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$3T Bush budget to trim domestic programs

Keeping troops in Iraq for another year and a half will cost nearly a quarter-trillion dollars - about $800 for every man, woman and child in the U.S. - under the budget President Bush will submit to Congress Monday.
/ Source: The Associated Press

Keeping troops in Iraq for another year and a half will cost nearly a quarter-trillion dollars - about $800 for every man, woman and child in the U.S. - under the budget President Bush will submit to Congress Monday.

Bush will ask for $100 billion more for military and diplomatic operations in Iraq and Afghanistan this year and seek $145 billion for 2008, a senior Pentagon official said Friday. Those requests come on top of about $344 billion spent for Iraq since the 2003 invasion that toppled Saddam Hussein.

At the same time, Bush's budget request will propose cost curbs on Medicare providers, a cap on subsidy payments to wealthier farmers and an increase to $4,600 in the maximum Pell Grant for low-income college students.

Bush's proposal, totaling almost $3 trillion for the budget year starting Oct. 1, will kick off a major debate with the new Democratic-controlled Congress. Democrats are sure to press for more money for domestic programs, and they've signaled they won't consider renewing Bush's tax cuts until closer to 2010, when they are to expire.

The White House plan will produce a surplus in 2012, budget director Rob Portman said Friday - assuming strong growth in tax revenues, continued curbs on domestic agencies' spending and relatively modest cuts to farm programs, Medicare and the Medicaid health care program for the poor and disabled.

Bush's plan assumes Congress extends the two rounds of tax cuts that were passed in 2001 and 2003.

Health care
Portman said Bush's budget submission contains about a 1 percentage point cut in the rapid growth in Medicare - which averages almost 8 percent a year without changes - to squeeze about $66 billion in savings over five years from the federal health care program for the elderly.

Bush would curb payments to health care providers such as hospitals, and would require more of the higher-income recipients to pay greater premiums.

"We need to get these unsustainable growth rates under control," Portman said, noting that Congress passed more ambitious cuts in 1997, when President Clinton and a GOP-controlled Congress enacted more than $160 billion in Medicare savings. "This is a good first step."

However, Congress has since given back much of the 1997 savings, particularly cuts in doctors' fees. Smaller cuts proposed last year got nowhere in a Congress controlled by Republicans.

The requests, to be released Monday, would bring war spending for fiscal 2007 to about $170 billion, with the $145 billion for 2008 representing a decline.

The additional request for the current year includes $93.4 billion for the Pentagon and $6 billion for foreign aid and State Department costs - on top of $70 billion approved by Congress in September.

Missing costs?
The White House assumes war spending will be down to $50 billion in 2009 with none planned beyond then in hopes the war in Iraq will have wound down.

Bush's recent budgets have been met with skepticism by Democrats, partly because they have left out war costs and expensive changes to the alternative minimum tax, which is hitting an increasing number of middle class taxpayers. The Congressional Budget Office estimates updating the AMT for inflation would cost $93 billion in 2012 alone.

The increase in war spending - up from $120 billion approved by Congress for 2006 - have been prompted by large costs to replace equipment destroyed in combat or worn out in harsh conditions in Iraq and Afghanistan.

The Iraq requests are certain to face scrutiny by the Democrats, who already are debating whether to try to block Bush's request to increase troop levels in Baghdad.

Critics say the Pentagon is also using war-money requests to modernize the armed services with weaponry - such as the next-generation Joint Strike Fighters or the controversial V-22 tilt-rotor aircraft - unlikely to see action in Iraq or Afghanistan. The Pentagon counters that the planes are replacing aircraft that are no longer manufactured.

The additional budget request for Iraq is far below lists assembled by the military branches, which were given a green light last fall by Deputy Defense Secretary Gordon England. He instructed the four services that they could add projects connected to the broader fight against terrorism, though critics said that could be interpreted to cover almost anything.

Those lists were met with resistance in the White House and on Capitol Hill, and the Pentagon pared them back in the request it forwarded to the White House's Office of Management and Budget, which trimmed them further.

In addition to its share of the $245 billion for the wars, the Defense Department will seek $481.4 billion to run the department for 2008 - an 11.3 percent increase over the $432 billion amount approved by Congress for this year, according to a defense official and budget documents.

That total includes about $12 billion to increase the size of the Army and Marine Corps, to meet the growing strains of fighting wars on two fronts, said the Pentagon official, who requested anonymity because the budget has not yet been released.