- The Washington Times - Tuesday, February 8, 2005

President Bush yesterday proposed what he called a “lean” $2.57 trillion budget that slashes nondefense spending and the deficit, while relying more heavily on taxes from affluent Americans.

“It is a budget that sets priorities,” Mr. Bush told reporters during his first meeting with the new Cabinet. “Our priorities are winning the war on terror, protecting our homeland, growing our economy.

“It’s a budget that focuses on results,” he added. “Taxpayers in America don’t want us spending their money on something that’s not achieving results.”

Congressional Democrats denounced the proposal and vowed to block its passage.

“The president’s budget is a hoax on the American people,” House Minority Leader Nancy Pelosi, California Democrat, said. “The two issues that dominated the president’s State of the Union address — Iraq and Social Security — are nowhere to be found in this budget.”

White House officials acknowledged the budget does not reflect an expected request for $80 billion in supplemental spending on Iraq and Afghanistan. Nor does it include the cost of proposed Social Security reforms, which would entail $664 billion spent over 10 years to create personal savings accounts.

Joshua B. Bolten, director of the Office of Management and Budget, told reporters at the White House he was not worried about Democrats declaring the budget “dead on arrival” at Capitol Hill.

“It’s part of political theater to declare ‘DOA’ at this moment, if you’re on the other side,” he said. “But the reality is that the same thing happened last year, and the president actually got the overall budget he was asking for.”

The budget for fiscal 2005, which began Oct. 1, has a projected deficit of a record $427 billion. But the deficit is projected to shrink to $390 billion in Mr. Bush’s 2006 budget, and to $233 billion, or 1.4 percent of the gross domestic product (GDP), by 2009.

That would fulfill the president’s promise to cut in half the deficit of fiscal 2005 — which is projected at $521 billion, or 4.5 percent of the GDP — within five years.

The new budget also proposes to reduce or eliminate 150 government programs that Mr. Bush said are not “performing” well. By reducing funds to such programs as Amtrak, the government would save about $20 billion in 2006 alone.

“This is the first proposed cut in this non-security spending since the Reagan administration,” Mr. Bolten said.

Overall, only six of the 15 Cabinet departments would get more money in fiscal 2006 than they are getting this year.

Among the federal agencies hit hardest by the budget are the Department of Housing and Urban Development. Mr. Bush wants to cut the department’s funding by 11.5 percent, eliminating Community Development Block Grant programs that cost taxpayers $4.7 billion last year.

Almost as hard-hit was the Agriculture Department, which faces a cut of 9.6 percent. Mr. Bush wants to reduce price-support payments to farmers by 5 percent and lower the annual ceiling on such payments to $250,000 from $360,000, which would save $587 million immediately.

“Farmers understand their future depends on a stable national economy,” Agriculture Secretary Mike Johanns said.

On the opposite side of the spectrum was the State Department, where the budget would grow by 15.6 percent, with former National Security Adviser Condoleezza Rice taking over as secretary of state.

The Defense Department would receive an increase of 4.5 percent, allowing service members to receive a pay increase of 3.1 percent. There would also be more money for special operations and a plan to restructure the military.

“This budget represents the latest installment in the president’s strong commitment to transforming this department to face the challenges of the 21st century,” Defense Secretary Donald H. Rumsfeld said. “We continue our transition to a more agile, deployable and lethal force.”

Less happy were those who came up short in the Bush budget, including the airline industry, which would pay the federal government another $3 per passenger per flight leg for federal screening of luggage and passengers.

“U.S. airlines appear to be the only business in America that the administration has chosen to tax back to economic health,” said James May, president of the Air Transport Association. “We fail to understand how this proposed tax squares with past administration policies that have cut taxes and successfully spurred economic growth.”

Mr. Bolten said the government was merely passing along its own increased costs, made necessary by the attacks of September 11, 2001.

“I don’t know what the effects on the industry might be, but we really have two choices,” he said. “We can ask those who are flying to bear those costs, or we can ask everybody, including those who are not flying, to bear those costs.”

He added: “The better policy is to ask those who are actually flying.”

Mr. Bush acknowledged he would have to fight for many aspects of his budget.

“I look forward to explaining to the American people why we made some of the requests that we made in our budget,” he said. ” I fully understand that sometimes it’s hard to eliminate a program that sounds good.”

But he added: “We go into this process upbeat because we’ve worked closely with the Congress the last four budget cycles.”

Sen. John Kerry, Massachusetts Democrat, called Mr. Bush’s 2,300-page spending plan fiscally irresponsible.

“It will cost $1.6 trillion to make the president’s tax cuts permanent, but there’s not a penny in the budget to pay for them,” said the defeated 2004 Democratic presidential nominee.

The budget assumes Congress will make the president’s tax cuts permanent. Mr. Bolten said the cuts have already shifted the burden of taxes in America.

“Those at the upper end of the spectrum are now paying a larger share of the income tax than they were before,” he said. “For example, the top 5 percent of income in this country — people making above about $140,000 a year — without the president’s tax cuts, that top 5 percent would be paying less than 52 percent of our total income-tax revenue.

“After the president’s tax cuts, that group is paying more than 54 percent of our total tax revenues,” he added. “So the notion that the president’s tax cuts have somehow made the code less progressive is wrong. The president’s tax cuts have made the code more progressive.”

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