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Monday, 4 February, 2002, 17:43 GMT
Bush unveils 'war' budget
First copies of the US 2003 budget
The US government printing office weighs up the 2003 budget
A sharp increase in US military spending and tax cuts to stimulate the economy are the top priorities in President George W. Bush's $2.13 trillion budget for 2003.

"The budget for 2003 is much more than a tabulation of numbers, it is a plan to fight a war we did not seek, but a war we are determined to win," Mr Bush wrote in a letter to Congress accompanying the budget.

Where government programs are succeeding, their efforts should be reinforced, and the 2003 budget provides resources to do that

President Bush
Defence spending will grow 12% on the year to $379bn, while domestic security is to nearly double from $19.5bn to $37.7bn.

Little money is expected to be offered for other new initiatives or existing programmes.

"Where government programs are succeeding, their efforts should be reinforced, and the 2003 budget provides resources to do that," says a draft text of the Budget speech.

"When objective measures reveal that government programs are not succeeding, those programs should be reinvented, redirected, or retired," Mr Bush will add.

The increase in federal spending is also expected bring an abrupt end to a four-year string of surpluses that began in 1998, with a deficits projected for the next three years.

The Budget for the fiscal year, starting 1 October, must first be approved by Congress where the Democrats are expected to oppose many of the cutbacks.

But White House budget chief Mitchell Daniels called the increases for defence and homeland security "non-negotiable".

Defence boom

In the biggest US military build-up in two decades, Mr Bush will press Congress to raise defence spending by $45bn in fiscal 2003 and $120bn over the next five years to $451bn by 2007, senior US officials told Reuters.

The 12% increase would be the largest since former President Ronald Reagan's Cold War-era build-up 20 years ago, which led to an arms race that eventually bankrupted the Soviet Union.

Spending on weapons and other supplies would increase by more than 30% to $99bn by the end of the five-year period.

Mr Bush's priorities for 2003 include building new fighter jets and high-tech munitions, raising troop pay and expanding their health care benefits.

The US war in Afghanistan is costing Washington more than $1bn a month and the budget is expected to allocate $1.1bn to replace thousands of satellite-guided bombs and other weapons used there.

Almost $7.8bn will be pumped into the missile defence programme, unchanged from the current year.

Sharp cuts

To offset the large increases, Mr Bush is expected to call for "curtailing unsuccessful programs and moderating the growth of spending in the rest of government" to shift resources to the war.

The administration has disclosed few details about the cuts as a battle with the Democrats brews in Congress.

But programs with major cost overruns, including the $95bn International Space Station, will be put on notice that they will be "reinvented, redirected or retired" if they do not perform.

So-called "youth opportunity grants", which support job training in poor communities, would feel the budget axe with 20% cut from this year's $225m, administration officials said.

The off-shore oil and gas exploration budget will be slashed by nearly 45%, which administration officials have said should be private sector funded.

A shortfall in fuel tax receipts will also result in a $9bn reduction in highway spending next fiscal year, federal and state officials said.

The administration defended its proposed cutbacks, saying Bush's budget would provide a total of $9.3bn to help the unemployed, an increase of 36%.

Good-bye surplus

Gone is the $5 trillion, 10-year surplus the White House projected just a year ago, reduced to $1 trillion for the same period.

Bush's entire budget is expected to grow by $76bn, or 3.7%, over this year's anticipated total of $2.05 trillion.

Budget documents show government spending, excluding automatic payments such as Social Security, would increase 9% to $746bn.

The biggest chunk of Mr Bush's tax proposal will cost $344bn to keep the $1.35 trillion personal tax cuts pushed through Congress last year, and he is expected to call for another $591bn in new tax relief over the next ten years.

So far few new revenue proposals have emerged beyond $89bn in tax credits to help lower-income people buy health insurance that the administration announced last week.

One budget chart shows Mr Bush's spending plan will rely on more than $15bn in savings from Medicaid and a program aimed at providing health insurance for low-income children whose families earn too much to qualify for Medicaid.

A proposal to raise $1.2bn in 2004 by leasing mineral drilling rights in Alaska's Arctic National Wildlife Refuge, which Congress blocked last year, is expected to be put forward.

The BBC's Katty Kay
"These soldiers will now get a pay rise"
President George W Bush
"Our men and women deserve the best weapons, the best equpiment, and the best training"
See also:

24 Jan 02 | Americas
Bush doubles security budget
24 Jan 02 | Americas
US prepares for budget battle
30 Jan 02 | Business
Bush promises to defeat recession
26 Jan 02 | Americas
Bush reinforces anti-terror pledge
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