U.S. President George W. Bush on Monday proposed a $24-billion US increase in military spending from a Democratic-controlled Congress as part of a $2.9-trillion budget plan for the 2008 fiscal year.

The massive boost in military spending for the fiscal year beginning Oct. 1 includes billions more to fight the war in Iraq, while squeezing the rest of government — including health-care programs — to meet Bush's goal of eliminating the deficit in five years.

President George W. Bush, right, speaking at a cabinet meeting at the White House in Washington, with Health Treasury Secretary Henry Paulson beside him, is seeking massive savings in health-care spending.
(Charles Dharapak/Associated Press)

Bush was seeking a Pentagon budget of $624.6 billion for 2008, more than one-fifth of the total budget, up from $600.3 billion in 2007.

For the first time, the Pentagon figures include what Bush wants to spend to fight the Iraq war, money that in past years was put in supplemental appropriations rather than the regular budget.

Plan trims $78B from health-care programs

Bush's spending plan would make his first-term tax cuts permanent, at a cost of $1.6 trillion over 10 years. He is seeking $78 billion in savings in the government's big health-care programs — Medicare and Medicaid — over the next five years. Medicaid, for children and the poor, stands to lose $12 billion under the plan.

Release of the budget begins a lengthy political battle between the White House and Democrats, who now are in control of both the House of Representatives and Senate for the first time in Bush's presidency.

The parties have made clear that they have significantly different views on spending and taxes.

"The president's budget is filled with debt and deception, disconnected from reality and continues to move America in the wrong direction," Senate budget committee chairman Kent Conrad, a Democrat, said Monday.

But the president insisted that he had made the right choices to keep the nation secure from terrorist threats and the economy growing.

"My formula for a balanced budget reflects the priorities of our country at this moment in its history: protecting the homeland and fighting terrorism, keeping the economy strong with low taxes, and keeping spending under control while making federal programs more effective," Bush said.
  
Bush projected a deficit in the current year of $244 billion, just slightly lower than last year's $248 billion imbalance.

For 2008, the budget year that begins next Oct. 1, Bush sees another slight decline in the deficit to $239 billion with further steady improvement over the next three years until the budget records a surplus of $61 billion in 2012, three years after Bush has left office.

Bush projects government spending in 2008 of $2.90 trillion, a 4.9 per cent increase from the $2.78 trillion in outlays the administration is projecting for this year.

The White House pegs the 2007 total as an estimate, given that Congress is still working to complete a massive omnibus spending bill to cover most agencies for the rest of the current fiscal year.

With files from the Associated Press