WASHINGTON - US President Barack Obama unveiled a politically risky plan on Wednesday to reduce the US deficit by $4 trillion over 12 years by cutting health care and defense while raising some taxes.

Obama delivers a speech on US fiscal and budgetary deficit policy at the George Washington University in Washington, April 13, 2011. [Photo/Agencies]

Obama's proposal set the stage for the ideological and political fight that is sure to dominate the 2012 presidential and congressional campaign.

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Under Obama's plan, three quarters of the deficit reduction would come from spending cuts, including lower interest payments as the debt eases. One quarter, or $1 trillion, would come from additional tax revenue.

"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," he said in a speech at George Washington University.

Even before Obama's speech announcing his proposal, Republicans argued that it didn't go far enough to reduce a debt that has reached $14 trillion. They also oppose any tax increases.

"If we're going to resolve our differences and do something meaningful, raising taxes will not be part of that," said Republican House Speaker John Boehner.

Obama and Democrats have similarly rejected a Republican proposal which would reduce spending by $5.8 trillion over the next decade, largely through cuts in health care programs for the elderly and the poor. And it would cut taxes for corporations and the wealthy.

Prospects are dim for the quick passage of either proposal. While the Republicans are likely to win approval for their plan in the House of Representatives, where they have a majority, the Democratic-led Senate would reject it.

For all his tough talk, Obama called for both parties to work with him and strike a deficit cutting compromise. He asked party leaders to name negotiating teams and set a June deadline for an agreement.

Still, both parties are taking big political gambles. Obama needs to keep the support of the liberal Democratis were reluctant to embrace its recommendations.

The budget battle is one of three separate spending fights in Washington. Last week, Democrats and Republicans narrowly averted a partial shutdown of the government by agreeing on a spending plan for the rest of the current budget year, which ends September 30. Final approval of that plan is expected this week.

Congress must vote in the coming few weeks for an increase in the federal debt limit, the amount the US government can borrow. Republicans say they want more spending cuts as a condition for raising the debt ceiling. Democrats warn that failure to raise it by midsummer could drive up the cost of borrowing, raise fears of a default and destroy the economic recovery.