JB

Reuters reports:

Boxed in by a record $521 billion deficit, President Bush (news - web sites) will propose a $2.4 trillion election- year budget on Monday that will cut dozens of government programs and set deficit-reduction goals that even fellow Republicans are skeptical he can meet.

Bush has seen a dramatic deterioration in the nation's budget picture since a record surplus was reported in 2000. He hopes to improve his fiscal image before the November presidential election by promising to reduce the deficit by one-third by 2005 and by more than half within five years.

But fiscal conservatives in both parties have doubts Bush can deliver. He will leave out of his fiscal 2005 budget the tens of billions of dollars that will almost certainly be needed next year to keep U.S. troops in Iraq (news - web sites), as well as a costly tax system overhaul that Republicans and Democrats say will soon become politically imperative to keep taxes from rising on the nation's middle class.

In line with Bush's election-year priorities, homeland security and the military will be the budget's biggest winners. Defense contractors including Lockheed Martin Corp., Boeing Co., Northrop Grumman Corp., Raytheon Co. and General Dynamics Corp. stand to benefit as Bush's $401.7 billion military budget sharply increases spending on missile defense and on modernizing the Army.

The biggest losers will be environmental, agricultural and energy programs. Facing the prospects of a revolt by fiscal conservatives, Bush will call for limiting growth in discretionary spending -- outside of homeland security and defense -- to just 0.5 percent. Because that is well below the rate of inflation, it will amount to a cut in domestic programs.

In a tacit acknowledgment that deficits are here to stay, Bush will set the goal of bringing this year's record $521 billion shortfall down to $364 billion in fiscal 2005 and eventually to $237 billion in fiscal 2009. There is no talk of returning to surpluses in the foreseeable future.

Oh, and by the way, while he's running up those huge deficits, he also wants to wants to make the tax cuts that caused the problem permanent.