Obama will also highlight his commitment to education overhaul, "including his plan to improve outcomes for students at every point along the educational pipeline," an official says.
Some education programs in the budget will be consolidated but overall there will be a 6.2 percent increase in funding for the Department of Education, including an additional $1.35 billion for the Race to the Top program, to be expanded with a separate competition for school districts.
White House spokesman Robert Gibbs said Tuesday that the president will also reflect on the economic situation he faced coming into office and the "tough decisions" he had to make within his first year.
"He'll again talk about why those decisions were made despite the fact that they may or may not have been popular at the time," Gibbs said.
Gibbs said the president would focus on getting the fiscal house in order.
"We have to take and continue to take the steps necessary to do that," he said.
Some voters, especially the independents that Democrats have been hemorrhaging in recent polls and in recent elections, want to hear that the president has a plan to rein in federal spending.
For them he will offer some symbolism -- a salary freeze for high-level White House staffers and political appointees, and elimination of any bonuses.
Last January, the president announced a pay freeze for more than 100 White House aides making more than $100,000. This year the pay freeze will extend to all political appointees, including executive branch employees under the executive schedule; ambassadors; non-career members of the foreign service and politically appointed senior executive service employees. This move will affect approximately 1,200 people, the White House estimates.
In a move that is raising alarms among many liberals, Obama will propose a three-year freeze on domestic spending not related to national security or entitlement programs like Medicare.
The freeze saves $250 billion over 10 years -- less than 1 percent of what the government spends.
"It's only one of the things that we're going to be doing, but it's nonetheless important. It's important to draw a line somewhere," said Peter Orszag, the director of the Office of Management and Budget.
The decision drew heat from liberals who questioned the president's priorities.
"If people are hungry, you want to make sure that we're spending appropriately so that nobody goes hungry," said Sen. Bernie Sanders, D-Vt., who sits on the Senate Budget Committee. "If we're spending money on weapons systems that are no longer relevant in the fight against terrorism, you want to eliminate that."
Meanwhile, conservatives say that the president is not cutting nearly enough federal spending.
"We've been on quite a binge over the last 12 months, and it's going it take a lot more than just this kind of modest freeze to get us back on the right track," said Sen. Minority Leader Mitch McConnell, R-Ky.
The deficit has become a political liability for the White House. The latest ABC News-Washington Post poll found that 56 percent of Americans disapprove of Obama's handling of the federal budget deficit. Among independents, who have flocked to Republicans in recent elections, the president fares even worse, with 2-1 disapproval.