Politics

Bush Budget Hits Farmers, Students

February 5, 2005 / 5:14 PM EST / CBS/AP

President Bush told his weekly radio audience that the budget he submits to Congress on Monday will hold down spending.

His budget calls for Congress to slow defense growth and slice aid to farmers and college students, testaments to the pressures record federal deficits are heaping on his forthcoming budget.

"I welcome the bipartisan calls to control the spending appetite of the federal government," Mr. Bush said.

He says he will keep the growth of discretionary spending below the projected 2.3 percent rate of inflation.

Discretionary programs are ones Congress must re-approve each year; the White House estimates their cost at $823 billion this year.

Mr. Bush plans to send his roughly $2.5 trillion spending plan for 2006 to lawmakers Monday. But as details leaked out, it was clear that even the Pentagon — a bipartisan priority at a time of war — was going to face some restraints, at least for now.

"This budget will really worry about" deficits, Mr. Bush told a crowd Friday in Omaha, Neb., as he rallied support for his Social Security overhaul. "And I'm looking forward to working with members of Congress to make tough choices."

The president wants the Pentagon to get $419.3 billion next year, or 4.8 percent more than this year. That total, however, is $3.4 billion below what he planned a year ago for fiscal 2006, which begins Oct. 1.

The figures exclude expenditures for the wars in Iraq and Afghanistan. A few days after sending Congress his budget, Mr. Bush plans to ask for another $80 billion for those conflicts for this year. Congress has already provided $25 billion for the wars for 2005.

Feeling much of the pinch in 2006 would be Pentagon purchases of weapons and other major items. Mr. Bush would hold such spending next year to $78 billion — $2.4 billion less than he projected for 2006 a year ago.

Weapons systems that would get less next year than in 2005 include the Aegis destroyer, the F-22 Raptor fighter and the C-17 cargo plane. The Apache helicopter and the Army's future combat system would see increases.

More than half the Pentagon's $19.2 billion increase next year — or $10.8 billion — would be for training, maintenance and other costs associated with keeping the military ready for action. Most of the rest would go for military salaries and construction of bases and housing.

In the longer run, Mr. Bush envisions defense spending growing steadily after next year, hitting $502.3 billion by 2011.

Also Friday, several federal officials speaking on condition of anonymity said Mr. Bush will:

Seek about $650 million for the Yucca Mountain nuclear waste-storage project north of Las Vegas, or about half what once was envisioned for 2006. Though Mr. Bush and Congress approved the project in 2002, opposition has continued and a federal court has rejected proposed radiation safety standards. New standards are being developed.

Propose slicing farmers' federal payments and other agriculture supports by $587 million in 2006 and $5.7 billion over the next decade. Payments to producers would drop by 5 percent, and the current $360,000 annual ceiling on those payments would be cut to $250,000.

Move to raise the maximum Pell Grant for students from $4,050 to $4,550 over five years, or by $100 a year. Along with other changes, Mr. Bush's financial aid plan would cost about $28 billion over 10 years. To help pay for it, the president would shrink subsidies the government pays banks to encourage them to make low-interest loans, and to the agencies that insure the loans for the lenders, education department officials said. He would also phase out Perkins loans, 673,000 of which were made to graduate and undergraduate students last year.

Create $3,000 tax credits to encourage people who don't have public or employer-provided health insurance to buy coverage. The plan, which would cost $74 billion over the next decade, would be part of $140 billion in tax breaks and expenditures aimed at improving health care over the coming 10 years. Administration officials had already said Mr. Bush will seek $60 billion in Medicaid savings over the coming decade. These will come largely from smaller reimbursements to pharmacies, trimming payments to other health providers, and making it harder for parents to qualify for coverage if their assets have been shifted to their children.

Mr. Bush spent the two days after his State of the Union address in rallies around the country to press Congress to back his idea for letting younger workers put up to two-thirds of their Social Security tax contributions into accounts invested in stocks and bonds. In return, those workers would see an unspecified reduction in their traditional Social Security benefit.

In his radio address Saturday, Mr. Bush said his proposal would give the younger workers allowed to set them up a better rate of return — without mentioning possible negative results — and would be something they could pass on to heirs.

CBS News Correspondent Bill Plante says a long-term fix for Social Security will be painful. Some possibilities on the table:

reduce benefits for wealthier retirees;

raise the retirement age, already on its way from 65 to 67, even higher;

calculate future benefit increases on price inflation rather than the way it's done now, on wage inflation;

make it more difficult for people to take early retirement.

Democrats have disputed Mr. Bush's assertion the Social Security system is in crisis, pointing out that it is not until 2042 when the system will be able to cover only about 73 percent of benefits owed. Most also oppose Mr. Bush's plan for private accounts, saying they would result in unacceptable benefit cuts, add to the federal debt and speed the program's insolvency.

In his party's weekly radio address Saturday, Democratic National Committee chairman Terry McAuliffe replied: "While Social Security faces challenges, Mr. Bush's privatization plan would make things worse. Benefit cuts, massive debt and more insecurity are not the type of drastic changes we need to make to our nation's retirement security."