President Barack Obama has unveiled a politically risky plan to reduce the US deficit by four trillion dollars (£2.45 trillion) over 12 years by cutting healthcare and defence while raising some taxes.
The president's proposal set the stage for the ideological and political fight that is sure to dominate the 2012 presidential and congressional campaign.
Under the plan, three quarters of the deficit reduction would come from spending cuts, including lower interest payments as the debt eases. One quarter of this, or one trillion dollars (£614 billion), 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 Mr Obama's speech announcing his proposal, Republicans argued that it did not go far enough to reduce a debt that has reached 14 trillion dollars (£8.59 trillion). They also oppose any tax increases.
"If he were serious, he'd be talking about a detailed roadmap for action, not just grabbing headlines by announcing another speech," Senate Republican leader Mitch McConnell said.
Mr Obama and Democrats have similarly rejected a Republican proposal which would reduce spending by 5.8 trillion dollars (£3.56 trillion) over the next decade, largely through cuts in healthcare programmes 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.
Both parties are taking big political gambles. Mr Obama needs to keep the support of the liberal Democratic base, which opposes cuts to social schemes, while demonstrating to independent, moderate voters - who often determine the outcome of elections - that he is serious about reducing the deficit.
Republicans have made spending cuts a core issue. They won control of the House last year largely on the strength of the ultraconservative tea party movement, which favours a smaller role for government and sharply reduced spending.