NEW YORK (CNN/Money) -
Wall Street analysts gave President Bush high marks for tackling domestic spending in his budget proposal Monday, but even they said it was unlikely the blueprint would survive Congress intact.
"There's an awful lot of sacred cows being lead to slaughter and the chances of them actually getting there are slim," said Brookings Institution fellow William Dickens, referring to farm subsidies in particular.
The president's $2.56 trillion budget for fiscal 2006, beginning Oct. 1 of this year, is up from the $2.47 trillion budget for the current fiscal year. The government projects that the 2006 deficit will total $390 billion, down from $426 billion in 2005's record deficit.
The proposed budget would cut domestic government programs, excluding Defense, Homeland Security and Social Security, by 0.7 percent, according to the White House budget office (OMB). If approved, these would be the biggest cuts since the Reagan administration.
The budget's biggest axe falls on the Department of Agriculture, which faces a 10 percent cut, and other programs face belt tightening as well. Declines include 1 percent cuts to the Departments of Education, Health and Human Services -- including Medicaid and Medicare -- and the Department of Transportation.
David Wyss, chief economist for Standard & Poor's, said he supported the proposal, but wasn't so sure that a lot of Congressmen would agree.
"I'm not convinced that it's going to end up being nearly as austere as it said it's going to be," said Wyss. "I'm in favor of cutting most of the programs, but I'm not convinced that you're going to get this through Congress."
John Silvia, chief economist for Wachovia, and former senior economist for two Senate panels, hailed the projected cuts as necessary for the country.
"I think it's way overdue for this administration to get tough on spending," said Silvia, adding the proposed cuts represent "moderate progress" in slashing the budget. "You've got to get across to people that these services cost money."
But lawmakers, who received the proposal Monday, aren't likely to rubberstamp the proposal.
Wyss called the budget's odds of clearing Congress "highly questionable," noting that lawmakers will of course try to protect their constituents. "I'm told there are farm states out there, and most of them are led by Republicans," he quipped.
Analysts believe cutting the budget deficit is important to help keep interest rates from rising and to protect the nation from the financial burden it will face when baby boomers start retiring in the next several years.
"We ought to get ourselves back to balance before the baby boomers retire, and we're running out of time to do that," said Wyss.
Richard Yamarone, chief economist for Argus Research, did not fault the government for sliding into a deficit, given the costs of war, the terrorist attacks of Sept. and the recession that ended in November 2001. But with an improved economy, the government has to face the task of paying it back.
"Now it's time to pay the piper and get this deficit back down to more manageable levels, and I believe the president's budget will address these issues," said Yamarone.
Silvia said that, like it or not, politicians and the public are going to have to realize that cuts are inevitable, especially as health care costs skyrocket. "Can we really afford a society where we have all the baby boomers coming in and they're all going to have quadruple bypasses?" he said. "Who is going to pay for all that?"
Under the president's proposal, defense spending would rise, but his budget doesn't reflect the cost of cost Iraq or Afghanistan. Bush will present a separate war budget to Congress.
Although austere some programs will see an increase in their coffers. The administration requested a 5 percent increase in defense spending and a 7 percent boost for the Department of Homeland Security.
The president's budget request played up the threat of terrorism. Even the Department of Health and Human Services, who's budget is set to be cut by the Bush proposal, would get $4.2 billion earmarked for the threat of bioterrorism, a jump of $154 million.