Bush Budget Calls for Renewal of Tax Cuts
By ANDREW TAYLOR, Associated Press Writer
Mon Jan 30, 6:12 PM ET

President Bush will renew his call for personal accounts within Social Security and ask Congress to renew tax cuts
and curb the growth in benefit programs like Medicare and Medicaid in his 2007 budget request next week,
according to administration officials.

But since election years hardly ever generate results on the budget or attempts to cut the deficit, Bush is far more
likely to find success in smaller-bore initiatives like freezing the operating budgets of most domestic Cabinet
departments.

Bush's call last year to let younger workers divert some of their Social Security taxes into private accounts never
got off the ground with lawmakers despite an election-style campaign by the administration and its supporters.
While the idea will again be in his proposed 2007 budget, the White House doesn't expect it to get even a nod this
year from Congress, a senior White House official said Monday, speaking on condition of anonymity.

At the same time, the rising budget deficit and the enormous cost of the war in Iraq may squeeze out upcoming
Bush initiatives to boost access to medical care — among the very few items in his budget that the White House
has trumpeted in advance.

Bush's market-based health care initiative includes creating health savings accounts, making out-of-pocket medical
costs deductible, and allowing small businesses to pool the purchasing of health insurance across state lines free of
state regulation.

Few of these initiatives are new; neither are Bush's demands for permanent extension of his 2001 and 2003 tax cut
bills and many other items in his budget.

"It's all, for the most part, replays of the same things that they've proposed for the past five years," said lobbyist
Hazen Marshall, former GOP staff director of the Senate Budget Committee. "They seem to be making a
concerted effort to highlight health care, but the proposals that I've seen haven't been anything new."

And the simple fact that something is proposed again and again means it's been rejected many times before. That's
why many lawmakers will consider much of Bush's budget plan "dead on arrival."

"The president's budget is not the agenda-setting development or event that it used to be," said Stan Collender,
managing director of Financial Dynamics, a business communications firm. "They use it to make a political
statement. It should in no way be taken as what they would actually do or what they actually want or what they're
ultimately going to accept."

Bush predicts the deficit for the current year will top $400 billion; last year's deficit registered $319 billion. Bush
says his budget plan will meet his pledge to cut the deficit in half by the end of his presidency — to $260 billion
from a preliminary estimate of $521 billion for the 2004 budget year.

Bush said Jan. 26 that his budget "will continue to eliminate programs that don't work or that are duplicative in
nature, ... cut our deficit in half by 2009 and make sure the American people still get their tax relief."

But that deficit-cutting claim is likely to come under assault from Democrats charging Bush can meet the pledge
only by leaving out the long-term cost of the war in Iraq and by proposing unrealistic budget cuts and fees.

"I think the president will send us a budget with triple-digit deficits for the rest of his presidency — can't avoid it â
€” and without any credible plan to balance the budget," said Rep. John Spratt (news, bio, voting record) Jr. of
South Carolina, top Democrat on the House Budget Committee.

The upcoming budget, to be submitted Feb. 6, opens an annual debate with Congress over tax and spending
priorities. Last year, fresh from his re-election, Bush had high hopes for overhauling Social Security with private
accounts. This year was supposed to be the year for reform the bloated tax code.

The first year of a term is when most presidents find success on the budget. Ronald Reagan and Bush produced
landmark tax cuts, while Bill Clinton won adoption of a tax-heavy deficit reduction plan in 1993 and a budget-
balancing plan produced with congressional Republicans in 1997.

Instead, Social Security reform never got off the ground and Bush's tax reform commission produced some
recommendations that his tax experts disagreed with.

To be sure, Bush and his GOP allies on Capitol Hill last year combined to take on the skyrocketing costs of
federal entitlement programs such as Medicaid. Although modest, the $39 billion measure — slated for a final
House vote Wednesday — is the first attempt in eight years to tackle such benefit spending.

And, despite reluctance from old-school Republicans such as Senate Appropriations Committee Chairman Thad
Cochran, R-Miss., Congress pretty much acquiesced in Bush's proposal last year to cut 1 percent from the
budgets of domestic agencies. Some 89 programs were eliminated entirely, producing $6.5 billion in savings.

Despite last year's success, Republicans are anxious about spending, in part due to the enormous price tag of
military operations in Iraq and Afghanistan — $8 billion to $9 billion per month — and the Hurricane Katrina
relief and rebuilding effort, whose tab is up to $99 billion over five years, including appropriations, tax incentives
and flood insurance borrowing authority.

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