Seeking spending restraint unseen since the 1980s, President Bush on Monday proposed a $2.57 trillion federal budget that cuts spending for education, farming and numerous other domestic programs while boosting defense spending at home and abroad.
In his blueprint for 2006, Bush said he wants to cut spending by just under 1 percent for programs outside of defense and security outlays where Congress has discretion to set priorities.
At the same time, the president asked for increases of about 5 percent for both national defense and homeland security, a buildup in defense spending that would total 41 percent on his watch if Congress follows his lead.
The increased spending for defense and homeland security does not include the costs of military operations in Iraq and Afghanistan, with the White House planning to seek an additional $81 billion later this month for those conflicts. Yet Bush said his new budget would keep Washington on track toward his promise of cutting the federal budget deficit in half by the end of his term in 2009.
“Our priorities are winning the war on terror, protecting our homeland, growing our economy,” Bush said in announcing his budget plan. “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.”
The president’s proposal is the start of a monthslong struggle leading to congressional approval of new spending plans by October, with the White House suggesting that the “political theater” already has begun.
While the president’s strongest ally on Capitol Hill, House Speaker Dennis Hastert (R-Ill.), hailed Bush’s budget as “a good starting point” with “common-sense” spending restraint, Senate Minority Leader Harry Reid (D-Nev.) denounced it as “irresponsible” and “misleading.”
Joshua Bolten, director of the White House’s Office of Management and Budget, said at a briefing for reporters, “I imagine you already have gotten some `dead-on-arrival’ comment.”
Yet Bolten expressed optimism that the president can fulfill the broad outline he has drawn, noting that when Bush asked Congress to hold non-security discretionary spending to a 1 percent increase last year, it did.
For 2006, Bolten said, Bush is seeking a 0.7 percent cut–the first president since Ronald Reagan to propose rolling back discretionary spending.
“The attitude here right now is actually kind of optimistic,” Bolten said. “It’s part of the political theater, if you will, to declare `DOA’ if you’re on the other side. . . . Are we going to get everything we ask for? No. Are we going to get all the program cuts? No. Are we going to get all the spending increases? No. [But] I actually enter into this with a happy spirit.”
Counts on growing economy
Bush based his spending plan on an expected gain of more than $100 billion in tax revenue flowing from an expanding economy next year, while asking Congress to make permanent nearly $2 trillion in tax cuts over the coming decade that Congress enacted on a temporary basis during his first term. The White House maintains those cuts have fueled economic growth, which eventually also will help reduce annual budget deficits.
Yet the new budget would demand a price from some citizens, such as a near-doubling of the tax that airline passengers pay for homeland security. The White House maintains that the flying public should bear the costs of protecting airlines from terrorism.
Bush proposed to more than double the fee for a single leg of a trip from $2.50 to $5.50. For passengers traveling on multiple legs, the fee would rise from $5 to $8. Bush proposes to raise $2 billion that way for a $50 billion homeland security budget that encompasses many agencies.
The budget also would curtail services for the disadvantaged, with the White House targeting Medicaid for the impoverished and elderly for the greatest share. The president proposed cutting about $60 billion from Medicaid over the next decade, part of an overall $137 billion in spending on mandatory programs that Bush is seeking to trim.
Bush’s tightest budget yet
The president’s plan calls for spending restraint in numerous other areas in what amounts to the tightest of the five budgets he has sent to Congress. In all he is seeking to eliminate more than 150 programs while curtailing spending in many others, to save a total of $20 billion.
While Bush proposed spending $1.5 billion to expand his No Child Left Behind Act into high schools–requiring the same testing as measures of progress there that the law now requires of elementary and middle school students–the budget calls for cutting $1.2 billion in federal spending for vocational programs.
Two other educational programs drawing $425 million this year–TRIO Upward Bound and TRIO Talent Search–would disappear under Bush’s 2006 budget plan. The president also proposed cutting another $2.7 billion in education spending.
