The proposal, which ignited protests from opposition Democrats, would raise military spending 4.8 percent to 419.3 billion dollars and add eight percent to the budget for Homeland Security, including fee-funded services.

At the same time, non-defense spending not mandated by law, so-called discretionary spending, would be cut one percent. About 150 domestic programs deemed inefficient or unnecessary would be eliminated.

"It is a budget that sets priorities. Our priorities are winning the war on terror, protecting our homeland, growing our economy," Bush said at a cabinet meeting.

"It's a budget that focuses on results. The taxpayers of America don't want us spending our money into something that's not achieving results. It's a budget that reduces and eliminates redundancy. It's a budget that is a lean budget."

The deficit for the fiscal year starting October 1 would be reduced to 390 billion dollars, or three percent of gross domestic product (GDP), from a projected 427 billion (3.5 percent of GDP) in the current year.

The deficit would decline to 233 billion dollars, or 1.5 percent of GDP, by fiscal 2009 under the outline, which aims to fulfill Bush's pledge to cut the deficit in half as a percentage of GDP.

The plan assumes economic growth of 3.6 percent in 2005 and 3.5 percent in 2006, in line with most private economists' forecasts.

Economists said the plan lacked key details about curbing the federal deficit.

The Bush administration "wants to present its budget as austere, trying to regain some fiscal credibility, but he is not very convincing," said Marie Pierre Ripert at Ixis Corporate and Investment Bank.

"Some efforts are made to restrain spending but it is clearly not enough to allow a significant improvement in the fiscal deficit as tax cuts enacted in 2001 and 2003 will be extended."

The plan sent to Congress is merely a blueprint of White House spending plans. A budget must be approved by Congress, which also would decide on specific funding plans each year.

Among the biggest cuts come reductions in programs for housing (down 11.5 percent), agriculture (down 9.6 percent), transportation (down 6.7 percent) and justice (down 5.5 percent).

Democrats came out swinging immediately in response.

House Democratic leader Nancy Pelosi said the plan excludes many programs that will be sought by the administration -- including an estimated 80 billion dollars for Iraq and 4.5 trillion dollars in coming years for reorganizing the Social Security retirement program.

"The president's budget is a hoax on the American people," Pelosi said.

"The two issues that dominated the president's State of the Union address -- Iraq and Social Security -- are nowhere to be found in this budget."

Pelosi criticized efforts to cut local law enforcement, health care and other domestic programs.

"The president's budget is fiscally irresponsible, morally irresponsible, and a failure of leadership," she said.

On the international front, Bush earmarked 3.2 billion for fighting AIDS worldwide in 2006 and three billion dollars -- two billion less than earlier projections -- for the Millennium Challenge Account program for developing countries.

Traditionally sacrosanct farm subsidies would be shaved, and the US passenger rail network, Amtrak, would no longer receive an operating subsidy.

Law enforcement, education and environmental conservation programs would suffer and several public health programs would be drastically cut.

Robert Bixby at the balanced-budget-minded Corcord Coalition said the budget does little to trim the deficit despite administration claims due to "budgetary gimmicks that understate likely expenses and overstate likely revenue."

"The main problem with this budget is not what's in it, but what's left out," he said.

"It assumes that the upcoming 81 billion dollars supplemental spending request for Iraq and Afghanistan will be the last one ... Rather than cutting the deficit in half, as the administration proposes, its budget policies are more likely to result in persistent annual deficits of about 400 billion dollars."

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