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Bush issues new budget plan


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Bush's $2.77 Trillion Budget Plan Calls for Medicare Cuts

By JOHN O'NEIL

Published: February 6, 2006

President Bush submitted a $2.77 trillion budget plan to Congress today that calls for cutting the growth of Medicare and putting tight limits on most spending not related to national security.

Mr. Bush also repeated his call for Congress to make tax cuts passed earlier in his administration permanent.

In his message to Congress, Mr. Bush emphasized money allocated to the departments of defense and homeland security, which would see increases of 7 percent and 8 percent if the budget were adopted.

"My administration has focused the nation's resources on our highest priority: protecting our citizens and our homeland," Mr. Bush said in his budget message. "Working with Congress, we have given our men and women on the frontlines in the war on terror the funding they need to defeat the enemy and detect, disrupt and dismantle terrorist plots and operations."

The plan calls for eliminating or making deep cuts in 141 programs for a savings of almost $15 billion, but would provide more money for preparations for a possible outbreak of bird flu and promotion of the physical sciences.

The biggest proposed savings were in entitlements, whose projected totals would come down by $65 billion over the next five years. In what may become the budget's most contentious proposal, the growth of Medicare spending would be cut by $36 billion over that time.

Mr. Bush's budget director, Joshua Bolten, called Medicare "unsustainable" as it currently stands, and said Mr. Bush remained committed to fundamental changes in entitlement spending, despite the failure of his call to revamp Social Security last year.

"As with Social Security and Medicaid, we do not need to cut Medicare, but we do need to slow its growth, and this budget begins to do just that," Mr. Bolten said at a televised briefing.

The budget plan submitted to Congress today covers the 2007 fiscal year, which will begin on Oct. 1. The total of $2.77 trillion in spending called for would be up by 2.3 percent from projected spending of $2.71 trillion this year.

The plan includes $50 billion for covering the cost of military operations in Iraq or Afghanistan into the next fiscal year, although administration officials said last week that requests would be submitted soon for supplemental spending for the current year for the wars and for the aftermath of Hurricane Katrina.

The budget office released a new estimate saying that the deficit for the current fiscal year would be $423 billion, a record high, up from its midyear estimate of $341 billion. The new budget projects the deficit to fall to $354 billion in the 2007 fiscal year, and to $183 billion in 2010.

Mr. Bolten said the costs of the war in Iraq and of Katrina relief had played a large role in driving up this year's deficit.

"The good news is that those costs aren't baked into the budget," Mr. Bolten said. "Those are ones that should dissipate substantially over time."

Mr. Bolten said that extending the tax cuts while holding down spending would allow the economy to grow, while "a vigorous policy of spending restraint" would bring down the deficit.

Over all, almost everything within the category known as discretionary non-security spending — things that don't involve security or entitlement programs, like Social Security, Medicare or Medicaid — faces cuts or tight constraints.

Democrats responded to the budget by questioning both its policy choices and its presentation of the true picture of the nation's fiscal health.

"The nation needed a new budget plan this year, a dramatic and bold acknowledgment from this administration that we need to put our fiscal house back in order," said Senator Kent Conrad of North Dakota. "Instead, we got more of the same — more deficits, more debt, and more hiding of the truth from the American people."

The Senate's minority leader, Harry Reid of Nevada, said the cuts proposed were the cost of what he called "the Republican culture of corruption."

"While working Americans are facing higher prices for everything from health care to gas to college tuition this president's budget continues to hand out costly, budget busting favors for special interests like the drug, oil, and H.M.O. industries," he said. "After creating record deficits and debt with his budget busting tax breaks, the president is asking our seniors, our students, and our families to clean up his fiscal mess with painful cuts in health care and student aid."

But Senator Judd Gregg, a New Hampshire Republican who is chairman of the Budget Committee, said the attention to holding down Medicare spending was critical.

"We have to face up to this fiscal reality that this baby boom generation is going to retire soon and we need to do something about it," he said.

The Speaker of the House, Representative J. Dennis Hastert, a Republican from Illinois, praised the budget but in terms that emphasized the need to hold down costs. "Make no mistake," he said in a statement. "This House of Representatives will keep a sharp eye on controlling spending throughout this budget process."

Other proposals in the budget include:

* An increase of 2.2 percent in base military pay.

