President Bush will propose shrinking an array of domestic programmes and cut billions from the Medicare health programme when he sends Congress a $2.7 trillion budget today.
Mr Bush's fiscal 2007 budget comes during a congressional election year as he faces concern and frustration among some of his Republican allies over surging deficits.
With the shortfall this year expected to top $400 billion, Mr Bush has vowed to find $14 billion in savings by trimming or scrapping 141 programmes.
He also wants to squeeze $36 billion in cost savings from Medicare over the next five years, partly by curbing the growth in reimbursements to hospitals.
Two major areas that would be spared the budget knife are defence spending and homeland security.
Democrats, hoping to overturn Republican dominance in both chambers of Congress in November elections, have condemned Mr Bush and other Republicans as fiscally reckless for pursuing big tax cuts and underestimating the costs of the war in Iraq.
Mr Bush will propose extra funds for domestic priorities such as research and development, math and science education programmes, and alternative fuel sources.
He aims to keep overall growth in discretionary spending below the inflation rate, which was 3.4 per cent in 2005. To achieve that, he would fund non-security discretionary spending below last year's level with no allowance for inflation.