- The Washington Times - Tuesday, February 5, 2008

President Bush’s record $3.1 trillion budget request yesterday for fiscal 2009 would add $407 billion to the federal debt behind continued increases in military spending and an economic-stimulus package, further complicating Republican Party efforts to assure voters they are fiscally responsible.

Mr. Bush’s budget calls for an eleventh straight funding increase for the Pentagon and virtually freezes domestic spending by making cuts in Medicare and Medicaid funding, on which Democrats will likely cast the GOP as uncaring toward the lower and middle classes and the elderly.

The deficit is projected to grow from $162 billion in fiscal 2007 to $410 billion in fiscal 2008, the White House said, blaming a decline in tax revenues from slower economic growth. Other reasons for the massive deficit, which is forecast at $407 billion in fiscal 2009, include the $146 billion economic-stimulus package being debated in the Senate, and spending for the wars in Iraq and Afghanistan.

The record budget deficit for a single year is 2004’s $413 billion.

Mr. Bush yesterday defended the budget, which has little chance of passage under a Democrat-led Congress, saying it “protects America and it encourages economic growth.” He called it “innovative” and “balanced.”

“Congress needs to pass it,” Mr. Bush said, speaking to reporters after meeting with his Cabinet. The White House maintains that the deficit will be eliminated by fiscal 2012, and that the president’s request would leave the country with a $48 billion surplus.

But Mr. Bush”s arithmetic came under heavy fire from both Democrats and Republicans on Capitol Hill.

New Hampshire Sen. Judd Gregg, the ranking Budget Committee Republican, said in an interview that the White House budget request “has an inordinate number of gimmicks and games and things that basically don’t do much in the way of getting us down the road towards improving our fiscal situation.”

House Majority Leader Steny H. Hoyer, Maryland Democrat, called the request “a continuation of failed policies that have created dangerous deficits and debt, while at the same time decreasing critical investments in our nation’s future.”

Rep. Mike Ross, the Arkansas Democrat who leads the “Blue Dog” coalition of conservative Democrats, said Mr. Bush has “added $4 trillion to the national debt, leaving our children and grandchildren to pick up the tab for eight years of irresponsible fiscal policies.”

House Speaker Nancy Pelosi, California Democrat, said her party “will offer a budget that takes America in a new direction, making critical investments to strengthen our economy and create jobs.”

Mr. Bush’s budget director, Jim Nussle, acknowledged that a “sluggish economy … does pose some challenges with regards to the deficit,” but said the White House believes the deficit increase will be “temporary” if taxes and spending remain low and the president”s tax cuts are made permanent.

However, the full cost of the two wars is not included in the budget request. The White House has requested only $70 billion for Iraq and Afghanistan, and will issue a second request for the full amount “once the specific needs of our troops are better known.”

That amount will likely be determined once U.S. commanders report back in March on their decision for future troop levels. Precedent suggests the amount will likely be around $100 billion. The full defense request is $515.4 billion, not including the $70 billion in war funding. The current budget includes $479.5 billion for the Pentagon and $189 billion in projected war costs, though only $87 billion in war funding has so far been disbursed.

Mr. Bush said his request “keeps spending under control” by holding nondefense, discretionary, or optional, spending to less than 1 percent growth. And he said it saves taxpayers $18 billion by eliminating 151 “wasteful or bloated programs.”

The president”s request seeks to cut more than $200 billion in mandatory spending over five years. About $178 billion of those cuts would be made in Medicare expenditures. In his second term, Mr. Bush has attempted to reduce discretionary spending after it ballooned in his first year and remained high for all of his first term, outpacing the rate of discretionary spending under President Clinton, a Democrat.

Mr. Bush also has tried to make spending a core Republican issue again, after he was maligned for expenditure levels and Republican lawmakers gained a reputation for stuffing appropriations bills with wasteful “pork-barrel” spending while they were in control of Congress.

