President Obama rolled out a $3.7 trillion budget blueprint Monday that would trim or terminate more than 200 federal programs next year and make key investments in education, transportation and research. The plan is aimed at boosting the nation's economy while reducing record budget deficits. 
 
 In a news conference at a Baltimore County middle school, Obama cast the document as a responsible alternative to the deep spending cuts that Republicans will urge in a vote this week on the House floor. Obama's plan would trim domestic spending by hundreds of billions of dollars over the next decade, striking hard at programs long favored by Democrats to make room for targeted increases in energy and medical research, corporate research and development and a new network to bring high-speed Internet access to 98 percent of Americans. 
 
 However, Obama also would rely heavily on new taxes, to a degree unacknowledged by administration officials in recent days. His budget request calls for well over $1.6 trillion in fresh revenue over the next decade, much of it through higher taxes on the wealthy and businesses. 
 
 Households with income of more than $250,000 a year would immediately see new limits on the value of their itemized deductions. And starting in 2013, they would lose the lower tax rates and other breaks that were enacted during the George W. Bush administration and recently extended. 
 
 The president proposes to hit businesses with an array of proposals he has offered in the past, including an end to subsidies for oil and gas companies, new taxes on hedge fund managers and a $30 billion fee on financial institutions aimed at repaying taxpayers for the federal TARP bailout. 
 
 The cuts target defense, heating assistance and the environment. 
 
 The announcement was Obama's opening argument in what is likely to be months of debate with congressional Republicans who want to see deeper cuts. 
 
 He cast the reductions as necessary but also said that more funding for scientific research, innovation and education were essential to keep American competitive with other nations. 
 
 "It would mean cutting things that I care deeply about," Obama said. "But if we're going to walk the walk when it comes to fiscal discipline, these kinds of cuts will be necessary," 
 
 He said that "while we are absolutely committed to working with Democrats and Republicans to find further savings ... we can't sacrifice our future in the process." 
 
 Obama described his education initiatives as "investments in the future" and said he would fight for more funding. His budget proposal includes $40 million for training math and science teachers in elementary, high school and college classrooms. 
 
 Although Obama seeks an overhaul of the corporate tax code to lower the 35 percent rate on corporate profits, his budget does not make that costly adjustment. Instead, it offers previous proposals to eliminate tax breaks for corporations that do business overseas, reaping $129 billion in new revenue through 2021. ||||| WASHINGTON—The White House projected Monday that the federal deficit would spike to $1.65 trillion in the current fiscal year, the largest dollar amount ever, adding pressure on Democrats and Republicans to tackle growing levels of debt. 
 
 WSJ's David Wessel reports on President Obama's proposed $3.73 trillion budget which calls for just over $1 trillion in spending cuts. Also, Apple plans to release a line of lower-priced iPhones that would compete with other smartphones on the market. 
 
 The projected deficit for 2011 is fueled in part by a tax-cut extension that President Barack Obama and Republican lawmakers brokered in December, two senior administration officials said. It would equal 10.9% of gross domestic product, the largest deficit as a share of the economy since World War II. 
 
 The new estimate is part of Mr. Obama's proposed budget for fiscal year 2012, which becomes public Monday morning. 
 
 Mr. Obama is proposing $3.73 trillion in government spending in the next fiscal year, part of a plan that includes budget cuts and tax increases that administration officials believe will sharply bring down the federal deficit over 10 years. 
 
 The deficit would decline in fiscal year 2012 to $1.1 trillion, or 7% of gross domestic product, under Mr. Obama's plan, as a year-long payroll tax holiday and an extension of federal jobless benefits expired, administration officials said. By 2017, the budget plan says, the deficit would be shaved to $627 billion, or 3% of gross domestic product. 
 
 Senior administration officials said the new budget would address concerns about the country's long-term fiscal challenges while spending more money on education and research programs that the administration says are needed to boost economic growth. 
 
 But Mr. Obama's plan is likely to be rewritten by Republicans who control the House, as proposed spending cuts in his budget fall short of the reductions congressional Republicans are seeking. 
 
 View Full Image Getty Images Barack Obama is proposing $3.73 trillion in government spending in the next fiscal year. 
 
 Even before turning to Mr. Obama's plan for fiscal year 2012, which begins Oct. 1, lawmakers are battling over levels of government spending for the remainder of fiscal year 2011, which House lawmakers will debate this week. 
 
