The Wall Street Journal-20080201-Bush-s 2009 Budget Will Top --36-3 Trillion

Return to: The_Wall_Street_Journal-20080201

Bush's 2009 Budget Will Top $3 Trillion

Full Text (716  words)

WASHINGTON -- President Bush's budget for 2009, which will be released Monday, will total more than $3 trillion, the first time that barrier has been broken, a senior administration official said.

The budget plan projects big increases in federal budget deficits, to about $400 billion for both fiscal 2008 and fiscal 2009, the official said. That is primarily due to the fiscal-stimulus bill the White House and congressional leaders are seeking in order to pump up economic growth.

Continuing costs of the conflicts in Afghanistan and Iraq also factor into the projected deficits, as does another one-year change to prevent the alternative minimum tax from hitting more middle-class people.

The official noted that the deficit for each of the two years averages about 2.8% of U.S. gross domestic product. That is a tick up from the 40-year average federal deficit of 2.4%. Mr. Bush's high was 3.6% in 2004. The president is aiming for a balanced budget by 2012.

Mr. Bush came into office with a budget surplus, but his deep tax cuts and the global war on terrorism -- along with the effects of the 2001 recession -- combined to produce annual deficits.

To get the budget back in balance, the White House plan depends in part on sharp cuts in entitlements that will be difficult to achieve in Congress this year. The budget also attempts to put a tight lid on many domestic agencies' annual spending. Without those projected savings, deficits could run even higher.

Entitlements -- federal programs that hand out benefits to eligible people and businesses -- are a fast-growing part of the federal budget. The Bush administration has tried repeatedly with little success to rein them in, most notably when it sought to overhaul Social Security in 2005.

Mr. Bush's latest budget would reduce entitlement spending overall by about $208 billion over the next five years. Medicare alone would account for $178 billion, or about 86%, of these reductions. This year's proposal is a bigger reduction than Mr. Bush has previously attempted in Medicare.

Rep. Pete Stark (D., Calif.), chairman of the House health subcommittee, blasted the proposed Medicare reductions, saying they would "endanger the health care of America's seniors, people with disabilities and low-income children." He predicted the weight of the cuts would fall on hospitals and physicians.

Even if the White House managed to get its proposed reductions this year, Medicare's rate of growth would still be 5%, the administration official said. That is higher than the overall inflation rate.

Medicare's current rate of growth is about 7.2%, which many economists, elected leaders and businesspeople say is unsustainable over the long run, especially as baby boomers start to retire and receive benefits. The current projected unfunded obligation of Medicare over 75 years is an estimated $34 trillion. This plan would reduce it by nearly one third.

One area of spending where the administration wants a significant increase, however, is in import-safety regulation.

Administration officials said the White House budget will increase the Food and Drug Administration's food protection efforts by about 7%, or $42 million, to $662 million for fiscal 2009. The funds will be used to help implement a new food-safety strategy that the administration rolled out last fall, after a wave of controversies over faulty toys, tires and pet foods, among other items, many of them from China.

The new strategy depends not only on increasing inspections, but on pressing manufacturers and importers to obtain independent certifications of their products' fitness.

"The government has a vital role as an inspector . . . but there's too much coming into the U.S. for us to inspect everything," said Michael Leavitt, secretary of the Department of Health and Human Services. "Our strategy is to identify the highest-risk products and then insist that everything is certified by someone we trust."

Officials anticipate moving FDA personnel "into several different regions of the world" to start implementing the plan, Mr. Leavitt said. Another part of the agency's mission overseas will be to help countries understand exactly how to mesh their own standards with U.S. standards.

But Mr. Leavitt conceded that more increases will be needed in future years. At a recent congressional hearing, experts criticized the agency's budget as woefully inadequate. Overall, the budget increases FDA's funding by 5.7%, to $2.4 billion.