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Both Sides Fault Bush's Budget Plan

The $2.4-trillion election-year proposal embraces deficit spending but is meant to reassure conservatives with fiscal discipline.

February 03, 2004|Janet Hook | Times Staff Writer

WASHINGTON — President Bush unveiled a $2.4-trillion election-year budget Monday that promised a new effort to limit the growth of government but still embraced deficit spending for years to come.

The budget, which provides a window into what Bush would do if elected to a second term, calls for continuing the robust expansion of defense and homeland security spending that has been the hallmark of his administration.

Bush also called for consolidating one of the biggest accomplishments of his first term in the White House -- the tax cuts enacted in 2001. He proposed making permanent the sweeping cuts, which are to expire before the end of the decade

The budget is the opening shot of an election-year battle as Bush's proposals make their way through the Republican-controlled House and Senate. It will set up the debate between the parties, and will help Bush build support within his own party.

For conservative Republicans, Bush's budget is intended to show a renewed commitment to their cause of fiscal discipline. Many of them have been disillusioned with budget policies that they consider profligate. But the budget also includes increases for education and arts funding, which appeals to swing voters and moderate Republicans.

Bush built his new budget for the year that begins Oct. 1 around the goal of reducing this year's $521-billion deficit by half within five years -- mostly by imposing a virtual freeze on spending for everything but national defense, homeland security and federal benefits.

"The government must exercise fiscal responsibility by limiting spending growth, focusing on the results of government programs and cutting wasteful spending," Bush said in his formal budget message.

Some conservative critics remain unimpressed, saying Bush's budget does not go far enough to curb Medicare, Social Security and other big benefit programs.

"I see almost nothing good about this budget," said William A. Niskanen, chairman of the Cato Institute, a libertarian research group. "This is big-government conservatism."

Even if Bush succeeded in his proposal to reduce the deficit to $237 billion in 2009, the gap would still be bigger than in all but three years over the last generation. But the cuts Bush proposes -- including the elimination of 65 programs -- may go too far for many in Congress, where even Republicans warn that it is unrealistic to expect lawmakers to squeeze popular programs in an election year.

"It is all fantasy," said a senior House Republican aide.

What's more, the budget probably understates future deficits because it does not include funding for several initiatives that administration and congressional officials expect or hope to be enacted. Most notably, it includes no funding for military operations in Iraq and Afghanistan -- an expense that Pentagon officials said could exceed $50 billion in 2005.

The budget also makes no provision for Bush's idea of reforming Social Security to allow people to invest part of their payroll taxes in individual investment accounts, an initiative that could cost more than $1.24 trillion over 10 years for the transition to a new system. Although Bush is expected to campaign on the politically volatile issue, he is not pushing wary Republicans to act on it before the election.

"It's a subject of such great sensitivity and broad political interest that we need to get the political debate going on it before there's an actual legislative proposal sent up to the Hill," said Joshua Bolton, Bush's budget director.

Democrats criticized the budget for omitting many likely expenses, saying it undercut Bush's claim to be serious about reducing the deficit.

"This budget is neither credible nor realistic because it omits so many costly items," said Rep. John M. Spratt Jr. of South Carolina, the ranking Democrat on the House Budget Committee.

On the presidential campaign trail, Bush's Democratic rivals portrayed his budget as an advertisement for why voters should not reelect him.

"George W. Bush comes out of the White House to deliver his budget, and once again, all of America falls in a deep, dark shadow of deficit," said Sen. Joe Lieberman of Connecticut. "We can't afford another four years of the same destructive fiscal leadership."

Retired Gen. Wesley K. Clark said it laid bare Bush's priorities: "Tax cuts for the rich and tough luck for everyone else."

Bush's proposals could be substantially revised as Congress writes its budget this spring and implements it with spending and tax bills.

Bush portrayed this budget, like his last two, as driven by the exigencies of the war in Iraq and the struggle against terrorism.

"Our nation remains at war," Bush said. "This nation has committed itself to the long war against terror."

Although he has argued in previous years that balancing the budget should not be a top priority while the nation is at war and in a recession, he is now putting more emphasis on reducing the deficit, which he projects will peak this year at $521 billion.

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