Posted on Tue, Feb. 08, 2005


'Lean budget' fattens defense

Defense and counterterrorism are big winners in President Bush's proposed budget for 2006, but many domestic programs would take a hit.


WASHINGTON - President Bush on Monday sent Congress a nearly $2.6 trillion federal budget that would boost spending for defense and national security while scaling back or eliminating hundreds of domestic programs. The 2006 spending plan calls for the biggest cuts in domestic expenditures since the Reagan years, but would still result in a $390 billion federal deficit.

Many Americans would feel a direct impact from the president's proposed cuts.

Airline passengers would pay $3 to $5 more each way to help cover the cost of improved airport security. Train passengers would face higher ticket prices or reduced service because Bush would end federal subsidies for Amtrak. Farmers would lose about $587 million in agriculture subsidies. Military veterans would pay more for prescription drugs. Agencies targeted for some of the biggest cuts include the Environmental Protection Agency, the Education Department, the Health and Human Services Department, and the Housing and Urban Development Department.

Bush called his spending proposal a ''lean budget'' that funnels tax dollars to the most vital programs.

Overall spending for discretionary government programs covered by the annual budget process would increase by about 2.1 percent -- slightly below the projected 2.3 percent inflation rate -- but the money would be allocated unevenly. Programs that aren't related to defense or homeland security would get a 1 percent cut.

About 150 programs would be eliminated or dramatically reduced, but administration officials declined to list them, and Congress is sure to feel differently. Bush targeted 65 programs for elimination last year; all but four survived.

But expenditures for Social Security, Medicare, Medicaid and other so-called mandatory ''entitlement'' programs that are essentially outside the budget process -- and that constitute about half of all federal spending -- would keep growing at rates well above most other programs.

''Our priorities are winning the war on terror, protecting our homeland, growing our economy. It's a budget that focuses on results,'' Bush said at a meeting with his Cabinet. ``I fully understand that sometimes it's hard to eliminate a program that sounds good.''

Although Bush said he was on track to cut the deficit in half by the time he leaves office, his projections don't include spending in Iraq and Afghanistan beyond this year, the long-term cost of extending his tax cuts or any costs of his plan to let workers divert some of their Social Security taxes to personal investment accounts, which alone is projected to cost trillions.


Congressional Democrats called the president's budget a hoax that masks the true outlook for federal deficits.

''This budget continues the wrong choices and misplaced priorities that have created record deficits and rising debt over the last four years,'' said Rep. John Spratt of South Carolina, top Democrat on the House Budget Committee. ``By any realistic accounting, the president's policies make the deficit problem worse, not better.''

Bush, who inherited a $236 billion surplus and a declining economy upon taking office in 2001, hopes to put the government on a path to a $207 billion deficit by fiscal 2010. The government expects to end this fiscal year $427 billion in the red.

That's a record in dollar terms, but not as a percentage of the economy -- considered a more important gauge of the government's financial health.

The budget would accelerate the shift in federal priorities that began with the terrorist attacks on Sept. 11, 2001. Four years later, the threat of terrorism influences spending across the board.

Bush's plan to increase defense spending by about 5 percent next year would bring the total increase since 2001 to 41 percent. The $419.3 billion defense budget for 2006 would consume about half the money that Congress has available for programs covered by the annual budget process. Funding for homeland security, which already has tripled since 2001, would increase by 8 percent next year, to nearly $50 billion. About $34.2 billion would go to the Homeland Security Department, but more than two dozen other agencies also have responsibility for homeland-security programs.

Social Security, Medicare, Medicaid and other so-called mandatory programs would keep consuming about half of all the tax dollars that Americans send to Washington. In addition, interest on the federal debt would take a $211 billion bite out of the budget, more than twice the combined amount allocated for the EPA, the Energy Department, federal law enforcement and foreign aid.

Bush offered no new details on his plans for overhauling Social Security, but said he hoped to save $45 billion over 10 years in Medicaid, a federal-state health care program for the poor. Even with the changes he advocates, Medicaid spending would increase by about 7.2 percent a year.


The proposed savings would put new burdens on state governments while many of them are struggling to avoid deficit spending. The National Governors Association said Bush's plan could force cuts in Medicaid services to the elderly and people with disabilities.