The Republican presidential front-runner, Sen. John McCain of Arizona, running as a fiscal conservative, distanced himself from Mr. Bush’s budget request yesterday, the eve of more than 20 “Super Tuesday” nominating contests.

“John McCain has said we are going to have to scrub the budget from one end to the other,” said Douglas Holtz-Eakins, Mr. McCain’s top economic adviser, in an interview.

A spokesman for fellow Republican candidate Mitt Romney, meanwhile, took aim at Mr. McCain, saying Mr. Romney’s experience as governor of Massachusetts makes him the better man to lead Republicans out of the wilderness.

“For someone like Senator McCain, who is recognized as a product of Washington and the Washington status quo, [the budget deficits] could make it harder to run against the Democrats,” Romney spokesman Kevin Madden said in an e-mail.

But the broad storyline of the budget’s move from a $236 billion surplus to more than $400 billion in deficits under Mr. Bush and mostly Republican-led Congresses has been a reliable target for Democratic attacks, and yesterday was no exception.

“America’s families are struggling to get by, but Bush either doesn’t care or just doesn’t get it. Neither do McCain, Romney and [former Arkansas Gov. Mike] Huckabee,” the Democratic National Committee said in a release that tied Mr. Bush’s budget to the top three Republican candidates.

The DNC said the three Republicans “are all supporting the same failed policies that have left American in debt and uneasy about the future. We simply can’t afford a third term.”

Democratic presidential candidate Sen. Hillary Rodham Clinton of New York, said that “it has been seven years since this president squandered the opportunities of the surpluses created during the Clinton administration, and it is past time to restore responsible fiscal management and put the priorities of middle-class Americans first.”

Sean Lengell contributed to this report.

REVENUE SOURCES

The sources of $2.7 trillion in government revenue in President Bush’s proposed 2009 budget are:

Individual income taxes: $1.259 trillion

Corporate income taxes: $339.2 billion

Social Security, Medicare and retirement receipts: $949.4 billion

Excise taxes: $68.9 billion

Estate and gift taxes: $26.3 billion

Customs duties: $29.1 billion

Miscellaneous user charges, fees and other receipts: $47.9 billion

Stimulus tax cuts and rebates: -$20 billion

Total: $2.7 trillion

Source: Associated Press

SPENDING PLAN

The following is a summary of President Bush’s proposed 2009 budget.

Receipts: $2.700 trillion

Outlays: $3.107 trillion

Deficit: $407 billion

Projected gross domestic product: $15.027 trillion

Deficit as a percentage of GDP: 2.7 percent

Discretionary spending: $1.212 trillion

Mandatory spending: $1.636 trillion

Interest: $260 billion

Source: Associated Press

U.S. BUDGET BALANCE HISTORY The following are White House figures for budget surpluses or deficits for the budget years 1987 to 2007.
Budget year Surplus/Deficit (in billions) (-)As percent of gross domestic product
2007 -$162.0 -1.2 2006 -$248.2 -1.9 2005 -$318.3 -2.6 2004 -$412.7 -3.6 2003 -$377.6 -3.5 2002 -$157.8 -1.5 2001 $128.2 1.3 2000 $236.2 2.4 1999 $125.6 1.4 1998 $ 69.3 0.8 1997 -$ 21.9 -0.3 1996 -$107.4 -1.4 1995 -$164.0 -2.2 1994 -$203.2 -2.9 1993 -$255.1 -3.9 1992 -$290.3 -4.7 1991 -$269.2 -4.5 1990 -$221.0 -3.9 1989 -$152.6 -2.8 1988 -$155.2 -3.1 1987 -$149.7 -3.2 Source: Reuters news agency

ECONOMIC ASSUMPTIONS

Gross domestic product: $15.027 trillion

Economic growth (real GDP): 3.0 percent

Consumer price inflation: 2.1 percent

Unemployment rate: 4.9 percent

90-day Treasury bill interest rate: 3.8 percent

10-year Treasury note interest rate: 4.9 percent

Source: Associated Press

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