Wed, Feb 06, 2002 page1

• Bush maps out US$2.1 trillion budget

  WAR FOOTING Deficits and reduced domestic spending are part of the US president's plan to pay for a massive military buildup in the wake of the Sept. 11 terrorist attacks

  • REUTERS
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  Literally wrapping his US$2.1 trillion budget in the flag, US President George W. Bush on Monday proposed bringing back deficits and curbing domestic spending to pay for the biggest military buildup in two decades to thwart attacks like those of Sept. 11.

  Democrats, while supportive of boosting defense and homeland security, accused Bush of slighting domestic needs in favor of a new round of tax cuts, and of employing accounting practices worthy of now-bankrupt Enron Corp.

  The response made clear that the budget would be a battleground this congressional election year.

  As was his presidency, Bush's budget priorities were transformed by the September attacks and the recession that deepened in its wake. The White House cited both to justify a budget that will plunge the federal government into deficits for the first time in five years and interrupt efforts to reduce the national debt.

  "The budget for 2003 recognizes the new realities confronting our nation," Bush said in the budget, its cover adorned with the Stars and Stripes to match the country's patriotic mood. "It is a plan to fight a war we did not seek -- but a war we are determined to win."

  Accordingly, Bush's budget would boost military and homeland security spending by 12 percent and 111 percent respectively, while allowing a scant 2 percent increase for most domestic programs.

  Bush targets the Labor Department, the Army Corps of Engineers, the Environmental Protection Agency and many other domestic programs for cuts as part of an effort to shift federal resources to the war against terrorism and away from programs the White House deems wasteful.

  Bush also asks for an additional US$591 billion in tax relief over the next decade.

  On top of his hotly contested economic stimulus plan, Bush wants Congress to extend income tax rate reductions, marriage penalty relief, child tax credits and estate tax cuts that were part of the US$1.35 trillion package that Congress passed last year.

  The extensions would cost US$344 billion.

  Democrats warned that these new tax cuts and accompanying higher debt interest costs could drain more than US$800 billion from Social Security and Medicare surpluses, weakening the retirement and health care programs as the baby boom generation approaches retirement.

  Chairman of the Senate Budget Committee Kent Conrad, a Democrat, suggested the White House was following the lead of Enron, the energy trader and Bush campaign backer that collapsed last year. "I was struck by how this budget takes the country down the same road," Conrad said.

  "This bomb now, pay later approach is fiscally irresponsible," said Representative Charles Rangel, the ranking Democrat on the House Ways and Means Committee.

  Some conservative Republicans also complained that under Bush's plan the government would post deficits of US$106 billion in fiscal 2002, US$80 billion in 2003 and US$14 billion in fiscal 2004. Likewise, the debt held by the public would increase from US$3.48 trillion this year to US$3.6 trillion in fiscal 2004, before beginning to decline in 2005.

  The White House defended its spending plan and expressed confidence Bush would get much of what he wants. "It's the right balance," budget chief Mitchell Daniels said.

  Under Bush's plan, the military would benefit most, with a proposed increase of US$48 billion in fiscal year 2003, including a US$10 billion contingency fund. Bush anticipates a cumulative total of US$423 billion in new military spending through 2007.

  If approved by Congress as expected, it would be the largest increase in military spending since former president Ronald Reagan's Cold War-era buildup 20 years ago.

  Daniels said the Pentagon may need even more money because the US$10 billion contingency "might not last more than a few months."

  Bush also proposes more than doubling spending on homeland security to US$37.7 billion in 2003, including US$5.9 billion to combat bioterrorism and US$10.6 billion to help stop would-be terrorists at the border.
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