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Bush Proposes $2.77 Trillion Budget Focused on Defense

By David E. Sanger


President Bush proposed a $2.77 trillion budget on Monday calling for increased spending on defense and homeland security and substantial cutbacks in domestic programs as disparate as education, farm subsidies and the national parks. The budget bears all the hallmarks of the Bush presidency, making clear that his overriding priorities are national security and making permanent the tax cuts passed by Congress in recent years.

But it is unclear how much appetite Congress will have in a critical midterm election year for further spending cuts, including a new formula Bush is proposing to limit the growth in Medicare spending, at a savings of $36 billion over the next five years. And Democrats said Bush’s emphasis on tax cuts had created what in their view was a false choice between addressing the budget deficit and maintaining necessary social programs.

The budget will pose particularly agonizing choices for the Republican majority. Republicans are caught between pressure from conservatives to make real headway in limiting the size and role of the federal government and the political reality that votes to cut programs that touch the lives of millions of people could make them especially vulnerable to Democratic attacks in the fall.

The budget is chockablock with proposals that could give Republicans pause, like one to scale back programs that help the poor insulate their homes.

While presidential budgets amount to an opening offer in a yearlong negotiation with Congress, the four hefty volumes released by the administration Monday underscored how radically the realities and politics of government spending have changed during Bush’s presidency.

As the president was taking office in January 2001, the Congressional Budget Office projected that the federal budget would run a surplus in excess of $5.6 trillion between 2002 and 2011. Now, after tax cuts, a terror attack, a recession and a war in Iraq that has proven far more expensive than the administration projected, the budget office projects deficits for the five years starting Oct. 1 totaling more than $2.2 trillion.

Moreover, Bush’s budget shows the tension between his promise, since he began seeking the presidency, to act as a “compassionate conservative” and the fiscal pressures created by his tax cuts and support for added spending on national security.

The main proposals contained in the budget include:

— An increase in military spending of $28.5 billion, or 6.9 percent, to $439.3 billion, and an increase in financing for domestic security programs of $1 billion, or 3.3 percent, to $33.1 billion.

— A reduction in spending on all other annually appropriated domestic programs of $2.2 billion, or one-half of 1 percent, to $398.3 billion. That reduction encompasses cutbacks in the budgets of 12 Cabinet agencies, including education, agriculture, housing and environmental protection.

— Tax incentives to encourage people to save more to cover their own medical costs and a mechanism intended to prod Congress to hold down the growth of costs in Medicare.