WASHINGTON - In a message that may not be music to Indian outsourcing firms, US President Barack Obama has served notice that he would end the tax breaks for corporations that ship jobs abroad.

Giving his first speech to a joint session of the US Congress Tuesday, Obama said: 'We will restore a sense of fairness and balance to our tax code by finally ending the tax breaks for corporations that ship our jobs overseas.'

If Obama follows through with the announcement in the budget, whose outline he would present Thursday, the move may hurt India's BPO sector as without the tax breaks, US companies may find it less attractive to outsource jobs to India.

After passing a $787 billion stimulus plan free of earmarks, or pet projects introduced by lawmakers in any legislation, Obama told the Congress: 'I want to pass a budget next year that ensures that each dollar we spend reflects only our most important national priorities.'

Recalling that at a fiscal summit Monday he had pledged to cut America's deficit in half by the end of his first term in office, he said: 'My administration has also begun to go line by line through the federal budget in order to eliminate wasteful and ineffective programmes.'

'In order to save our children from a future of debt, we will also end the tax breaks for the wealthiest two percent of Americans,' he added.

Noting that his recovery plan provides a tax cut for 95 percent of working families, Obama said to preserve America's long-term fiscal health, 'we must also address the growing cost in medicare and social security'.

'Comprehensive health care reform is the best way to strengthen medicare for years to come, and we must also begin a conversation on how to do the same for social security, while creating tax-free universal savings accounts for all Americans,' Obama said.

'Finally, because we're also suffering from a deficit of trust, I am committed to restoring a sense of honesty and accountability to our budget,' he said announcing that for the first time the budget will reflect the full cost of fighting the war in Iraq and Afghanistan.

'For seven years, we've been a nation at war. No longer will we hide its price,' Obama said.