updated 1/31/2008 4:50:34 PM ET 2008-01-31T21:50:34

President Bush’s 2009 budget will virtually freeze most domestic programs and seek nearly $200 billion in savings from federal health care programs, a senior administration official said Thursday.

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The Bush budget also will likely exceed $3 trillion, this official said.

Bush on Monday will present his proposed budget for the new fiscal year to Congress, where it’s unlikely to gain much traction in the midst of a presidential campaign. The president has promised a plan that would erase the budget deficit by 2012 if his policies are followed.

Bush will propose nearly $178 billion in savings from Medicare — a number that’s nearly triple what he proposed last year. Much of the savings would come from freezing reimbursement rates for most health care providers for three years. An additional $17 billion would come from the Medicaid program, the state-federal partnership that provides health coverage to the poor. The cuts would come over five years.

The official, whose spoke on condition of anonymity because the budget has not yet been released, said the budget for domestic programs would look like last year’s.

“It’s a very small increase,” he said. “Very small.”

A second official, who also spoke on condition of anonymity, said that domestic discretionary spending would increase by less than 1 percent under Bush’s proposal.

The budget is likely to have deficits of about $400 billion for this year and next.

Economists say the best measure of the deficit is to compare it against the size of the economy. By that standard, a $400 billion deficit represents almost 3 percent of the gross domestic product. By contrast, President Clinton was facing deficits in the 4 percent range when he felt compelled to tackle the issue in 1993.

One official made that clear that Medicare would continue to grow, but not as quickly as had been expected. “Medicare will grow at 5 percent. It just won’t grow over 7 percent,” said this official.

Savings also would come by charging wealthier people higher monthly premiums for Medicare’s drug program.

Last year, Congress declined to go along with the nearly $65 billion in savings the president proposed for Medicare over five years, and that proposal pales in comparison with the savings he now seeks.

Independent experts have warned that the government needs to address the rising cost of health care for businesses to stay competitive and for the government to be able to pay for other important programs in the decades ahead.

“In fact, if there is one thing that could bankrupt America, it’s runaway health care costs. We must not allow that to happen,” David M. Walker, the U.S. comptroller general, told lawmakers Tuesday during a congressional hearing.

But Democrats said Bush’s budget targets the wrong health care providers for cuts. They said insurers subsidized to provide Medicare coverage are being overpaid.

“The president is proposing to once again slash health care coverage for seniors and low-income working Americans,” House Speaker Nancy Pelosi, D-Calif., said. “The president’s cuts are exactly the wrong medicine when the cost of health care and the number of uninsured continue to rise and families are feeling economically insecure.”

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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