Bush to cut Medicare and Medicaid to fund wars

Obviously one of the opportunity costs of funding the Iraq and Afghanistan wars is a decline in funding of social programs.


Bush says budget will limit non-defense spending By Caren Bohan
Sat Feb 3, 3:59 PM ET



WASHINGTON (Reuters) - President George W. Bush said on Saturday his upcoming budget proposal would emphasize restraint on domestic spending while making defense and war costs for Iraq and Afghanistan the top priority.



"Cutting the deficit during a time of war requires us to restrain spending in other areas," Bush said in his weekly radio address.

Previewing the fiscal year 2008 budget he will unveil on Monday, Bush also said it would show that his goal of erasing the deficit by 2012 could be accomplished while making his tax cuts permanent.

"Congress needs to make this tax relief permanent, so we can keep America's economy growing. Pro-growth economic policies also play a vital role in our plan to balance the federal budget," he said.

"Our growing economy has produced record levels of tax revenue. This increase in tax revenue has helped us cut the deficit in half three years ahead of schedule," he added. "On Monday, we will take the next step when I submit to Congress a budget that will eliminate the deficit by 2012."

Bush will propose a 1 percent increase in spending outside defense for fiscal 2008, according to The Washington Post. That would amount to a decrease in programs after accounting for inflation, which is running at about 2.5 percent.

The Post also said the president would seek a 10 percent increase in the regular Pentagon budget to $481 billion.

FINANCING IRAQ, AFGHANISTAN WARS

An administration official has said the president will request a total of $245 billion to finance the wars in Iraq and Afghanistan through late 2008. That will include a $100 billion request for the wars for the rest of the current fiscal year that ends on September 30 and $145 billion for next year.

Including $70 billion that Congress has already approved, the total of $170 billion for this fiscal year would mark the highest spending level so far for the two wars.

"Our troops deserve our full support, and this budget gives them the resources they need," Bush said, adding he would set as his top priority "keeping America safe and winning the war against extremists."

He did not discuss any of the numbers in the budget, nor did he specify the non-defense areas where he would curb spending. However, he said some "wasteful spending" could be cut by getting rid of "earmarks" -- or special interest projects.

This is the first year Bush will submit his budget to a Democratic-controlled Congress. Many Democrats have called Bush fiscally reckless and contend that his huge tax cuts were heavily skewed toward the wealthy and were unaffordable.

The nonpartisan Congressional Budget Office said in a report last month that balancing the budget was possible by 2012. But its assumptions did not factor in an extension of the Bush tax cuts or changes Congress is likely to make to shield middle-class Americans from the alternative minimum tax.

Bush, who addressed House of Representatives Democrats at their retreat in Williamsburg, Virginia, on Saturday, also called for a bipartisan effort to rein in entitlement programs, such as the Medicare health program for older Americans.

"Controlling spending also requires us to address the unsustainable growth of entitlement programs such as Social Security, Medicare, and Medicaid," Bush said. "Spending for these programs is growing faster than inflation, faster than our economy, and faster than our ability to pay for it.

Bush's budget will propose squeezing about $70 billion in savings from the Medicare and Medicaid health programs over the next five years, an administration official said.