President Barack Obama's budget blueprint, due out Thursday, provides the government an additional $250 billion if it needs to stabilize banks and the financial system, according to a senior administration official.

Overall, 134-page budget outline spells out health, tax, energy and priorities which would push the federal budget deficit to $1.75 trillion this year, the official said. The official spoke on condition of anonymity because the budget won't be released until 11:00 a.m. EST.

The document will offer new details about the president's spending plans, and spell out the scale of potential additional financial rescue efforts. The Obama administration has no current plans to use the $250 billion, but wanted to include an "overly conservative" placeholder just in case, the official said.

"Hopefully... nothing will be necessary, the best outcome would be zero," the official said. "But just out of a healthy degree of caution on fiscal rectitude and honest accounting, we included a placeholder."

Obama opened the door for a broader bank rescue package on Tuesday, when he told a joint session of Congress that the government "probably" will need more money than it has set aside to restore confidence in the banking system. The Treasury Department on Wednesday committed to providing new capital injections to U.S. banks, but has declined to say if it will need to ask Congress for additional funds beyond the $700 billion authorized by lawmakers in October.

The administration official said the $250 billion placeholder could finance the purchase of up to $750 billion in financial assets, assuming a roughly 33% subsidy rate.

The budget blueprint to be released Thursday provides an overview of the Obama administration's budget request for fiscal 2010. The full budget, which typically runs the size of a phone book, will be released in mid- to late-April.

The White House also is looking to close tax loopholes in an effort to narrow the more than $300 billion "tax gap." As expected, it will propose raising taxes on investment managers' "carried interest." The official declined to say how much revenue that proposal could generate, however.

The budget will also include measures to cut down on tax evasion and avoidance, and eliminate tax incentives for companies that send jobs overseas.

As reported late Wednesday, the White House also will propose $634 billion in new taxes on upper-income Americans.

The White House projects a $1.75 trillion deficit for the current fiscal year, which ends in September. That will be more than triple the previous record - $455 billion. As a percentage of gross domestic product, the 2009 deficit would hit 12%, a level not seen since World War II.

Obama pledged this week to halve the deficit by the end of his term in 2013, to $533 billion. At that time, the budget gap will be around 3% of GDP, the official said.

The White House says the soaring deficit is a reflection of budget and tax policies inherited from the Bush administration. And Obama's aides said it also shows a desire to avoid accounting gimmicks that Democrats say Bush used to flatter the budget.

"Even if it means that the numbers are less auspicious than one would like, at least they're an honest depiction of the underlying reality," the official said.

For "overseas contingency operations" - the cost of the wars in Iraq and Afghanistan - the budget will include just over $140 billion for fiscal 2009. Some of this already has been appropriated under the Bush administration's request a year ago. The budget will include $130 billion for the wars in 2010, and $50 billion a year for the remainder of the next decade.

Obama said Tuesday that the administration has identified $2 trillion in savings over the next 10 years, and officials say they have begun the process of reviewing federal programs for cuts, including in agriculture and education.

The administration expects to save $9.8 billion over 10 years by phasing out direct payments to farmers with sales revenues greater than $500,000. It also proposes ending payments to cotton producers to cover the storage of their cotton. That would save $570 million over 10 years.

In the area of education, the administration is proposing the elimination of a federal mentoring program it believes is ineffective, generating savings of $49 million in 2009.

Other cuts in government spending, designed to pay for Obama's promised healthcare expansion, would affect managed care companies, prescription drug manufacturers and hospitals.

Another senior administration official acknowledged the cuts will disappoint some interests.

"Anytime you make a cut, you're making someone unhappy. I'm sure the insurance companies won't be happy about having competitive bidding in the Medicare Advantage program, but... we're not in a situation to think conventionally about how to approach this budget," the official said. "There's no doubt that there are going to be things that we do that are going to create some political heartburn."

On another issue, the White House will not put the operations of Fannie Mae (FNM) and Freddie Mac (FRE) onto the federal budget this year. The budget will include cash payments that go from the Treasury Department to GSEs, however.

The official said the administration would consider putting the mortgage giants onto the federal books in its fiscal 2011 budget request next year, suggesting the issue was too complex to confront in the five weeks since Obama took office.

  -By Henry J. Pulizzi, Dow Jones Newswires; 202-862-9256; henry.pulizzi@dowjones.com