In his State of the Union address, President Bush laid out ambitious goals for the future, behind which all
Americans can unite, and urged the Nation to move forward with the work that still needs to be done. Today,
President Bush announced his Fiscal Year 2005 budget, a plan to help make America a more secure, more
prosperous, and more hopeful country.
The President's budget addresses key priorities while restraining overall spending. The budget
provides substantial increases to improve our Nation's security and win the War on Terror. It also
increases funding for key priorities such as economic growth and job creation, education, and affordable
health care. At the same time, the budget restrains spending in other areas of government -- keeping
non-defense, non-homeland security Federal spending growth to less than 1% (less than the rate of
inflation) and staying on course to cut the deficit in half within 5 years.
President Bush's budget is focused on:
Winning the War on Terror by Defeating Terrorists and Their Supporters President Bush's FY
2005 budget includes $401.7 billion for the Department of Defense, a 35% increase over FY 2001 levels
and a 7% increase over the FY 2004 enacted level. These funds are giving America's armed forces the
tools they need to win the War on Terror, while modernizing our military to meet the emerging threats of
the 21 st century. Since FY 2001, President Bush has improved the quality of life for military personnel
and their families by providing pay raises of more than 21% and increasing the quality of housing and
covering housing costs for personnel who choose to live off-base. His budget also includes $10.3 billion
to develop missile defenses for our homeland, U.S. forces deployed abroad, and our allies.
Protecting America by Securing Our Homeland The President's budget for FY 2005 proposes a
9.7% increase in government-wide homeland security funding, nearly tripling the FY 2001 levels -- even
when homeland security funding for the Department of Defense and Project BioShield are excluded.
Strengthening Our Economy The President's budget proposes to continue the strong pro-growth
policies that are creating jobs and opportunities for the American people. The budget would make
permanent the tax relief he signed into law, which doubled the child tax credit; reduced the marriage
penalty; phases out the death tax; lowered rates on capital gains, stock dividends, and small businesses
to create incentives for job creation; and lowered rates for every American who pays income taxes. And
it provides more than $500 million for the President's Jobs for the 21 st Century initiative to give current
and future workers the skills they need to secure jobs in the highest-demand, highest-growth sectors,
while helping to create those jobs by making the research and experimentation tax credit permanent.
Supporting Key Priorities Like Education, Health Care, and Helping Americans Most in Need The
President's budget includes substantial increases for key National priorities, including strengthening
public schools through the No Child Left Behind Act (including a $1 billion increase for high-poverty
schools, a 52% increase since 2001); providing funding for Medicare prescription drugs; making
healthcare insurance more affordable with new tax credits; and providing support to local charities that
are helping to solve some of America's most pressing social problems.
Protecting Our Homeland: While 28 months have passed since September 11, 2001, President Bush will not
allow our Nation to return to a sense of complacency and false security.
The President's budget includes a 10% increase over FY 2004 for the Department of Homeland
Security, a doubling of funding for DHS programs since FY 2001. These funds include a $900 million
(20%) increase over last year for aviation security and transportation security; a $450 million (5%)
increase for border security; $1.9 billion for port security efforts and a $490 million (9%) increase for the
Coast Guard; and a $65 million (123%) increase for the BioWatch network of sensors to detect a terrorist
release of biological pathogens.
The budget includes $2.6 billion for Department of Justice counterterrorism operations, a
19% increase over FY 2004 levels, including a $1.9 billion (60%) increase over FY 2001
levels for FBI counterterrorism operations.
Since 2001, the Federal government has provided more than $13 billion to help state and local
governments prepare to respond to potential terrorist threats. The President's budget proposes an
additional $3.6 billion for first-responder grants and $1.3 billion for state, local, and hospital bioterrorism
preparedness grants. It also includes $1.4 billion specifically targeted to high-threat urban areas.
The budget includes $568 million (190% increase) to improve America's food and agriculture security by
increasing detection capabilities and developing counter-measures against potential attacks.
Strengthening Our Economy: Despite the series of shocks that slowed the economy, including a sharp drop in
the stock market beginning in 2000, the terrorists attacks of 9/11, corporate scandals, and war, America's
economy is strong and getting stronger.
The tax relief proposed and signed into law by President Bush was the right action at the right
time for our economy. The results of this decisive action are clear. Economic growth in the
second half of 2003 was the fastest in nearly 20 years. New home construction in 2003 was the
highest in 25 years; homeownership levels are at historic highs; manufacturing activity is increasing; inflation and
interest rates are low; and a quarter million jobs were created in the last half of 2003. And the President's tax
relief agenda has resulted in significant benefits for the residents of California:
More than 12.4 million taxpayers in California have seen their income tax bills reduced.
Over 3 million small business taxpayers in California have additional tax savings to invest in new
equipment, expand facilities and hire additional workers.
More than 3.7 million married couples in California are benefiting from marriage penalty relief.
Over 2.9 million families in California have benefited from the increase in the child tax credit from $600 to
President Bush's FY 2005 budget includes his call to Congress to secure these positive economic trends for the
future by making the tax relief permanent -- so families and businesses can plan and invest with confidence.
