Bush Proposes Steep Cuts in $2.57T Budget

ALAN FRAM / AP 7feb2005

WASHINGTON — President Bush proposed a $2.57 trillion budget Monday that would erase scores of programs and slice Medicaid, disabled housing and many more but still worsen federal deficits by $42 billion over the next five years.

In one of the most austere presidential budgets in years — one that faces precarious prospects in Congress — Bush would give nine of the 15 Cabinet-level departments less money in 2006 than they are getting this year. Overall, he would cut non-security domestic spending — excluding automatically paid benefits like Medicare — by nearly 1 percent next year. Bush said it was the first such reduction proposed by the White House since President Reagan's day.

Forty-eight education programs would be eliminated, including one for ridding drugs from schools. In all, more than 150 government-wide programs would be eliminated or slashed deeply, including Amtrak subsidies, oil and gas research, and grants to communities hiring police officers.

Bush would slow the growth of benefit programs by $137 billion over the next decade, nearly quadruple the savings he proposed a year ago with little success. Chief among the targets would be Medicaid, the federal-state health insurance program for the poor and disabled, but farmers' payments, student loans and veterans medical services were also on the chopping block.

"It's a budget that focuses on results," Bush told reporters after meeting with his Cabinet. "The taxpayers of America don't want us spending our money into something that's not achieving results."

Yet largely because of Bush's plans for a defense buildup, this year's Iraq and Afghanistan war costs, and a handful of new tax cuts, the budget shows that deficits over the five years ending in 2010 would total nearly $1.4 trillion.

That is $42 billion worse than they would be if the government continued current spending levels and made no tax-law changes other than making permanent his already enacted tax cuts, his budget tables showed.

Bush's blueprint would leave next year's deficit at an estimated $390 billion, and omits any new money next year for wars in Iraq and Afghanistan. That would be a reduction from last year's record $412 billion shortfall and would still leave Bush on his course to halve deficits by 2009, the White House said.

Even so, a $390 billion shortfall would be the third worst ever if his projection for $427 billion in red ink for this year comes true.

Without Bush's new tax and spending plans, the 2006 deficit would otherwise be $361 billion, the budget tables showed. The figures demonstrated how federal costs are soaring despite growing revenues the economy is pumping into the government.

"We have investments we need to be making," said White House budget office spokesman Chad Kolton, referring to Bush's proposed military boost and other proposals. "Even so, we are significantly reducing the growth of spending" and moving toward halving the deficit.

Bush's package faced an uncertain fate in Congress, where conservatives seemed ready to demand deeper deficit reduction and Democrats — and some Republicans — were sure to resist its spending cuts.

Underscoring the jostling that lawmakers were preparing for, House Speaker Dennis Hastert, R-Ill., lauded the plan as "a blueprint to fund our nation's priorities" but called it "a good starting point for the Congress to begin its work."

Democrats chided the package for its proposed cuts and because they said it obscured more serious deficit problems ahead. They complained it excludes next year's war costs and the price tags of Bush's Social Security overhaul and of keeping the alternative minimum tax from affecting more middle-income families.

"Why is he playing this hide-and-seek game?" asked Sen. Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee. "I believe it's because he really doesn't want people to know where he is headed."

Among other proposals that deficit hawks considered unrealistic were the budget's assumption that spending for non-security programs would remain level at $389 billion over the next five years.

Bush was expected to propose an $81 billion war package for the rest of 2005 in a few days. Congress has already approved $25 billion for the year.

Besides omitting the impact of revamping Social Security, Bush proposed no specific savings at all from Medicare, the health program for the elderly and disabled. The $340 billion-a-year program, though $200 billion smaller than Social Security, faces a long-term solvency problem whose solution is technically and politically more complicated because of the intricacies of health costs.

Bush was using some of his budget cuts to funnel billions to White House priorities.

Defense and domestic security would both see healthy growth, as would select education, public housing, space and other programs. He would also create tax breaks totaling $74 billion over the next decade to encourage low-income people to buy health insurance.

Even so, the budget provided ample evidence that deficits were limiting his agenda.

Bush's proposed 4.8 percent increase for the Pentagon would bring its budget next year to $419.3 billion, excluding Iraq war costs. Yet that was $3.4 billion less than he projected for 2006 just a year ago, with weapons procurement among the leading areas feeling the crunch.

He was seeking increases for perennial favorites like veterans health care, aid to low-income school districts, special education — but all dramatically less than he proposed last year.

Even his tax-cutting agenda was under the gun and had little new. Of the $1.4 trillion in 10-year tax cuts, more than $1.1 trillion was his oft-repeated call to make his 2001 and 2003 tax cuts permanent.

Bush Sends Congress $2.57 Trillion Budget

MARTIN CRUTSINGER / AP 7feb2005

Washington, DC — President Bush sent Congress a $2.57 trillion budget plan Monday that would boost spending on the military and homeland security but seeks spending cuts across a wide swath of other government programs. Bush's budget would reduce subsidies paid to farmers, cut health programs for poor people and veterans and trim spending on the environment and education.

