Bush's stringent approach comes as record federal deficits that hit $413 billion last year hinder his ability to pay

for overhauling Social Security and extending his tax cuts. He also has tied the budget shortfalls to the weakening dollar and pledged to reduce red ink to help prop up the currency.

At his White House economic conference Thursday, Bush said he made "good progress" in holding the growth of nondefense, non-homeland-security programs this year to about 1 percent.

"What I'm saying is we're going to submit a tough budget," he said. "And I look forward to working with Congress on the tough budget."

....As word of Bush's still-evolving plans for domestic spending has seeped out, it has cheered conservative Republicans. They spent much of Bush's first term criticizing him for letting spending grow too rapidly and pressuring congressional leaders to try clamping down on spending.

Excluding homeland security and emergencies like hurricanes, domestic spending has grown by 27 percent since Bush took office in 2001.

...."They've run out of excuses," said Stephen Slivinski, budget director of the conservative-leaning Cato Institute. "They can't blame anyone else."

Still, Democrats and many moderate Republicans are certain to fight for their priorities when Congress begins translating Bush' budget proposal to actual spending legislation next year.

"This tells you the administration's priority is tax cuts over fiscal responsibility and providing central services to the American people," said Thomas Kahn, Democratic staff director of the House Budget Committee. [AP]

The Boston Globe is not convinced or pleased:

President George W. Bush's two-day economic summit was an exercise in political propaganda that attempted to hide the underlying economic problem for the administration over the next four years: The government is spending far more than it is taking in and needs to raise taxes to make up at least part of the difference.

....The Congressional Budget Office notes that federal spending, growing at a 3.5 percent rate in the 90's, has soared to a 6 to 7 percent growth rate under Bush. Much of that can be attributed to the war against terrorism, but it made no sense to embark on the invasion of Iraq while simultaneously cutting taxes, as Bush continued to advocate throughout his first term. And the Medicare drug benefit, which Bush pushed through Congress last year, will put more pressure on the budget when it takes effect in 2006. The program lacks the price restraints necessary to keep it under control.

....Even if all unnecessary spending were eliminated, essential federal programs would require more funding than is possible when revenues shrink to an unreasonably low percentage of the gross domestic product - 16.5 percent, according to the CBO.
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Participants at the summit also barely focused on the decline of the dollar, but foreign investors' tendency to put their money elsewhere is a sign that the Bush administration and Congress are pursuing polices that threaten American economic leadership. Despite Republican rhetoric, Americans are far from overtaxed. The Bush administration is underperforming in its essential role as guardian of the U.S. economy.