Mr. Bush has faced a shifting budget picture after inheriting a record surplus when he took office in 2000. He pointed to the 2001 recession and the costs of fighting the war on terrorism as key factors to the soaring deficit.
"The reason we are where we are is because we went through a recession, we were attacked and we're fighting a war. Those are high hurdles for a budget and for a country to overcome," the president told his Cabinet Monday.
The budget for the fiscal year that begins Oct. 1, proposes spending $2.4 trillion for all government activities, up 3.5 percent from the current year. Revenues will total $2.04 trillion, a sizable 13.2 percent increase that the administration predicts will result from growing tax receipts powered by a strengthening economy.
White House budget director Joshua Bolten said as much as $50 billion more will be added to the budget's projected $364 billion deficit for 2005 when the costs of the war in Iraq and Afghanistan are added. Those requests will not be made until next year, when there is a clearer picture of what the security needs will be, he said.
"I would hope that we would be spending substantially less than we are today, but I don't know," Bolten told reporters at a budget briefing.
To battle the lofty deficits, President Bush proposed cutting back on several government programs and sought up front spending cuts in seven of 16 Cabinet-level agencies.
He said he was confident he could cut the deficit in half in five years by working with Congress "to bring fiscal discipline to the appropriations process."
Mr. Bush set the goal of bringing this year's record $521 billion shortfall down to $364 billion in fiscal 2005, to $241 billion in 2007 and then to $237 billion in 2009.
Homeland security and the military stand to benefit most from the new budget with rises of nearly 10 percent and 7 percent, respectively.
"Our budget reflects the continuing importance of providing for the defense and security of the American people," the president said in a statement released by the Office of Management and Budget with the package. "We will continue to provide whatever it takes to defend our country by fully supporting our military, which is performing with great skill and honor in our battles overseas."
Other programs that would receive boosts in the president's budget include his No Child Left Behind education program; job training programs and an $18 million increase for the National Endowment for the Arts.
Hardest hit were the departments of Agriculture and Transportation, the Environmental Protection Agency, Small Business Administration, and Army Corps of Engineers, with cuts ranging from 1 percent for the Commerce Department to as much as 49 percent for the General Services Administration's discretionary budget.
The budget will be closely scrutinized on Capitol Hill this election year when, in addition to the White House, all of the seats in the House of Representatives and about a third of seats in the Senate will be put to the voter's choice next fall.
Democrats immediately criticized the spending proposal, saying that the cuts in programs will be detrimental to American workers and families, and that the president's plan to make his 2001 and 2003 tax cuts permanent is projected to cost more than $900 billion over 10 years.
"This administration pledged that its tax cuts and policy choices would not turn record surpluses into record deficits, but this budget shows that's exactly what's happened," Senate Democratic Leader Tom Daschle told the Associated Press.