Washington — President George W. Bush gave Americans a peek at a more austere future Monday, unveiling a budget that promised to halve the record $521-billion (U.S.) federal deficit in five years without sacrificing spending on the military and homeland security or his cherished tax cuts.
"The reason we are where we are in terms of the deficit is because we went through a recession, we were attacked and we're fighting a war," Mr. Bush said after a cabinet meeting at the White House. "These are high hurdles for a budget, and for a country, to overcome."
He acknowledged that reining in the deficit will require "fiscal discipline" after two years of soaring spending on everything from farm subsidies and education to the war in Iraq.
The $2.4-trillion budget comes as Mr. Bush faces increasingly harsh attacks on his handling of government finances and the economy, from both the right wing of his own Republican Party and from Democrats seeking to deny him a second term in the White House.
"The chickens are coming home to roost," said economist Peter Morici, a business professor at the University of Maryland. "The war in Iraq and the war on terrorism are very expensive. Something has got to give."
Mr. Bush's budget forecasts deficits totalling $1.35-trillion through 2009, pushing up the nation's debt load to $10.5-trillion.
In just three years, America's projected budgetary surpluses have melted away and most economists expect large deficits for most of the next decade.
The administration conceded that some hefty expenses aren't even included in Mr. Bush's proposed budget — including the roughly $50-billion a year it's costing to keep American troops in Iraq and Afghanistan.
The budget course charted by Mr. Bush is clearly unsustainable, said Kevin Hassett, director of economic studies at the pro-business American Enterprise Institute. Spending is "out of control" and the President shows no inclination to seriously tackle the problem, he said.
"The question for Mr. Bush is, how does he change from where he is to a more sustainable policy?" said Mr. Hassett, a former senior economist at the U.S. Federal Reserve Board. "He hasn't answered that with this budget."
Mr. Bush insisted that an economic turnaround, combined with spending restraint in all areas except homeland security and defence will cut the deficit to $364-billion in 2005, and in half by 2009. He wants to restrict most government spending increases to an average of less than 4 per cent a year, with cuts to more than 125 government programs and substantially less money for many departments, including the Environmental Protection Agency and the Agriculture Department.
That would be a startling about-face from the past two years, when discretionary spending averaged nearly 13 per cent. In the past, Congress has shown a reluctance to rein in spending unless bound by law to do so via mandatory spending caps.
William Niskanen, president of the right-wing Cato Institute, dismissed the proposed budget as "wishful thinking."
Democrats seized on the fact that Mr. Bush is also urging Congress to renew his tax cuts, a move that could cost the government up to $2.2-trillion over the next decade.
Massachusetts Senator John Kerry, front-runner in the Democratic race to oppose Mr. Bush in the November election, said the large deficit is depriving Washington of money for things Americans really care about, such as health care and education. "This is the same failed Republican prescription that has caused Bush to lose 2.5 million jobs in the last three years," Mr. Kerry said. "The President clearly does not understand the economic, social and security challenges that our nation faces today."
"The President's budget is just the beginning of a long haul, with many planned and unforeseen bumps in the road," said Kim Wallace, an analyst at Lehman Brothers in Washington. Economists also warned that government failure to tackle the deficit soon could push up interest rates and further undermine the already fragile U.S. dollar.
