WASHINGTON — President Obama's $3.8 trillion proposed budget, released yesterday, contains $708 billion for defense — a record amount that will have important implications for Hawai'i's military-dependent economy.

The overall proposed budget, which would take effect Oct. 1, is 3 percent larger than what the government is spending this year, according to the Office of Management and Budget.

It includes a 3.4 percent increase in the Pentagon's base budget and $159 billion to fund the U.S. military missions in Iraq, Afghanistan and Pakistan.

It contains a 1.4 percent basic pay raise for the military, and an average housing increase of 4.2 percent.

"It should keep salaries roughly in concert with the private sector," said Robert Hale, comptroller for the Pentagon.

Also for Hawai'i in the budget, the White House says:

• $785.9 million to provide health coverage to low-income children and families.

• Tax cuts for many families.

• $179.6 million for schools, students and teachers.

• $294.8 million to fix and expand the state's roads and highways, modernize airports, and expand water and sewer infrastructure.

• $71.2 million in new funding for Pell grants to help pay for college.

• $156.8 million for housing assistance.

The proposed 2011 defense budget contains increases for programs important for military people, their quality of life and their families:

• $30.9 billion overall for medical care, an increase of 5.8 percent over the 2010 enacted level. That includes increases in funding for brain injuries and mental health.

• A 3 percent increase in family support programs, above the 2010 enacted level. That includes a bump for childcare services, career education and life-skills counseling, such as handling finances.

Yesterday's proposed budget coincided with the Pentagon's release of its congressionally mandated four-year strategy report, known as the Quadrennial Defense Review.

That plan stresses boots on the ground over expensive weapons systems, but it still pours significant funding into the new F-35 fighter and into ship-building, both of which will affect the make-up of the military in Hawai'i.

The budget and the defense review draw together factors that will play heavily in Hawai'i during the coming fiscal year and beyond.

Perhaps the most important factor in how Hawai'i fares in the budget process is the role of Sen. Daniel K. Inouye, D-Hawai'i, chairman of the Appropriations Committee and its defense subcommittee. He will play a leading role in how the defense review is implemented through the budget, as well as in the budget negotiations that steer money toward Hawai'i and other locales.