President Barack Obama is promising $US4 trillion in savings between now and 2023 to rein in the US government's growing deficit.
The president is planning the savings through a mixture of spending cuts in areas such as defence and health and in tax increases for high income earners, the BBC reports.
"We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt," Mr Obama said in a speech at George Washington University elaborating on his savings plan.
His announcement follows warnings from the International Monetary Fund that the growing budget deficit is a threat to the country's financial stability.
The IMF has called for prompt action to rein in spending.
Financial markets reacted positively to the news, with bond prices rising.
However, Republicans have attacked the Mr Obama's speech as campaign rhetoric and were particularly critical of the proposed increase in taxes on the wealthy.
The deficit is expected to be a major issue in the coming US presidential election campaign.
