
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, February 4, 1991                   TAG: 9102040359
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-1   EDITION: EVENING 
SOURCE: Associated Press
DATELINE: WASHINGTON                                LENGTH: Medium

BUSH BUDGET ASKS NO TAX INCREASES

President Bush today sent Congress a $1.45 trillion budget that he said prepares America for "a rapidly changing world." But the document is likely to be remembered more for its record deficits than for any new initiatives.

The spending plan for the fiscal year starting Oct. 1 seeks more money for the war on drugs, space exploration, education and highway construction. But the increases are mostly modest, in some cases amounting to only small pilot programs.

Defense spending - excluding the cost of the Gulf war - would be reduced from last year's $298.9 billion to $295.2 billion, reflecting the easing of Cold War tensions. The administration wants more money for the Strategic Defense Initiative, hoping to build on the successes the Patriot missile has achieved in knocking down Iraq's Scud missiles.

The budget acknowledges that the country is mired in a recession but unlike past presidents, Bush offered no government spending initiatives to fight the downturn. Instead, he said his budget focuses on efforts to improve America's long-term competitiveness.

Bush said his budget "lays the groundwork for a brighter future, protects our national interests and helps create the conditions for long-term economic growth and prosperity."

To pay for the programs being increased and to help reduce the budget deficits, the administration is seeking to save $46.6 billion over five years by cutting such government programs as Medicare, farm subsidies and student aid.

The administration did not propose any tax increases to help narrow the deficits but instead called for a tax cut in capital gains, the profits earned from the sale of investments. This proposal stirred heated controversy over the past two years with Democrats charging that it is a giveaway to the rich.

The administration also proposed allowing penalty-free withdrawals from individual retirement accounts for first-time home buyers and creation of a new tax-free family savings plan, both ideas rejected by Congress from last year's budget.

In a reprise of the "new federalism" proposals put forward by Ronald Reagan and Richard Nixon, the administration provides a laundry list of $21 billion in federal programs it seeks to turn over to the states along with the money to pay for them. The list included everything from aid to public libraries to sewage construction grants.

The president said he hoped Congress would select $15 billion in programs from this target list. The proposal to turn the programs over to the states "moves power and decision making closer to the people," Bush said.

But overhanging the entire budget were the forecasts for the largest deficits in U.S. history. The budget said the deficit for the current fiscal year would hit $318.1 billion, meaning that through this year the government will be going into debt at a rate of nearly $1 billion a day.

by CNB