In his State of the Union Address Tuesday night, U.S. President Barack Obama proposed annual domestic spending freeze for the next five years, which he said would reduce the deficit by more than 400 billion U.S. dollars over the next decade.

The proposal "will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was president," Obama said at the House of Representatives, which is now controlled by Republicans following their overwhelming win in the midterm elections.

"I recognize that some in this Chamber have already proposed deeper cuts, and I'm willing to eliminate whatever we can honestly afford to do without," said Obama. "But let's make sure that we're not doing it on the backs of our most vulnerable citizens. And let's make sure what we're cutting is really excess weight."

House and Senate conservatives recently proposed cutting 2.5 trillion dollars from the federal budget over 10 years. Just hours before the president's speech before Congress, the House voted to slash spending this year to 2008 levels or less, a campaign promise Republican leadership made during the midterm elections.

"Cutting the deficit by gutting our investments in innovation and education is like lightening an overloaded airplane by removing its engine," he said. "It may feel like you're flying high at first, but it won't take long before you'll feel the impact."

The programs Obama targeted for a freeze represent around 12 percent of the U.S. budget. In the coming months, Congress will debate fiscal 2012 spending and Obama's proposal.

Democrats and Republicans are expected to fight hard over federal budget and deficit reduction measures in the coming months. The continuing budget resolution is to expire by early March and both parties have to negotiate a new one to fund the federal government through the rest of the fiscal year which ended September.

The U.S. federal deficit, which recorded 1.42 trillion dollars in fiscal year 2009, dropped to 1.29 trillion dollars in fiscal year 2010. It is widely expected that the figure will continue to top 1 trillion dollars in 2011.

On the other hand, the U.S. national debt now stands at nearly 13.9 trillion dollar. That's only 400 billion dollars below the 14.3 trillion federal debt ceiling set by Congress.