President Sends '06 Budget to Congress
Programs Are Cut, But War Costs Are Not Included spacer

"The president's budget is a hoax on the American people," said House Minority Leader Nancy Pelosi (D-Calif.). "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." The spending blueprint, she added, "is fiscally irresponsible, morally irresponsible and a failure of leadership."

Interest groups rushed out statements denouncing aspects of the budget. Families USA, a health care consumer group, said that "many seniors, children and the sickest people in Medicaid will be devastated." Gerald W. McEntee, president of the American Federation of State, County and Municipal Employees, said,

"There is nothing moral about putting more children at risk for abuse and neglect." Joseph G. Estey, president of the International Association of Chiefs of Police, said Bush "talks about homeland security but then guts funding for the very programs that help secure our homeland."

Republicans either stayed silent or produced mixed evaluations. In separate statements, House Speaker J. Dennis Hastert (Ill.), House Majority Whip Roy Blunt (Mo.) and House Budget Committee Chairman Jim Nussle (Iowa) all used the same language to describe Bush's plan as a "starting point."

Senate Budget Committee Chairman Judd Gregg (R-N.H.) praised Bush's focus on discipline and said he would follow "the concepts" of the budget proposal, while adding, "We don't have to follow those programs." Sen. Susan Collins (R-Maine), chairman of the Homeland Security and Governmental Affairs Committee, was more blunt, saying that when it comes to "first responders," the Bush budget "falls short."

The White House expressed confidence that Congress would fall in line at least in terms of the bottom line, much as it did last year. "Are we going to get everything we ask for?" asked Joshua B. Bolten, director of the Office of Management and Budget. "No. . . . But I think we will get a lot of them."

Relying on the nation's stronger economic performance, the Bush budget would increase overall spending by 3.6 percent in the fiscal year starting Oct. 1 and embody a strong commitment to security. An extra 4.8 percent would be devoted to the Defense Department for a cumulative 38.6 percent increase over the past five years, and the Department of Homeland Security would receive almost 7 percent more, much of it coming from a $3-per-flight tax increase on airline tickets. State Department and foreign aid spending would go up 15.7 percent.

To offset those increases, the rest of the discretionary budget would fall almost 1 percent, with programs for health, education, the environment, farming and housing taking the biggest hits. Nine of the 15 Cabinet departments would lose funding, including Housing and Urban Development (11.5 percent), Agriculture (9.6 percent), and Transportation (6.7 percent).

The Environmental Protection Agency would be cut 5.6 percent and the Centers for Disease Control and Prevention by 12.4 percent, and the White House said it would take a 1.7 percent reduction in its spending. Altogether, about 150 programs would be eliminated or drastically scaled back, one third of them education-related.

But even amid the cutbacks, some presidential priorities would remain flush. Youth programs advocating sexual abstinence would increase by $39 million, to $206 million, while $161 million would be set aside for grants to faith-based organizations to "mentor children of prisoners and provide a safe place for young pregnant and parenting mothers." In another sign of the times, financing for the apprehension of Army deserters would double.

The budget plan relies on substantial savings in entitlement programs, particularly Medicaid, which it envisions cutting by $60 billion over the next 10 years in what the administration described as a crackdown on states abusing the program. The cuts, offset by $15 billion in new Medicaid spending, would force state governments to either absorb the expenses or eliminate some services.

But the cost of Medicare appeared to be soaring beyond earlier expectations. The Medicare prescription drug benefit Bush pushed through in his first term will take effect in 2006 and cost $395 billion over five years, a steep increase from the original projection of $400 billion over 10 years. Last summer, the administration boosted the estimate to $534 billion over 10 years. At the rate outlined in yesterday's budget, that would mean the program would cost at least $256 billion more by 2016.

Bush disputed suggestions that his budget cuts would fall hardest on impoverished Americans, saying he targeted ineffectual or redundant spending. "The important question that needs to be asked for all constituencies is whether or not the programs achieve a certain result," he said. "Have you set goals, and are those goals being met? And the poor and disadvantaged absolutely ought to be asking that question too."

Acknowledging that the war in Iraq would make it difficult to reduce the deficit much in the coming year, Bolten said the budget sets a path to slicing it to $233 billion by 2009, or 1.7 percent of the gross domestic product, lower than the average proportion of the economy in modern history. Even adding in the beginning of transition costs for Bush's Social Security plan would increase that to only $256 billion in 2009, officials said.

"Our expectation is that we're still on a good path," Bolten said. "We don't know yet what additional spending is likely to be outlaid in '06 and adding to the deficit number, but . . . a year from now at this time I think we will see that declining path coming true and looking very solid out through the course of the budget window."

The budget documents, though, indicate that Bush's policies would contribute to the deficit. Without any of the spending or revenue policy changes included in the Bush plan, the deficit in fiscal 2006 would be $361 billion instead of $390 billion, the documents show. Over the next five years, the impact of Bush's policy proposals would add a cumulative $42 billion in deficit spending.

Staff writers Mike Allen and Ceci Connolly contributed to this report.

OMB Deficit Projections

More Data Note: Numbers beyond 2004 are estimates. 2005 estimates include a portion of the $80 billion supplemental war spending.

By Peter Baker
Washington Post Staff Writer
Tuesday, February 8, 2005; Page A01

President Bush sent Congress a $2.57 trillion federal budget yesterday that is designed to project U.S. power and priorities overseas while squeezing government programs at home but would not make a sizable dent in the nation's record deficit next year, despite politically painful cuts.

While pumping more money into the Pentagon and foreign aid programs, the budget for the 2006 fiscal year would slash funding for a broad array of other government services as part of the deepest domestic reductions proposed since the Reagan era. In the long term, the fiscal plan envisions holding non-security discretionary spending flat for the next five years to fulfill Bush's promise to cut the deficit in half by 2009.

Yet, because of the cost of the continuing wars in Iraq and Afghanistan, documents released yesterday make it clear that the administration may make little if any progress in curbing the red ink in the short run. The budget projects the deficit falling from an all-time high of $427 billion this year to $390 billion next year, but does not count the warfare expenses it expects in 2006. If the administration continues to spend at current rates, it will need more than $37 billion for the conflicts in 2006, leaving the deficit undiminished.

Administration officials maintained they would still meet the president's deficit goal by 2009 with sharper reductions in spending in the next few years, particularly as some proposed policy restructuring begins to yield savings. Bush, who inherited budget surpluses when he took office four years ago, depicted the spending plan as "a lean budget" and pronounced himself "upbeat" that a skeptical Congress would follow his lead.

"It is a budget that sets priorities," the president told reporters after meeting with his second-term Cabinet for the first time. "Our priorities are winning the war on terror, protecting our homeland, growing our economy. It's a budget that focuses on results. Taxpayers in America don't want us spending their money on something that's not achieving results."

But as Bush targeted popular programs for farmers, low-income children and police departments, the reaction on Capitol Hill immediately signaled a tough slog for his budget. Democrats leapt to attack, and Republicans responded cautiously with an eye on their favorite programs facing the budget ax. Virtually no major congressional figure embraced the budget without reservation, and even some Republicans fretted because it did not include the transition costs envisioned by Bush's plans to restructure Social Security.

OMB Estimates
Note: Numbers beyond 2004 are estimates. Budget estimates after 2005 do not include any supplemental war spending.