President George W. Bush yesterday challenged Congress to cut domestic spending in an effort to meet his pledge to halve the US deficit by the time he leaves the White House.
In the toughest budget request of his presidency, Mr Bush called for savings at the departments of education, transport, housing and urban development and at the Environmental Protection Agency.
With a 4.8 per cent increase to $419 billion (€328 billion) at defence, the proposals would cut discretionary domestic spending outside national security by 0.7 per cent.
Overall discretionary spending, with an increase of 2.1 per cent, would also be kept below the rate of inflation. Mr Bush called it "a budget that sets priorities. Our priorities are winning the war on terror, protecting our homeland, growing our economy".
But experts warned that his plans would be insufficient to bring the US deficit under control. Mandatory spending, including pensions and healthcare for the elderly and poor, represents more than half of government outlays and costs are rising fast. The programmes targeted by Mr Bush represent less than 20 per cent of total spending.
"Mr Bush is still failing the test of being a fiscally responsible president," said Mr Chris Edwards, head of fiscal studies at the Cato Institute, a Washington think-tank. "Overall spending is projected to rise 3.6 per cent in 2006 even without further money for Iraq."
The White House forecasts a deficit of $427 billion for 2005, falling to $233 billion by 2009. These estimates do not include the cost of the operations in Iraq, the possible transition costs of reforming social security, or of fixing the alternative minimum tax - a levy for the rich that will start to encroach on the middle classes.
Mr Bush asked Congress to increase defence spending by $19 billion to $419 billion for the 2006 fiscal year, to meet administration plans to cut back expensive weapons programmes while increasing spending on forces tailored to fight terrorism.
The White House is requesting $5 billion less than it forecast a year ago but defence spending is expected to rise to more than $500 billion within five years.
However, the White House has asked Congress to scale back spending on next-generation F/A-22 Raptor fighter jets, warships and stealth submarines. The navy will also retire the aircraft carrier John F Kennedy, one of 12 operating carriers. - (Financial Times Service)
