- The Washington Times - Tuesday, February 4, 2003

President Bush yesterday sent Congress a $2.23 trillion budget that cuts taxes, boosts military spending and overhauls Medicare while creating a record deficit of $307 billion.
"A recession and a war we did not choose have led to the return of deficits," Mr. Bush said in his budget for fiscal 2004, which begins Oct. 1.
Democrats blamed the projected deficit on Mr. Bush's policy of cutting taxes. He began implementing a $1.35 trillion tax-cut package in 2001 and has proposed $674 billion in additional cuts.
"President Bush's budget not only proposes record deficits this year and next, but his plan has this nation dangerously awash in red ink for as far as the eye can see," said Sen. Kent Conrad of North Dakota, ranking Democrat on the Senate Budget Committee.
"His plan will push up interest rates, retard economic growth and create massive problems for the soon-to-be retiring baby boom generationfl" he said.
Mitchell E. Daniels Jr., director of the Office of Management and Budget, defended the return of deficit spending as a necessary evil, with the administration struggling to stimulate the sluggish economy and shore up the military. The budget does not include costs of a war with Iraq, which would add billions in red ink.
"A balanced budget is a high priority for this administration," Mr. Daniels told reporters. "It is not the top let alone the only priority."
He added: "It's the president's job to balance priorities a balanced budget being one of those. If we correctly balance them, especially including economic growth, the budget will balance, and probably before we expect it."
Democratic National Committee Chairman Terry McAuliffe disagreed, saying the budget "will create trillions in deficits over the coming decade."
Although the projected deficit of $307 billion is numerically higher than ever before, it is only about 2.8 percent of the gross domestic product. The deficit 20 years ago was about 6 percent of the GDP.
"Compared to the overall federal budget and the $10.5 trillion national economy, our budget gap is small by historical standards," Mr. Bush said.
The budget, which requires congressional approval, increases military spending by $15.3 billion, or 4.2 percent, from $364.6 billion to $379.9 billion. Funding for the Department of Homeland Security jumps to $36.2 billion, or about 7.4 percent more than what had been spent on the agencies being combined to create the department.
Although the budget includes a 3 percent increase for NASA, the White House hinted that such funding might increase in the wake of the explosion Saturday of Space Shuttle Columbia, which killed all seven astronauts aboard. After the disaster of the Space Shuttle Challenger in 1986, NASA funding was boosted roughly 20 percent.
"No one can make any conclusions this quickly after the disaster," said White House Press Secretary Ari Fleischer. "The amount that's in the budget is the amount the president thought was necessary.
"Clearly, now a disaster has taken place," he added. "It's a flexible process, and it allows for additional input as events warrant."
The budget also calls on Congress to open up the Arctic National Wildlife Refuge (ANWR) in Alaska to oil drilling, a proposal that was defeated by the Senate last year when it was controlled by Democrats. Republicans now control both the Senate and House, giving Mr. Bush a better chance of success with his proposal to begin leasing tracts of a half-million acres in ANWR to oil companies by 2005.
While boosting money for such sectors as defense, the budget calls for cuts in a variety of programs. For example, it proposes that Amtrak eliminate some long-distance train routes, some of which lose more than $1,000 per passenger.
Presidents of both parties have long proposed curtailing Amtrak, which has lost money throughout its 32-year history and is saddled with $4 billion in debt. Mr. Bush is likely to meet stiff resistance from some members of Congress who have long defended the rail service.
"It's important to listen to and work with members of Congress on … all areas of the budget," Mr. Fleischer said. "The process begins today in terms of where the decisions get made in the Congress."
The White House, however, made clear that it expects to get most of what it wants, especially in terms of keeping a lid on spending.
"I proposed that discretionary federal spending increase by no more than 4 percent this year," Mr. Bush said yesterday during a speech in Bethesda.
"That's about as much as family income is expected to grow; seems like a reasonable benchmark for our federal budget. Within that limit, we can fund essential priorities at home and abroad and meet the responsibility to show spending discipline in Washington, D.C."
Mr. Daniels pointed out that the president has been successful on this initiative in his administration.
"Every year, somebody asks: Is there any chance Congress will stick to these levels?" he said. "They have every single time. You know, sooner or later, I guess, people start to recognize the president's serious about this and he's effective."
Mr. Daniels suggested that the White House is not inflexible.
"At each point along the line, there's been some good healthy arguments, and there should be," he said. "And there have been some changes in priorities.
"But when the president has said a given amount is enough, that's been what happened," he said. "And so I would not expect different this year."
The budget also proposes spending $400 billion during the next 10 years to overhaul Medicare and provide a prescription drug benefit to the elderly for the first time. Democrats have attacked the plan because it offers the drug benefit only to people in managed-care plans.
Mr. Bush also wants to reform Medicaid, which provides health care to the poor, through $12.7 billion in incentives to participating states during the next seven years. Democrats say the change would sharply restrict access to the program.

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