Bush’s Spending Plan Would Leave Near-Record Deficit

WASHINGTON _ President Bush, facing his final go-around on spending with a Democratic-run Congress during this presidential election year, on Monday unveiled a $3.1 trillion budget for 2009 that boosts defense spending and pares Medicare costs while leaving a near-record deficit.

It is unlikely that Bush will win all of what he is seeking in the budget, with Republicans and Democrats grappling for control of the White House. However, the president and Congress already are moving toward agreement on a tax-relief plan to stimulate the economy _ and that is certain to sharply increase a federal budget deficit that had fallen from a record high in 2004.

“We’ve made a determination to drive up the deficit in order to stimulate the economy,” said Jim Nussle, Bush’s budget director. “I’d much rather work with a balanced budget … but I also would much rather make sure that our country is protected.”

The spending plan proposed by the White House envisions a 7.5 percent boost in defense spending, while acknowledging that the full costs of the wars in Iraq and Afghanistan are not included. As it stands, the proposal represents a 70 percent increase in defense spending during Bush’s two terms.

The Bush blueprint also asks doctors and hospitals to hold the line on what they charge the elderly for medical care, in a bid to slow the expected increase in spending on Medicare next year from 7.2 to 5 percent. This and other measures would save $178 billion over the next five years, averting a financial crisis down the road.

The budget also takes into account something that the Republican president and Democratic-controlled Congress already have agreed to in principle: offering individuals, families and businesses about $145 billion in tax relief this year in an attempt to spur the economy.

The combination of all this at a time of slowing economic growth augurs a sharp negative turn in the nation’s budget deficit, which had reached a record of $413 billion in 2004 and had fallen to $162 billion. The White House now projects what it calls “an uptick” _ a deficit of $410 billion in 2008 and $407 billion in 2009.

These deficits could well surpass the record, in sheer dollar terms, when the full costs of war are accounted for in 2009 _ though the White House maintains that the deficit is shrinking as a percentage of the nation’s Gross Domestic Product. Bush, who inherited a surplus as president in 2001, still contends that the budget can be balanced by 2012 _ four years after he leaves office.

White House budget documents allow that the accumulated national debt, $9.6 trillion this year, will rise to an estimated $10.38 trillion by 2009. It stood at $5.77 trillion at the end of Bush’s first year.

For the first time, the White House has delivered to Congress an electronic budget, boasting of saving trees.

“It’s a good budget,” the president said Monday. “It’s a budget that achieves some important objectives. … It understands our top priority is to defend our country. … Secondly, the budget keeps our economy growing.”

But Democratic leaders were quick to denounce the president’s final budget.

“For seven years, President Bush’s budgets have weakened our economic security,” said Senate Majority Leader Harry Reid, D-Nev. “Today’s blueprint is no different.”

House Majority Whip James Clyburn, D-S.C., called the plan “unrealistic and uncompassionate.” The budget undermines “seniors and aging baby boomers” by failing to adequately invest in Medicare, he says.

The budget holds the increase in “discretionary” spending _ areas of the budget outside of Medicare, Medicaid and other entitlements _ to less than 1 percent. And Congress has in the past year hewed to that limit set by the White House.

The White House is seeking some increases in education _ with more money for Pell Grants, college scholarships for lower-income students _ while cutting elsewhere. The budget proposal trimmed $1.1 billion in career and technical education grants to states.

While Bush is seeking boosts in defense and homeland security (7.7 percent), he proposed cuts at the Justice Department (10.7 percent), for agriculture (4.8 percent), at the Environmental Protection Agency (4.4 percent), and in health and human services (2.1 percent).

Putting limits on Medicare payments and moving seniors into privately run Medicare plans “target the most vulnerable,” said George Kourpias, president of the Alliance for Retired Americans. “Only in Washington could this be the work of a `compassionate conservative.’”

The White House maintained that cuts in Medicare can be painless _ even lowering premiums that seniors pay by capping what doctors and hospitals can charge _ and will help control Medicare costs that could, if unchecked, consume the entire budget in four decades.

Yet, at the same time, the White House is low-balling the costs of war in 2009, seeking just $70 billion in this budget, after already seeking nearly $200 billion for Iraq and Afghanistan in 2008.

“This is just utterly dishonest,” said Norman Ornstein, a senior scholar at the American Enterprise Institute who criticized the White House for “hiding” war spending.

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(c) 2008, Chicago Tribune.

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GRAPHICS (from MCT Graphics, 202-383-6064): 20080204 1 FEDBUDGET and 20080204 2 FEDBUDGET

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