Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, February 5, 1991 TAG: 9102050198
SECTION: NATIONAL/INTERNATIONAL PAGE: A2 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
The president conceded tough economic times. "The longest period of economic expansion in history has been temporarily interrupted," Bush wrote in a budget introduction. "We can, we hope, return to growth soon - and proceed on the path to a new era of expansion."
He said he will send Congress a supplemental request to cover Operation Desert Storm in the coming weeks.
Democratic congressional leaders called the fiscal 1992 budget inadequate, saying it envisions only a short war and proposes no programs to counter the recession. Senate Budget Committee Chairman James Sasser, D-Tenn. said, "With war and recession staring us in the face, I would have to characterize this as a cross-your-fingers, close-your-eyes and hope-for-the-best budget."
In brief, Bush proposed:
A spending increase of 2.6 per cent over the current year, which will not keep pace with inflation, expected to reach 4.3 percent this year.
A deficit of $280.9 billion, at the same time he admitted this year's red ink will hit a record $318.1 billion.
Selected domestic program cuts, some rejected in past years, worth $46.6 billion over five years.
Bush's budget for the bookkeeping year that begins Oct. 1 seeks modest increases for the war on drugs, space exploration, education and highway construction. But it also seeks savings by slashing domestic programs, such as Medicare, guaranteed student loans, crop insurance and subsidies for wealthy farmers.
The $318.1 billion shortfall projected for this year comes despite last fall's $500 billion, five-year package of tax increases and spending cuts.
And it's more than three times the deficit Bush projected just a year ago and far surpasses the $64 billion target of the Gramm-Rudman deficit-reduction law.
The Gramm-Rudman targets may be moot this year: War and recession are under way, and both provide exemptions to the law.
Budget Director Richard Darman blamed the huge deficit on the recession and the cost of the savings-and-loan cleanup.
But the budget projects an end to red ink by fiscal 1996.
"By virtually any measure anyone has come up with, the pattern is for balance in the 1990s," he said, but added: "I know there is understandable skepticism . . . "
The budget, whose numbers went to print before the war erupted, earmarks only $15 billion for the conflict. That figure was a so-called "placekeeper" in the overall budget.
Darman said that a supplemental Pentagon budget to cover war costs would be submitted by late February.
House Democratic Leader Richard Gephardt, D-Mo., called Bush's proposal to grant the states $15 billion to take over various federal programs "another twist at federalism." But Bush defended the plan, outlined in last week's State of the Union address.
"Some people call some of our proposals warmed-over federalism. They miss the point," Bush told a group of governors at the White House. "The point is you are on the problem-solving edge of this equation. You are better equipped to represent the diverse interest of the various states."
Bush proposed no new taxes beyond those called for in last fall's budget agreement. But he again proposed lowering capital gains taxes, an idea already twice rejected by Congress.
by CNB