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In '05 budget tax breaks, spending scaled back

By Wire services
Published February 1, 2004

WASHINGTON - President Bush's $2.4-trillion budget for 2005 would ease away from tax breaks for energy and business favored by Republicans while cutting spending on programs from the environment to community development, GOP officials said Saturday.

Bush's election-year fiscal plan, which he plans to ship to Congress on Monday, also envisions cutting spending on agriculture, natural resources and energy, the Associated Press reported, citing GOP officials it did not identify. Further reflecting the pressures of mounting federal deficits, his plan will edge only slightly toward the extra highway spending members of both parties demand, according to the report. Included is a smaller package of tax breaks for energy production than the $23-billion he supported last year.

The president's budget, already known to predict an unprecedented $521-billion deficit this year, projects the red ink will fall to $363-billion next year.

In 2009, when Bush has pledged to cut the shortfall in half, it would be a projected $237-billion. In Philadelphia on Saturday to address GOP lawmakers, Bush said cutting the red ink in half is an "important goal."

The largest deficit on record in dollar terms was last year's $375-billion. The soaring shortfalls and spending have angered conservative Republicans and prompted them to pressure Bush to produce a budget that takes clear, strong steps toward controlling spending and federal shortfalls.

In his remarks to lawmakers, Bush stressed the austerity he said his fiscal blueprint would impose.

"You spend, I propose," he said, acknowledging the division of power between the executive and legislative branches. "Together we're responsible. And this is going to be a challenging year for making sure we spend the people's money wisely."

GOP aides said those remarks echoed similar, earlier comments at the three-day meeting by White House budget director Joshua Bolten. They said the statements seemed to hint that the administration was willing to negotiate deeper spending cuts.

Democrats scoff that Bush has been anything but a fiscally responsible leader. Halving the deficit in five years masks the far more serious longer-term pressures the budget will face from his plan to make earlier tax cuts permanent or from the looming retirement of the baby boom generation, they said.

"He's not leveling with the American people how serious this thing is," said Sen. Kent Conrad of North Dakota, top Democrat on the Senate Budget Committee.

Bush's fiscal blueprint will propose letting annual spending controlled by Congress grow by 3.9 percent, from $787-billion to $818-billion next year, the officials said. Those figures exclude both the extra $87-billion approved last year for wars in Iraq and Afghanistan and a new request for those operations the administration says it expects to make early next year.

White House officials have already said that within that total, defense and domestic security would get large increases and everything else would be held to growth of 0.5 percent. That is less than the rate of inflation.

Foreign aid, education and job training would also be allowed to grow, the officials said. But agriculture, natural resources, environment, energy and community development would all be cut from this year's levels.

Officials said Bush will not propose extending a law temporarily letting companies take faster write- offs for the costs of equipment they buy. That tax break is due to expire at year's end.

Bush's budget will also propose $23-billion for one year only to keep growing numbers of Americans from having to pay the alternative minimum tax. That is short of the hundreds of billions needed to fix the problem. That tax was designed to prevent wealthy people from avoiding taxes, but inflation is forcing more middle-income people to face that levy.

Budget highlights

Some numbers from the $2.4-trillion budget for 2005 that President Bush will release Monday, as described by Republican officials.

Overall 2005: Spending $2.399-trillion, receipts $2.036-trillion, deficit $363-billion.

Deficits: $521-billion in 2004, $363-billion in 2005, $267-billion in 2006, $241-billion in 2007, $239-billion in 2008; $237-billion in 2009.

Overall discretionary spending, the money Congress approves annually: $787-billion in 2004, $818-billion in 2005. Figures exclude extra money approved for wars in Iraq and Afghanistan for this year and that administration says it expects to request early next year.

Some categories of discretionary spending:

Natural resources and environment: $30.4-billion in 2004, $28-billion in 2005.

Energy: $3.6-billion in 2004, $3.5-billion in 2005.

Community development: $15-billion in 2004, $13.2-billion in 2005.

International affairs: $26.8-billion in 2004, $31.6-billion in 2005.

Defense: $393.5-billion in 2004, $420.7-billion in 2005;

Education: $78-billion in 2004, $80.4-billion in 2005.

[Last modified February 1, 2004, 01:45:59]

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