Springfield State Journal Register

Feburary 8, 2005

Bush: Cut domestic programs
Record deficit in budget plan for fiscal 2006

By FINLAY LEWIS and OTTO KREISHER
COPLEY NEWS SERVICE

WASHINGTON - President Bush on Monday 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 hit a record $427 billion. But he said that his blueprint for the 2006 fiscal year, which begins Oct. 1, would advance the government toward his goal of halving the deficit over the next four years.

Lawmakers on Capitol Hill began girding for what is likely to be a tough struggle as leaders of the Democratic minorities in the House and Senate denounced the plan for excluding both future war-making costs and the cost of Social Security restructuring from the estimates of future deficits.

Meeting briefly with reporters Monday, Bush described the budget as "lean" and said he was "very optimistic" about persuading Congress to agree to a cut in overall federal spending on a range of popular domestic 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."

However, Rep. Nancy Pelosi, D-Calif., the House minority leader, termed the budget a "hoax" because of the omissions.

Sen. Harry Reid, D-Nev,, the Senate minority leader, declared, "The Republican budget is as irresponsible as it is misleading."

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 spending cut of about 10 percent in its budget for the fiscal year that begins Oct. 1.

Meanwhile, Bush's proposal would boost military spending next year by 4.8 percent to $419.3 billion and on the newly established Department of Homeland Security by 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.

However, the White House's deficit projections do not include funds for military operations in Iraq and Afghanistan beyond a previously announced request for $81 billion in supplemental financing to cover costs already incurred.

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 over the next decades.

But there will be pain - and political combat - over reaching Bush's deficit-reduction goal.

In overall terms, some of the hottest battles 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 soared by 15 percent in the last year of the Clinton administration. Among the programs that would now be eliminated under Bush's budget are a family literary program known as Even Start and grants for drug-free schools. Both are Education Department programs that received $247 million and $441 million in congressional funding a year ago.

However, the administration rated both programs as "ineffective," and said that 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 would collapse 18 community development initiatives into one Commerce Department program with an estimated savings of $1.8 billion, while also zeroing out the subsidy for Amtrak and eliminating $100 million in grants for land and water conservation.

In a move that may pit the administration against Republican congressional allies from rural red 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 reforming several mandatory spending programs including Medicaid, the federal-state initiative to help provide the poor gain access to medical care, and the student loan program.

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