According to Orszag, the administration's deficit reduction strategy involves four mechanisms, the first being an assumption that the economy recovers and federal revenues rise as a result. When questioned about whether the administration's economic assumptions tilted towards the "rosy" end compared to private forecasts, White House Council of Economic Advisors Chairman Christina Romer responded that "we certainly are somewhat more optimistic, but certainly nothing out of the ballpark."

An estimated $636 billion in additional federal revenues will go towards deficit reduction over the 10-year window by allowing the Bush tax cuts for upper-income earners to expire in December 2010. The White House is also proposing to close down tax "loopholes" for companies that expatriate and ship jobs overseas.

"Third, we are winding down the war, and that will reduce costs over time," Orszag noted.

The fourth mechanism is eliminating wasteful and fraudulent spending such as improper Medicare payments, and closing the so-called "tax gap," which is the difference between taxes owed and taxes paid to the federal government.

"All told, the budget contains almost $50 billion in reduced errors and improper payments, both on the benefits side and in -- on the revenue side, over 10 years," said Orszag.

Other cost-cutting measures in the White House budget include reduced federal payments for certain large farms for an estimated $10 billion in savings over 10 years, and ending subsidies to private lenders of college loans for an estimated $48 billion in savings over 10 years.

Orszag said that the total $2 trillion in deficit reduction proposals are split evenly between spending reductions and additional revenues resulting from tax hikes -- as compared to baseline estimates.

The administration is projecting a $1.75 trillion deficit this fiscal year that winds down to $533 billion in FY 2013, then inches back up over the remaining 10-year window. Obama will send Congress his full budget request in April.