THE EVENT: President Obama delivered a $3.6 trillion budget to Congress that calls for expanded government activism, tax increases on affluent families and businesses, and spending cuts targeted at those he says profited from "an era of profound irresponsibility."

The plan projects a federal deficit of $1.75 trillion for 2009, or 12.3% of the gross domestic product, a level not seen since 1942.

The budget represents a reordering of the federal government to provide national health care, shift the economy away from oil and gas, and boost the commitment to education.

Troops would leave Iraq as another war ramps up in Afghanistan.

To fund it all, families earning more than $250,000 and some businesses will pay steeply. Obama implored Americans to accept profound sacrifices.

 
   HIGHLIGHTS:

-Community Service: Expands Corporation for National and Community Service. AmeriCorps, the agency program that partners with nonprofits to recruit young Americans for community service, would expand to 250,000 slots from 75,000.

-Health Insurance: $630 billion for national health-insurance program. Managed-care companies would lose subsidies for offering Medicare plans.

-Banking: sets aside additional $250 billion to complete effort to rescue financial markets and stabilize banking sector, on top of $700 billion already allocated by Congress. Reserve would leverage purchase of toxic assets weighing down the banking sector's books, $750 billion in asset purchases overall. That could mean a doubling of the original bailout in the end. The administration also acknowledged the government is likely to get only 66 cents on the dollar for the hundreds of billions it has invested in bailing out the U.S. banking system, a figure more pessimistic than some previous cost projections for the financial-rescue plan.

-Education: discontinue fees paid to banks that provide loans to students, effectively ending private sector student lending. Proposes large increases in education funding, including indexing Pell Grants for higher education to inflation.

-Energy: $26.3 billion for Department of Energy's 2010 budget to fund transition to low-carbon energy economy.

-Greenhouse Gases: cap emissions of greenhouse gases, forcing polluters to purchase permits for emissions that slowly would be brought down to 14% below 2005 levels by 2020 and 83% below 2005 levels by 2050. The sale of those permits, beginning in 2012, would reap $646 billion through 2019. Of that, $525.7 billion would be devoted to extending Obama's signature "Making Work Pay" $800 tax credit for working couples. Another $120 billion would go to clean energy technology.

-Oil and Gas: $13 billion over 10 years in new charges on oil and gas companies from repeal of a tax deduction for domestic production. Proposes new excise tax on oil and gas production in the Gulf of Mexico.

-High-Speed Rail: proposes spending $5 billion over five years on program that provides grants to states to invest in "high-speed" rail, on top of the $8 billion over two years for high-speed rail in the economic-stimulus package.

-Agriculture: would cut federal payments to the nation's largest and wealthiest farmers, reduce subsidies for crop insurance, and eliminate credits for cotton storage. The administration endorsed a $500,000 commodity program payment limit, saying that will help ensure payments "are made to those who most need them."

-Trade: includes funds to reform trade-adjustment assistance, after the program to help workers displaced by trade was expanded in the recently passed stimulus package.

-IMF: request for $8 billion increase in the U.S. quota to the International Monetary Fund. Projects full funding of all 2010 scheduled payments to multilateral development banks, as well as paying part of outstanding arrears "to reinforce the U.S. commitment to play a leadership role in these institutions."

-FBI: Federal Bureau of Investigation would get funds to boost the ranks of agents investigating mortgage fraud.

-FDA: Food and Drug Administration would receive more than $1 billion to improve inspections and domestic surveillance of food facilities.

-Pensions and Savings: requires employers who don't offer a pension program to implement a direct-deposit retirement savings system. The plan would be implemented in the form of an Individual Retirement Account, similar to 401(k)-type plans.

-Social Security fraud: proposes $759 billion for efforts to find Social Security overpayments; the White House estimates that the federal government could save $12.1 billion over five years by making sure that only eligible people receive Social Security payments. The budget documents are largely silent on broader Social Security reforms.

-SEC and CFTC: The SEC would stand to receive a 13% increase in funding from 2008 levels, and the Commodity Futures Trading Commission would see a 44% increase relative to its 2008 funding level. Part of the latter's increase will go toward helping implement new oversight powers for energy, over-the-counter derivatives and retail foreign exchange trading.

-Commerce Department: seeks $4.5 billion increase over the $9.3 billion Congress is expected to appropriate for the agency this year. Much of that additional money, $4 billion, is designated for the 2010 census.

MARKET REACTION: After gaining as much as 132 points in the morning, the Dow Jones Industrial Average fell into negative territory, closing down 88.81 points, or 1.2%, to 7182.08. The S&P 500 fell 12.07 points, or 1.6%, to 752.83, and the Nasdaq Composite declined 33.96 points, or 2.4%, to 1391.47.

Shares of student lenders fell, with SLM Corp. (SLM) sinking 31% and Nelnet Inc. (NNI) losing more than half its value.

Stock prices across the health-care sector also struggled. Managed-care companies were especially hard-hit, with Humana Inc. (HUM) sinking 19% and UnitedHealth Group Inc. (UNH) losing 13%. Among drug makers, Merck & Co. (MRK) fell 6.7% and Abbott Laboratories fell 5.7%.

For more coverage, please see:

Obama Unveils Budget With Ambitious Policy Prescriptions 
Obama Budget Incorporates Optimistic Forecasts 
White House: Deficit To Hit $1.75T In FY09, $1.17T In FY10 
Obama Fiscal 2010 Budget Overview By Agency 
US Budget Proposal Seeks To Limit Social Security Fraud 
Obama Admin's Budget Would Delay Tax Increases Until 2011 
GETTING PERSONAL: Tax Deduction Changes In Obama Budget 
Obama Budget Reserves New Funds For Bank Rescue 
MUNI WATCH: Obama Budget Could Aid Tax-Exempts, States 
Obama Budget Hits Oil,Gas Cos With New Fees,Taxes 
Shell Exec Says 'Too Early To Judge' Obama Oil, Gas Policy 
Defense Stocks May Lose Safe-Haven Status In Budget 
Obama's Proposed Budget Weighs On Entire Health Care Sector 
Health Industry Voices Budget Concerns-In Conciliatory Way 
Obama Proposes Budget Increases For SEC, CFTC In FY10 
Crop Insurance Subsidies Cut In Obama Budget Proposal 
Obama: To Raise $646 Bln From New Climate Laws By 2020 
WSJ: Obama Budget Boosts Community Service Program Spending 
Obama Proposes Tax Hike On Foreign Profits 
Obama:Cos Without Pension Plan Required To Create Svgs Acct 
Budget Ends Student Loan Payments To Private Lenders 
US Plan Includes $5B Over 5 Years For High-Speed Rail 
Budget Ups Labor Dept Funding For Safety, Fair Labor Units 
Obama 2010 DOE Budget At $26.3B To Fund Clean-Energy Agenda

(Compiled by Lisa Reynolds, Dow Jones Newswires; 201-938-5138; lisa.reynolds@dowjones.com)