President Bush sent to Congress a $2.9 trillion budget plan that would dramatically increase military spending - including an extra $245 billion for the wars in Iraq and Afghanistan - but squeeze federal health care programs and most domestic agencies to achieve his goal of eliminating the deficit by 2012.

The proposal seeks to make permanent tax cuts enacted in 2001 and 2003 at a cost of $374 billion over five years. And it would slice nearly $96 billion over five years from Medicare and Medicaid, the government's health care programs for the poor and the elderly. The proposal would also cut spending at eight federal agencies - including the education, environment and interior departments - to below fiscal 2006 levels.

Bush said his budget proposal "shows we can balance the budget in five years without raising taxes." The budget is "realistic, it's achievable and it's got good reforms in it," he said.