Bush's Budget Stirs Tension On Left, Right

WASHINGTON - In drawing up a budget that keeps spending levels roughly even with last year's but sidesteps a major overhaul of three entitlement programs, President Bush reignited tensions with Democrats, who say the plan favors the rich, and conservative Republicans, who say it does little to check future spending.

Under the $2.8 trillion plan, Mr. Bush proposes to produce $65 billion in savings over five years by eliminating or reducing spending on 141 discretionary programs and by reforming mandatory ones. The cuts would reduce the federal deficit to $190 billion from a projected $423 billion this year, even as it increases defense spending by 7%.

The cuts, including a $36 billion reduction over five years to the country's Medicaid entitlement program, were not enough to satisfy some of Congress's most conservative members, potentially driving a wedge between Mr. Bush and his base at a time when political analysts said he most needs loyal supporters.

"The administration is proposing $36 billion in cuts when we have a $400 billion deficit," a vice president for policy at Citizens Against Government Waste, David Williams, said. "Obviously, the numbers just don't add up. I think the Republicans really should be concerned. If they don't stand for fiscal responsibility, what do they stand for?"

Mr. Bush's spending plan sets the stage for a battle in the months ahead between Republicans and Democrats in Congress likely to center on proposed cuts to health care. In a phone call with reporters yesterday, Senator Clinton, a Democrat of New York, ticked off a series of cuts to health and education in New York that she said she will fight to keep from being enacted.

"I think the clear message you can take away from this budget is that for children and families and veterans and seniors, you're on your own," Mrs. Clinton said. "This budget represents a failure of priorities ... while the president is asking the nation to tighten our belts, we don't see that sacrifice shared by everyone."

Mrs. Clinton, a possible contender for the 2008 Democratic presidential nomination, deflected a question about whether the budget made her angry. The chairman of the Republican National Committee, Kenneth Mehlman, said Sunday on ABC's "This Week" that she will turn off voters because of what he described as her angry response to Republican policies.

Mrs. Clinton pointed to the budgets her husband proposed. "I'll leave the political prognostications to the experts," she said. "But I think it's a sad fight to have because it's a fight that really illustrates how badly we have undermined our fiscal health over the last five years. Five years ago we had a balanced budget, we had a surplus, and we were equipped to make investments in actual energy independence programs. It's a striking and sad reminder of how far we've gone in the wrong direction."

New York's other Democratic senator, Senator Schumer, was more tempered in his response. Saying the budget contained "the good, the bad, and the ugly," he decried proposed cuts to Medicare, Medicaid, and first responder grants, among other programs.

But Mr. Schumer also noted approvingly the Bush administration proposal to reduce the minimum funding that each state receives in federal Homeland Security grants. Mr. Schumer is the co-sponsor of a bill that would reduce to 0.25% from 0.75% the minimum amount each state receives in such grants. Mr. Schumer and Mrs. Clinton both lamented a proposed $900 million reduction in subsidies for the subsidized rail corporation, Amtrak.

Conservative Republicans have pressed Mr. Bush to veto a congressional spending bill, even for symbolic reasons. The party has suffered in recent months from a cascade of corruption scandals and is looking to restore its appeal on core issues such as fiscal restraint.

Though Mr. Bush asked Congress in his State of the Union address last week to grant him the power to make targeted, or line-item vetoes, he has yet to veto a spending bill.

Fiscal conservatives point to omnibus bills like the Transportation Treasury Housing and Urban Development bill, which they say is larded with special projects "earmarked" by members of Congress, as a place to start. Some issued statements coaching Mr. Bush to make such a gesture of fiscal restraint as a way of following through on the budget.

Senator Coburn, a Republican of Oklahoma who chairs the Senate Subcommittee on Federal Financial Management, Government Information, and International Security, said the budget gives Congress room "to indulge in wasteful spending." He urged Mr. Bush to exercise his veto power as a way of reining in federal spending.

"While many of the president's budget enforcement proposals, such as tightening the definition of emergency spending, are important steps, the most effective budget enforcement tool is a presidential veto," Mr. Coburn said. "If Congress continues its addiction to earmarking ... the president should use his veto power and not give tacit approval to a practice most taxpayers find indefensible."

Budget analysts, who have been issuing grave warnings about spending on entitlement programs, said Mr. Bush's budget does little to reverse a trend that, if unchecked, will result in the consumption of 100% of the federal budget by three programs alone: Social Security, Medicare, and Medicaid. The programs already consume 42% of the federal budget, and an estimated 77 million baby-boomers are expected to retire over the next 23 years - eventually drawing more money out of the system than workers pay in.

"Overall, I think the budget takes a strong step toward holding down discretionary spending," a budget analyst with the Heritage Foundation, Brian Riedl, said. "But it does not do enough to rein in entitlements. The coming entitlement spending boom is the biggest economic challenge the country will face over the next 50 years, and the president's budget doesn't do enough to address that."

In a report on spending that Mr. Riedl published earlier this week, he noted that federal spending under Mr. Bush has grown twice as fast as it did under President Clinton and that federal spending per household is at its highest level since World War II, when adjusted for inflation. Mr. Riedl calculated federal spending at $22,000 a household for fiscal 2005.

"If current trends continue, the entire federal budget will be one giant transfer scheme from workers to retirees within a few decades," Mr. Riedl said. "The president has to make entitlement reform the centerpiece of his domestic policy, and he has to back it up with a credible proposal in his budget."

Some conservatives were critical of Mr. Bush's proposed increases on defense spending. Despite the boost in funding, some analysts said the money would be better spent on new troops rather than long-range strategic programs. A resident scholar at the American Enterprise Institute, Frederick Kagan, said the budget's proposed reduction to 2002 troop levels could cause a fight on Capitol Hill, where, he said, a number of Republicans are wary of such reductions.

"I think it's not enough of an increase and I think it's wrongly targeted," Mr. Kagan said. "I think the Pentagon is continuing to give enormous priority to long-range transformation plans as opposed to dealing with current problems. All of this stuff we probably need, but we don't need it remotely as much as we need larger ground forces."

Mayor Bloomberg hewed a middle course on the budget.

"Some of it I don't like; some of it I do like," Mr. Bloomberg told reporters in New York City yesterday. "It's part of a process. Just as I said before with the governor's budget, there were parts I liked and parts I didn't. But the next step in a Democracy after the executive puts out a budget is a negotiation with the legislative side, and you can rest assured we'll be working very hard in Washington to fight for those programs that help New York City."