- "Homeland security and the military will be the
budget's biggest winners with rises of nearly 10 percent and 7 percent
respectively."
-
- WASHINGTON (Reuters) -- Facing
a record $521 billion deficit, President Bush proposed a $2.4 trillion
election-year budget on Monday that will cut dozens of domestic programs
and set deficit-reduction goals that even fellow Republicans are skeptical
he can meet.
-
- Bush has overseen a dramatic worsening of the budget
picture after inheriting a record surplus. He hopes to improve his fiscal
image before the November election by promising to reduce the deficit by
a third next year and in half by 2007.
-
- The White House still expects the shortfall to total
$1.35 trillion through 2009, and for government debt to rise from $8.1
trillion to $10.5 trillion.
-
- "The government must exercise fiscal responsibility
by limiting spending growth, focusing on the results of government programs,
and cutting wasteful spending," Bush said.
-
- But fiscal conservatives in both parties doubt Bush can
deliver on his deficit reduction promises.
-
- His fiscal 2005 budget left out the tens of billions
sure to be needed next year to keep U.S. troops in Iraq and omitted a fix
for provisions in the tax code that will put a big burden on many middle-class
households.
-
- Homeland security and the military will be the budget's
biggest winners with rises of nearly 10 percent and 7 percent respectively.
-
- Defense contractors including Lockheed Martin Corp.,
Boeing Co., Northrop Grumman Corp.,, Raytheon Co. and General Dynamics
Corp. stand to benefit as Bush's $401.7 billion military budget increases
spending on missile defense and on modernizing the Army.
-
- Hardest hit were the departments of Agriculture and Transportation,
the Environmental Protection Agency, the Small Business Administration,
and the Corps of Engineers, with cuts ranging from 1 percent for the Commerce
Department to as much as 49 percent for the General Services Administration.
-
- To placate conservatives threatening a revolt, growth
of discretionary spending -- outside of homeland security and defense --
would be capped at 0.5 percent. Because that is well below the inflation
rate, it amounts to a cut in domestic programs and the lowest growth since
1993.
-
- In a tacit acknowledgment that deficits are here to stay,
Bush set the goal of bringing this year's record $521 billion shortfall
down to $364 billion in fiscal 2005, to $241 billion in 2007 and then to
$237 billion in 2009. There is no talk of surpluses in the foreseeable
future.
-
- ELECTION-YEAR FIGHT
-
- Already members of both parties are bracing for a bitter
fight, and many question whether any budget deal can be reached.
-
- Democrats scoffed at Bush's plan to stem the red ink
while asking Congress to make permanent his tax cuts. "It's the most
anti-family, anti-worker, anti-health care, anti-education budget in modern
times, and it doesn't deserve to pass," said Sen. Edward Kennedy,
a Massachusetts Democrat.
-
- Fiscal conservatives accused the White House of relying
on gimmicks, like stretching the definition of homeland security to sidestep
its own spending limits.
-
- Keeping troops in Iraq and Afghanistan could bloat the
deficit by at least $40 billion in 2005 alone.
-
- Even a spending freeze in areas targeted by Bush would
cut the deficit by just $3 billion, according to some Republicans.
-
- Conservatives want much deeper cuts after the White House
acknowledged its prescription drug plan would cost one-third more than
initially advertised. Spending under Bush has grown at the fastest pace
since the Johnson administration of the mid-1960s, they complain.
-
- "He's got to get really serious about budget control
and really defend and enforce this budget if he's going to hold conservatives
with him in the November elections," said Stephen Moore, president
of the Club for Growth, a politically powerful conservative group.
-
- While homeland security and military spending will rise,
more than 65 government programs will be cut.
-
- Some tax breaks favored by Republicans will also be reined
in, including some for energy production and business investment.
-
- Bush will delay budget-busting reform of the alternative
minimum tax, which requires a growing number of middle-income taxpayers
to calculate their taxes in two ways and pay the higher bill.
-
- Instead, Bush will propose a one-year extension of the
AMT provisions. As with Iraq, he has decided to push back the day of reckoning
until after the election.
-
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-
- http://www.reuters.com/newsArticle.jhtml;jsessionid=NKZRUV5TTOTB
KCRBAEZSFEY?type=businessNews&storyID=4263242
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