- The Washington Times - Monday, February 3, 2003

WASHINGTON, Feb. 3 (UPI) — President George W. Bush sent a $2.23 trillion 2004 budget to Congress with big increases for defense, homeland security and Medicare that drove deficit estimates to $307 billion.

"A recession and a war we did not choose have led to the return of the deficits," Bush said in a statement accompanying the budget, but "compared to the overall federal budget and the $10.5 trillion national economy, our budget gap is small by historical standards."

The budget predicts a $307 billion shortfall in 2004, and Mitch Daniels, director of the Office of Management and Budget, argued at a Monday briefing that deficit growth will begin to tail off in 2005 and head in a downward direction. His predictions, however, are based on the assumption that the president's nearly $674 billion, 10-year tax reduction plan will jump-start the economy and bring increased tax revenues.

The plan is the second attempt by the Bush administration to bring economic turnaround primarily through tax reductions.

By contrast to the OMB's figures, Democrats in the House of Representatives have charged that Bush's tax plans will result in a budget deficit of $1.7 trillion by 2011.

The budget estimates a deficit for fiscal 2004 of $307 billion and $304 billion for 2005, surpassing the record of $290 billion set in 1992 when Bush's father was president.

The $307 billion shortfall does not reflect the estimated cost of a war with Iraq or increased funding for the National Aeronautics and Space Agency should it become necessary after the shuttle Columbia tragedy Saturday.

Bush said he has three national priorities: "winning the war against terrorism, securing the homeland, and generating long-term economic growth."

In his moves to strengthen the economy, the budget estimates that 92 million Americans will receive an average tax cut of $1,083 and that the increased economic activity will create 2.1 million jobs. Bush proposed spending $3.6 billion for "Re-employment Accounts" in 2003 and 2004 to give the unemployed a $3,000 fund to help them find work, and he is asking for $7.1 billion in 2003 to pay for a five-month extension in unemployment insurance.

A Washington Post-ABC News poll released Sunday said 52 percent of Americans disapprove of how Bush is handling the economy.

Bush asked for nearly $1 billion in increased enforcement costs to protect shareholders from corporate crime. The Securities and Exchange Commission would receive $842 million, the Federal Bureau of Investigation $16 million — and there would be additional funding for U.S. Attorneys offices to prosecute business crime.

Bush raised the Department of Defense budget by 4 percent, up $15 billion over last year, the highest increase since the Reagan administration, but one that still does not include the costs of military action in Iraq or in the North Korea nuclear crisis. But the Pentagon's $379.9 billion does include assistance for several key partners in the war against terrorism, including Jordan, $250 million; Pakistan and Turkey, $200 million each; Afghanistan, $150 million; and Columbia, $463 million.

Recently, Jordan and Turkey both tentatively agreed to allow U.S. military operations in their countries in the event of war.

Homeland security, including the portion within the defense budget, will be beefed up, rising from $37 billion to some $41 billion. This includes the cost of uniting some 22 agencies into the new department under former Pennsylvania Gov. Tom Ridge. The budget calls for $400 million to increase the stockpile of vaccines and treatments to counter bio-terrorist attacks, part of $5.6 billion to be spent over the next decade.

This will pay for Project BioShield, "next generation" vaccines for anthrax, smallpox, botulinum toxin, and additional unspecified funds to produce and purchase so-called treatments for dangerous agents such as Ebola and plague.

Even before the shuttle disaster Saturday, the budget for NASA had been increased to some $15.5 billion from $15 billion in 2003.

The administration will submit its federal budget proposal to a Republican-controlled Congress as questions remain about exactly how much it will cost to prosecute a war against Iraqi leader Saddam Hussein.

"If war is forced upon us, we will fight with the full force and might of the United States military — and we will prevail," Bush said in his State of the Union speech. "And as we and our coalition partners are doing in Afghanistan, we will bring to the Iraqi people food, and medicines, and supplies … and freedom."

Bush has proposed a higher defense budget than any since the early 1990s, and the Pentagon expects it to grow to $484 billion in spending by fiscal year 2009, according to the Washington-based Center for Strategic and Budgetary Assessments.

Bush's economic and tax-cut package makes the income tax reductions set for 2004 and 2006 permanent and effective this year, abolishes the marriage penalty and hikes the child tax credit to $1,000, both effective immediately.

But the plan also eliminates the tax on share dividends, and Democrats lambasted it as a bail-out for the wealthy that will produce huge deficits and do little to stimulate the economy. An effective plan, they said, would have to be immediate, benefit as many people as possible and be fiscally responsible.

With the threat of a conflict that might disrupt half of the United States' oil supplies, Bush has proposed funding what he calls the Freedom Fuel and Freedom Car Initiatives, slated to reverse America's dependence on foreign oil sources. He proposed spending $1.2 billion over five years to develop technology needed for viable hydrogen-powered fuel cells to power cars and trucks.

Bush proposed $15 billion for an emergency HIV/AIDS plan that will address the international pandemic, particularly in Africa and the Caribbean. The fund would receive $2 billion in 2004 and then increase in subsequent years.

The president sought to resurrect interest in his faith-based and "compassionate conservative" agendas with $450 million for mentors for children of prison inmates and more than 1 million disadvantaged middle school children. The administration also announced a three-year, $600 million federal treatment initiative for drug-addicted Americans.

Medicare reform has been a cornerstone of Bush's domestic agenda, along with providing prescription drug coverage for seniors who have been faced with escalating medication costs. Bush said he plans to set aside $400 billion over 10 years to revamp the senior health insurance plan to give the elderly more choices in how they receive their medical care.

The administration also proposed providing in 2004 an additional $3.25 billion in federal funding for Medicaid, the health insurance program for low-income families. The program would receive a total of $12.7 billion over the next seven years under the budget proposal.

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