Bush seeks cuts to meet deficit pledge
President George W. Bush challenged Congress yesterday to cut domestic spending in an effort to meet his pledge to halve the US deficit by the time he leaves the White House.
In the toughest budget request of his presidency, Mr Bush called for savings at the departments of education, transport, housing and urban development and at the Environmental Protection Agency.
With a 4.8 per cent increase, to $419bn (€328bn, £225bn), at defence, the proposals would cut discretionary domestic spending outside national security by 0.7 per cent. Overall discretionary spending, with an increase of 2.1 per cent, would also be kept below the rate of inflation. Mr Bush called it “a budget that sets priorities. Our priorities are winning the war on terror, protecting our homeland, growing our economy.”
But experts warned that the president’s proposed restraint in only a small part of government would be insufficient to bring the US deficit under control. Mandatory spending, including pensions and healthcare for the elderly and poor, now represents more than half of government outlays and costs are rising fast.
The programmes targeted by Mr Bush – discretionary spending, excluding defence and homeland security – represent less than 20 per cent of total spending.
The White House forecasts a deficit of $427bn for 2005, falling to $233bn by 2009. These estimates do not include the cost of the operations in Iraq, the possible transition costs of reforming Social Security, or of fixing the alternative minimum tax – a levy for the rich that will start to encroach on the middle classes.
Democrats said that the administration’s second-term goals – extending the tax cuts of its first term and reforming Social Security – would start to damage the fiscal outlook after 2009.
There was also a risk that Congress showed even less restraint than the president, experts said.
One proposed cut that the Congress is unlikely to accept is to ending support for Amtrak, the national rail service. Last year’s subsidy of $1.2bn was granted despite calls from the president to cut it to $900m. So far, Mr Bush has never backed his calls for fiscal restraint by using his presidential veto to block a spending bill.
During his first term, overall spending rose at its fastest rate since the mid-1970s, according to the Office of Management and Budget – by 7.9 per cent in 2002, 7.4 per cent in 2003, 6.1 per cent in 2004 and 8.2 per cent in 2005.
Spending growth has averaged 7.4 per cent a year under Mr Bush compared with 3.5 per cent under Bill Clinton, his predecessor.
In the toughest budget request of his presidency, Mr Bush called for savings at the departments of education, transport, housing and urban development and at the Environmental Protection Agency.
With a 4.8 per cent increase, to $419bn (€328bn, £225bn), at defence, the proposals would cut discretionary domestic spending outside national security by 0.7 per cent. Overall discretionary spending, with an increase of 2.1 per cent, would also be kept below the rate of inflation. Mr Bush called it “a budget that sets priorities. Our priorities are winning the war on terror, protecting our homeland, growing our economy.”
But experts warned that the president’s proposed restraint in only a small part of government would be insufficient to bring the US deficit under control. Mandatory spending, including pensions and healthcare for the elderly and poor, now represents more than half of government outlays and costs are rising fast.
The programmes targeted by Mr Bush – discretionary spending, excluding defence and homeland security – represent less than 20 per cent of total spending.
The White House forecasts a deficit of $427bn for 2005, falling to $233bn by 2009. These estimates do not include the cost of the operations in Iraq, the possible transition costs of reforming Social Security, or of fixing the alternative minimum tax – a levy for the rich that will start to encroach on the middle classes.
Democrats said that the administration’s second-term goals – extending the tax cuts of its first term and reforming Social Security – would start to damage the fiscal outlook after 2009.
There was also a risk that Congress showed even less restraint than the president, experts said.
One proposed cut that the Congress is unlikely to accept is to ending support for Amtrak, the national rail service. Last year’s subsidy of $1.2bn was granted despite calls from the president to cut it to $900m. So far, Mr Bush has never backed his calls for fiscal restraint by using his presidential veto to block a spending bill.
During his first term, overall spending rose at its fastest rate since the mid-1970s, according to the Office of Management and Budget – by 7.9 per cent in 2002, 7.4 per cent in 2003, 6.1 per cent in 2004 and 8.2 per cent in 2005.
Spending growth has averaged 7.4 per cent a year under Mr Bush compared with 3.5 per cent under Bill Clinton, his predecessor.
May 24, 2005
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