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WASHINGTON, Feb 12 (Reuters): President George W Bush's quest to cut or eliminate as many as 150 federal programmes will reduce funding for state and local homeland security grants, job training and several education programmes, the White House said Friday.
The White House issued 233 pages of documents giving specifics on how Bush would meet his goal of limiting the growth of discretionary spending for fiscal 2006 to 2.1 per cent -- less than the rate of inflation.
Bush had promoted plans to cut or eliminate 150 programmes in his State of the Union address on Feb 2. But his $2.57 trillion budget, released Monday, did not specify which programmes.
The White House provided the list in response to a request from House of Representatives Budget Committee Hairman Jim Nussle, an Iowa Republican.
The Bush budget cut $420 million in grants, training and other assistance programmes that the Homeland Security Department issues for state and local governments.
The Office of Management and Budget said the majority of the $14.5 billion in such grants given out since 2001 have been awarded based on criteria that "do not target funds based on terrorism risks, vulnerabilities and needs."
Another $146 million would be cut from job training grants to states and local governments under the Workforce Investment Act of 1998. Bush has long argued the need for job training programmes to meet the needs of a changing economy.
The OMB said the Workforce Investment Act needs comprehensive reforms because currently "governors have too little control and flexibility, and programmes do not train workers for jobs in high- growth industries.
Bush would cut $145 million in funding for the Army Corps of Engineers, a civil construction programme long cited by critics as a prime source of congressional pork.
A $497 million cut was made in federal assistance to the nation's airports for repairing runways and other facilities. A number of education programmes were slated to get no funding at all in 2006, including the Even Start family literacy programme and the Perkins loan programme that gives money to colleges and universities to make low- interest loans available to needy students.
When Bush released his budget, Democrats derided the plan as a "hoax" that would fail to balance the budget because it failed to include big costs such as funding in fiscal 2006 for the Iraq war and the costs for Bush's plan to add private investment accounts to the Social Security retirement system.
"The real story about this budget is what it includes is what it deliberately excludes, which are the major initiatives of the Bush administration," said Tom Kahn, Democratic staff director on the House Budget Committee.
Meanwhile, a report from Palo Alto, Calif, says: The US economy is on track for sustainable above-trend growth, and with onetary policy still accommodative, interest rates will keep rising, San Francisco Federal Reserve Bank President Janet Yellen said Friday.
Separately, Fed Gov. Ben Bernanke said he could not gauge the chances for the central bank adopting a numerical target for inflation, currently a hot topic as it prepares for a leadership change in early 2006.
Yellen and Bernanke, who both spoke at a Stanford Institute of Economic Policy Research conference, were the final Fed officials to take the podium before Chairman Alan Green span delivers eagerly awaited testimony on the US economy to Congress next week.
Yellen, who is not a voting member of the Federal Open Market Committee this year, signalled the Fed would continue to push up benchmark rates as it has done since June.
However, the task of deciding how much higher to raise rates is getting trickier, she said.
Labour markets are gradually improving, but with the January jobless rate at 5.2 per cent, the economy still has "at least a bit of slack," which should keep a lid on wage-based inflation, she said.
A potential target would be 1.5 per cent on the core personal consumption expenditures (PCE) index, within a range of about a point or so, which would equate to about 2 per cent in the core consumer price index, she said.
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