Bush budget plans cuts to education, other grants

WASHINGTON (Reuters) - The Bush administration on Monday sought a cut of $4.9 billion, or 8 percent, in education, training, employment and social services grants but estimated that overall outlays to state and local governments would rise slightly.

President Bush holds a copy of his latest 2008 budget during a cabinet meeting at the White House in Washington, February 5, 2007. Alongside Bush are Secretary of the Interior Dirk Kempthorne (L) and Secretary of the Treasury Henry Paulson. REUTERS/Jason Reed

In an analytical document accompanying its proposed budget, the White House estimated federal grant outlays in fiscal 2008 would total $454.0 billion, up 1.6 percent from $448.8 billion in fiscal 2007.

Health spending overall would rise to $219.0 billion in fiscal 2008 from $208.9 billion, the fiscal 2008 budget proposal shows.

But the White House’s five-year plan foresees $66 billion in cuts to Medicare, a program for the elderly, and $12 billion in cuts for Medicaid, the state-federal program for the poor.

The cuts met with a rebuke from Senate Finance Committee Chairman Max Baucus.

“The proposed Medicare reductions are more than the President has asked from any previous Congress during his administration,” Baucus said in a statement.

“My health care agenda in the Finance Committee will supplement the search for entitlement savings with efforts to reduce health care costs overall,” he added.

In fiscal 2008 federal outlays for Medicaid were estimated to grow to $206.89 billion from $195.19 billion in 2007.

The administration sought a $2.4 billion cut in community and regional development grants to $16.5 billion from $18.9 billion, with Community Development Block Grant funds at over $3 billion in fiscal 2008.

The White House requested that the budget for the Housing and Urban Development Department, another major source of federal funds to state and local governments, be increased to $37.3 billion from $36.2 billion in fiscal 2007.

The Bush administration’s budget also proposed lifting a cap on private activity bonds that are used for drinking water and wastewater infrastructure from the overall private activity bond limit, and helping facilitate public-private partnerships.

In addition, it sought a $2.9 billion increase in grants for transportation, including $100 million for capital matching grants to states for intercity passenger rail projects.