In addition, Bush called for a cut in federal farm subsidies, a plan that would slash direct payments to farmers by 5 percent and impose a $250,000 annual cap on subsidy payments. The current limit is $360,000 a year.
Bush proposed cutting the Environmental Protection Agency budget by 6 percent, to $7.57 billion, and trimming that of the Interior Department by about 1 percent, to $10.8 billion.
Most of the EPA cuts would fall on a program to upgrade local sewage and storm water projects, with Interior forfeiting land and water conservation funding. Bush proposed elimination of the Wildland Rural Fire Assistance program and Jobs in the Woods program.
“I fully understand that sometimes it’s hard to eliminate a program that sounds good,” Bush said. “But by getting people to focus on results, I was saying to members of Congress, show us the results as to whether or not this program is working. I think we’ll get a pretty good response.”
At the same time, Bush proposed new spending on his own favored programs, including a $150 million increase over the $235 million budgeted this year for social services offered by faith-based and community groups. That includes $50 million for prevention of gangs.
Even as spending for Iraq and Afghanistan pushes this year’s budget deficit to a projected record $427 billion, Bush said he can meet his promise of cutting the deficit in half by the end of his term.
However, that promise is based on a deficit that was projected to peak at $512 billion last year, a level never reached. It totaled $412 billion.
“There are tough fiscal challenges ahead,” said Hastert, calling Bush’s plan “a good starting point for the Congress to begin its work so together we can overcome the fiscal challenges on the road ahead, lower the deficit and instill more common sense to our nation’s budget.”
Reid blasts missing costs
Reid, the Senate Democratic leader, called Bush’s budget “as irresponsible as it is misleading” for overlooking the costs of the conflict in Iraq, or the cost of the new Social Security plan Bush has proposed. The president wants to allow younger workers to take as much as 4 percentage points of the payroll taxes they pay for Social Security and invest the money in government-run personal savings accounts.
The White House said that could take $736 billion from Social Security from the inception of his plan in 2009 through 2015. That would result in a greater federal budget deficit than what Bush has projected for 2009 and beyond, Bolten acknowledged.
Taking into account Iraq, the president’s plan for Social Security and costs of making tax cuts permanent, Reid said “you get the true cost of the largest deficit in our nation’s history.”
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WINNERS
DEFENSE
4.8% increase to $419.3 billion
Increases military pay by 3.1 percent and civilian pay 2.3 percent.
HOMELAND SECURITY
7% to $34.2 billion
Includes $37 million for 210 Border Patrol agents, creates nuclear detection office.
STATE DEPARTMENT
15.6% increase to $32.7 billion
Provides $22.8 billion for military and economic foreign aid and $5.7 billion for nations on the front line against terrorism.
LOSERS
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AGRICULTURE
9.6% decrease to $19.4 billion
Cuts $587 million from farm price supports, mainly by cutting subsidies 5 percent.
TRANSPORTATION
1% decrease to $57.5 billion
Eliminates Amtrak’s operating subsidy.
HEALTH AND HUMAN SERVICES
1.2% decrease to $67.2 billion
Slows the growth of Medicaid by $45 billion over the next decade. Cuts back funding for CDC, Administration on Aging, and Administration for Children and Families.
MIXED BAG
EDUCATION
1% decrease to $56 billion
– Adds $1.5 billion to expand No Child Left Behind into high schools and increases Pell Grant funding by 45 percent.
– Eliminates 48 programs, reduces spending on 16 others.
JUSTICE
1% increase to $20.3 billion
– FBI budget goes up 11 percent to $5.7 billion, including 468 new agents.
– Community-Oriented Policing Services (COPS) would be cut from $499 million to $22 million.
NOT INCLUDED
Social Security: Transactional costs for the proposed privatization of the program aren’t included.
Wars in Iraq and Afghanistan: Bush is expected to ask for another $81 billion to run the conflicts.
Sources: AP, U.S. Office of Management and Budget
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HIGHLIGHTS BY DEPARTMENT
ENERGY
– The budget would shut down federal support for oil and gas research programs, request funds for a nuclear waste repository in Nevada, expand research into clean-coal technology and provide $67 million to find ways to store climate-changing carbon emissions.
