Bush seeks $11bn fund to wage war on bio-terrorism

Presient George Bush requested $11bn (£7.7bn) from Congress yesterday to tackle the threat to America from biological terrorism.

The budget – contained in a document adorned with the Stars and Stripes – brings back deficits after four years of surpluses, to fund America's biggest military build-up since the Cold War. If approved by Congress, America's defence budget would match those of the next 15 nations combined.

Mr Bush said his spending plan "recognises the new realities confronting our nation". He added: "It is a plan to fight a war we did not seek – but a war we are determined to win."

The total budget of more than $2,000bn (£1,400bn) includes a 12 per cent increase in military spending and a 111 per cent increase on homeland security to defend the nation against the deliberate use of disease as a weapon.

The military spending increase of $48bn in the fiscal year 2003, followed by projected increases over the next five years, would take military spending from its current total of $120bn to $450bn by 2007.

If approved by Congress as expected, it would be the largest increase in military spending since Ronald Reagan's Cold War-era build-up two decades ago. It would also augur well for military contractors such as Lockheed Martin, Boeing and General Dynamics.

Under the President's proposals, the budget for everything else would increase overall by a mere 2 per cent.

The budget also revives Mr Bush's controversial economic stimulus package, despite signs last week suggesting America's faltering economy may already be recovering without it. The budget also calls on Congress to extend income tax rate reductions, marriage penalty relief, child tax credits and estate tax cuts that were part of the $1,350bn package that Congress passed last year. The extensions would cost $344bn. "Despite the encouraging signals from financial and non-financial markets, a strong and sustained expansion is far from assured," the budget statement said.

But like much else in America, Mr Bush's spending priorities have been determined by the events of 11 September and their aftermath. Because of the spate of anthrax letters last year that killed five people, infected 18 and led to 30,000 people taking antibiotics as well as the discovery of documents in Afghanistan suggesting al-Qa'ida was preparing biological weapons, Mr Bush has set aside $11bn over the next two years to counter that threat.

The budget proposes $5.9bn to finance improvements in the public health system. This is extra to the $1.4bn Congress approved last year and a supplemental request of $3.7bn that has been approved. The proposed increase in homeland security spending also sets aside $10.6bn to help stop would-be terrorists at the border.

To make room for these increases, Mr Bush is calling for controversial cuts in a wide range of domestic programmes, including grants that support job training in poor areas. The budget will trim $9bn from highway programmes and cut the Army Corps of Engineers' budget by nearly $500m. Mr Bush would reduce the Environmental Protection Agency's budget by about 4 per cent, slashing spending on clean water projects. The Forest Service also faces cuts.

Buoyed by unprecedented approval ratings, the Bush administration is confident that its military spending proposals will be approved, despite the criticism by some Republicans that under the plan the government would post deficits of $106bn in 2002, $80bn in 2003 and $14bn in 2004. Likewise, the debt held by the public would increase from $3,480bn this year to $3,600bn in 2004, before beginning to decline in 2005.

Democrats warned that tax cuts and accompanying higher debt interest costs could drain more than $800bn from social security and Medicare surpluses, weakening retirement and healthcare programmes. While Mr Bush has a largely free hand on Capitol Hill in regard to his wartime agenda, with the Democrats controlling the Senate, the passage of his non-defence proposals is much less certain.