Bush wants budget balanced by 2012

President Bush, boasting that it took only two years to cut in half the record budget deficit created early in his tenure, said Wednesday that he would propose wiping out the other half by 2012 -- a goal that could tie the hands of the Democrats as they take control of Congress today.

Bush said he could put the budget on a course toward balance and still win the war on terrorism and make permanent his first-term tax cuts that are set to expire after 2010. That would leave the Democrats little or no room to maneuver their priorities through Congress.

Bush would concentrate his cuts on giant government benefit programs -- Social Security, Medicare and Medicaid -- that constitute more than 40% of federal spending. He also called on the new Congress to cut by half the use of earmarks to provide funds for projects in lawmakers’ home states and districts.

Bush’s proposal to balance the budget in five years could make it difficult for the Democrats to use their new majority in the House and Senate to advance their agenda. House Speaker-designate Nancy Pelosi of San Francisco has included only one spending item -- beefed-up college student loans -- in her agenda for the first 100 hours of the new Congress, but other Democrats are likely to advance their own plans.

Rep. John M. Spratt Jr. (D-S.C.), who will lead the House Budget Committee, said he was “wary” of Bush’s plan to balance the budget by 2012: How, he wondered, could Bush balance the budget while the conflicts in Afghanistan and Iraq are costing more than $100 billion a year? And what about the cost of providing relief from the alternative minimum tax, which was supposed to hit only the rich but would cost as many as 30 million taxpayers a total of $100 billion in 2012 if Congress does not act?

Incoming Senate Budget Committee Chairman Kent Conrad (D-N.D.) said Congress would not take the tough steps to control the budget until Bush convinced Americans that the country is headed for a fiscal crisis when the baby-boom generation retires and qualifies for government benefits -- starting next year for Social Security and 2011 for Medicare.

“Unfortunately,” Conrad said in an interview, “the president’s credibility on fiscal matters is about the square root of zero. He’s run up $3 trillion of debt in five years.... But you never hear the word ‘debt’ leave his lips. He’s in deep denial about the fiscal chasm he’s created.”

Bush, reading a statement in the Rose Garden after meeting with his Cabinet, said, “It’s time to set aside politics and focus on the future.” Referring to the Democrats, he added: “Together, we have important things to do.”

Bush’s goal of a balanced budget by 2012 -- which would be realized three years after leaving office -- won almost universal acclaim. But feuding broke out immediately about how to get there.

Republicans said higher taxes were the wrong way to go. “We do not have a revenue problem; we have a spending problem,” said Rep. Paul D. Ryan of Wisconsin, the top Republican on the budget committee.

Democrats said the problem could not be solved only on the spending side of the equation. Conrad said he favored a combination of spending discipline, benefit program revisions and revenue enhancers, starting with tougher enforcement of the tax laws.

In his Rose Garden statement, Bush said the 2008 budget that he would submit to Congress next month “will address the most urgent needs of our nation -- in particular, the need to protect ourselves from radicals and terrorists, the need to win the war on terror, the need to maintain a strong national defense and the need to keep this economy growing by making tax relief permanent.”

James R. Horney, a senior fellow at the liberal Center on Budget and Policy Priorities, said he worried that Bush would show the projected 2012 budget in balance by, among other things, ignoring the cost of the wars in Iraq and Afghanistan (on grounds that the cost is unpredictable).

The White House says the deficit was cut in half between 2004, when it was projected before the year began to be 4.5% of the nation’s economic output, and 2006, when it turned out to be 1.9%.

Spratt noted that the budget for 2000, the year before Bush took office, had a surplus of 2.4%.

joel.havemann@latimes.com