WASHINGTON — American Jewish social service agencies, still reeling from recent funding cuts, are bracing for another round with this week’s launch of the annual budget process.

President Bush outlined his $2.77 trillion budget Monday, which includes a $36 billion cut in Medicare over the next five years, and a $13.6 billion reduction from Medicaid over the same period.

The proposal also includes $2.5 billion in aid to Israel. And it leaves open the possibility that $150 million in U.S. funds to the West Bank and Gaza Strip will be cut because of Hamas’ victory last month in the Palestinian parliamentary elections.

The domestic spending cuts could have a strong impact on Jewish social service programs, which have faced similar budget cuts and costly regulatory changes in recent years. Many programs have been forced to seek other avenues of funding to offset the shortfall from federal coffers, or to cut programs altogether.

Jewish homes for senior citizens and hospitals will be among those hardest hit.

Medicaid, which is the largest funding source for Jewish nursing homes and hospitals, provides an estimated $2 billion a year.

“It’s going to cause the Jewish homes to have a shortfall of revenue, ” said Harvey Tillipman, president and CEO of the Association of Jewish Aging Services of North America.

The budget proposal calls for increased funds for domestic security and national defense. It also asks Congress to approve $300 billion in tax cuts in the next five years.

Among the other highlights in the president’s proposed budget:

* $100 million for vouchers for students to use to attend private schools. These programs are opposed by numerous Jewish groups, but backed by the Orthodox community, which seek federal dollars for day school programs. Congress has traditionally struck down funds for national voucher programs.

* A $500 million reduction in Social Service Block Grants and a $630 million reduction in Community Services Block Grants. Both programs give money, through the states, to Jewish programs. The social service grants fund immigrant, elderly and children’s programming. The community grants aid to low-income populations.

* An increase of more than $600 million for the Low-Income Home Energy Assistance Program.

Many of the earmarks for specific programs of interest to the Jewish community are added by lawmakers in Congress when they tackle the budget. They are not in the president’s budget proposal. There is some hope that many of the proposed cuts in programs will be salvaged by Congress. That has happened in the past.

Tillipman said it is too soon to tell the specific impact that the proposed Medicare and Medicaid cuts will have on Jewish aging services.

Nursing homes are still trying to grapple with new cuts came from last year’s budget, which was just passed into law last week after a prolonged budget battle.

One new regulation passed last week bars a Medicaid applicant from receiving coverage for five years after he or she has transferred assets to a family member or a charity. The wait used to require two years.

And nursing home residents will now have to wait until they have entered a home to apply for coverage, a move the Congressional Budget Office predicts will lead to expensive delays in payment.

There also now will be a cap on Medicare coverage of nursing home stays. Now, homes will receive only $1,740 per resident per year. One facility, the Menorah Park Center for Senior Living in Beechwood, Ohio, estimated the cap would cost them at least $250,000 each year.

“It’s the combination of all these things, ” Tillipman said. “It creates a problem for Jewish homes to be able to finance services for those who are indigent and don’t have the ability to pay. “

He said fund-raising will need to increase dramatically, and the cost of services will increase for those who can afford to pay it.

The White House says the Medicaid and Medicare cuts will allow the programs to be more cost-efficient, and be sustainable for a longer period of time. Secretary of Health and Human Services Mike Leavitt said Monday that the quality of care would not be reduced.

“Medicare is simply not sustainable in the long-term in its present form, ” Leavitt said. “So we have proposed modest steps to strengthen and modernize Medicare, and to reduce the burden of entitlement spending on future generations. “

Congressional Democrats are likely to fight the cuts, and some Republicans have expressed reservations about cutting taxes and services, especially before the mid-year elections.

Jewish community programs that help the poor and the aging will also likely be affected by the block grant cuts. The federation system is a large recipient of these funds.

The White House said Monday they are cutting the programs because they do not reward grants on a competitive basis, and because they are not directed at programs that achieve results.

William Daroff, vice president for public policy at the United Jewish Communities, the federation umbrellas, said he is “deeply concerned ” about the block grant cuts.

“Obviously, the executive branch’s budget request is just that, a request, a starting point for the debate, ” he said. “As the budget process moves forward in Congress, we look forward to working with our allies in both parties to restore and expand programs critical to the Jewish federation system’s network of social service providers. “

The foreign aid earmarks, which have become standard in recent years, may be controversial this year because of Hamas’ victory.

The $2.5 billion in economic and military aid for Israel is part of a total foreign aid request of $23.7 billion, up $2.86 billion up from last year.

Israel would receive $2.34 billion in military aid, an increase of $60 million from last year, along with $120 million in economic aid, which is half of what it received last year. The changes are part of a 10-year aid restructuring plan President Clinton signed with former Israeli Prime Minister Benjamin Netanyahu.

The $150 million slated for the West Bank and Gaza is the same as last year’s request, but twice what it received when Yasser Arafat was president of the Palestinian Authority. The Bush administration said that funding was being reviewed “in light of recent legislative elections.”

The Palestinian Authority has received additional direct aid in recent years, but this year’s budget includes only development projects through USAID. The money would be used to promote democratic reform, the rule of law and economic revitalization.

Israel also would receive $40 million for immigrant absorption in Israel.

Egypt is slated to receive $455 million in economic aid, along with $1.3 billion in military aid. Jordan is earmarked for $245 million in economic aid and $206 million in military aid.

Last year, Egypt received $495 million in economic aid and $1.3 billion in military aid. Jordan received $250 million in economic aid and $210 million in military aid.