San Diego Union Tribiune

February 8, 2005
Bush's 'lean budget' would cut social programs, boost defense
Democrats criticize proposal as 'a hoax' for what's left out

By Finlay Lewis
and Otto Kreisher

WASHINGTON – President Bush yesterday proposed a $2.57 trillion budget for next year that would eliminate or sharply reduce more than 150 domestic programs while beefing up spending on the military and homeland security.

The president told Congress in his annual budget message that the federal deficit at the end of this year would reach a record-high $427 billion. But he said his blueprint for the 2006 fiscal year beginning Oct. 1 would advance the government toward his goal of halving the deficit by 2009.

Lawmakers on Capitol Hill began girding for what is likely to be a tough political struggle over the budget. Leaders of the Democratic minorities in the House and Senate denounced the plan for excluding from deficit estimates the future costs for operations in Iraq and Afghanistan, and the cost of the president's proposed Social Security restructuring.

Graphic: Agency expenditures under Bush's plan
Meeting briefly with reporters yesterday, Bush said he was introducing a "lean budget," adding that he was "very optimistic" about persuading Congress to agree to a rare cut in overall federal spending on a range of popular domestic-spending programs.

"It is a budget that focuses on results," Bush said. "Taxpayers in America don't want us spending their money on something that's not achieving results."

Rep. Nancy Pelosi of San Francisco, the Democratic minority leader, derided the budget for its omissions.

"The president's budget is a hoax on the American people," Pelosi said. "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."

Sen. Harry Reid of Nevada, the Democratic floor leader, said, "The Republican budget is as irresponsible as it is misleading."

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 also called it "a good starting point for the Congress to begin its work."

Out of almost two dozen major government agencies, about half would have their budgets sliced next year, with the Department of Education being asked to absorb the termination of 48 programs, and the Department of Agriculture facing a proposed spending cut of nearly 10 percent.

2006 federal budget:

INCREASES: The budget would boost spending on the military and homeland security.

CUTS: The budget would reduce subsidies paid to farmers, cut health programs for poor people and veterans and trim spending on the environment and education.
Meanwhile, Bush's budget proposal would boost spending next year on defense by 4.8 percent to $419.3 billion and on the newly established Department of Homeland Security by nearly 7 percent to $34.2 billion.

Overall, the administration envisions spending $2.567 trillion in 2006 against revenues of $2.177 trillion for a deficit of $390 billion, or 3 percent of the gross domestic product. The administration had projected that last year's deficit would hit $521 billion, which serves as Bush's benchmark for halving the deficit by 2009. Although the White House now says the actual deficit last year was $412 billion – a record – Bush hopes to be able to make good on his deficit pledge by paring it to $233 billion by 2009.

White House budget director Joshua Bolten said Bush would satisfy his re-election pledge by halving the deficit's share of the GDP – rather than actually halving the deficit.

However, the White House's deficit projections do not include funds for ongoing military operations in Iraq or Afghanistan beyond this year.

Also left out of the calculations are the costs of establishing individual retirement accounts within Social Security – a top Bush priority that is expected to cost trillions of dollars over the next decades.

In a briefing for reporters, Bolten defended the White House for omitting spending on war and on Social Security's restructuring from its deficit calculations. He contended that any attempts to come up with spending totals in both cases would just be guesses.

In overall terms, some of the hottest battles over Bush's spending plan are likely to be fought over discretionary domestic spending on such things as education and environmental protection.

For the first time since the mid-1980s, the White House is proposing that outlays in this category be reduced by slightly less than 1 percent. Not included would be entitlement programs such as Medicare and Social Security whose benefits are mandated by law.

By comparison, spending on these discretionary programs rose 15 percent in the last year of the Clinton administration. Among the programs that would now be eliminated under Bush's budget plan are a family literary program known as Even Start and grants for drug-free schools. The Education Department programs received $247 million and $441 million, respectively, in congressional funding a year ago.

The administration rated both programs as "ineffective" and said their funds could be put to better use by being redirected to programs aimed at improving inner-city education, strengthening high schools and improving teacher quality.

In addition, the budget plan would collapse 18 community development initiatives into one Commerce Department program with an estimated savings of $1.8 billion, while also eliminating the $1.2 billion subsidy for Amtrak and $100 million in grants for land and water conservation.

The budget also calls for an increase in the security fee paid by airline travelers, from $3 to a maximum of $8.

In a move that may pit the administration against Republican congressional allies from rural states, Bush is seeking a $250,000 cap on subsidies to farmers, who in some cases are now receiving checks totaling $1 million from the government. The move is estimated to save the budget about $587 million this year and about $5.7 billion over the next decade.

The administration also hopes to save $137 billion over the next decade by revamping several mandatory spending programs including Medicaid, the federal-state health care program for the poor, and the student loan program.

White House Budget Director Bolten said the changes sought by the White House would be aimed at eliminating middlemen in these and similar programs. And, as in the case of Medicaid, the budget would foil schemes now being employed by some state governments and others to "get federal money to which we believe they're not entitled," he said.

"This is not in any respect a cut in the benefits that we expect Medicaid recipients to receive," Bolten said.

Veterans' medical services and grants to communities to hire police officers also face cuts under Bush's budget proposal.

On the military side of the budget, the Pentagon already has received $25 billion in supplemental funding for the current fiscal year and is expected to get about $75 billion more of an $81 billion supplemental request to be presented next week.

That additional $100 billion is supposed to cover the extra cost of the conflicts in Afghanistan and Iraq.

However, Defense Secretary Donald Rumsfeld conceded yesterday that much of it will go to help the Army and the Marine Corps repair or replace equipment worn out or destroyed in Iraq and to pay for 30,000 additional soldiers and 3,000 more Marines.

A similar supplemental request is likely to come in the new budget year sometime after Oct. 1.

"For a nation at war, the overriding priority must be to ensure that commanders have the forces and equipment they need to prevail," Rumsfeld told a Pentagon briefing.

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