- The Washington Times - Tuesday, February 5, 2002

President Bush yesterday sent Congress a $2.1 trillion budget proposal that spends billions for the defense of America, cuts dozens of spending projects and provides relief for millions of taxpayers.
The budget blueprint also calls for the creation of a new system to hold federal agencies accountable by proving that taxpayer money is being spent wisely.
Under the president's plan, defense spending would rise $48 billion, a 14 percent increase, and expenditures for homeland security would nearly double to about $38 billion. Spending on all other federal services would increase just 2 percent.
Mr. Bush yesterday implored Congress to provide his entire request for the Defense Department, which would amount to the largest increase in military spending since President Reagan's Cold War-era buildup 20 years ago.
"We're unified in Washington on winning this war. One way to express our unity is for Congress to set the military budget, the defense of the United States, as the number one priority and fully fund my request," Mr. Bush said at Eglin Air Force Base in Florida.
The budget's projections for the next five years would raise Pentagon spending by $120 billion to $451 billion by 2007 in an attempt to reverse eight years of neglect by the Clinton administration, which in 1993 authorized $128 billion in defense spending cuts.
The budget for fiscal year 2003, which begins Oct. 1, projects deficits of $106 billion for next year and $80 billion in 2004. Much of the deficit would result from tax cuts proposed by the president.
Democrats in Congress, seeking an edge against the popular president in a midterm election year, immediately panned the plan.
"The president's budget will put us further into deficit, use money from the Social Security and Medicare trust funds that both parties called off-limits, and cut education, health care, skills training and rural programs," said House Minority Leader Richard A. Gephardt of Missouri.
Republicans praised the president's proposal, with House Speaker J. Dennis Hastert of Illinois calling the plan "a responsible, common-sense budget that meets the needs of our nation in a time of war."
While defense spending would rise dramatically, the proposal calls for cuts to the budgets of the Labor Department, the Army Corps of Engineers, the Environmental Protection Agency and other departments.
The budget would cut $9 billion from highway programs, but only because a congressional funding formula based on fuel tax revenues governs such spending, said Mitchell Daniels, director of the Office of Management and Budget.
The budget reduces the Army Corps of Engineers' budget by nearly $500 million and cuts spending by the Environmental Protection Agency by about 4 percent. In addition, subsidy payments to farmers would decline by $5 billion.
Mr. Bush's budget focuses on three priorities: military upgrades, homeland defense and economic recovery. He proposes doubling funding for protecting America from attack to $38 billion and calls for $591 billion in new tax reductions including a permanent extension of last spring's $1.35 trillion tax cut, which expires in 2010.
Next year's installment of the tax cut will total $94 billion, Mr. Daniels said.
While congressional Democrats blame the budget's deficit spending on Mr. Bush's 10-year tax cut, Mr. Daniels said America is by no means "undertaxed."
"By now, its opponents have blamed the tax cut for everything except mad cow disease," Mr. Daniels said. "Those who believe we need higher taxes on an already very heavily taxed economy will have all kinds of chances to make that case."
Some analysts believe the 2 percent overall growth in the budget is likely to increase to as much as 6 percent by the time Congress adds "pork-barrel" spending, a move the budget director said should be eliminated.
"The long-time practice of special projects and earmarking by Congress has gotten out of hand. It's multiplied eight times in the last four or five years. We're certainly not going to become party to the practice by repeating or renewing in the budget projects the president never asked for and for which he thinks there might be a better use of the dollars," Mr. Daniels said.
Meanwhile, some Republicans on Capitol Hill favor passing a balanced budget at any cost. A group of conservative House Republicans says that if Senate Democrats again block Mr. Bush's economic stimulus plan, Congress should pass a balanced budget.
"The presidents' budget is virtually in balance right now," said Rep. Patrick J. Toomey, Pennsylvania Republican. "None of us are talking about getting to balance by cutting defense or homeland security. It's a matter more of modest belt-tightening in other areas."
Under Mr. Bush's tax cut proposal stalled in the Senate late last year by Senate Majority Leader Tom Daschle future income tax cuts would be accelerated to provide a new round of rebate checks of up to $600 aimed at lower-income Americans.
"Unless economic growth can be restored, it will mean fewer jobs, smaller growth in incomes and smaller budget surpluses," the budget document says.
The budget estimates that these items would provide $62 billion in economic stimulus in 2002 and $65 billion in 2003.
The largest part of the tax-relief proposal in the new budget is the $344 billion included for the first years of a permanent extension of the 10-year tax cut enacted last spring.
The proposal also includes:
A tax credit of up to $1,000 for adults and $500 for children to help low-income people afford health insurance. Cost: $88.9 billion.
Credits to be administered by states for the development of single-family housing units. Cost: $15.2 billion.
A tax deduction, beginning at $100 and eventually rising to $500, for taxpayers who make charitable contributions but do not itemize. Cost: $32.6 billion.
A tax credit of up to 50 percent of the first $5,000 of the costs of attending a public or private school for students who moved out of a failing public school. Cost: $4.2 billion.
A mix of tax credits and other incentives intended to promote energy conservation (including purchase of hybrid and fuel-cell vehicles), residential solar energy systems and alternative sources such as landfill gas. Cost: $9.7 billion.
The budget proposal calls for $38 billion for homeland defense to fight bioterrorism, tighten border controls, improve airline security and help firefighters, police officers and other "first responders" to emergencies.
The dramatic increase for defense comes as the United States is spending nearly $2 billion a month in its war in Afghanistan. The $379.3 billion Pentagon budget includes Mr. Bush's proposal for a $10 billion emergency fund to fight terrorism.

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