Bush plans 4 percent spending hike in 2004

President Bush will propose a 4 percent increase in fiscal 2004 discretionary spending as part of the budget he plans to announce early next month, Office of Management and Budget Director Mitch Daniels said Tuesday.

The figure would include the budgets for defense and homeland security, as well as the rest of domestic discretionary spending programs. But Daniels, who briefed a small group of reporters by telephone, did not specify how the various portions of the budget would fare.

Although Bush is expected to include in his 2004 submission generous amounts of new spending for the military and homeland security, the 4 percent increase does not include war spending for the current fiscal year.

Daniels indicated the administration this spring may seek a supplemental spending bill covering ongoing expenditures for the war on terrorism and other spending that could be associated with a war with Iraq.

Daniels was unwilling to talk about specific cuts in the 2004 budget, but he said certain areas of the non-defense budget were slated for healthy increases, particularly education and the Veterans Affairs Department. The increase for Veterans Affairs will be in the range of 7 percent, according to an OMB official.

The White House is assuming a fiscal 2003 discretionary spending level of $752 billion, according to an OMB spokesman, so a 4 percent increase amounts to just over $30 billion in new spending. Congress has yet to finish the 2003 appropriations bills. The increase from 2002 to 2003 in discretionary spending amounted to nearly 9 percent, using a White House 2002 level of $686 billion that omitted one-time costs such as the rebuilding of New York City and the war in Afghanistan.

Daniels sought to justify the much smaller increase this year, asserting that the existing baseline is already "enormous." He indicated Bush had settled on the 4 percent increase "early in the fourth quarter" of 2002.

The administration assumes a rate of inflation "well under 2 percent," said Daniels, although he would not provide the White House forecast for GDP growth during the next budget cycle.

Daniels indicated the administration would also outline-as part of its 2004 budget-strategies for reducing mandatory spending. Daniels pointed to an expected Bush effort to reform Medicare, but he would not comment on whether the president's budget would make Social Security overhaul a priority.

At a Washington breakfast Tuesday morning, Daniels lauded Senate Appropriations Committee Chairman Ted Stevens, R-Alaska, for adhering to 2003 budget levels backed by Bush while negotiating the omnibus package incorporating 11 unpassed spending bills. Daniels also praised Senate Majority Leader Bill Frist, R-Tenn., saying he was off to a "tremendous start."