Bush blasts Democrats over US budget spending

CRAWFORD, Texas, June 16 (Reuters) President George W Bush blasted Democrats today for bloated annual federal spending bills and threatened to use his veto liberally, despite failing to carry out similar threats in the past.

Democrats who now control the Senate and the House of Representatives are crafting a dozen bills for more than 900 billion dollars in government spending to fund items ranging from the space programme and education to foreign aid and defense.

''I will use my veto to stop tax increases and runaway spending that threaten the strength of our economy and the prosperity of our people,'' Bush said in his weekly radio address. He was spending the weekend at his Texas ranch.

''By keeping taxes low and restraining federal spending, we can meet my plan to have a balanced budget by 2012,'' he said.

''The Democrats in Congress are trying to take us in a different direction.'' Democrats have countered that they have only proposed modest increases in spending -- 22 billion dollars over Bush's proposed 933 billion dollars -- to make up for shortchanging some programmes during the previous six years, when Bush's fellow Republicans controlled both Congress and the White House.

Bush could also soon be confronted with a new bipartisan Senate proposal to boost the tax rate on private equity firms going public, like Blackstone Group LP, to the level paid by other public corporations.

Democratic Senate Finance Committee Chairman Max Baucus and the panel's ranking Republican Sen. Chuck Grassley earlier this week proposed raising that tax rate to as much as 35 per cent from 15 per cent, arguing the partnerships were underpaying.

The White House said it was studying the proposal. Bush has sought to make permanent earlier tax cuts, while Democrats would like to let tax reductions for the wealthiest expire.

Bush has only vetoed two bills during his six-plus years in office: a bill to provide additional funds for the wars in Iraq and Afghanistan that included a timetable for withdrawing US troops from Iraq, and a measure that would have expanded embryonic stem cell research.

REUTERS GT RAI2116