The US Senate has agreed a plan to cut federal spending by $35bn (£19bn) as a first step towards curbing the country's huge budget deficit.
President Bush wants to leave office with a much lower deficit
The Republican-controlled Senate voted to approve proposals to lower spending on agriculture, medicine and education programmes over the next five years.
The Democrats opposed the plan, arguing that planned Republican tax cuts would further widen the $319bn deficit.
The House of Representatives has yet to vote on its own deficit cutting plan.
The two Houses of Congress must send joint proposals to President Bush for approval.
President Bush welcomed the passage of the act in the Senate, which was approved by 52 votes to 47.
The Bush administration has pledged to slash the US deficit by the time it leaves office.
"Congress needs to send me a spending-reduction package this year to keep us on track to cutting the deficit in half by 2009," President Bush said in Argentina, where he is attending a summit of Latin American leaders.
Economists, including the Federal Reserve chairman Alan Greenspan, have warned that the US economy will be damaged unless the government brings its spending under control.
The Senate-approved package would reduce government spending in all areas apart from defence and national security between 2006 and 2010.
It would cut $16bn from education and healthcare programs and $3bn in agricultural subsidies.
Controversially, it also paves the way for drilling to take place in Alaska's Arctic National Wildlife Refuge to exploit energy reserves.
Senator Judd Gregg, Senate Budget Committee chairman, said the budget measures would ensure the government started to live within its means.
Democrats said the act would be invalidated by separate Republican tax-cutting proposals - currently being tabled in the House of Representatives - adding $70bn to the deficit.
The US deficit has fallen slightly in 2005 after topping $400bn in 2004.
However, experts believe it will soon rise again as government spending on post-Hurricane Katrina reconstruction takes effect.