US president George Bush presented his $2,900 billion (€2,242 billion) budget to Congress yesterday, setting the stage for a confrontation with Democrats by making greater means-testing for middle-class benefits a central part of his proposals to address entitlement reform.

The budget represents a challenge to the system of entitlements enacted as part of the Great Society agenda of the 1960s, with plans to cut Medicare spending, the main publicly funded health insurance programme for those over 65, by raising premiums for wealthier recipients.

That could save $66 billion over five years, according to budget estimates, and up to $9,000 billion over 75 years, according to some analysts.

Michael Franc, vice-president for government relations at the Heritage Foundation, said Mr Bush had considered means-testing as part of social security reform. "Now there is a shift to applying it across the board for all entitlements. The big change concerns the wealthy. Democrats want to tax them more. Republicans say they want to make them pay more for their middle-class benefits and shoulder more of the burden."

The budget underscored Mr Bush's priorities for his final two years, with proposals to fund defence, the Iraq war and homeland security generously.

In addition to the proposals to increase means-testing in Medicare and other plans intended to slow the growth in entitlement spending in the long term, the budget set out to show it is possible to eliminate the federal deficit by 2012 while making the Bush tax cuts permanent.

Energy policy was also a priority, with plans to encourage use of renewable fuels. - ( Financial Times service )