Bush proposes $3.1-trillion budget

February 5th 2008 - President Bush unveiled a $3.1-trillion budget today that would boost military spending and trim health benefits for retirees. The proposal was immediately tagged by Democrats as “irresponsible.”

The first spending plan in history to top $3 trillion would freeze or eliminate many domestic spending programs yet still rack up a $407-billion deficit for fiscal 2009, which begins Oct. 1. The Pentagon is the only department for which Bush proposes a significant increase; its budget would grow 7.5% to $515 billion.

“It’s a good budget,” Bush said after meeting with his Cabinet. “It’s a budget that achieves some important objectives. One, it understands our top priority is to defend our country, so we fund our military as well as fund the homeland security.”

Because Bush is leaving office in a year, his budget proposal is largely an academic exercise. The Democratic-controlled Congress has responsibility for proposing and passing budget bills, and it’s unlikely to adopt his priorities.

The plan’s significance is mostly political. Bush’s proposal seeks to codify the policies he considers his legacies as president, namely the tax cuts he won in 2001 and 2003; significant increases in military spending; and a few education programs, including his No Child Left Behind legislation.

For Democrats, the Bush budget provides a summary of the policies of his administration they find most egregious: the war in Iraq, tax cuts that worsened the federal deficit, and the squeezing of social programs such as Social Security and Medicare.

“This budget is fiscally irresponsible and highly deceptive, hiding the costs of the war in Iraq while increasing our skyrocketing debt,” said Senate Majority Leader Harry Reid (D-Nev.). “President Bush’s fiscal policies are the worst in our nation’s history – he has turned record surpluses into record deficits – and this budget is more of the same.”

Bush said the proposal would balance the federal budget by 2012. But Democrats said it would do so by relying on accounting tricks, including ignoring most funding for the Iraq war and pretending that the government would essentially permit a huge tax increase on the middle class by not rescinding the alternative minimum tax after Bush leaves office.

“The president proposes more of the same failed policies he has embraced throughout his time in office – more deficit-financed war spending, more deficit-financed tax cuts tilted to benefit the wealthiest and more borrowing from foreign nations like China and Japan,” said Sen. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee.

The deficit projections are also worsened by the $146-billion economic stimulus package negotiated between the administration and Congress in an effort to soften or forestall a feared recession. The budget assumes a 3% increase in gross domestic product this year, a rate that is unlikely if the economy continues to slow down as it has in recent months.

“When President Bush took office, the national debt stood at $5.7 trillion,” said Rep. John M. Spratt Jr. (D-S.C.). chairman of the House Budget Committee. “Today it is $9.2 trillion and rising, projected to increase to $9.7 trillion by the time President Bush leaves office – up by $4 trillion in eight years. This is the legacy our children and grandchildren will inherit from the fiscal policy of this administration.”

But the administration hailed the budget as balanced and innovative.

In a cost-saving gesture, the government for the first time did not provide free copies of the four-volume proposal to Congress, instead releasing it online and charging $200 per printed copy ordered through the Government Printing Office.

“It’s not only an innovative budget, in that it’s coming to Congress over the Internet, it’s a budget that’s balanced – gets to balance in 2012 and saves taxpayers money,” Bush said.

A hefty chunk of the proposed savings would come from the government’s two giant healthcare programs, Medicare and Medicaid, but leading Democratic lawmakers have already called the cuts unacceptable.

Medicare, which serves about 44 million seniors and disabled people, would be squeezed by $178 billion over five years, reducing its growth from an average of 7.2% a year to 5% a year. At least $115 billion of the savings would come from reduced payments to hospitals, according to initial calculations by a senior Democratic congressional aide. Hospitals and other providers in traditional Medicare would face the sharpest cuts, and private health insurance plans that now constitute one of the fastest-growing parts of the program would get only a light trim, critics said.

Over 10 years, Bush’s proposed Medicare savings would grow to $556 billion.

The president also called for reductions totaling $17 billion over five years in Medicaid, a federal-state partnership that serves some 55 million people, including the poor and many elderly nursing home residents.

Although the scale of Bush’s Medicare reductions appear to be far beyond what Congress would accept, some of his specific proposals may make into law. Congress must act by the summer to roll back a scheduled cut in Medicare fees to doctors, and it will have to consider cutting other parts of the program to offset the added costs of protecting physicians.

Addressing other health priorities, Bush proposed a modest increase in the Food and Drug Administration’s food safety budget, but some critics said it would do little more than offset inflation. And public health advocates protested a proposed 7% cut for the Centers for Disease Control and Prevention.