- The Washington Times - Wednesday, January 29, 2003

ASSOCIATED PRESS

President Bush's $2.2 trillion budget for next year will seek big increases for domestic security and special education, creating annual deficits that could be erased quickly if that were the top priority, the White House budget director said yesterday.

Citing a continuing falloff in revenue, budget chief Mitchell E. Daniels Jr. said Mr. Bush would predict a deficit this year of less than 3 percent the size of the U.S. economy. That would work out to a shortfall of about $300 billion or less close to the record $290 billion in 1992 when Mr. Bush's father was president.

Mr. Daniels, who provided no other specifics about deficits, said Mr. Bush could erase the red ink quickly "if all the nation cared about was getting back to balance in the budget." He said instead, Mr. Bush's budget, to be released Monday, was focused on battling terrorism, strengthening the economy, shoring up Medicare and other priorities.

"There is a conscious choice here, but we should bear in mind if the number one priority was balancing the budget, it would not be a great trick to do," simply by limiting growth in spending, he said in an interview.

Mr. Daniels' defense of the red ink underlines how the Bush administration has had to defend an abrupt turnabout in the government's fiscal health. After four decades of annual deficits, there were four consecutive surpluses in the final years of the Clinton administration that ended in a $159 billion shortfall last year under Mr. Bush.

While the administration has blamed the weak economy and the terror attacks for the problem, leading Democrats have emphasized the $1.35 trillion, 10-year tax cut that Mr. Bush, backed by Republicans and some Democrats, enacted in 2001.

Democrats also have complained that the $674 billion, 10-year economic growth package Mr. Bush wants would throw the budget even deeper into the red.

Mr. Daniels said Mr. Bush's economic plan would add $114 billion to the projected deficit for 2004, and less than half that amount to the 2003 shortfall.

Congress, gridlocked during last year's elections, still is working on spending bills for the budget year that began last Oct. 1.

By voice vote, the House approved a bill that keeps agencies open through Feb. 7 while budget negotiations continue. Without the bill, spending authority will expire Jan. 31, and quick Senate passage is expected.

As a result of the budget stalemate, Mr. Bush's proposals for 2004 will be compared to amounts he sought for this year, Mr. Daniels said.

Mr. Daniels had said last week that all federal agencies, except for benefit programs such as Medicare, would get 4 percent more in Mr. Bush's budget than the roughly $751 billion they are on track to get in 2003, an increase of close to $31 billion. Yesterday, he provided more detail.

Homeland-security spending including defense programs the administration considers aimed at countering domestic terror would surpass $40 billion, 7 percent to 8 percent higher than Mr. Bush's 2003 plans, Mr. Daniels said.

The Defense Department, the one part of the budget already enacted into law, would grow by 4 percent to 5 percent, Mr. Daniels said. That would mean a roughly $16 billion boost over the $365 billion provided for 2003.

That would leave a 3 percent to 4 percent increase for the rest of the government, he said, which works out to about $13 billion.

Of that amount, Mr. Daniels said Mr. Bush would propose $1 billion more for education for handicapped students under the Individuals with Disabilities Education Act. Mr. Bush sought $8.5 billion for this year.

Mr. Daniels said revamping Medicare would be another Bush priority. An administration official, speaking on the condition of anonymity, said Mr. Bush's proposal, which will include making prescription-drug benefits available, would cost $400 billion over the coming decade.

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