President Obama will this week make an enormously ambitious and high-risk promise to the American people that he can not only spend the US out of recession but also push ahead with expensive campaign promises while simultaneously slashing the budget deficit.

In a key prime-time address to Congress tomorrow, followed by the outline of his first budget on Thursday, Mr Obama will lay out an agenda to cut the ballooning national deficit in half within four years, while pressing ahead with plans to tackle healthcare, education and climate change.

The pledges come amid a financial crisis that one of Mr Obama's top advisers said could be even worse than the Great Depression, and after his Administration has already outlined plans to line up an extraordinary $3trillion (£2trillion) to stabilise the stricken banking sector and revive the economy. About $2 trillion of that will come from borrowing.

After last October's $700billion rescue package for Wall Street, and Mr Obama's $787billion economic stimulus package that he signed into law last week, many predicted that the President would be forced to shelve much of his domestic agenda. Analysts said that it would be too costly at a time when the national deficit is projected to reach $1.5 trillion this year.

Yet Mr Obama, in his speech tomorrow night - which will have all the trappings of a State of the Union address - will call for even more spending: a big expansion of healthcare coverage, education reform and the development of alternative energy sources.

At the same time, in a White House “fiscal responsibility summit” tomorrow, he will lay out plans to cut back the deficit to $533 billion by 2013.

That prediction comes despite the hundreds of billions of dollars already borrowed to stimulate the economy, stabilise the banks, tackle the home repossession crisis and rescue the car industry from collapse.

The scale and ambition of the overall agenda is so enormous that some economists said yesterday that it was simply unrealistic, while Republicans decried it as fanciful. Global markets have thus far reacted with significant scepticism to Mr Obama's plans to revive the US economy, and this week will provide another test of his efforts to convince investors that his plans will work.

“If you are going to the country with hundreds of billions of fiscal stimulus, and hundreds of billions of financial-sector rescue, and now more for mortgages and more for the auto industry, it becomes very difficult for them to say, ‘And now for my real agenda',” said Robert Bixby, head of the bipartisan fiscal watchdog group Concord Coalition. “At that point the political system just chokes up.”

Tim Pawlenty, the Republican Governor of Minnesota and a possible presidential candidate in 2012, said he found it hard to believe that the White House “is serious about cutting the deficit while exploding spending”.

Mr Obama and his economic team insist that it can be done. They say that the budget deficit, which now accounts for more than 10 per cent of gross domestic product - the highest level since the Second World War - can be cut by less war spending, higher taxes on businesses and the wealthy after 2010, and reining in spending on government-run health programmes for the elderly and poor.

Mr Obama's aides have projected that withdrawing combat troops from Iraq will save $90 billion a year. Yet it is unclear how those savings will be offset by the war in Afghanistan, for which Mr Obama has just ordered an additional 17,000 troops.

Much of the projected deficit reduction is also based on the end of spending - after two years - of the stimulus money and higher tax revenues from an improving economy. Yet last week a committee inside the US Federal Reserve predicted that the recession could last another five years.

On Friday the investor George Soros said that the turbulence in the banking sector was more severe than during the Great Depression and that there was no near-term resolution to the crisis. He said that, when Lehman Brothers collapsed in September, “we witnessed the collapse of the financial sector. There's no sign that we are anywhere near the bottom.”

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