There is only one route that I can see making Bush's space initiative work, commercial opportunities on the moon that would reduce much of the cost of getting and maintaining a permanent presence. Otherwise the entire initiative is unlikely to fly for the amount budgeted.
These profit opportunities would come in three different flavors. First, and least useful would be support operations for government initiatives. If you have a government moon base building the mars probe, you could contract out food production to a commercial concern. Profitable? Sure, but it will only reduce expenses in a minor sort of way. Government food production, as the Soviets and everybody else has painfully learned, is probably the worst way to do it. There are probably a lot of support opportunities like that that could be bid out to private suppliers.
The second commercial opportunity is energy production. There is some work being done on beamed power and certainly there is no atmosphere to disperse the energy and plenty of cheap, empty space to lay out the panels. If they can work out the problems, you can have a profitable operation that would pay for itself. This would lower the cost of everything else, including transport.
The third commercial opportunity is manufacturing. All across the world, everywhere there is cheap power there is an aluminum plant nearby even though aluminum is in persistent overproduction. Put cheap power on the moon and you'll draw high energy, high value manufacturing there. This would be for government manufacturing needs (see opportunity one above) but would also work for commercial satellite production, production of those solar cells, and anything else that you would rather not have to haul out of earth's gravity well.
So what would happen if the President had made commerce the focus of his space initiative? What would have happened politically going into the election year? What would have happened in Congress? What would have happened with our relations with OPEC? What would have happened to those who simply do not wish to see free enterprise in space? It would have generated huge controversy, resistance, and greatly increased the chance of political failure to implement the initiative.
There is only one piece missing to make commercial activity a realistic possibility for carrying much of the expense of a permanent presence on the moon. A presidential or congressional directive ordering NASA to contract out whatever a qualified private supplier can offer, eliminating the greatest fear of private space investors, a fat, fully funded government entity willing to drive their profit margins down below zero. If that gets tacked onto the enabling legislation for this initiative and it passes, you can take the rest of the speculative game plan I've outlined above to the bank.
Chance of this being a complete fantasy? 75%
Chance of the budget being blown out if it is a fantasy? 100%