* Proposed cuts a small percentage of total deficit
* Budget details to guide spending bills in Congress
* Republicans say they have their own savings plan (Adds quote, more details, background)
By Richard Cowan and Jeff Mason
WASHINGTON, May 6 (Reuters) - U.S. President Barack Obama, facing criticism over huge budget deficits, will propose on Thursday shaving $17 billion from a 2010 budget that will still hover around $3.5 trillion, administration officials said.
About half of the proposed cuts would come from the defense budget, and a total of 121 programs in areas including education would be trimmed or scrapped, one official told a conference call with reporters.
Even with the spending reductions, the White House's own estimates suggest the deficit will be $1.17 trillion next year. Congressional analysts believe the gap could be $1.4 trillion.
Obama officials said the administration would look for further cuts in the 2010 fiscal year, which starts on Oct. 1.
"This is an important first step but it's not the end of the process," the official told reporters on Wednesday. "We will continue to look for additional savings."
Obama, who has vowed to cut the country's ballooning deficit in half by 2013, was widely panned last month when he challenged agencies to find $100 million in savings. Critics pointed out that was about equal to what the government spends in 13 minutes.
Congress has already passed a $3.4 trillion budget blueprint that will guide tax policy and government spending for the upcoming fiscal year. It embraces many of Obama's top priorities.
But the budget details the White House will release on Thursday, which build on a bare-bones outline the new president submitted to Congress on Feb. 26, could have an impact on those individual spending bills that will wind their way through Congress in coming months.
FOCUS ON CUTS
Asked by Reuters whether the budget document would contain other major new policy initiatives, another official said the $17 billion was "pretty much the news."
The first official said an early childhood education program known as "Even Start" and a long-range radio navigation system that has been made obsolete by GPS technology were on the chopping block.
"We're trying to cut back on the things that don't work, invest more in the things that do," the official told the conference call.
Other examples of cuts included halting payments to states for abandoned mines that have already been cleaned up, saving $142 million, and cutting a Department of Education attache position in Paris, saving more than $600,000.
The official said many of the defense cuts had been announced already by Defense Secretary Robert Gates.
Obama will ask for $1.25 billion from Congress to settle claims by black farmers that they were denied help by the Agriculture Department due to racism, the White House said.
Congressional Republicans, who are a minority in the House of Representatives and Senate, gave tepid praise for the new round of proposed funding reductions.
"While we appreciate the newfound attention to saving taxpayer dollars from this administration, we respectfully suggest that we should do far more," House Republican leader John Boehner said in a statement.
A Boehner spokesman said House Republicans would offer their own set of savings.
During his eight years in office that ended in January, Republican President George W. Bush presided over a huge run-up in federal spending, with record budget deficits and ballooning debt that reversed a few years of budget surpluses. Congressional Republicans signed off on Bush's budgets when they controlled Congress, until 2007.
The White House has already revealed that Obama will include in the 2010 budget a $63 billion, six-year health initiative to help people in the world's poorest countries, largely bolstering existing programs.
Obama's budget was widely seen as sketching out an ambitious agenda that includes healthcare reform, big increases in education spending and a controversial environmental initiative to reduce emissions of carbon dioxide and other greenhouse gases associated with global warming. (Additional reporting by Caren Bohan, Jeremy Pelofsky and Charles Abbott; Editing by Peter Cooney)