US: President George Bush has asked Congress to approve big spending increases for defence and homeland security and cuts to federal spending on education, health and housing.
The budget proposal would give the Pentagon an increase of almost 5 per cent, bringing its budget to $439.3 billion (€364bn), with an additional $120 billion (€100bn) earmarked for operations in Iraq and Afghanistan. Some $18 billion (€15bn) more would be spent on hurricane relief along the US gulf coast, bringing total spending in response to hurricanes Katrina and Rita above $100 billion (€83bn).
Over the next five years the plan would cut $36 billion (€30bn)from Medicare, a government programme which offers basic health care for the poorest Americans.
The president wants to make permanent his first-term tax cuts, which are set to expire after 2010, and to cut the budget deficit - expected to reach $400 billion (€332bn) this year - in half by 2009.
"As this budget shows, we have set clear priorities that meet the most pressing needs of the American people while addressing the long-term challenges that lie ahead. The 2007 budget will ensure that future generations of Americans have the opportunity to live in a nation that is more prosperous and more secure," Mr Bush said in a letter to Congress.
The budget seeks to please Republicans, who are concerned about the size of the deficit, but Democrats said that the cuts were unfair. "After driving the nation into a fiscal mess, the president is asking our seniors, our students and our families to clean it up while the wealthy special interests reap the rewards," Senate Democratic leader Harry Reid said. The budget comes as congressional Republicans are under pressure to make changes to ethics laws in response to the Jack Abramoff lobbying scandal.
Many legislators want a clampdown on appropriations earmarks - targeted spending written into appropriations Bills by individual congressmen, usually to benefit their own districts - which critics say create incentives for lobbyists to corrupt congressmen. Earmarks have, however, helped the Republican leadership to persuade recalcitrant congressmen to support important spending Bills, and the controversy comes during an election year, when legislators are under greater pressure to secure spending for their districts.
The budget is set for months of debate on Capitol Hill, with Democrats seeking to portray the administration as uncaring in advance of November's mid-term elections. Although Congress can amend the proposals significantly, newly-elected Republican House majority leader John Boehner expressed support for Mr Bush's objectives.
"The American people know that our government is too big, and it spends too much. And they expect Congress to do something about it," he said.