Bush boosts defence spending in $2,400bn budget

President Bush unveiled a $2,400bn election-year budget yesterday that included a large boost in spending on defence and homeland security but was criticised by Democrats for cutting numerous social and environmental programmes. It also contained the biggest ­ $521bn ­ federal deficit in history.

Mr Bush sought to blame the recession and the so-called war on terror for the fiscal 2005 deficit, accepting it was a "legitimate matter of concern." He said: "The reason we are where we are is because we went through a recession, we were attacked and we're fighting a war. Those are high hurdles for a budget and for a country to overcome.

"This nation has committed itself to the long war against terror. And we will see that war to its inevitable conclusion: the destruction of the terrorists."

To try to battle the deficit, the budget Mr Bush sent to Congress for approval proposed squeezing scores of government programmes and sought spending cuts in seven of the 16 Cabinet-level agencies, even as it increased overall spending by 3.5 per cent. The Agriculture Department and the Environmental Protection Agency were hit with the biggest reductions, seeing their funding cut by 7 and 8 per cent respectively.

Amid these cuts, Mr Bush managed to find plenty of money for his favourites. The budget would enlarge military spending by 7 per cent in 2005 to a total of $401.7bn, though that does not include the billions of dollars being spent to maintain US troops in Iraq and Afghanistan. An additional budget request for $50bn is likely to be made to cover that after the election in November.

The budget papers also revealed Mr Bush is planning to put the first weapons in space despite broad international opposition. His spending plans call for an unspecified sum for developing and testing advanced, lightweight, space-based missile interceptor components.

The budget papers state that stronger economic growth and reductions in general spending will produce steady improvements in the deficit, which the administration projects will be reduced to $237bn in 2009.

But Democrats immediately attacked the plan and criticised Mr Bush's demand to make permanent his 2001 and 2003 tax cuts ­ something that is expected to cost the federal government at least $900bn over the next 10 years. "This administration pledged that its tax cuts and policy choices would not turn record surpluses into record deficits, but this budget shows that's exactly what's happened," Tom Daschle, the Senate Democratic leader, said.

Senator Ted Kennedy urged that Congress reject the plan, calling it the "most anti-family, anti-worker, anti-healthcare, anti-education budget in modern times".

The dollar took news of the deficit proposal in its stride. Indeed the greenback rose after a survey showed that US manufacturers enjoyed their best month for 20 years in January.

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