Bush Sends $2.4 Trillion Budget to Congress

WASHINGTON – The $2.4 trillion budget President Bush sent to Congress Monday would cut back scores of discretionary programs in an effort to reduce a half-trillion-dollar deficit while still boosting military and homeland security spending.

The budget contains a 7 percent increase in defense spending and a 10 percent boost in homeland security spending, which includes counter-terrorism programs. Meanwhile, seven of the 15 Cabinet-level agencies face spending cuts.

Bush told reporters Monday his budget "sets clear priorities: Winning the war on terror, defending our homeland, making sure children get educated, making sure the seniors get a modern Medicare system."

"At the same time," he added, "we are calling upon Congress to be wise with taxpayers' money. We look forward to working with them to bring fiscal discipline to the appropriations process so we can cut the deficit in half over a five-year period of time."

Democrats in Congress immediately attacked the president's plan.

This budget "qualifies the president as the most fiscally irresponsible president in our nation's history," said Sen. Kent Conrad (search), D-N.D., ranking minority member on the Senate Budget Committee. The president "will be spending $990,000 more per minute than he is taking in."

"As this document makes clear," said House Minority Whip Steny Hoyer (search), D-Md., "when it comes to masquerading as a fiscal conservative, President Bush deserves an Academy Award."

The blueprint for the 2005 fiscal year, which begins Oct. 1, proposes a 3.5 percent increase in discretionary spending from the current year. Social Security and Medicare entitlements will rise by 3.9 percent.

Revenues are projected to total $2.04 trillion, or 13.2 percent more than fiscal 2004. The administration forecasts the increases will be powered by a stronger economy and the resulting healthier tax returns.

Despite large increases in some programs, the overall budget includes just a half-percent increase in non-entitlement, non-defense spending — below the inflation rate.

Office of Management and Budget (search) Director Josh Bolten said the budget proposes ending 65 programs and reducing the size of 63 major programs.

The president's proposal incorporates a $364 billion budget deficit in fiscal year 2005, down from a projected record high $521 billion deficit this year.

The dollar figures are among the highest deficits the United States has ever carried, but the deficit is a smaller percentage of the total budget than deficits carried during the Reagan and first Bush administrations.

The administration projects the deficit will fall to $237 billion in 2009.

"Our nation remains at war," Bush declared in his budget message. "This nation has committed itself to the long war against terror. And we will see that war to its inevitable conclusion: the destruction of the terrorists."

More than three-quarters of discretionary spending since Sept. 11, 2001, has gone to the war on terror and homeland security.

Lawmakers said even with the small growth in some areas, the president's deficit spending is out of control.

"We could eliminate all of our defense spending and discretionary spending and still have a deficit of over $100 billion," said Senate Minority Leader Tom Daschle, D-S.D. "That's how bad the situation is."

A top Republican House leader acknowledged that deficit reduction would not happen soon and warned colleagues to not start itching for pork projects.

"While I am dedicated to developing fiscally conservative budgets, no one should expect significant deficit reduction as a result of austere non-defense discretionary spending limits," said Rep. C.W. Bill Young, R-Fla., chairman of the House Appropriations Committee. "The numbers simply do not add up."

"Non-defense discretionary represents less than one-fifth of the federal budget, and freezing this spending reduces the deficit by a marginal amount," Young added. "With a 1 percent growth or freeze in non-defense programs, everyone should have realistic expectations and be prepared to make sacrifices."

During his Monday morning Cabinet meeting, Bush said deficit spending would continue for the foreseeable future.

"The reason we are where we are, in terms of the deficit, is because we went through a recession, we were attacked, and we're fighting a war," he said. "These are high hurdles for a budget and for a country to overcome."

"Yet we've overcome them, because we've got a great country, full of decent people," he added. "And the economy is getting better. And as the economy gets better, it enables us to send up a budget to the Congress that does cut the deficit in half."

Under Bush's spending plan, tax cuts enacted in 2001 and 2003 would be made permanent. The Congressional Budget Office has estimated that prolonging the programs, now sent to phase out by 2011, would add an additional $1.2 trillion in cash returns to taxpayers.

Last week, the administration admitted that the 10-year cost of the Medicare prescription drug benefit passed by Congress in November would cost $534 billion, rather than the $400 billion lawmakers were told to expect.

Daschle said the administration's increase in Medicare spending raises questions about the president's credibility. He also criticized Bush's call to make tax cuts permanent.

"This administration pledged that its tax cuts and policy choices would not turn record surpluses into record deficits, but this budget shows that's exactly what's happened," Daschle said.

The 7 percent hike in military spending does not include money needed to keep troops in Iraq and Afghanistan after the current $87.5 billion wartime supplemental runs out.

Bolten said a new supplemental spending bill would not be requested until 2005, and its size would be dependent on the security situation. He said he did not expect it to be over $50 billion.

The 10 percent homeland security increase includes an 11 percent increase in FBI funding to support increased counter-terrorism activities.

Bush's budget contains money to undertake an ambitious program to return Americans to the moon as early as 2015 and to eventually send a manned mission to Mars.

The $12 billion earmarked for the effort over the next five years includes only $1 billion in new money, however; the rest is reallocated from existing NASA programs.

Areas that would receive boosts in Bush's budget include his No Child Left Behind education program; job training programs, including one that links community colleges with employers; and an $18 million increase for the National Endowment for the Arts (search).

It is uncertain how much success Bush will have in persuading lawmakers to constrain a broad swath of government, especially in an election year.

"Progress needs to be made on the deficit, but that isn't likely to happen this year. Nobody likes to inflict pain in an election year," said David Wyss, chief economist at Standard & Poor's in New York.

The Associated Press contributed to this report.