 "We're very eager to work with Republicans to cut spending and reduce our deficit," a senior administration official said Sunday night. 
 
 At $1.65 trillion, the administration's projection for the 2011 deficit is significantly larger than the $1.48 trillion estimated by the non-\partisan Congressional Budget Office a few weeks ago. In fiscal year 2010, the deficit was $1.29 trillion. 
 
 White House officials believe their budget proposal would shave $1.1 trillion off of accumulated federal deficits over 10 years, which they believe would push levels of federal spending into a healthier balance. 
 
 That would be less than the $4 trillion in reductions the White House's deficit-reduction commission proposed in December, but it's still a level administration officials believe is achievable and sustainable. 
 
 The budget wouldn't do much, though, to arrest a future spike in the projected costs of Medicare, Medicaid, and Social Security. Mr. Obama has said he's open to making changes in these programs, but he wants cooperation from Republicans before he will begin. 
 
 The savings in the budget come from a combination of spending cuts and increases in revenue. A five-year freeze on non-defense discretionary spending would save more than $400 billion over 10 years, the administration says. 
 
 The White House, in its plan for 2012, reduces certain programs to save an additional $33 billion. This includes more than $2 billion in cuts to travel, printing, supplies and other overhead costs. The plan also would cut more than $1 billion in grants to large airports and $950 million to revolving funds for state water treatment plants, among other things. 
 
 View Full Image Associated Press Willow Wimbush, left, and Nancy Harris, work on copies of the Appendix of the fiscal 2012 federal budget on Thursday at the U.S. Government Printing Office in Washington. 
 
 The proposed budget seeks to prevent many middle-class Americans from being subjected to the Alternative Minimum Tax, which would raise their tax bills, for three years starting in fiscal 2012. To cover the cost, the administration would put new limits on the ability of the wealthiest earners to utilize tax deductions to lower their tax burden, among them deductions for charitable contributions and mortgage interest. 
 
 The Alternative Minimum Tax was designed to ensure that wealthier earners do not use deductions to avoid most or all taxes. Lawmakers in both parties want to find a long-term solution that limits its growing reach into middle-class households. But Republicans are unlikely to agree to what, in effect, is a tax increase on wealthier Americans to pay the cost of doing so.. 
 
 The budget will also propose averting scheduled reductions in payments to doctors who treat Medicare patients for the next two fiscal years, at a cost of $62 billion over 10 years. To cover the cost, savings would be found by making improvements in the health care delivery system that weren't detailed by administration officials. 
 
 The White House will propose cutting 12 tax breaks to oil, gas and coal companies, which it projected will raise $46 billion in revenue over 10 years. 
 
 The budget calls for $148 billion in overall spending on research and development, which includes $32 billion in biomedical research at the National Institutes of Health. It would create 20 new Economic Growth Zones, providing tax incentives meant to attract investors and employers in hard-hit economic areas. 
 
 The tax deal agreed to by the president and congressional Republicans in December extended all current tax rates for two years, continued an expanded federal jobless benefits program for a year, and exempted most Americans from having to pay payroll taxes for a year. When it was signed into law, it was estimated the compromise would cost more than $850 billion over the next decade. 
 
 Write to Damian Paletta at damian.paletta@wsj.com and Corey Boles at corey.boles@dowjones.com
– The White House expects the national budget deficit to peak at $1.65 trillion this year, or roughly 10.9% of GDP—its highest level since World War II, the Wall Street Journal reports. That figure—which is significantly more pessimistic than the Congressional Budget Office’s $1.48 trillion estimate—comes alongside Obama’s newly released $3.73 trillion budget proposal for fiscal year 2012, which the administration says would shave $1.1 trillion off the deficit over the next decade. Under Obama’s plan, the deficit would shrink to $1.1 trillion in 2012, and to around $600 billion a year thereafter through 2018. The budget would cut funding on a host of programs long-championed by Democrats, and raise taxes on the rich and corporations, the Washington Post reports. At the same time, it would boost spending on education, energy and medical research, and high-speed internet infrastructure. It's a revealing look at Obama's priorities, but odds are it'll be all but ignored on Capitol Hill, as Republicans push much larger cuts in a House vote this week.