Bush unveils $2.13 trillion `bold agenda' budget

Monday, February 4th 2002, 12:00 am

By: News On 6

WASHINGTON (AP) _ President Bush sent Congress a $2.13 trillion budget Monday that would provide billions of dollars in new spending for the war on terrorism and homeland security but would squeeze much of the rest of government to keep the deficit from soaring.

The spending plan for the fiscal year that begins Oct. 1 came wrapped in a red-white-and-blue cover depicting the American flag _ and for the first time ever featured color photos of everything from military jets to ordinary Americans in an effort to bring the mind-numbing parade of budget charts to life.

Bush's budget, which will set off months of wrangling in Congress, proposes spending $2.13 trillion for the 2003 budget year, a 3.7 percent increase from this year's spending.

But that overall increase masks huge differences among programs.

Defense is projected to receive a $48 billion boost, the biggest increase in two decades, and spending to make Americans more secure at home nearly doubling to $37.7 billion.

To make room for those big gains, scores of other programs from highway spending to environmental projects, would be cut.

The president, in a message accompanying the budget, said his administration was prepared to do whatever it took to win the war against terrorism.

``My budget provides the resources to combat terrorism at home, to protect our people and preserve our constitutional freedoms,'' Bush said.

He pledged to wage a ``bold agenda for government reform'' that would eliminate wasteful spending by using for the first time a formal performance rating that determined which government programs were failing to do their job effectively.

Bush's proposed cuts include a $9 billion reduction in highway spending, reductions in water projects by the Army Corps of Engineers and elimination of hundreds of education and health projects that lawmakers had won congressional approval for last year for their home districts.

Critics contended Bush was wielding the budget knife to protect his most prized economic achievement: last year's passage of a massive $1.35 trillion, 10-year tax cut.

In his new budget, the president proposes spending $344 billion to make that cut, which is due to expire after 2010, last for two more years.

Overall, Bush proposes new tax cuts totaling $591 billion over 10 years. Two major reductions involve tax relief for corporations and higher-income individuals that are part of his economic stimulus program that has been stalled in the Senate because of Democratic objections.

Bush's budget is being released in a vastly different environment than his first spending blueprint just a year ago.

Because of the recession, the terrorist attacks and his huge tax cut, the projection he made just a year ago for a 10-year surplus of $5.6 trillion has melted down to just $1 trillion, a figure that assumes his new spending and tax proposals became law.

The budget projects a deficit for the current year of $106 billion, breaking a string of four straight years of surpluses, a feat last accomplished 70 years ago.

For the 2003 budget, Bush projects a deficit of $80 billion followed by a small $14 billion deficit in 2004 before surpluses return in 2005.

Bush proposes getting $1.2 billion in new revenue by leasing the drilling rights in Alaska's Arctic National Wildlife Refuge, something strongly opposed by environmentalists.

The president also makes another attempt to win congressional approval to provide prescription drugs for Medicare recipients, which he estimates would cost $190 billion over the next decade. Democrats contend the cost would be much higher.

One of the president's savings would be a $9 billion reduction in 2003 in federal payments to hospitals.

The military budget would increase by 14.5 percent, the biggest gain since 1982 when Ronald Reagan was president, with seven cents of every dollar in the $379 billion proposal going for the war on terrorism.

Spending on homeland security would nearly double with big increases slated to beef up airport security and fight bioterrorism.

The portion of the budget governed by annual appropriations _ the part excluding big benefit programs such Social Security _ is scheduled to increase by 8 percent to $773 billion next year. However, spending outside of defense and homeland security would rise by only 2 percent.

The shrinking of the projected surplus over the next decade has forced the administration to delay one of Bush's major campaign promises: bolstering Social Security by letting workers set up individual investment accounts.

Also set aside for now is the president's goal last year of paying off $2 trillion of the national debt to improve the government's balance sheet in preparation for the retirement of baby boomers.