Budget cuts may prove difficult in election year

The White House unveiled a $2.77 trillion fiscal 2007 budget Monday that aims to slow the growth of entitlement spending and cuts non-security discretionary spending, a formula that lawmakers say will be difficult to implement in an election year.

President Bush's proposed budget would boost spending for the Defense and Homeland Security departments.

"As this budget shows, we have set clear priorities that meet the most pressing needs of the American people while addressing the long-term challenges that lie ahead," Bush said in his budget message. The budget would build on last year's reconciliation effort by proposing to again slow Medicare's growth.

The budget projects a $423 billion deficit for fiscal 2006 -- up from $318 billion last year -- driven by unanticipated spending on hurricane relief and reconstruction. But the deficit would decline to $354 billion in 2007 and $208 billion in 2009, or 1.4 percent of the economy, well below the 2.3 percent 40-year average. That would exceed Bush's goal of cutting the deficit in half by 2009.

The budget says that goal can be accomplished while making Bush's 2001 and 2003 tax cuts permanent. The deficit impact of the tax cuts would not be felt in large part until Bush leaves office and would add $1.35 trillion to the deficit over 10 years.

The 2007 budget would hold discretionary spending to $870.7 billion, a 3.2 percent increase over this year. Within that figure, non-security spending would be cut by 0.5 percent, and education, health and social services spending would be cut by $4 billion, or nearly 3 percent. Bush would terminate or sharply reduce 141 programs for a savings of $14.5 billion.

Defense programs would see a 6.9 percent increase, to $439.3 billion, while Homeland Security would increase by 3.3 percent, to $33.1 billion.

But Bush's discretionary spending proposals rely on $3 billion in new user fees that Congress is unlikely to approve. That includes $1.6 billion from doubling the airline ticket passenger security fee to $5 per one-way trip. Congress has refused to go along with the higher fee, suggesting a gap that appropriators will have to fill.

"Congress has repeatedly rejected increased fees, which will necessitate cuts in other programs in order to balance congressional and presidential priorities," House Appropriations Committee Chairman Jerry Lewis, R-Calif., said in a statement.

Senate Budget Committee Chairman Judd Gregg, R-N.H., said in an interview that increased fees such as the airline ticket proposal were unlikely to be approved.

"It will be difficult to maintain the very stringent numbers in the president's budget" on discretionary spending, especially in an election year, Gregg said. But he praised Bush's proposal to trim $65.2 billion from mandatory programs over five years -- including $35.9 billion from Medicare. "It's going to be a challenge, but we think it is doable," Gregg said.