* Money to provide for 1,500 new border patrol agents.

* Changes meant to promote health savings accounts, which are low-cost, high-deductible plans linked to a tax-free savings account.

* An increase of 22 percent in funds for research into clean sources of energy.

* An American Competitiveness Initiative that would get $5.9 billion. Most of that would go to tax credits for research and development, and other funds would go to recruit new math and science teachers.

While presidents traditionally submit budget proposals, budget making is a Congressional prerogative, and even when the same party controls the White House and Capitol Hill, few presidential plans are ever adopted without major changes.

This year's budget negotiations are sure to be complicated by awareness of Congressional elections in the fall.

The Republican Party, in particular, has been caught in recent months between pressures from its different wings. Ever since the passage of billions in aid for victims of Hurricane Katrina, conservatives in the House of Representatives have been stepping up their calls for reining in spending as a way of bringing down the deficit. But Republican moderates have been nervous about cutting popular programs, and cuts far smaller than those proposed today by President Bush passed only by narrow margins late in the year.

There were few sweeping proposals in the budget. On Social Security, Mr. Bush said in his State of the Union address last month that he would seek to work with both parties in a new commission he plans to appoint to study entitlement programs.

Mr. Bolten, the budget director, acknowledged that "being in an election year makes it even more difficult to take up something as controversial as fundamental Social Security reform."

A different perspective was offered on Sunday by Douglas Holtz-Eakin, who was President Bush's top economic adviser before becoming head of the Congressional Budget Office from 2003 to 2005.

"The federal budget does not add up," Mr. Holtz-Eakin wrote in an op-ed article in The Washington Post.

Mr. Holtz-Eakin, now a fellow at the Council on Foreign Relations, said the projections used in budget making overstate revenue prospects and understate the looming costs of entitlements for retiring Baby Boomers.

"I'd rather not raise taxes, but unless government remains at its traditional size, I don't see any way around it," he wrote. And any "serious approach" to budget making "should rethink the package of support for old-age medical care, long-term care services and retirement income."

"But most of all," he said, "a serious approach should make sure that the budget adds up."

Well, who can really be surprised that they're taking money ftom the sick and elderly to support the war?

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To be fair, no matter how "secure" we are anyone can attack us. It's just that it'll be harder for them to do it. But if they really want to, they can certainly execute an attack.

We are the greatest military power in the world by more then ten times. And yet over three thousand civilians were killed.

No matter how much we spend we cannot always stop an attack like that.

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Yeah, I see nothing wrong with increasing the homeland security budget. The defense of the country should be our number one priority. The problem, of course, is that the Bush administration has a tendency to take away freedoms in the name of security... and still do a bad job of protecting the country. :mellow:

How much more money do we need? You can see the chart. What's the point of protecting a country from attack if it's crumbling from a lack of social welfare?

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I know that chart is well known, but I'd like to see a source for it. I don't really doubt it, but as I said they raise the military budget, take away civil liberties, and still don't do a good job of protecting the country. They're missing the critical point, which is the airports.

My point is that I see no problem with the concept of raising the security budget, but the Bush administration is horrible at mangaging it usefully.

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The way I see it...

More than half the US budget goes to the military. What this says to me is that if we stopped funding the military, everything else would get twice as much funding. Which would pretty much solve all of our current problems.

There's the small issue of not having a military, but really... The government has gotten us into trouble, and there's no reason why Americans should die so that friends of the people in government should get rich.

I understand the reason for National Defense. I just don't think we need even a quarter of what we have. The US could pretty much do anything it wants with this army it's got. And I think that's a problem.

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This is a poorly thought out plan. We need more money in the realm of medical and educational support over homeland security and tax cuts. But no one said Bush and crew were any good at planning for the future.

Bush Krew: Give the people tax breaks! Let them eat cake!

every reasonable economist in the world: Um, sir, I really, REALLY don't think that is the best course of actio-

Bush Krew: DO IT!

*cough*

Thank god more money is being put toward the military eh? It's not like they don't have a ridiculous amount already. Whew.

Some could argue that the military needs that much money, because due to being the numero uno powerhouse of the world, you've got to protect yourself, but considering the sheer amount of money involved it still doesn't make much sense.

"But we need more missles!"

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