Kraven Moorehead

Bush sends $2.57 trillion budget proposal to Congress
House minority leader calls plan a 'hoax'
Monday, February 7, 2005 Posted: 1:42 PM EST (1842 GMT)

WASHINGTON (AP) -- President Bush sent Congress a $2.57 trillion budget plan Monday that would eliminate or vastly scale back 150 government programs while cutting the deficit to $390 billion for 2006

The spending proposal -- the most austere of Bush's presidency -- will spark months of debate in Congress, where lawmakers will fight to protect their favored programs.

Outside defense, homeland security and the government's huge mandatory programs such as Social Security, Bush proposes cutting spending for the rest of government by 0.5 percent, the first such proposed cut since the Reagan administration.

Of 23 major government agencies, 12 would see their budget authority reduced next year, including cuts of 9.6 percent at Agriculture, 5.6 percent at the Environmental Protection Agency, 6.7 percent at Transportation and 11.5 percent at Housing and Urban Development.

Aside from defense and homeland security, favored Bush programs included a new $1.5 billion high school performance program, expanded Pell Grants for low-income college students and more support for community health clinics.

"It's budget that sets priorities," Bush said after a meeting with his Cabinet. "It's a budget that reduces and eliminates redundancy. It's a budget that's a lean budget."

Bush acknowledged that it would be difficult to eliminate popular programs but he said programs must prove their worth. "I'm very optimistic."

Joshua Bolten, Bush's budget director, said, "Are we going to get everything we asked for? No." But he predicted Congress would likely accept the administration's broad priorities. He said he entered the upcoming congressional budget battle with a "happy spirit."

House Democratic Leader Rep. Nancy Pelosi of California called Bush's budget "a hoax on the American people. 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."

Bush's budget proposal does not reflect the costs for overhauling Social Security by allowing younger workers to set up private investment accounts. Aides said accurate cost estimates could not be made since the plan is still being developed.

Bolten said the administration would soon be coming forward with a supplemental request for an additional $81 billion for operations in Iraq and Afghanistan. He said that request was reflected in the overall spending projections in Bush's budget for the current year and into 2006.

But he said including further additional spending for Iraq and Afghanistan "wouldn't be responsible" because it would represent guesses on what will be needed. Bolten also said that even if transition costs for Social Security had been included, the president would still be able to meet his goal of cutting the deficit in half by 2009 as a percentage of the total economy.

Bush's 2006 spending plan, for the budget year that will begin October 1, counts on a healthy economy to boost revenues by 6.1 percent to $2.18 trillion. Spending, meanwhile, would grow by 3.5 percent to $2.57 trillion.

The spending document projects that the deficit will hit a record -- in terms of dollars -- $427 billion this year, the third straight year that the red ink in dollar terms has set a record. Bush projects that the deficit will fall to $390 billion in 2006 and gradually decline to $233 billion in 2009 and $207 billion in 2010.

In his budget message to Congress, Bush said, "In order to sustain our economic expansion, we must continue pro-growth policies and enforce even greater spending restraint across the federal government."

Democrats complained that Bush was resorting to draconian cuts that would hurt the needy in order to protect his first term tax cuts that primarily benefited the wealthy.

"This budget is part of the Republican plan to cut Social Security benefits while handing out lavish tax breaks for multimillionaires," said Senate Democratic Leader Harry Reid, D-Nevada. "Its cuts in veterans programs, health care and education reflect the wrong priorities, and its huge deficits are fiscally irresponsible."

Democrats also contended that the budget masked the costs of some Bush initiatives such as making his first-term tax cuts permanent by only making deficit projections through 2010. The budget puts the cost of making Bush's tax cuts permanent at $1.1 trillion through 2015 but does not show how that would impact the deficit at that time.

"This budget paints a misleading picture by providing no deficit figures after 2010 and by omitting the full long-term costs of the president's policies on Social Security privatization, taxes and operations in Iraq," said Rep. John Spratt, top Democrat on the House Budget Committee.

Bush's budget proposed increasing military spending by 4.8 percent to $419.3 billion in 2006. However, even with the increase a number of major weapons programs, including Bush's missile defense system and the B-2 stealth bomber, would see cuts from this year's levels.

Bush's proposal would trim $5.7 billion over the next decade from government support programs for farmers, which would represent cuts to farmers growing a wide range of cuts from cotton and rice to corn, soybeans and wheat.

Overall, the administration projected saving $8.2 billion in agriculture programs over the next decade including trimming food stamp payments to the poor by $1.1 billion.

Other programs set for reductions include the Army Corps of Engineers, whose dam and other waterway projects are extremely popular in Congress; the Energy Department; several health programs under the Health and Human Services Department and federal subsidies for Amtrak.

About one-third of the programs subject to elimination are in the Education Department, including federal grant programs for local schools in such areas as vocational education, anti-drug efforts and Even Start, a $225 million literacy program.

In all, the president proposed $137 billion less over the next 10 years than previously forecast for mandatory programs with much of that occurring in reductions in Medicaid, the big federal-state program that provides health care for the poor, and in payments the Veterans Administration makes for health care. The administration proposed no savings for Medicare, the giant health care program for the elderly.

Many of the spending cuts in the plan are repeats of efforts the administration has proposed and Congress has rejected previously.