and big deficits
Eds: UPDATES with 12 grafs of detail from budget. Moving on general
news and financial services.
By MARTIN CRUTSINGER
AP Economics Writer
WASHINGTON (AP) - President Bush unveiled a $3.1 trillion budget
on Monday that supports sizable increases in military spending to
fight the war on terrorism and protects his signature tax cuts.
The spending proposal, which shows the government spending $3
trillion in a 12-month period for the first time in history,
squeezes most of government outside of national security, and also
seeks $196 billion in savings over the next five years in the
government's giant health care programs - Medicare for the elderly
and Medicaid for the poor.
Even with those savings, Bush projects that the deficits, which
had been declining, will soar to near-record levels, hitting $410
billion this year and $407 billion in 2009. The all-time high
deficit in dollar terms was $413 billion in 2004.
Bush's final full budget is for the 2009 fiscal year, which
begins on Oct. 1. It proposes spending $3.1 trillion, up 6 percent
from projected spending of $2.9 trillion in the current budget
Part of the deficit increase this year and next reflects the
cost of a $145 billion stimulus package of tax refunds for
individuals and tax cuts for business investment that Bush is
urging Congress to pass quickly to try to combat a threatened
Bush projects that the deficit will decline rapidly starting in
2010 and will achieve a $48 billion balance in 2012.
But Democrats said that forecast was based on flawed math that
only included $70 billion for the wars in Iraq and Afghanistan in
2009 and no money after that and also failed to include any
provisions after this year for keeping the alternative minimum tax,
originally aimed at the wealthy, from ensnaring millions of
middle-class taxpayers. The Congressional Budget Office estimates
that fixing the AMT in 2012 would cost $118 billion, more than
double the surplus Bush is projecting for that year.
Even some Republicans faulted Bush's budget sleight of hand.
"They've obviously played an inordinate number of games to try
to make it look better," Sen. Judd Gregg, the top Republican on
the Budget Committee, said in an interview with The Associated
"Let's face it. This budget is done with the understanding that
nobody's going to be taking a long, hard look at it," said Gregg,
Bush's spending blueprint sets the stage for what will probably
be epic battles in the president's last year in office, as both
parties seek to gain advantages with voters heading into the
The 6 percent overall increase in spending for 2009 reflects a
continued surge in spending on the government's huge benefit
programs for the elderly - Social Security and Medicare, even with
the projected five-year savings of $196 billion over five years.
Those savings are achieved by freezing payments to hospitals and
other health care providers. A much-smaller effort by Bush in this
area last year went nowhere in Congress.
While Bush projects that total security funding in the areas of
the budget controlled by annual appropriations will go up by 8.2
percent, he projects only a 0.3 percent increase in discretionary
spending for the rest of government.
To achieve such a small boost, Bush would hold hundreds of
programs well beyond what is needed to keep up with inflation. He
also seeks to eliminate or sharply slash 151 programs he considers
Bush targeted many of the same programs last year but Congress
rejected the effort.
(Copyright 2008 by The Associated Press. All Rights Reserved.)