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Monday, 4 February, 2002, 17:59 GMT
Bush unveils 'war' budget
US Budget document
Bush: 'My budget provides the resources'
President George W. Bush has proposed a $2.13 trillion budget to Congress that would pour billions of dollars into the armed forces but cut government spending to keep the deficit down.

My budget provides the resources to combat terrorism at home, to protect our people and preserve our constitutional freedoms

President Bush
The spending plan for the fiscal year that begins on 1 October came draped in a red-white-and-blue cover and featured for the first time colour photos of weapons and "ordinary" Americans.

"We're unified in Washington on winning this war," Mr Bush told cheering soldiers at the Eglin Air Force Base in Florida.

"One way to express our unity is for Congress to set the military budget, the defence of the United States, as the number one priority, and fully fund my request," Mr Bush said.

The budget will now spend months being debated in Congress before it passes into law.

Defence spending as % of GDP
US: 3%
Israel: 8.1%
UK: 2.5%
Germany: 1.5%
Japan: 1%
Source: SIPRI (figures for fiscal 99)

But Mr Bush is expected to win bipartisan support in Congress for a sizable spending increase for the military as Democrats and Republicans rally behind the US-led war.

"I think every member of Congress knows our first responsibility is to defend the nation and I expect the president will largely get what he wants for defence," said Senate Budget Committee Chairman Kent Conrad, a North Dakota Democrat.

Big bang budget

Defence spending is projected to rise by $48bn, or 12%, the biggest increase in 20 years, while domestic 'homeland' security spending will jump 111% to $37.7bn.

Click here for a graphic of US military spending

President Bush at Elgin Air Force Base
Soldiers applaud military spending boost
Meanwhile, funding for hundreds of programmes - including education, health, environmental and highway - would be cut.

"My budget provides the resources to combat terrorism at home, to protect our people and preserve our constitutional freedoms," Mr Bush said.

He also proposes to introduce for the first time a formal performance rating system for government programmes which would identify those that were failing.

Sharp cuts

Some critics have accused Mr Bush of using the cuts to protect his most prized economic achievement - last year's $1.35 trillion, 10-year tax cut.

Key spending
Defence $350.7bn +13%
Foreign Affairs $23.9bn +7%
Environment $30bn -3%
Education $80.9bn +1.6%
Health $234.3bn +16.6%
Pensions $476.9bn +3.4%
The budget proposes spending $344bn to extend those cuts, which are due to expire in 2010, for another two years and further cuts worth $591bn.

Mr Bush had already proposed the tax cuts as part of his economic stimulus program that has been stalled in the Senate because of Democratic objections.

Corporations and high income earners would be the major beneficiaries.

Deficit returns

Overall budget spending will increase 3.7% on the year.

2003 Budget proposals
Spending: up 3.7%
Growth: up 3.8%
Inflation: 2.2%
Deficit: $80bn
The budget projects a deficit for the current year of $106bn, after four straight years of surpluses, and a smaller one for 2004 before returning into the black by 2005.

Last year, Mr Bush projected a 10-year surplus of $5.6 trillion but that has been reduced to just $1 trillion, provided the budget becomes law.

The US economic recession, Mr Bush's tax cuts and the war have all worked to slash the surplus.

Click here to return

The BBC's Katty Kay reports from Washington
"This is a wartime budget cloaked in patriotism"
United States President George W Bush
"Our men and women deserve the best equipment and the best training"
Michael O'Hanlon, Brookings Institute
"There is no interest in challenging the president"
See also:

04 Feb 02 | Business
Budget debate looks to elections
04 Feb 02 | Americas
Analysis: US defence bonanza
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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