Bush budget enshrines tax cuts, trims 141 federal programs

The $2.77 trillion budget calls for an increase in defense and homeland security spending, but belt-tightening in other areas.

By Rob Hotakainen and Aaron Blake, Star Tribune Washington Bureau

Last update: February 7, 2006 - 12:35 AM

WASHINGTON - Seeking to cut the deficit in half by 2009, President Bush asked Congress Monday to make his first-term tax cuts permanent and to cut or eliminate 141 government programs, more than a quarter of them in education.

The cuts in domestic programs and a call for Medicare curbs promise to bog down in a Congress already roiled by election-year politics.

"It's a heavy lift," said Senate Budget Committee Chairman Judd Gregg, R-N.H. "There's no question it's going to be a challenge."

The proposals are part of the president's $2.77 trillion budget for 2007, which would push the federal deficit to a record $423 billion. It calls for a 2.3 percent increase in spending. The White House said its tax cuts would produce more jobs, fatten government revenues and eventually lower the deficit.

Defense spending, with a proposed budget of $439 billion, would rise by 7 percent, one of the biggest winners. The budget includes a 2.2 percent increase in basic military pay.

Hospitals and nursing homes would be hit hard with a proposal to cut Medicare spending by $36 billion over five years. Farm groups complained that they'd suffer from a proposal to reduce subsidy payments by 5 percent. Advocates for the poor noted that spending on food stamps would be reduced by $706 million over five years.

"This focuses the cuts on the low-income, vulnerable people," said Nan Madden, director of the Budget Project of the Minnesota Council of Nonprofits.

The budget built on several themes outlined in Bush's State of the Union message last week.

The president proposed spending 22 percent more on research and development for alternative energy sources, including solar, wind, nuclear, batteries for hybrid and electric cars, hydrogen and biomass. Bush's goal is to replace 75 percent of oil imports in the Middle East by 2025.

Competitiveness Initiative

And he suggested that states could benefit by participating in a $5.9 billion American Competitiveness Initiative that would, among other things, provide training for 70,000 teachers in math and science.

"I'm just kind of salivating over getting some of that money so that we can grow our high school initiatives," said Minnesota Education Commissioner Alice Seagren. She said the new national program would fit well with what Minnesota is already doing in the areas of math and science.

Bush proposed to eliminate or cut 42 education-related programs to save nearly $3.5 billion. They range from civic education to arts in education to dropout prevention. He also proposed creating a $100 million "school choice" program that would create grants that could be used to pay for the cost of attending private schools.

Many Democrats criticized Bush, saying the budget did not include all of the anticipated costs of fighting the wars in Iraq and Afghanistan.

"It is more of the same from this administration -- wealthy Americans and special interests win, at the expense of students, seniors, farmers, and veterans," said Sen. Mark Dayton, D-Minn.

Dayton said the budget singles out law enforcement, including the elimination of a grant program that combats the spread of methamphetamine and other drugs in local communities.

In 2005, Minnesota received $7 million from the program to fund 21 drug task forces throughout the state.

Sen. Norm Coleman, R-Minn., called the budget "a blueprint for fiscal responsibility" but expressed caution about some of the president's proposed cuts in areas such as agriculture, Medicare, education and community development block grants.

"While fiscal discipline must be our priority, there are some places where the president's budget either cuts too deeply or fails to recognize the positive impact of a program," Coleman said.

'Jeopardizing economic freedom'

Rep. Betty McCollum, D-Minn., said the budget would require $247 billion of interest to be paid on the national debt: "This massive borrowing from Chinese and Saudi creditors to pay for special interest tax giveaways and the Iraq war is seriously jeopardizing America's economic freedom."

Defending his tax cuts, Bush said that they have strengthened the economy and that his new spending plan would allow Americans "to live in a nation that is more prosperous and more secure."

"A tax increase is the wrong prescription, not only for the nation's economic health, but also for the government's fiscal health," said Joshua Bolten, director of the White House Office of Management and Budget. "We are not an under-taxed society."

The president's budget is the opening salvo in a months-long effort to shape the nation's spending priorities in the next fiscal year, which begins Oct. 1.

"This sets off the sitting around the table, just as any family would, to discuss what are our priorities and how do we balance those priorities with the need to be fiscally responsible," said Rep. Mark Kennedy, R-Minn., who called Bush's plan "a tight budget."

David Strom, president of the Taxpayers League of Minnesota, called the budget "too big and very modest in terms of pointing in the direction of reform."

Washington Bureau Correspondent Kevin Diaz and the Associated Press contributed to this report. Rob Hotakainen is at rhotakainen@startribune. com. Aaron Blake is at ablake@startribune.com

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