He said Monday he was cutting things he cares "deeply about."
The plan "makes a down payment" on reducing the federal deficit, Obama said, discussing his budget blueprint at a middle school in Baltimore. "There's going to be more work that needs to be done."
Obama said the plan is needed to boost the national economy and compete globally.
The president said his proposal would slow the burgeoning deficit by $1.1 trillion over the next 10 years. The savings over 10 years would equal next fiscal year's projected $1.2 trillion deficit, the non-partisan Congressional Budget Office says.
The administration proposed 211 terminations, reductions and savings measures that officials said would save more than $33 billion in 2012 alone. The terminations and reductions are across all government agencies.
Among items in the plan are:
-- Cuts amounting to $2.8 billion from low-income heating assistance and community-service block grants next fiscal year, starting Oct. 1.
-- Reductions of more than $1 billion in airport grants.
-- Cuts of nearly $1 billion from grants to states for water treatment plants and other similar projects.
-- Freezing non-security discretionary domestic spending for five years.
Obama already announced two-year pay freezes for non-military federal employees.
He said his budget meant "cutting things I care deeply about [such as] community action programs ... and community block grants."
"But if we're going to walk the walk, these kinds of cuts are necessary," Obama said.
He said he looked forward to working with Democratic and Republican congressional members to develop the 2012 budget and finding more ways to whittle down the deficit.
"Here's the thing. While it's absolutely essential to live within our means, we committed to work with Democrats and Republicans to find more savings," Obama said. "But we can't sacrifice our future in the process."
He said he wanted to preserve the steps already taken to fund education, infrastructure and research so the United States could compete in a global economy.
However, Pell Grants and other higher-education programs would be trimmed $100 billion over 10 years by doing things such as capping awards at $5,550, the White House said.
Obama's budget adopts $78 billion in savings proposed by Defense Secretary Robert Gates that include elimination of several weapons programs deemed unnecessary, such as the C-17 Globemaster III strategic airlifter, an alternative Joint Strike Fighter engine and a Marine Expeditionary Force vehicle.
Obama would also extend tax cuts passed during George W. Bush's administration, but not for people making more than $250,000 a year, administration officials said.
Budget documents are available at http://www.whitehouse.gov/omb/budget/ (Adobe Reader required).