Bush Budget Seeks Social Spending Cuts

The US president, George Bush, sent a $2,500bn (£1,346bn) budget to Congress today that seeks cuts in social spending while boosting funding for the military and homeland security.

Apart from defence, homeland security and the government's huge mandatory programmes such as social security - the federal pensions scheme - the administration proposes cutting spending for the rest of government by 0.5%.

The first such proposed cut since the Reagan administration grappled with its ballooning deficits, Mr Bush's budget is bound to spark ferocious battles in Congress as members seek to protect their various pet projects.

The Bush administration, which transformed a budget surplus into record deficits in its first term, described its 2006 budget as the most austere proposal since the Reagan era.

While the Pentagon and the new department of homeland security are among the budget's few winners, even they will have to endure a slight slowdown in growth after big increases following the September 11 2001 attacks.

Under the proposal, the Pentagon would $419.3bn, an increase of $18.2bn. But the 4.8% rise is smaller than the 7% boost in military spending Mr Bush requested for the 2005 financial year.

By contrast, the budget would cut farm programmes by 2.9% and squeeze $45bn in savings from the Medicaid health programme for the poor, while abolishing subsidies for the Amtrak rail system and cutting community development programmes by 4.5%.

Nine of the 15 cabinet agencies would see cuts, including an 11.5% reduction for the department of housing and urban development. Defenders of housing programmes warned the cuts will force communities to close youth centres and put vulnerable people such as the elderly at risk at a time "when wealthy Americans are enjoying the tax cuts that fuelled the deficit".

The spending document projects that the deficit will hit a record $427bn this year, the third year in a row of record deficits. The administration projects the deficit falling to $390bn in 2006, to $233bn in 2009 and to $207bn in 2010.

But critics contend that the deficit projections mask the costs of some Bush initiatives such as making his first-term tax cuts permanent, the bulk of which do not show up until after 2010. The budget puts the 10-year cost of making the president's tax cut proposals permanent at $1,290bn.

The spending plan for the 2006 budget year, which begins on October 1, counts on a healthy economy to boost revenues by 6.1% to $2,180bn. Spending, meanwhile, would grow by 3.5% to $2,570bn.

The budget leaves out some big items, such as the future costs of military operations in Iraq and Afghanistan, for which Mr Bush will request another $80bn in the coming days in addition to the $25bn provided for 2005.

The president is expected to send another big supplemental request for the Iraq war to Congress next year. Also left out of today's numbers is the huge borrowing required by plans to add private retirement accounts to social security. Democrats complained that Mr Bush was cutting programmes that help the needy in order to protect his first term tax cuts that primarily benefited the wealthy.

"This budget is part of the Republican plan to cut social security benefits while handing out lavish tax breaks for multimillionaires," said the Senate Democratic leader, Harry Reid. "Its cuts in veterans programmes, health care and education reflect the wrong priorities and its huge deficits are fiscally irresponsible."