"It is a budget that sets priorities," Bush said after a meeting with his Cabinet. "It's a budget that reduces and eliminates redundancy. It's a budget that's a lean budget."

Bush acknowledged that it would be difficult to eliminate popular programs but he said programs must prove their worth. "I look forward to explaining to the American people why we made some of the requests that we made in our budget," the president told reporters.

Democrats immediately branded the budget a "hoax" because it left out the huge future costs for the war in Iraq and Afghanistan and did not include the billions of dollars that will be needed for Bush's No. 1 domestic priority, overhauling Social Security.

Joshua Bolten, the president's budget director, said the administration would soon be coming forward with a supplemental request for an additional $81 billion for operations in Iraq and Afghanistan. He said that request was reflected in the overall spending projections in Bush's budget for the current year and into 2006.

But he said including further additional spending for Iraq and Afghanistan "wouldn't be responsible" because it would represent guesses on what will be needed. Bolten also said that even if transition costs for Social Security had been included, the president would still be able to meet his goal of cutting the deficit in half by 2009 as a percentage of the total economy.

The budget — the most austere of Bush's presidency — would eliminate or vastly scale back 150 government programs. It will spark months of contentious debate in Congress, where lawmakers will fight to protect their favored programs.

House Democratic Leader Rep. Nancy Pelosi of California called Bush's budget "a hoax on the American people. The two issues that dominated the president's State of the Union address — Iraq and Social Security — are nowhere to be found in this budget."

The spending document projects that the deficit will hit a record $427 billion this year, the third straight year that the red ink in dollar terms has set a record. Bush projects that the deficit will fall to $390 billion in 2006 and gradually decline to $233 billion in 2009 and $207 billion in 2010.

Bush's 2006 spending plan, for the budget year that begins next Oct. 1, counts on a healthy economy to boost revenues by 6.1 percent to $2.18 trillion. Spending, meanwhile, would grow by 3.5 percent to $2.57 trillion.

However, outside defense, homeland security and the government's huge mandatory programs such as Social Security, Bush proposes cutting spending by 0.5 percent, the first such proposed cut since the Reagan administration battled with its own soaring deficits.

Of 23 major government agencies, 12 would see their budget authority reduced next year, including cuts of 9.6 percent at Agriculture, 5.6 percent at the Environmental Protection Agency, 6.7 percent at Transportation and 11.5 percent at Housing and Urban Development.

In his budget message to Congress, Bush said, "In order to sustain our economic expansion, we must continue pro-growth policies and enforce even greater spending restraint across the federal government."

But Democrats complained that Bush was resorting to draconian cuts that would hurt the needy in order to protect his first term tax cuts that primarily benefited the wealthy.

"This budget is part of the Republican plan to cut Social Security benefits while handing out lavish tax breaks for multimillionaires," said Senate Democratic Leader Harry Reid, D-Nev. "Its cuts in veterans programs, health care and education reflect the wrong priorities and its huge deficits are fiscally irresponsible."

Critics also contend that the five-year deficit projections also mask the costs of some Bush initiatives such as making his first-term tax cuts permanent, the bulk of which do not show up until after 2010. The budget puts the 10-year cost of making the president's tax cut proposals permanent at $1.29 trillion.

Bush's budget proposed increasing military spending by 4.8 percent to $419.3 billion in 2006. However, even with the increase a number of major weapons programs, including Bush's missile defense system and the B-2 stealth bomber, would see cuts from this year's levels.

Aside from defense and homeland security, favored Bush programs included a new $1.5 billion high school performance program, expanded Pell Grants for low-income college students and more support for community health clinics.

One of the most politically sensitive targets on Bush's hit list is the government support program for farmers, which he wants to trim by $5.7 billion over the next decade, which would represent cuts to farmers growing a wide range of cuts from cotton and rice to corn, soybeans and wheat.

Overall, the administration projected saving $8.2 billion in agriculture programs over the next decade including trimming food stamp payments to the poor by $1.1 billion.

Other programs set for cuts include the Army Corps of Engineers, whose dam and other waterway projects are extremely popular in Congress; the Energy Department; several health programs under the Health and Human Services Department and federal subsidies for the Amtrak passenger railroad.

About one-third of the programs being targeted for elimination are in the Education Department, including federal grant programs for local schools in such areas as vocational education, anti-drug efforts and Even Start, a $225 million literacy program.

In all, the president proposed savings of $137 billion over 10 years in mandatory programs with much of that occurring in reductions in Medicaid, the big federal-state program that provides health care for the poor, and in payments the Veterans Administration makes for health care. The administration proposed no savings for Medicare, the giant health care program for the elderly.

Many of the spending cuts in the budget are repeats of efforts the administration has proposed and Congress has rejected previously.

source: http://sfgate.com/cgi-bin/article.cgi?file=/n/a/2005/02/07/national/w071227S13.DTL&type=printable 7feb2005