Associated Press President Bush addresses the Reserve Officers Association luncheon in Washington yesterday. Bush proposed a $48 billion increase in military spending for fiscal 2003, the largest increase in two decades.

WASHINGTON - President Bush called yesterday for nearly $50 billion in additional military spending for the war on terrorism, the largest increase for the Pentagon in two decades.

Privately, he assured Republican and Democratic leaders that he has "no ambition whatsoever" to exploit the war on terrorism for political gain in this election year.

With his chief political strategist, Karl Rove, seated behind him in the Cabinet Room, Bush gave House and Senate leaders an update on the fight against terrorists and added: "I have no ambition whatsoever to use this as a political issue. There is no daylight between the executive and the legislative branches."

No one in the room for the closed-door morning meeting responded, according to congressional and White House sources who related the scene to The Associated Press.

Rove had caused a stir among Democrats last week when he told a GOP conference that Republicans would do well to talk up the popular war in this year's midterm elections.

In an afternoon address to the Reserve Officers Association, Bush gave the first details of the $2 trillion budget that he submits to Congress on Feb. 4.

That spending plan will ask Congress to give the Pentagon an increase of $48 billion, bringing its budget within range of $380 billion. If approved by the House and Senate the funds would amount to the largest increase in military spending in 20 years, Bush said.

The extra money would give service personnel another pay raise, acquire more precision weapons and build missile defenses. "Buying these tools may put a strain on the budget but we will not cut corners when it comes to the defense of our great land," Bush said to cheers from the Reserve officers.

The new spending would include a $10 billion "war reserve" that Bush wants to have on hand for active military operations, said White House budget chief Mitchell Daniels.

Sen. Daniel Inouye, D-Hawaii, chairman of the Appropriations subcommittee on defense, was skeptical that lawmakers would support the big increase in these tight budget times. "They'd be reluctant to, unless the president can justify it," Inouye said.

To keep Americans safe from terrorists here at home, Bush said his budget will also call for hiring 30,000 airport security workers and an additional 300 FBI agents, buying new equipment to improve mail safety, and beefing up research on bioterror threats.

For the budget year beginning on Oct. 1, Bush is expected to request roughly double the current $13 billion for homeland security, a spending item that did not exist a year ago.

After four straight years of federal surpluses, Bush's budget will project deficits of $106 billion for this year, $80 billion for 2003, with a stream of surpluses beginning again in 2005 with $61 billion in black ink, Daniels said.

To address the recession, which Bush blames for the return to deficits, lawmakers emerged from their White House meeting and expressed commitment on both sides to a compromise economic package.

Senate Republican Leader Trent Lott told reporters in the White House driveway that the middle-ground plan offered by Senate Majority Leader Tom Daschle, D-S.D., has potential to break the long partisan stalemate over how to boost the economy and help millions of unemployed Americans.

"It is a focus of our attention. It's a process that could get us into considering the bill and reaching a conclusion," said Lott, R-Miss.

House Speaker Dennis Hastert agreed, for the most part.

"We made a commitment to at least start the discussion and try to work things out. I'm committed -- and I think other leaders are -- that we need some type of a stimulus package," said Hastert, R-Ill.

Daschle, who for much of the holiday recess was locked in a long-distance war of words with the White House over economic policy, suggested detente was in the works.

Bush invited Daschle and the other leaders to continue the White House breakfast meetings he began after launching the anti-terror war in Afghanistan, Daschle said.

The breakfasts will shift from a weekly happening to once every two weeks, with the first already scheduled for Tuesday, aides said.

Daschle chuckled when Bush jokingly wondered whether they would be able to keep the breakfasts going "as things heat up" in the election year, the Capitol Hill and White House sources said.

"A new year brings a new opportunity to start over. We're going to do that and work, hopefully, in a very positive and a bipartisan spirit," Daschle said.

"We talked today about the areas for which we both have a high priority and it was amazing. I thought it was identical - trade, energy, the economy, election reform, prescription drugs, patients bill of rights, agriculture."

Bush wants tens of billions of dollars more for homeland defense and military spending. On the economic front, he's pushing to break the stalemate over his economic revival package of tax cuts - mostly for businesses - and extended unemployment benefits.

Daschle proposes that Republicans and Democrats work on a compromise economic plan requiring both sides to make concessions.

Democrats would shelve raising unemployment benefits and subsidizing health care premiums for the newly unemployed under the Daschle plan, while Republicans would drop accelerating the income tax cuts enacted last year and repealing the corporate alternative minimum tax.

The Democratic proposal focuses on extending unemployment benefits, giving tax rebate checks to people who missed out last year, allowing businesses more generous tax write-offs for new investment and increasing federal Medicaid money to cash-strapped states.

Administration advisers said yesterday the president was open to a slimmed-down package as long as it includes job-creating provisions.

Later yesterday, Bush signed legislation waiving income tax liability for two years for families of victims of the Sept. 11 terrorist attacks, last fall's anthrax attacks and the 1995 Oklahoma City bombing.