Bush finalizes 2009 budget proposal

WASHINGTON – President Bush will present a budget Monday that would slow the growth of Medicare and cut or eliminate an array of domestic programs but still anticipates a flood of new red ink that will rival the record deficits of his first term, administration officials said.

Bush’s fiscal 2009 budget would increase defense spending by 5 percent and put a modest amount of new money into favored initiatives such as veterans affairs, education and homeland security.

But the president wants to dramatically slow the growth of big, federal health programs, reduce anti-terrorism grants for states and cities, and cut spending on anti-poverty, housing and social service programs, according to budget documents and interviews with officials throughout the federal government.

Even as he proposes restoring funding for the controversial Reading First program, Bush will take aim at a number of education initiatives, officials said. The early literacy program Even Start would be eliminated, as would grants to states for education technology, technology careers and incarcerated youth. Funding for a college scholarship program named after Senate Appropriations Committee Chairman Robert Byrd, D-W.Va., would fall from $40 million to zero, a symbolic shot at a fierce Bush critic.

The more than $3 trillion federal budget for 2009 that Bush will unveil is his final opportunity to shape the priorities of the government before leaving office a year from now. Lawmakers and their aides say Bush has little leverage left to force his proposals on a recalcitrant Congress.

But even in the unlikely event that he were to get his way, the budget deficit would jump sharply, from $163 billion in 2007 to about $400 billion in 2008 and 2009 – partly the result of the new economic stimulus plan. Such deficits would rival the record deficit of $412 billion of 2004, though administration allies argue that shortfalls of that size now represent a smaller share of the overall economy and are thus more manageable.

Still, the new budget underscores Bush’s inability to get control of spending over the course of his seven-year tenure.

Alice Rivlin, who served President Clinton as budget director, pointed out that Bush “inherited a very large surplus,” but his “legacy from a fiscal point of view is having blown an opportunity to ameliorate the long-run budget deficits.”