President's '06 budget would boost Pentagon, cut farm payments

Saturday, February 5, 2005

WASHINGTON -- President Bush will propose a nearly 5 percent increase for next year's defense spending while calling for cuts in payments to farmers and work on a nuclear waste storage site in Nevada, according to documents and federal officials.

Bush also will propose boosting the size of Pell grants for low-income college students as he seeks to abolish a widely used college loan program and to shrink federal subsidies for banks that lend money to students.

Those details and others emerged Friday about the roughly $2.5 trillion budget for 2006 the president will ship Congress on Monday. Including a smaller defense boost than was planned a year ago, the proposals underscore how Bush is responding to a string of record federal deficits by paring expenditures across the breadth of government.

"The people in Congress on both sides of the aisle have said, 'Let's worry about the deficit,"' Bush said Friday in Omaha, Neb., as he barnstormed the country for his Social Security plan. "I said, 'OK, we'll worry about it again.' My last budget worried about it, this budget will really worry about it."

Bush administration officials also revealed new details of some health proposals the president will unveil. Among them, Bush will propose $3,000 tax credits to encourage people who don't have public or employer-provided health insurance to buy coverage. The plan, which would cost $74 billion over the next decade, would be part of $140 billion in tax breaks and expenditures aimed at improving health care over the coming 10 years.

Administration officials had already said Bush will seek $60 billion in Medicaid savings over the coming decade. These will come largely from smaller reimbursements to pharmacies, reducing payments to other health providers, and making it harder for parents to qualify for coverage if their assets have been shifted to their children.

According to documents obtained by The Associated Press, Bush will propose $419.3 billion for the Pentagon for next year, a 4.8 percent boost over this year. That total, however, is $3.4 billion less than he planned a year ago for fiscal 2006, which begins Oct. 1.

Taking a major hit are his proposals for procuring weapons and other items. Such spending with total $78 billion -- $2.4 billion less than he projected spending in 2006 a year ago.

Despite budget pressures, it is unclear how Bush's defense plan will play in Congress. The top Democrat on the House Armed Services Committee, Rep. Ike Skelton of Missouri, has expressed concern that Bush won't seek enough for U.S. troops and their families.

None of the figures include expenditures for the wars in Iraq and Afghanistan. Bush plans in a few days to ask for another $80 billion -- in a separate spending bill -- for those conflicts. Congress last summer provided $25 billion for the wars in 2005.

In the longer run, Bush envisions defense spending grow steadily after next year, hitting $502.3 billion by 2011.

The documents said Bush's defense budget is designed "to implement lessons learned from ongoing operations in the war" -- including more flexible military forces and beefed up special operations forces, intelligence and communications.

Weapons systems that would get less next year than in 2005 include the Aegis destroyer, the F22 Raptor fighter and the C17 cargo aircraft. The Apache helicopter and the Army's future combat system would see increases.

In other areas:

--Bush will seek about $650 million for the Yucca Mountain nuclear waste project north of Las Vegas, said officials speaking on condition of anonymity. That is about half what once was envisioned for 2006. Though Bush and Congress approved the project in 2002, opposition has continued and a federal court has rejected proposed radiation safety standards. New standards are being developed.

--Bush will propose paring farmers' federal payments and other agriculture supports by $587 million in 2006 and $5.7 billion over the next decade. Payments to producers would drop by 5 percent, and the current $360,000 annual ceiling on those payments would drop to $250,000, said a senior administration official speaking on condition of anonymity.

Two-thirds of the savings would come from cutting direct payments to crop and dairy farmers. Even without the cuts, aid to farmers was already projected to drop from $24.06 billion this year to $19.64 billion in 2006 because stronger prices have pushed down government payments. Bush's proposal would push overall spending down further to $19.05 billion, and a battle with farm-state lawmakers is possible.

--Bush would raise the maximum Pell Grant for students from $4,050 to $4,550 over five years, or $100 a year. Along with other changes, Bush's financial aid plan would cost about $28 billion over 10 years.

To help pay for it, Bush would shrink subsidies the government pays banks to encourage them to make low-interest loans, and to the agencies that insure the loans for the lenders, education department officials said.

Bush would also phase out Perkins loans, 673,000 of which were made to graduate and undergraduate students last year. Officials said the plan would save $6 billion over 10 years.


Associated Press writer Alan Fram contributed to this report.

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