A federal budget is a very boring, very intimidating and very political document. Read as a unit – and no sane person actually does this – a presidential budget is a broad statement of an administration’s priorities. Examined as a series of line items, it is a mind-numbing expression of the breadth and depth of government’s involvement in everyday life.

This year’s is no different – and yet there is something very different about it. It is the budget for the last full year of President Bush’s two terms in office. But more than that, it is President Bush’s challenge to his political allies on the right and his most creative effort at calling the bluff of his political rivals on the left. In this budget he sets forth hundreds of spending targets, but the one that really matters is his effort to cut the growth of federal entitlements by forcing Democrats to confront their own core beliefs.

Dangerous experiment

By proposing to expand means tests to more federal programs, the president is embarking on a dangerous experiment – dangerous for him because the outcry will be so great, and dangerous to the Democrats because they are on record for putting a heavier financial burden on the rich but still recoil from cutting entitlement programs.

In fairness, the Democrats have talked most about raising taxes on the rich, not cutting subsidies for the rich. But the practical effect is little different. Cutting federal entitlements on wealthier Americans applies the Democratic ethos – the notion that those of different economic fortune should have different economic burdens – to the most protected, beloved and untouchable corners of the federal budget. Fair’s fair, and consistent is consistent.

This is a presidential challenge for the ages, all the more so for its subtlety – and lack of exposure in just about every media outlet except the ever-vigilant Financial Times, which isn’t even an American newspaper. What Mr. Bush is doing is taking the values his opponents cherish most and seeking to apply them to the federal entitlement programs that Americans of all income groups cherish the most.

Means testing on Medicare

The principal collision point is Medicare, where the administration is seeking to apply means tests that would affect an increased number of wealthier Americans. “Democrats claim to be defenders of the poor against the wealthy,” says Brian M. Riedl, a federal budget analyst for the conservative Heritage Foundation. “Here we have working families paying taxes so that very wealthy seniors don’t have to pay more than 25 percent of their voluntary Medicare costs. Those concerned with working-class taxpayers should be very concerned about these huge medical subsidies for the very wealthy.” The irony is telling.

The administration is not proposing means tests for Medicare Part A, which is hospital insurance underwritten by payroll taxes. The targets are programs like Medicare Part B (doctors and physicians) and Part D (the drug benefit), which are funded largely by current taxpayers. Many conservatives view Parts B and D as traditional government subsidy programs and, according to Riedl of the Heritage Foundation, “there’s no reason to dump trillions of dollars of debt onto the next generation so that the wealthiest seniors can get huge subsidies.”

Two key targets

There are two other important fronts in this war. One is the new farm bill, where the administration wants to exclude households earning more than $200,000 from farm subsidies. Another is a proposal for adjustments in federal tax law governing health-insurance deductions that would increase taxes on wealthier Americans.

Cynical interpretation: The administration sculpted its Medicare proposal as a way to transform it from a popular universal program into a welfare program with a smaller natural constituency as a way station toward eliminating the program eventually. Possibly the case, but probably not. There’s a real budget crisis in Washington, and Rob Portman, the budget director, is not an ideological warrior.

The timing of this quiet, subtle philosophical challenge is intriguing from the Democrats’ point of view. It comes at a time when about a 10th of the Democratic senators are engaged in, or contemplating, presidential campaigns during a political cycle in which the leading candidates are forgoing federal campaign matching funds. That means they are so confident of raising money among wealthy donors that they don’t need the federal subsidy. (This flight from federal financing is so great that it is endangering the entire campaign-finance system, not necessarily a bad thing, but surely an important thing.)

Uncomfortable Democrats

Until now, the Democrats have concentrated their efforts on eliminating or reducing tax advantages for the wealthy that the Bush administration implemented early in its term. Indeed, former Sen. John Edwards of North Carolina last week proposed a health-care plan that would be financed in part by wiping out administration-sponsored tax cuts for families earning more than $200,000 a year. Proposals like that traditionally prompt enthusiastic bursts of applause among Democrats in Iowa, New Hampshire, and states with early contests in the 2008 presidential election.

So the Democrats are in a doubly uncomfortable position. They see the same fiscal train wreck the Republicans see in Washington, but they are stuck with the unpopular alternative of raising taxes. Now the president has lobbed another grenade at them, increasing their discomfort.

But the challenge for the Bush administration (beyond the one it issued to the Democrats) and the challenge for the Democrats (beyond the political pressures they face) is to find common ground on the budget battleground, and beyond. This could be a start.