Obama sticks to budget but sees room for compromise

WASHINGTON (Reuters) - President Barack Obama vowed Saturday to stick to the big-ticket items in his budget proposal but acknowledged that dollar amounts would "undoubtedly change" as Congress prepared to take up his record spending plan.

Trying to refocus attention from the AIG (nyse: AIG - news - people ) bonus scandal that has drawn public outrage, Obama stepped up defense of his $3.55 trillion budget for fiscal 2010, a linchpin of his efforts to rescue the ailing economy from the worst crisis in decades.

"It's an economic blueprint for our future, a vision of America where growth is not based on real estate bubbles or over-leveraged banks, but on a firm foundation of investments in energy, education and health care that will lead to a real and lasting prosperity," Obama said in his weekly radio address.

The budget committees of the Senate and House were set to begin crafting their budget legislation next week.

Republicans and even some of Obama's fellow Democrats who control Congress have complained that his budget, the first of his presidency, is too costly. It projects deficits of $1.75 trillion this fiscal year and $1.17 trillion next fiscal year.

Congressional budget experts Friday offered a darker economic and budget outlook, projecting a $1.8 trillion deficit this year which could complicate Obama's efforts to win passage of his 2010 budget.

Taking on his critics, Obama said: "These investments are not a wish list of priorities that I picked out of thin air.

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"They are a central part of a comprehensive strategy to grow this economy by attacking the very problems that have dragged it down for too long: the high cost of health care and our dependence on foreign oil, our education deficit and our fiscal deficit."

Reminding listeners that he had inherited a "fiscal mess" from his Republican predecessor, George W. Bush, Obama -- who took office on Jan. 20 -- reiterated his pledge to cut the federal deficit in half by the end of his term.

But he acknowledged room for compromise on a final budget deal. "As the House and the Senate take up this budget next week, the specific details and dollar amounts in this budget will undoubtedly change," Obama said. "That's a normal and healthy part of the process.

He urged lawmakers to act with a sense of urgency, saying "the challenges we face are too large to ignore." (Editing by Chris Wilson)