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Key expenses are omitted, analysts say

WASHINGTON -- President Bush's budget proposal does not include some of his biggest spending and tax-cutting priorities, and includes no money for future expenses for the conflicts in Afghanistan and Iraq. If all costs were included, Bush would fall well short of his campaign pledge to halve the federal budget deficit within five years, according to independent budget analysts.

Bush is asking for $81 billion for Afghanistan and Iraq, but his budget plan does not anticipate any future expenses because the administration considers the costs of active military operations to be separate from the main Pentagon budget.

In addition, Bush does not include the transition costs for his plan to partially privatize Social Security for younger workers, a priority that would cost at least $754 billion in its first five years. Also missing from the budget are the $1.6 trillion over 10 years it would cost to make his tax cuts permanent, and the $642 billion, 10-year cost of changing the alternative minimum tax so that it will not affect middle-class taxpayers.

While the budget's supporting documents say Bush would put the nation on track to slice the deficit by 55 percent by 2009, that is only because of a series of ''scorekeeping gimmicks," said Robert L. Bixby, executive director of the Concord Coalition, a nonpartisan group that advocates fiscal responsibility.

''It's easier to achieve your goal if you leave stuff out," Bixby said. ''I do give the president credit for presenting some hard choices on entitlements. But this isn't a realistic budget because of what it leaves out and what it ignores."

In addition, White House officials yesterday for the first time recast the deficit in terms of its relationship to the gross domestic product, a calculation that makes it easier for the administration to seem to meet its pledge by assuming steady economic growth. Joshua Bolten, director of the Bush administration's Office of Management and Budget, said the deficit -- now 3.5 percent of GDP -- will be at 1.5 percent of GDP by 2009.

Bolten said Bush is not backing off his pledge to reduce the deficit in actual numbers, but merely offering an alternate measure that indicates the extent of his fiscal restraint.

Bolten and other Bush supporters noted that the $2.57 trillion budget he submitted to Congress yesterday is the most austere of his presidency, with the ax falling on education programs, farm subsidies, and housing grants.

''It's a budget which I think takes an appropriate approach to how we manage our fiscal house here in Washington," said Senate Budget Committee chairman Judd Gregg, Republican of New Hampshire. ''This budget is a very restrained budget."

But the biggest areas of government spending -- including Social Security, Defense, and Medicare -- would continue to rise rapidly under Bush's plan. The federal budget deficit is set to rise again this year, to $427 billion from last fiscal year's record high of $412 billion.

The deficit will shrink in subsequent years only if military needs in Iraq and Afghanistan disappear in the coming year -- something the administration concedes is highly unlikely -- and if Bush does not succeed in remaking Social Security. Also, it assumes that Congress will not enact more tax cuts, including Bush-backed extensions of tax cuts that are due to expire toward the end of this decade.

''The administration is sweeping under the carpet the huge costs of some of their most reckless policies and is doing next to nothing to rein in out-of-control spending in Washington," said Senator John F. Kerry, Democrat of Massachusetts. ''The Bush administration has succeeded in reaching new lows of fiscal irresponsibility."

As a candidate for reelection last year, Bush repeatedly pledged to cut the federal budget deficit in half within five years. On paper, Bush's budget seems to do that; it says the deficit will be at $233 billion in fiscal 2009, down from $521 billion that the administration says was the expected deficit at the time he made the promise.

But the $521 billion figure has been shown to be artificially high because the current estimate for the deficit is only $427 billion. That means the administration is taking credit for nearly $100 billion in deficit-cutting because of economic growth, not tough budget choices.

''They'll continue to redefine 'half' until they come up with something that works," said Stan Collender, a budget and economics analyst with Financial Dynamics Business Communications.

Democrats also noted that under Bush's plans, deficits will begin to rise substantially in fiscal 2010 and beyond, as government costs continue to rise and baby boomers start to retire. The ranking Democrat on the Senate budget committee, Kent Conrad of North Dakota, appeared at a news conference yesterday with charts that had black curtains covering up the sea of red ink -- representing the mounting deficits he said Bush does not want the nation to see.

''When we pull back the curtains, we see the reality: more deficits, more debt, and more focus on the wrong priorities," Conrad said. ''This budget hides the true fiscal condition of the country from the American people."

Rick Klein can be reached at 

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