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Tuesday, 4 February, 2003, 04:49 GMT
Bush plans huge military spend
US Marines on a live fire exercise in Australia. Photo: US Department of Defense
Bush wants to transform the military
George W Bush is to propose increasing US defence spending to almost $500bn a year by the end of the decade.

In his proposed 2004 budget - being released on Monday with a total price tag of $2.23 trillion - Mr Bush will ask for an additional $15bn for the military, an increase of just over 4%.

US ECONOMIC GROWTH FORECASTS
2003: 2.9%
2004: 3.6%
2005: 3.5%
2006: 3.3%
2007: 3.2%
2008: 3.1%
Source: US Government

None of the new money, though, is earmarked for a possible war with Iraq.

The budget will also include a $300bn deficit - a record in dollar terms but not when expressed as a percentage of gross domestic product.

The contrast with predictions just two years ago of trillions in surpluses was the key theme of the Democrats' response.

"Since then, deficits have replaced surpluises, war has replaced peace and the economy has lost 2 million jobs," said Rep. Charles Rangel, top Democrat on the House Ways & Means Committee.

And it includes a fresh 10-year tax cut programme totalling about $1.5 trillion - the centre-piece of which is President Bush's controversial stimulus package centred on hundreds of millions in tax breaks for investors.

Tough talk

Analysts say Mr Bush will have a fight on his hands getting the budget through Congress - which has still not approved his 2003 budget.

The US 2003 fiscal year began four months ago.

George W Bush
Mr Bush is proposing a deficit
The Pentagon says next year's budget is the first to reflect the department's goal of transforming the military while also prosecuting Washington's so-called war on terrorism.

But some critics are already saying that even the amount Mr Bush is proposing - which works out to about $45m per hour next year - will not be enough.

Other sceptics argue that the Bush budget short-changes the new Department of Homeland Security, which is slated to get about $36bn, plus several billion from the Pentagon.

At least two of Mr Bush's Democratic challengers for the White House - Senators Joe Lieberman and John Edwards - have said they will make an issue of homeland security spending.

Commitments

Other pledges include some extra money for financial reform, in the shape of a 42% boost for the Securities and Exchange Commission.

The move goes some way towards making up for the current year's increase to $594m from $489m, much less than the $700m or more that Congress had demanded in the wake of scandals such as WorldCom and Enron.

This budget could be set aside completely in a few days

Unnamed Republican Senate aide
The rest of the $15bn or so in new money that the President is asking Congress to grant is earmarked for a range of programmes, including a global Aids initiative and education funding focusing on districts with large numbers of poor students.

And aid earmarked for allies in the "War on Terror" is boosted, with traditional recipients Israel, Jordan, Pakistan and Colombia - not to mention Afghanistan - all receiving healthy increases.

Preparing for war

White House budget director Mitch Daniels told the Washington Post that the administration would ask Congress for extra money in case of war in the Gulf.

"I have no doubt that Congress would react very quickly," he told the newspaper.

Despite Mr Daniels's sanguine attitude, an unnamed Republican Senate aide said a war with Iraq would force the White House to start all over again with the budget.

"This budget could be set aside completely in a few days," the aide told the newspaper.

Leading spender

Defence spending accounts for about 13.5% of the proposed budget. The US spends about as much on defence as the next 20 leading countries combined.

Defense Secretary Donald Rumsfeld
Mr Rumsfeld is an architect of the transformation
Mr Bush is also calling for big percentage increases in spending for education, homeland security and veterans.

Critics say other programmes will have to grow more slowly or even face budget cuts, especially given Mr Bush's call for $670bn tax cut over 10 years.

The proposed $300bn deficit breaks a record of $290bn set by the current president's father in 1992.

The White House says the 1992 budget deficit amounted to about 6% of GDP, while the proposed 2004 deficit would be about half that.

Defenders of the budget also say deficit spending will help the sluggish US economy.

 WATCH/LISTEN
 ON THIS STORY
Nick Childs reports
"By the end of the decade the Pentagon would be spending nearly $500bn a year"
Barry Hyman, independent strategist
"There is a concern as to what the deficit means from an economic perspective"
The BBC's Andrew Walker
"The specific costs attributable to any military action... are not in there"

Key stories

Reference

Looming war

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03 Feb 03 | Americas
02 Sep 02 | September 11 one year on
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