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Conservatives say Obama, a Democrat, is a tax-and-spend liberal, and they aim to make the 2012 presidential election a referendum on his fiscal track record.

Details of the budget proposal provided by the White House before its official release showed the deficit rising to $1.645 trillion in fiscal 2011, then falling sharply to $1.101 trillion in 2012.

This trend would trim the deficit as a share of the U.S. economy to 3.2 percent by 2015 from 10.9 percent this year.

"It's a start, it's a move in the right direction," said Philip Poole, global head of macro investment strategy at HSBC Global Asset Management in London. "It's a lot less than the Republicans wanted to see. It's not clear that this can actually be enacted," he said.

Obama's budget for fiscal 2012, to be formally released at 10:30 a.m. EST (1530 GMT), is a proposal to Congress laying out the president's policy priorities. Months of wrangling with the Republican opposition in Congress will now follow.

"Even though we might have some differences at the outset, we're very eager to work with Republicans to cut spending, reduce our deficit," a senior Obama administration official told reporters.

The official cited a December tax pact forged between Obama and Republicans as evidence the two sides can work together, but the initial reaction from the other party was skeptical.

"The president talks like someone who recognizes that spending is out of control, but so far it hasn't been matched with action," Senate Republican leader Mitch McConnell said in a statement.

"Americans don't want a spending freeze at unsustainable levels. They want cuts, dramatic cuts. And I hope the president will work with us on achieving them soon."

Republicans have already unveiled much tougher proposals aimed at reining in rising U.S. debt, which is set to hit a legal limit in coming months. Failure by lawmakers to agree on funding government operations after a March 4 deadline expires could result in the government shutting down.

That would replay a 1995-1996 showdown between a Democratic president and a Republican-led House of Representatives that ultimately backfired on Republicans. The public sided with then-President Bill Clinton, who won re-election.

GROWTH LIFTS REVENUE

Two thirds of Obama's deficit savings come from spending cuts and expected reductions in interest payments as the deficit declines. The rest comes from higher revenue, in part as provisions in a December pact on payroll taxes and jobless aid expire, and also as stronger growth lifts tax revenue.

As a result, Obama's budget delivers on a promise to halve the deficit by the end of his current term in the White House, in January 2013, compared to when he took office in 2009.