WASHINGTON - President Bush on Monday sent Congress a proposed $2.8 trillion budget for fiscal 2007 that favors tax cuts and national security and squeezes domestic programs.
The proposal would eliminate 141 government programs, cut spending not related to defense and homeland security, and scale back the rate of growth for Medicare and other so-called entitlement programs. Even with those savings, federal spending would exceed anticipated tax revenues by $354 billion next year, down from this year's record $423 billion deficit.
Bush's plan to permanently extend temporary tax cuts that Congress approved during his first term and other tax breaks would cost the federal government $1.7 trillion in revenue over the next 10 years.
"My administration has focused the nation's resources on our highest priority: protecting our citizens and our homeland," Bush said in a budget message accompanying the four-volume document.
Defense spending would increase by nearly 7 percent, to $439.3 billion - not including expenses for the war in Iraq. Spending on homeland security would increase by more than 8 percent.
Spending for government services not related to defense, homeland security or entitlements would be cut by about a half a percent overall, but some agencies would suffer more than others.
Education spending would be cut by 23 percent, largely in student loans and the proposed elimination of 42 programs. The Army Corps of Engineers civil programs would be cut by 20.7 percent. Amtrak would be cut by 30.4 percent.
Americans would feel the budget pinch in different ways. An estimated 300,000 low-income families would no longer qualify for food stamps because of tighter eligibility requirements. Airline passengers would pay an additional $2.50 for each one-way ticket to help cover the cost of airport security. Farmers would see a reduction in crop subsidies and price supports.
Many of the proposed cuts are replays from previous presidential budgets that Congress rejected. Administration officials didn't provide a list of the 141 programs targeted for elimination, but White House Budget Director Joshua Bolten said the list includes 65 programs that Congress spared last year.
"The budget reflects the president's proposals. We don't expect every single one of the president's proposals to be adopted," he said.
Bush's plan to slow the growth of entitlement programs - Medicare, Social Security, Medicaid and federal retirement programs - by $65 billion over the next five years is sure to be one of the most controversial items in the budget. Entitlement spending accounts for more than half of the federal budget, and it's essentially on autopilot because funding increases automatically keep pace with population growth and inflation.
Most of the savings - nearly $36 billion over five years - would come from Medicare, the politically popular health care program for the elderly and disabled. The plan would reduce future payments to hospitals and other health care institutions.
That would cut the growth rate of Medicare expenses to 7.7 percent instead of 8.1 percent a year, according to administration officials. The 2007 budget for Medicare is $387 billion. Even with Bush's $36 billion in proposed cuts, Medicare's five-year cost is projected to be $2.14 trillion.
Although Bush's Medicare cut is little more than a symbolic first step, opposition was swift and fierce. Critics attacked the president's attempt to cut social services while slashing taxes.
Bush's latest proposal to trim entitlement spending comes less than a week after Congress narrowly approved another plan to scale back spending on Medicare, Medicaid and student loans by $39 billion over five years.
"After creating record deficits and debt with his budget-busting tax breaks, the president is asking our seniors, our students and our families to clean up his fiscal mess with painful cuts in health care and student aid," Senate Democratic Leader Harry Reid of Nevada said. "We can do better than this immoral and irresponsible budget."
Conservative deficit hawks called Bush's proposed cuts timid. Brian Riedl, a budget analyst at the Heritage Foundation, a conservative Washington think tank with close ties to the Bush administration, said Bush's Medicare cuts would have little impact on the program's growth.
"Unfortunately, it's probably even more bold than Congress is willing to go in an election year," he said.
Administration officials acknowledged that this year's $423 billion deficit is higher than they'd expected earlier in the year. They blamed the increase on unanticipated costs from Hurricane Katrina and Hurricane Rita, as well as spending for the war in Iraq.
Bush included $50 billion for war spending in his 2007 budget, but that's just a down payment. Operations in Iraq and Afghanistan have cost at least $120 billion so far in fiscal 2006, and expenses in Iraq are costing more than $4.5 billion a month.
"It's very hard to say what we're going to be spending 18 months from now in Iraq," Bolten, the top White House budget adviser, said. "It's been a very expensive undertaking."
Hurricane recovery has cost the federal government about $88 billion so far, and Bush will soon ask for about $18 billion more.
