Tax cuts, terror fight top Bush spending list, campaign

WASHINGTON -- President Bush is sending Congress a $2.4 trillion budget that emphasizes the major themes of his re-election campaign -- bolstering the military to fight terrorism, strengthening homeland security and making his sweeping tax cuts permanent.

But the spending plan released today, covering the budget year beginning Oct. 1, is constrained by deficits projected to top a half-trillion dollars this year.

Bush's blueprint calls for spending $2.399 trillion and collecting $2.036 trillion in revenue, leaving a deficit of $363 billion for 2005, according to Republican officials who spoke on condition of anonymity.

The president wants to boost defense spending by 7 percent, increase spending on homeland security by 10 percent and bolster counterterrorism activities with an 11 percent increase for the FBI.

"We will devote the resources necessary to win the war on terror and protect our homeland," Bush said in his weekend radio address. "America will not let down its guard."

For the current budget year, Bush projects the deficit will reach $521 billion, a record in dollar terms. It is a figure he proposes to cut to $237 billion in 2009.

Medicare cost jump

The deficits reflect in part the jump, from $400 billion to $534 billion, in the administration's estimate of the 10-year cost of the Medicare prescription drug benefit Congress passed in November.

Bush's latest spending plan starkly de-picts how steep the deficit slide has been since 2001, the last of four straight years of government surpluses.

Democrats have sought to make these deficits an issue in the presidential campaign.

"He's promising a trillion-dollar tax cut and a trip to Mars. And he has a half-trillion-dollar deficit. Where do these Washington people think this money comes from?" former Vermont Gov. Howard Dean said Sunday on NBC's "Meet the Press."

The chairman of the Democratic National Committee charged that the administration's higher Medicare estimate would become a campaign issue along with the administration's justification for the war in Iraq.

"The president has misled us day in and day out on every single issue," Terry McAuliffe told ABC's "This Week."

The Congressional Budget Office has estimated that the president's proposal to make the 2001 and 2003 individual tax cuts permanent would cost an additional $1 trillion on top of the original 10-year price tag of $1.7 trillion. All of Bush's tax cuts are currently scheduled to phase out by 2010.

The budget Bush is sending to Capitol Hill also contains money to undertake a costly program to return Americans to the moon as early as 2015 and eventually send a mission to Mars.

The Mars proposal shows the constraints that soaring deficits impose on such bold initiatives. Bush asks for only $1 billion in new money over the next five years with an additional $11 billion coming from a reallocation of funds from other NASA programs.

Bush proposes to bolster spending for his education goals, job training at community colleges and support for the arts. But all these programs are structured in such a way that they carry only modest budget increases.

To demonstrate his commitment to trimming the deficit in half in five years, Bush proposes to hold the growth in general government programs to just 3.9 percent next year; outside of military and homeland security, the increase is less than 1 percent.

But it is uncertain how much election-year success Bush will have in persuading lawmakers to agree to keep spending below the level of inflation for scores of government programs.

"Many in the president's own party are becoming concerned about the size of the deficits and the growth of government spending, but it will be very difficult to hold spending increases outside of defense and homeland security to less than 1 percent in an election year," said Robert Reischauer, president of the Urban Institute and former head of the Congressional Budget Office.

Regardless of what happens in Congress, budget analysts expect Bush will promote on the campaign trail his spending priorities of permanent tax cuts and increases in popular programs.

"An election-year budget doesn't have to be enacted. It just has to be proposed so the president can talk about it all year long," said Stanley Collender, managing director for Fleishman-Hillard's "Federal Budget Report."