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2004-01-04 -- Bush 2005 budget cuts to housing, vets, and jobless

New York Times, January 4, 2004

Bush's Budget for 2005 Seeks to Rein In Domestic Costs

By ROBERT PEAR

WASHINGTON, Jan. 3 - Facing a record budget deficit, Bush
administration officials say they have drafted an election-year budget
that will rein in the growth of domestic spending without alienating
politically influential constituencies.

They said the president's proposed budget for the 2005 fiscal year,
which begins Oct. 1, would control the rising cost of housing vouchers
for the poor, require some veterans to pay more for health care, slow
the growth in spending on biomedical research and merge or eliminate
some job training and employment programs. The moves are intended to
trim the programs without damaging any essential services, the
administration said.

Even with the improving economic outlook, administration officials
said, the federal budget deficit in the current fiscal year is likely
to exceed last year's deficit of $374 billion, the largest on record.

The Congressional Budget Office and the White House budget office have
projected a deficit of more than $450 billion this year.

But Joshua B. Bolten, director of the White House Office of Management
and Budget, has said the president's policies will cut the deficit in
half within five years, through a combination of economic growth and
fiscal restraint.

Mr. Bush's budget request, to be sent to Congress by Feb. 2, includes
several tax cut proposals, including new incentives for individual
saving and tax credits to help uninsured people buy health insurance.
The Democratic candidates for president have accused Mr. Bush of doing
little to halt the recent rapid increase in the number of uninsured.

Administration officials said the president's budget would call for an
overall increase of about 3 percent in appropriations for so-called
domestic discretionary spending, which excludes the Department of
Homeland Security, the Defense Department and insurance benefits like
Medicare and Medicaid.

As he completes work on his budget, Mr. Bush faces criticism from
conservatives, who say he has presided over a big increase in federal
spending, and liberals, who say his tax cuts have converted a large
budget surplus to a deficit.

Total federal revenues have declined for three consecutive years,
apparently the first time that has happened since the early 1920's.
But in those years, from 2000 to 2003, total federal spending has
increased slightly more than 20 percent, to $2.16 trillion last year.

Brian M. Riedl, an economist at the conservative Heritage Foundation,
said: "President Bush is not focusing on his fiscal conservative base
right now. He's trying to position himself in between conservatives in
Congress and the Democratic Party. It may be good politics, but it's
bad policy, a lost opportunity to get runaway government spending
under control."

White House officials deny that they have acquiesced in a domestic
spending spree. They insist, as do some liberal advocacy groups, that
appropriations for domestic programs are not exploding.

Such spending, they say, will increase 3 percent in 2004, after
increases of 5 percent in 2003, 6 percent in 2002 and 15 percent in
2001. Moreover, they say, increased corporate profits should lead to
an increase in corporate tax payments, lifting revenues in the coming
years.

Richard Kogan, a budget analyst at the Center on Budget and Policy
Priorities, a liberal-leaning research and advocacy group, said the
increase in military and domestic security spending in the last two
years dwarfed the increase in domestic discretionary programs, which
did not quite keep pace with inflation.

"The increases for defense, international affairs and homeland
security have been much greater - and thus have played a much larger
role in the return to deficits - than the increases for domestic
appropriations," Mr. Kogan said.

Housing officials said the administration was alarmed at increases in
the cost of vouchers, which provide rental assistance to low-income
families, and would take steps to prevent local housing agencies from
issuing more vouchers than Congress had authorized. Congress has
tentatively decided to provide $14.2 billion for renewal of vouchers
this year, an increase of about 15 percent.

Federal officials said they would also require families seeking
housing aid to help the government obtain more accurate information on
their earnings. As a condition of receiving aid, families would have
to consent to the disclosure of income data reported to a national
directory of newly hired employees. The directory was created under a
1996 law to help enforce child-support obligations.

Administration officials said the president's budget would also slow
the growth of spending at the National Institutes of Health, which
doubled in the last five years, reaching $27.1 billion in 2003.
Congress has tentatively agreed to provide $28 billion this year,
slightly more than Mr. Bush requested, and administration officials
said they would seek an increase of 3 percent or less for 2005.

Budget officials defended the proposal, saying they wanted to be sure
the agency was properly managing a huge infusion of federal money.

Mr. Bush proposed last year to double co-payments on prescription
drugs for many veterans, primarily those with higher incomes and no
service-connected disabilities. The White House reaffirmed its support
for that proposal in November.

In the last week, the Pentagon has been considering a new proposal to
increase pharmacy co-payments for retirees with at least 20 years of
military service. Under the proposal, the charge for a generic drug
would rise to $10, from $3, while the charge for a brand-name medicine
would rise to $20, from $9.

The Military Officers Association of America criticized this as "a
grossly insensitive and wrong-headed proposal." In e-mail messages to
the White House, members of the association asked Mr. Bush, "Why do
your budget officials persist in trying to cut military benefits?"

Col. Steven P. Strobridge, director of government relations at the
association, said he understood that the Pentagon was now inclined to
study the issue for a year and renew the proposal, as part of a
systematic effort to "reduce military health care costs."

Administration officials said they expected Mr. Bush to seek increases
of $1 billion, or 10 percent, for the education of children with
disabilities and $1 billion, or 8 percent, in Title I grants for
schools with high concentrations of students from low-income families.

Budget officials said they were concerned that they did not have
enough money for Pell grants to keep pace with a recent surge in
low-income students seeking help with college costs. They said Mr.
Bush would address that problem in some way, without seeking an
increase in the maximum grant, now $4,050.

The budget also seeks money to train more nurses, to encourage sexual
abstinence among teenagers and to recruit "volunteers in homeland
security," who can respond to emergencies, including terrorist
attacks.