WASHINGTON: President Barack Obama unveiled a budget pouring billions of dollars into nurturing the economic rebound and battling 10-percent unemployment, while taking aim at record deficits.

The 3.834-trillion-dollar plan for 2011 cuts programs like the US bid to return to the moon, freezes non-security discretionary outlays, and hikes spending on US wars and wounded veterans, but faces a tough ride in Congress.

It sees the budget deficit soar to a record 1.556 trillion dollars in 2010, then reduces it to 1.267 trillion dollars in 2011, with further commitments to plug the massive hole in US government finances in the years to come.

"It's a budget that reflects the serious challenges facing the country," Obama said, touting a spending plan which will set political battle lines in the run up to crucial mid-term Congressional elections in November.

"We're at war, our economy has lost seven million jobs the last two years and our government is deeply in debt after what can only be described as a decade of profligacy."

With unemployment clouding the recovery and Obama's own political prospects, the budget spends 100 billion dollars on a jobs package, and hikes taxes for the wealthiest Americans that were lowered by the former Bush administration.

It contains a grim forecast: unemployment, currently at 10 percent, will average 9.2 percent in 2011, and 8.2 percent in 2012, the year when Obama faces reelection.

There are also forecasts however for solid GDP growth of 2.7 percent in 2010 and 3.8 percent in 2011, though some critics saw those numbers as overly rosy.

"The fiscal year 2011 budget focuses on three things: job creation, middle class security, and putting the nation back on a path to fiscal sustainability," said Obama's budget director Peter Orszag.

But already, there were signs the budget could face a battering by lawmakers.

"The president?s proposed NASA budget begins the death march for the future of US human space flight," said Republican Senator Richard Shelby, condemning the decision to cancel the Constellation rocket program.

Related article: Obama cuts moon travel, links NASA to private firms

Obama ally Dave Obey, powerful chairman of the House Appropriations Committee, raised the idea of extending the spending freeze beyond non-security discretionary programs to defense and overseas aid agencies.

And Republican Senate Minority leader Mitch McConnell seized on the size of the spending plan to brand Obama a big-spending liberal.

"It's now crystal clear that this budget is more spending, more taxes and more debt," McConnell said.

"It's not what our country needs. And it?s not the way to grow good jobs."

Some critics have warned it may be premature to focus on deficit cutting, as the credit crunch lingers and the US government remains one of the few sources of stimulatory funds in the economy.

Orszag said the administration did not want to repeat the mistakes of the 1930s when the US government eased up on artificial stimulus too early.

"When the economy was beginning to recover, the nation moved to consolidate the deficit too quickly, and you threw the economy back into recession. We don't want to do that," he said.

The 2011 budget contains more than 300 billion dollars in tax cuts for families and businesses over the next 10 years and terminates 120 programs for savings of 20 billion dollars. Related article: Winners and losers in Obama's budget

As the administration combines a push for green energy development with deficit cutting, the budget phases out fossil fuel subsidies for oil, gas and coal companies to raise 40 billion dollars over 10 years.

Following the thwarted bid by an Al-Qaeda affiliated group in Yemen to bring down a US airliner on Christmas Day, there are new investments in US security.

The Homeland Security Department gets a two-percent funding boost to 43.6 billion dollars, which will include money to deploy 1,000 new imaging technology screening machines and explosives detection equipment at airports.

The budget will also provide funding for more federal air marshals on international flights in a bid to ward off future attacks, the officials said.

The cost of US military operations overseas, including in Afghanistan and Pakistan, are put at 159.3 billion dollars in 2011. The 2010 budget asked for 130 billion dollars. Related article: Budget to ease strain on military

The administration will also make a supplemental request for 2010 of 33 billion dollars to cover Obama's 30,000 strong Afghan troop surge.

In keeping with a pledge to work on development, 10.7 billion dollars is requested in funds to stabilize "frontline states" such as Afghanistan, Pakistan and Iraq.

Officials said the figure, a 7.5 percent increase over the request for fiscal year 2010, includes nearly five billion dollars for Afghanistan, nearly 3.2 billion dollars for Pakistan and more than 2.5 billion dollars for Iraq.

The budget also focuses on the staggering mental and financial burden placed on US forces and wounded veterans of the Iraq and Afghan wars.

It calls for 30.9 billion dollars for medical care, including 669 million to treat traumatic brain injury and psychological problems as well as 250 million for research into mental health and suicide prevention measures.