Medicare and Deficit Estimates Revised Upward

WASHINGTON – President Bush's 2005 budget proposal estimates that his Medicare bill will cost one-third more than the $400 billion the White House promised, and predicts the largest deficit ever in dollar terms, congressional aides said Thursday.

Bush will send the budget for the 2005 fiscal year, which starts Oct. 1, 2004, to Congress on Monday, barely a week after wrapping up the 2004 budget fight.

The president now estimates that the just-enacted prescription-drug program and Medicare overhaul will cost about $540 billion, and that this year's budget deficit will be about $520 billion, congressional sources told The Associated Press.

That deficit figure would easily surpass the $375 billion shortfall of last year. The new estimates come as Bush braces for a difficult election-season fight with Congress over his spending, which has angered budget watchdogs, including some conservatives.

Six of this year's 10 domestic spending bills cost more than Bush proposed, according to House Appropriations Committee figures. The conservative Citizens Against Government Waste (search) estimates all 13 bills had more than 10,000 "earmarks" for congressmen's home-district projects.

"This administration has been unwilling to fight those battles," said Steve Ellis, vice president of the conservative Taxpayers for Common Sense (search).

As the Medicare measure, which Bush signed last month, was moving through Congress, the president, White House officials and congressional Republican leaders had assured doubting conservatives that the bill's costs would stay within the $400 billion estimate.

The new Medicare estimate comes from the Medicare actuaries, and is a figure the president is compelled to include in his budget estimates. However, in Bush's stump speeches around the country, he has stressed that the real costs of Medicare may drop as additional prescription drugs could prevent some more costly medical procedures.

Additionally, the Congressional Budget Office, Congress' nonpartisan fiscal analyst, estimated the bill's 10-year cost at $395 billion.

Some conservatives voted against the legislation anyway. Many are now angry that Bush has presided over excessive increases in spending and budget deficits.

"I'm not the least bit surprised," said Rep. John Shadegg (search), R-Ariz., who voted against the Medicare bill and said he had heard the cost estimate would rise. "Historically, our estimates of what these programs will cost have been so far off as to be meaningless."

An administration official, speaking on condition of anonymity, acknowledged that the estimate would rise to nearly $540 billion.

"Both numbers provide what you can call a reasonable range of possible future costs for Medicare," the official said. "These are complex estimates, based on hundreds of individual programs, decisions and potential actions over an extended period of time."

Bush has been very successful in getting his budget priorities through Congress. White House officials cite Bush's victories on tax cuts, Medicare prescription drug coverage and funds to fight the Iraq war, not to mention what they characterize as his overall spending restraint.

"Taken collectively, they are a very impressive record for a given year," said White House budget office spokesman Chad Kolton.

In a bid for conservative support, Bush's new budget will propose holding spending for non-defense, non-domestic security programs to an increase of about 0.5 percent.

"He wanted a carpet that looked like X, and generally speaking he got a carpet that looked like X," said Richard Kogan, who analyzes the budget for the liberal Center on Budget and Policy Priorities (search).

The Republican-run Congress avoided overt clashes with the president, but did not roll over completely.

Lawmakers trimmed Bush's defense plans while boosting funds for highways, Amtrak and veterans. They ignored his plan to make tax cuts permanent, scaled back his proposal to stop taxing corporate dividends, derailed his energy bill and added thousands of home-district projects to spending measures.

Even so, the results were a far cry from the "dead on arrival" tag applied to the spending proposals of some of Bush's recent predecessors.

Democrats and moderate Republicans often gave that assessment to plans written by the first President Bush and President Reagan, who were forced to accept both tax and spending increases.

President Clinton, despite the GOP takeover of Congress two years into his tenure, won frequent spending concessions from lawmakers wary of battling him. Bush has followed a similar pattern.

"It would be hard to say he's not getting what he wants," Stan Collender, a senior vice president who follows the budget for the accounting firm Fleischman-Hillard (search).

Bush has yet to cast a veto after three years in office. He often uses the threat of a veto to get his way, issuing 19 as Congress considered the 13 annual spending bills for this year.

In the end, lawmakers dropped challenges, such as against the administration plans to change overtime-pay rules and divert more government work to private contractors.

Major priorities Bush proposed last year included:

— Tax reductions of $1.3 trillion over 10 years. The bill he signed had $330 billion in tax cuts. That number is expected to grow should lawmakers, as anticipated, make some of its temporary reductions permanent.

— $400 billion over a decade for revamping Medicare and adding prescription-drug coverage. Bush last month signed a bill resembling his proposal.

— $87 billion this year for wars in Iraq and Afghanistan, $500 million less than he got. The final bill gave him $1.7 billion less than the $18.6 billion he wanted to rebuild Iraq and less flexibility than he wanted for controlling the money.

Fox News' Peter Brownfeld and The Associated Press contributed to this report.