Bush sets his course on budget His $2.4 trillion plan seeks more for defense and security. It projects a $364 billion deficit.

Posted: February 03, 2004

WASHINGTON — President Bush yesterday sent Congress a $2.4 trillion federal budget that would boost spending for defense and homeland security, squeeze domestic programs, and reduce the record 2004 deficit.

The fiscal 2005 budget leaves no doubt about Bush's priorities as he seeks a second term. It calls for boosting spending by 10 percent for programs to fight domestic terrorism and 7 percent for defense, while cutting spending for the Environmental Protection Agency, the Agriculture Department, and the Transportation Department.

Despite pressure to reduce the deficit further, Bush's proposal includes a mix of new or expanded tax cuts in the name of sustaining economic recovery. But simply making permanent the tax cuts already enacted, as Bush requests, would reduce federal revenue by $936 billion over 10 years, according to White House budget experts.

"We will continue to provide whatever it takes to defend our country," Bush said in his annual budget message to lawmakers.

The budget submission to the Republican-controlled Congress set the stage for a bitter election-year struggle over spending priorities and the nation's direction.

Congressional Democrats declared the plan dead on arrival and ridiculed Bush's promise to halve this year's record $521 billion deficit within five years. The 2005 budget projects a deficit of $364 billion.

Bush's pledge to rein in domestic spending is likely to be tested by lawmakers eager to fund popular programs - from health research to highway projects - before they, too, face the voters in November.

Yet Democrats still blasted the President as a big spender.

Sen. Kent Conrad of North Dakota, the top Democrat on the Senate Budget Committee, said that under Bush's plan, the federal government would spend $991,000 more per minute than it takes in.

"This President is running us right over the fiscal cliff," Conrad said. "The President says he wants to go to Mars. He's taken the deficit to the moon."

Some Republicans also questioned Bush's plan for slashing the deficit.

"The numbers simply do not add up," said House Appropriations Committee Chairman C.W. Bill Young (R., Fla.).

Bush's budget does not include new funding for military operations in Afghanistan or Iraq, but administration officials acknowledged that Bush was likely to ask Congress for as much as $50 billion more in a separate budget request sometime after the Nov. 2 election.

Bush wants Congress to permanently extend tax cuts that are scheduled to expire at the end of 2010, and to expand tax breaks for various savings accounts and charitable contributions. His budget also would offer temporary relief in 2005 for middle-class taxpayers who fall under the alternative minimum tax, a tax-law provision aimed at ensuring that wealthy taxpayers with extensive deductions pay at least some taxes.

Critics called the tax cuts a time bomb set to explode just as the baby-boom generation reaches retirement age.

"The really jarring thing is where his plan takes us after the next five years," Conrad said. "The deficits go into hyperspace."

Bush expressed confidence that he could meet his deficit-reduction goals with help from an improving economy and spending restraint in Congress. He urged Congress to impose new spending limits that would require offsetting cuts for any future spending increases.

"We went through a recession, we were attacked, and we're fighting a war," Bush said after a cabinet meeting at the White House. "These are high hurdles for a budget and for a country to overcome, and yet we've overcome them."

If Bush's deficit and spending projections come true, the government will borrow 22 percent of what it spends this year and 15 percent next year. The President's plan sets aside $178 billion next year just for paying interest on its debt.

Massachusetts Sen. John Kerry, the Democratic presidential front-runner, called Bush's budget "more of the same: record deficits, tax cuts for the wealthy and special interests, and cuts in areas that matter most to families, such as health care and education."

Programs unrelated to defense and homeland security would get an overall spending increase of 0.5 percent in Bush's budget, but the money would be allocated unevenly.

Agencies targeted for funding cuts include the Justice Department, down 3 percent; the Transportation Department, down 4 percent; the Small Business Administration, down 10 percent; and the Army Corps of Engineers, down 13.1 percent.

Bush's budget would cut Amtrak funding from $1.2 billion to $900 million, or 25 percent, unless the administration's proposal to restructure the nation's passenger rail system is adopted. Then, funding would increase to $1.4 billion.

Administration officials said Bush targeted 65 programs for outright elimination, but they did not provide a list. The Associated Press reported that 38 programs slated for extinction were in the Education Department, including a $35 million arts-in-education program, school counseling, and Even Start for improving poor children's reading skills. Overall for the department, Bush proposed a 3 percent funding increase.

Funding increases were also proposed for the State Department, up 10.7 percent; NASA, up 6 percent; and the Department of Housing and Urban Development, up 2.8 percent.

Foreign aid would also grow, including a $400 million increase over this year's $2.4 billion for battling AIDS abroad. Bush also wants $2.5 billion - up from $1 billion - for his Millennium Challenge Account for countries embracing democratic reforms.

Bush also favored his top priorities within each agency. In contrast to the overall cut to the Justice Department budget, within it the FBI would see its funding increased 11 percent to help fight terrorists. The law-enforcement agency hopes to add 211 agents to investigate terrorism.

Other presidential priorities include programs to help poor people insulate their homes against cold weather, research into the use of hydrogen as a fuel for cars and power plants, and technology to reduce emissions at coal plants.

Critics said Bush was obscuring what they believe is a White House attempt to clamp down on domestic spending while putting the nation on permanent wartime footing.

The National Environmental Trust concluded that the budget would cut environmental programs by about 6 percent, despite increases for a Great Lakes cleanup effort and a handful of other environmental projects.

"Listening to the administration, you'd think President Bush had given the environment the biggest funding increase in history," said Philip Clapp, the trust's president. "These minuscule increases are nothing more than prepackaged campaign events targeted at critical swing states like Michigan and Illinois."

Members of Congress from both parties signaled that they were not about to rubber-stamp Bush's budget, even in areas dealing with defense and homeland security.

"When you have troops in the field, you support the troops so you can complete the mission," said Rep. John Spratt of South Carolina, ranking Democrat on the House Budget Committee and a senior member of the Armed Services Committee. "But I am not writing a blank check."

Contact reporter Ron Hutcheson at 202-383-6101 or rhutcheson@krwashington.com.

Sumana Chatterjee and Shannon McCaffrey of the Inquirer Washington Bureau contributed to this article. It includes information from the Associated Press also.

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