Bush unveils $2.4 trillion fiscal 2005 budget proposal

President Bush unveiled a $2.4 trillion fiscal 2005 budget on Monday that aims to cut an estimated $521 billion fiscal 2004 deficit to $237 billion in fiscal 2009, through a projected steady rise in tax revenues over the next several years coupled with spending restraint.

Tax receipts are expected to increase to $2.036 trillion in fiscal 2005 and $2.616 trillion in fiscal 2009, cutting the fiscal 2005 deficit to $364 billion and steadily tapering off from there. As a percentage of gross domestic product, the deficit would decrease from 4.5 percent in fiscal 2004 to 1.6 percent in fiscal 2009 under the Bush plan. The fiscal 2005 budget would make expiring tax cuts permanent and create new tax-free savings accounts, while providing large increases for defense and homeland security programs but slowing the growth of other discretionary spending to an 0.5 percent increase over fiscal 2004 levels. The budget would also impose spending limits similar to so-called pay/go requirements that would trigger offsetting spending reductions if funding caps are exceeded, though they would not require corresponding tax increases. But, unlike the original pay/go requirement enacted in 1990, Bush's plan would not require that tax cuts be offset.

Defense spending would increase by 7.1 percent to $401.7 billion in fiscal 2005, and homeland security funds would grow 9.7 percent to $30.5 billion. All other discretionary spending -- $386 billion -- would increase by $2 billion over fiscal 2004 levels, or a 0.5 percent increase, as opposed to the 4 percent increase in fiscal 2004. Total discretionary spending would rise to $818 billion in fiscal 2005, a 3.9 percent increase. The budget proposal also outlines a six-year transportation reauthorization bill at $256 billion -- much lower than the Senate's $318 billion plan and the $375 billion plan proposed by House Transportation and Infrastructure Chairman Don Young, R-Alaska.

The sharp reduction in spending growth for other discretionary programs would mean cuts at six departments -- Agriculture, Commerce, HHS, Justice, Transportation and Treasury -- as well as EPA. The largest decreases are at the Agriculture Department -- an 8.1 percent decline to $19.1 billion -- and at EPA, which faces a 7.2 percent decrease to $7.8 billion. The Agriculture budget would face cuts in conservation and research funds but would see increases for food safety, including for monitoring Bovine Spongiform Encephalopathy, or "mad cow" disease. EPA's budget request does not include earmarks included by Congress in previous years, and would cut funds for the clean water state revolving fund, while increasing Superfund spending. The Education, Energy, HUD, Labor and Veterans Affairs departments all would see slight increases. Much larger increases are requested for NASA, the State Department and foreign aid programs. NASA would see a 5.6 percent rise to $16.2 billion, to accommodate Bush's new space initiative.