Budget winners? Defense and Homeland Security

Huge Deficits, Spending Freeze Dominate Bush Budget 
 
 
Feb 1, 5:05 pm ET 

By Adam Entous
WASHINGTON (Reuters) - President Bush will propose a $2.4 trillion budget on 
Monday that will cut dozens of government programs, roll back business tax 
breaks and set an election-year goal of reducing a record $521 billion deficit 
by one-third in a year and by more than half in 2009.

But even his fellow Republicans were skeptical that Bush can deliver. The 
fiscal 2005 budget he will send to Congress does not include the tens of 
billions of dollars that will almost certainly be needed in 2005 and beyond to 
keep U.S. troops in Iraq, nor the costly tax system overhaul that both 
Republicans and Democrats say will soon become politically imperative to 
protect the nation's middle class.

Homeland security and the military -- the two most critical issues in Bush's 
re-election campaign -- will be the biggest budgetary winners. Defense 
contractors including Lockheed Martin Corp., Boeing Co., Northrop Grumman 
Corp., Raytheon Co. and General Dynamics Corp. stand to benefit as Bush's 
$401.7 billion military budget sharply increases spending on missile defense 
and on modernizing the Army. 


The biggest losers will be environmental, agricultural and energy programs. 
Facing the prospects of a revolt by fiscal conservatives, Bush will call for 
limiting growth in discretionary spending -- outside of homeland security and 
defense -- to just 0.5 percent. Because that is well below the rate of 
inflation, it will amount to a cut in domestic programs.

In a tacit acknowledgment that deficits are here to stay, Bush will set the 
goal of cutting the shortfall in half within five years. There is no longer 
talk of eliminating it. His budget envisions bringing this year's record $521 
billion shortfall down to $364 billion in fiscal 2005 and eventually to $237 
billion in fiscal 2009.

Bush has overseen a dramatic deterioration in the nation's fiscal picture 
since a record surplus was recorded in 2000, and his advisers hope to at least 
show some progress reducing the deficit -- even if only on paper -- before the 
November election.

Members of both parties are bracing for a bitter fight over Bush's tax and 
spending priorities, and many question whether any agreement can be reached.

Democrats scoffed at Bush's plan to stem the red ink while asking Congress to 
make permanent his tax cuts at a cost of nearly $2 trillion over the next 10 
years.

"He's promising a trillion-dollar tax cut and a trip to Mars. And he has a 
half-a-trillion-dollar deficit. Where do these Washington people think this 
money comes from? This is crazy," Democratic presidential hopeful Howard Dean 
said Sunday on NBC's "Meet the Press."

Fiscal conservatives -- who say government spending under Bush has grown at 
the fastest pace since the Johnson administration of the mid-1960s -- said the 
White House was relying on gimmicks such as stretching the definition of 
homeland security to sidestep its own spending limits.

Congressional aides and budget analysts say keeping troops in Iraq and 
Afghanistan could add $40 billion or more to the 2005 deficit.

And according to the Republican appropriators who divvy up federal funds each 
year, even a complete freeze in the spending targeted by Bush would cut the 
deficit by only a "minimal" $3 billion.

Some conservatives are already pushing Bush to make even deeper cutbacks after 
the White House acknowledged its newly enacted prescription drug plan would 
cost one-third more than the administration had advertised two months ago.

They want Bush to back up his tough talk about budget discipline by 
threatening to veto costly highway and energy bills.

"He's got to get really serious about budget control and really defend and 
enforce this budget if he's going to hold conservatives with him in the 
November elections," said Stephen Moore, president of the Club for Growth, a 
politically powerful conservative group.

The White House said it would do just that.

Bush will propose a 3.9 percent increase in overall discretionary spending to 
$818 billion in 2005.

While the Pentagon would get 7 percent more and homeland security a nearly 10 
percent increase, more than 60 government programs are expected to face cuts 
under Bush's plan.

Even some business tax breaks favored by Republicans will be reined in, 
including a package for energy production.

In a blow to a key constituency, Bush will not extend tax breaks that allow 
businesses to quickly write off half of the cost of investments in new 
equipment.

Bush will also put off even modest reform of the alternative minimum tax, 
which threatens to envelope the middle class. Instead, the administration will 
propose a one-year extension of the AMT provisions, setting aside the issue -- 
and the budget-busting $400-billion-plus price tag -- until later. 



_______________________________________________
heads mailing list
[email protected]
http://ballistichelmet.org/mailman/listinfo/heads/
http://ballistichelmet.org/donate/