new budget will trim or terminate more than 200 federal programmes next year, cuts that have drawn criticism from members of Mr Obama’s own Democrat Party who complained that he is targetting the poor and needy.

Speaking at the Parkville School in Maryland – chosen to highlight his focus on education in the budget – Mr Obama said a five-year freeze on non-essential govement spending would cut $400 billion over the next decade.

And while the deficit would rise in the short term, he claimed his spending crackdown would reduce deficits by more than $1.1 trillion over the next decade.

But he said: ‘While it is absolutely essential to live within our means, we can’t sacrifice our future in the process.’

He said he still wants to increase funding for energy and medical research, to recruit 100,000 new science and math teachers and fiund a national wireless network.

White House budget director Jack Lew said on CNN: 'There are scores of programmes that are being reduced, and I think it's important to note that we're beyond the easy, low-hanging fruit.'

The budget proposal by Obama is the opening strike in what is certain to be a contentious policy debate with Republicans, whose big gains in November's elections were fuelled by conservative Tea Party activists who wanted to slash spending and reduce the size of govement.

The White House intends to get two-thirds of its $1.1 trillion in savings from spending cuts and one-third from tax revenues, including closing several tax loopholes, according to sources familiar with the budget

Despite their initial opposition, Republican House Budget Committee chairman Paul Ryan would not say whether Republicans would oppose Obama's plan until he saw the full text.

'It looks like to me that it is going to be very small on spending discipline and a lot of new spending so-called investments,' Ryan said on Fox News.

Not convinced: Repuclican House Of Representatives Speaker John Boehner said on NBC's Meet The Press that the budget would not do enough to control the deficit

The two parties have clashed over the level of spending cuts needed to trim the deficit and also boost economic recovery, and are on a collision course ahead of the expiration of a temporary govement funding measure on March 4.

Boehner refused to rule out the possibility of a govement shutdown when that measure runs out. 'Our goal is to reduce spending, it is not to shut down the govement,' he said.

Democrats have criticised Boehner for such comments. 'He should completely take a shutdown off the table and tell other Republicans to stop with the threats,' said Senate Democratic Leader Harry Reid.

The White House hopes to keep the debate over the funding measure and Obama's 2012 budget plan separate from a bill to raise the $14.3 trillion debt ceiling, which will be taken up by Congress in April or May.

Some Republicans oppose raising the debt ceiling without deeper budget cuts, but rejection of the increase could put the U.S at risk of falling into a debt default that could cause economic havoc globally.