– Money for environmental cleanup at Cold War-era nuclear weapons sites would be cut by $779 million, to $6.5 billion. About $4 million is requested for research, but not development, of a “bunker-buster” nuclear warhead, a program Congress has rejected.
– The budget calls for nearly $1 billion for nuclear non-proliferation programs, a 20 percent increase, including additional money for safeguarding nuclear materials in Russia and $50 million to expand the “megaports” security program to screen U.S.-bound cargo shipments at major seaports.
VETERANS
– After four years of increases in the VA budget, President Bush wants veterans to start picking up more of the tab. He asks veterans who have the highest incomes among those seeking VA health care and who do not have service-connected illnesses or injuries to pay a $250 annual fee. Bush also wants to increase prescription co-payments for such veterans from $7 to $15 for a 30-day supply. More than 2 million veterans could be affected.
HUD
– Would eliminate Community Development Block Grant programs, funded at $4.7 billion in 2005. That is part of an administration proposal to consolidate 18 community development programs from various agencies into a new $3.7 billion economic development program for distressed communities to be overseen by the Commerce Department.
COMMERCE
– The major reason for the proposed spending increase is the addition of the $3.7 billion economic development program for distressed communities. That program would consolidate 18 federal programs, including the Community Development Block Grants program now run by the Department of Housing and Urban Development.
HEALTH AND HUMAN SERVICES
– Existing law sets spending for Medicare at $340 billion, a 17 percent increase over last year, mostly for the new prescription drug benefit. Bush proposes no significant increases over that amount.
LABOR
– The Office of Disability Employment Policy would see its funding reduced from $47 million to $28 million.
– The 2006 budget also includes $7 million to fight fraud and corruption in labor unions. Money would be used to beef up audits help hire 48 new auditors, and investigate and combat embezzlement of union money.
EDUCATION
– Would end 48 programs and reduce spending on 16 others to free $4.7 billion for other priorities. A third of the federal programs President Bush promised to cut in his budget are in the Education Department. All federal spending on vocational education, $1.2 billion, would be eliminated and redirected toward other high school initiatives.
– The start of Bush’s second-term school agenda has two big themes: expanding his No Child Left Behind law in high schools, and overhauling federal aid for college students. But to pay for it, Bush is calling for major cuts, too, and Congress may balk.
Overall education spending would drop slightly in 2006 after increasing yearly during his first term.
TRANSPORTATION
– Would eliminate Amtrak’s operating subsidy and set aside $360 million to run trains along the Northeast Corridor if the passenger rail service ceases operating; Amtrak received $1.2 billion this year in operating subsidy and capital investment. Bush has consistently proposed cutting Amtrak funding, and Congress just as consistently has given the rail service close to what it says it needs to keep running.
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DEFENSE
– Does not include much of the money needed to fund the wars in Iraq and Afghanistan, which are being paid for with extra, or supplementary, budgets that are expected to total more than $100 billion this year. Further supplemental requests are expected in 2006.
– The budget would add people and money to the Special Operations forces to support the global war on terrorism and would accelerate the restructuring of the Army while creating two Marine infantry battalions.
EPA
– Low-interest loans to states for water quality protection projects would drop by a third, to $730 million. That would mean less money to treat wastewater, reduce pollution from non-specific sources and manage watersheds and estuaries.
HOMELAND SECURITY
– Would increase Border and Transportation spending by 10 percent, to $16 billion, including $37 million for 210 new Border Patrol agents.
STATE
– Key goals include supporting Iraq and Afghanistan to make a transition to democracy and aiding key partners in the war on terrorism, such as Turkey, Jordan, Pakistan, Indonesia and the Philippines.
– Afghanistan would receive $1 billion in reconstruction aid. Iraq would get $360 million for various programs, including political institutions and agricultural development, but reconstruction would be funded with $18.4 billion approved two years ago by Congress.