It calls for ending production of Lockheed Martin's F-22 fighter jet at 187 aircraft while increasing funding for Lockheed's F-35, the Joint Strike Fighter.
The F-22 is manufactured in Fort Worth.
Other recommendations include buying 31 more Boeing F/A-18 fighter jets and terminating a $13 billion presidential helicopter program.
Defense contractors such as Boeing, Lockheed Martin and Northrop Grumman employ roughly 377,000 people. Defense cuts could provoke some big fights with lawmakers and defense industry lobbyists.
Gates' budget proposals call for billions to be spent on things like unmanned aerial systems to give U.S. troops new capabilities to fight less conventional wars.
He also recommends slashing $1.4 billion from the Pentagon's missile shield development project in 2010.