President Bush yesterday launched a budget heralding a return to heavy defence spending and large government deficits and signalled his determination to take on critics of his remedy of tax cuts for the US's faltering economy.
The proposed budget, which will kick off the administration's negotiations with Congress over taxes and spending for next year, forecasts federal deficits rising to $307 billion (€285 billion), or about 3 per cent of gross domestic product, next year, and remaining in the red until at least 2008.
If enacted, the combination of spending increases and tax cuts in the budget would add nearly $1,000 billion to the federal budget deficit between 2004 and 2008, which was previously forecast at only $114 billion.
But in a pugnacious defence of its fiscal responsibility, the administration blamed this on events outside its control.
"A recession and a war we did not choose have led to the return of deficits," Mr Bush said.
Mr Mitch Daniels, White House budget director, said the forecasts were deliberately cautious.
The stimulative effect of the tax cuts meant the deficits would probably be lower, he added.
"The president has taken aggressive steps to grow the economy, which is the best way to return to surplus," he said.
The largest single element of the budget deficit would be the package of tax cuts the administration proposed last month, which would cost $380 billion between 2004 and 2008.
In addition to this year's estimated $304 billion deficit, the cumulative deficit between 2004 and 2008 is now forecast at $1,084 billion.
The largest increases in proposed spending for next year went to homeland security and defence, with the remainder of discretionary expenditure spending, outside of entitlement programmes such as social security and medicare, held to a low increase.
One area for increased spending that Mr Bush has targeted is the Securities and Exchange Commission.
He is looking for $842 million for the SEC - nearly double its 2002 budget - to enable the stock market regulator to hire more accountants and lawyers to pursue corporate fraud.
The administration's projections for economic growth of 2.9 per cent this year and 3.6 per cent next were slightly more optimistic than those of independent and Congressional forecasters.
The administration has been accused of hiding the true state of the public finances by returning to the practice of presenting mainly five-year forecasts for the deficit.
This conceals the fact the deficit would be sharply higher in later years if the administration's plans were enacted to make permanent some elements of the 2001 $1,350 billion tax cut, due to expire in 2010.
The budget forecasts do not include the cost of any war with Iraq, which will be handled in a separate supplemental budget.
"The Bush administration does not have a budget, it has a 308-page press release," said Mr Charles Rangel, the senior Democrat on the House of Representatives tax-writing ways and means committee.
"A budget is supposed to make choices among our priorities and explain how the government will raise the revenue to pay for them.
"By demanding large tax cuts again, even though there are no longer surpluses, the administration will starve the government of funds."
