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Bush proposes U.S. 1st $3 trillion budget, deficits to balloon+
Feb 4 09:22 AM US/Eastern
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WASHINGTON, Feb. 4 (AP) - (Kyodo)—U.S. President George W. Bush unveiled Monday a $3.11 trillion budget plan for fiscal 2009 that would increase military funding but nearly freeze many domestic programs, allowing a stalled U.S. economy to bleed more red ink this year and next.

The plan for the year starting Oct. 1 will be up 6.0 percent from fiscal 2008 and the country's first budget surpassing $3 trillion. It will lead to a deficit of $410 billion in fiscal 2008 and $407 billion in fiscal 2009.

The deficit expansion will be attributable to a slowing economy stemming from U.S. subprime mortgage woes and tax relief to be incorporated in an upcoming economy-spurring package. The deficit for this year and next will be more than twice the $162 billion shortfall seen in fiscal 2007 and close to an all-time high of $413 billion logged in fiscal 2004.

Bush's five-year projection makes his first-term tax cuts permanent while still claiming to bring the budget into balance by 2012, three years after he leaves office.

In his final budget plan, Bush is seeking $515.4 billion for the Defense Department for fiscal 2009, up 7.5 percent from the current year. And that is before accounting for an additional $178.1 billion in military costs over the next two years.

The proposed extra military spending involves a $108.1 billion request for fiscal 2008 and $70.0 billion for fiscal 2009. With the $89.4 billion that Congress has already approved, the total of about $200 billion for this fiscal year would represent the highest spending level so far for military operations in Iraq and Afghanistan.

With the additional funding requests, the costs for terror-related operations since the attacks on Sept. 11, 2001, would total $869.1 billion, far above those for the Vietnam War.

The fiscal 2009 budget blueprint would hold discretionary spending unrelated to defense to a 0.3 percent rise. That would result in cutbacks in many domestic programs after factoring in inflation, which is estimated at 2.1 percent.

Bush is proposing a five-year savings of $208 billion in mandatory spending, the part of the budget that includes the hefty benefit programs in pensions and healthcare.

Mandatory outlays, including social security, Medicare and Medicaid, came to $1.64 trillion in fiscal 2009, up 5.5 percent, accounting for around 53 percent of total outlays.

The budget plan is based on the administration's forecast that the economy will grow 3.0 percent in calendar 2009, up from the 2.7 percent projected for 2008. The unemployment rate is estimated at 4.9 percent, unchanged from 2008.