WASHINGTON - PRESIDENT-ELECT Barack Obama said on Tuesday he expects to inherit a U.S. budget deficit approaching US$1 trillion (S$1.45 trillion) and his administration would have to make some tough budget choices.

Just after meeting with his economic team, Mr Obama said it was possible that trillion-dollar deficits could stretch into coming years and that he and his team want to instill a 'sense of responsibility' about future budget choices.

Mr Obama, who takes over from President George W. Bush on Jan 20, is seeking quick action from Congress on a package of spending and tax-cut measures that would total nearly US$775 billion over next two years.

The president-elect is to deliver a speech on Thursday about the economy, where he will lay out more details about the plan that he says would save or create 3 million jobs and is aimed at helping lift the US economy out of a deepening recession.

Mr Obama and congressional Democrats are talking about a package that would include money for the building of roads, bridges and schools as well as money to promote renewable energy projects. It may also include more than US$300 billion in tax cuts.

Mr Obama fears a delay could deepen the recession and bring double-digit unemployment. The current jobless rate nationally is 6.7 per cent.

While many in the Democratic-led Congress also are eager to move swiftly on an economic stimulus, Republicans are insisting that the package receive careful scrutiny to avoid wasteful spending.

Mr Obama initially had said he hoped the package could approved and ready for his signature shortly after he takes office but now his aides and congressional sources say mid-February seems like a more realistic time frame for passage of the measure.

The stimulus package would add to already growing budget deficits.

Mr Obama spoke about the fiscal outlook a day before the Congressional Budget Office, the nonpartisan budget analyst for the US Congress, plans to unveil its latest estimates on the budget deficit.

Private analysts expect the report to show a deficit of more than US$1 trillion for the fiscal year 2009 that ends in September. That would be more than double the roughly US$455 billion budget gap in 2008, which was already a record.

Mr Obama, who is trying to garner broad backing for the stimulus plan and has been courting Republicans as well as Democrats, said Americans who voted for him were 'demanding that we restore a sense of responsibility,' including on budget practices.

He said his pick to become the new White House budget director, Peter Orszag, was forecasting that the budget deficit would likely approach US$1 trillion 'before we've even started' and that more deficits could be coming in years ahead.

'The reason I raise this is because we're going to have to stop talking about budget reform' and realise it is 'an absolute necessity.'

He said a rescue package is needed but that 'we're not going to be able to expect the American people to support' the rescue unless steps are taken to reform the budget.

Mr Orszag, who attended the economic meeting that Mr Obama convened at his transition headquarters in Washington, has been head of the Congressional Budget Office for the past two years.

But the budget report to be issued on Wednesday will be prepared by acting CBO director Robert Sunshine. -- THOMSON REUTERS