Promoting Accountability and Results in America's Public Schools: President Bush's FY 2005 budget
represents a 49% increase in Federal funding for elementary and secondary education since FY 2001. Through
the No Child Left Behind Act, these historic levels of support are combined with an unprecedented commitment to
achieving high standards and accountability to ensure that America's schools are producing real results for every
The President's budget includes an additional $1 billion in Title I funding for disadvantaged students (for
a total representing a 52% increase since FY 2001) and $138 million for reading programs (for a total
that represents more than a 400% increase over FY 2001). California would receive more than $1.9
billion in Title I funding for the No Child Left Behind Act in FY 2005, a 10.4% increase over FY 2004 and
a 62.9% increase over FY 2001.
The President is also committed to ensuring that children with special needs receive a quality education.
His budget provides an additional $1 billion for special education programs (for a total increase of 75%
since FY 2001). As a result of the President's budget, California would receive more than $1.1
billion for Individuals with Disabilities Education Act (IDEA) special education funding, an 11% increase
over FY 2004 and an 83% increase over FY 2001.
Making Health Care More Affordable and Accessible: President Bush's budget would help extend the
benefits of modern medicine throughout our country, help to control the rising costs of medical care, and give
more Americans access to healthcare insurance.
Strengthening Medicare The President's Budget would implement the new Medicare prescription drug
law. Starting this year, seniors can choose to receive a drug discount card that will save 10-25% off the
retail price of most prescription drugs -- and millions of low-income seniors can get an additional $600 to
buy medicine. Beginning next year, seniors will have new coverage for preventive screenings against
diabetes and heart disease, and seniors just entering Medicare can receive wellness exams. And in
January of 2006, seniors can get prescription coverage with real health coverage choices under
Medicare. For a modest monthly premium, most seniors who do not have prescription drug coverage
could see their drug bills cut roughly in half.
Addressing the Rising Cost of Health Care President Bush has outlined a number of proposals to
address the rising cost of health care. His budget includes proposals to make health insurance more
affordable and accessible. It would provide lower-income Americans a refundable tax credit so millions
can buy their own basic health insurance coverage. It also enables individuals who buy catastrophic
health care coverage as part of their new Health Savings Accounts to deduct 100% of the premium,
whether or not they itemize deductions from their taxes. The budget includes a plan to computerize
more health records to reduce health care costs and improve care. The President also proposes to
enable small businesses to band together and negotiate for lower health coverage costs for their
Building a Better and More Compassionate America for All
Veterans The President's FY 2005 budget for VA medical care is over 40% larger than when he took
office -- enabling a million more patients to receive treatment. He has also implemented changes to
ensure that veterans receive timely and quality medical care, shortened the time needed to process a
veteran's disability claims, and put VA on track to eliminate the waiting lists for veterans in need of
medical care this year. The President's FY 2005 budget provides more than $5.9 billion for veterans in
California, an 8% increase over FY 2004.
Medicaid Medicaid assists one-fourth of the Nation's children and it is the largest single purchaser of
maternity care and nursing home/long-term care services. The President's FY 2005 budget provides
more than $183 billion for Medicaid in FY 2005, including more than $18 billion in California.
Women, Infants, and Children (WIC) Program The President's Budget strongly supports the Women,
Infants, and Children nutrition program, providing almost $4.8 billion for WIC services for an estimated
7.8 million people nationwide per month. California is estimated to receive approximately $849
million in WIC funding.
Helping Americans Most in Need The President is fully committed to empowering more of America's
faith-based and community groups to address some of our toughest social problems and help those
most in need.
His budget includes a new four-year, $300 million initiative to bring faith-based and
community groups together with Federal agencies to help recently released prisoners
make a successful transition back to society and long--term employment -- reducing the
chance that they will commit crimes again. This four-year, $300 million initiative will
provide basic job training and placement, transitional housing, and mentoring.
His budget also provides $150 million as part of a three-year program for mentoring
disadvantaged youth and children of prisoners, and $200 million as part of a three-year
effort to provide treatment for addicts including through faith-based and community
drug treatment programs.
Budget Items of Special Interest to California
Support for the Klamath River Basin President Bush's proposed budget for Fiscal Year 2005 calls for
investing $105 million in habitat restoration and water improvements for the Klamath River Basin, a 21%
increase over FY 2004 funding. This is an unprecedented level of commitment to help Klamath
communities restore their beleaguered watershed and avoid future water supply crises. The investment,
a 38% increase in funding since the President established the Cabinet-level Klamath Basin Federal
Working Group in 2002, would accelerate habitat rehabilitation for endangered fish and spur water
quality and quantity improvements for the 12,000 square-mile watershed in Oregon and California.
Healthy Forests Initiative The President's budget reflects his commitment to restoring our forests and
grasslands to their more natural conditions through his Healthy Forests Initiative, which was enacted into
law by Congress in 2003 with broad bipartisan support. The budget includes $760 million to continue
implementation of the Healthy Forests Initiative, including an approximately $58 million increase in
hazardous fuels reduction. The request funds activities that advance the goals of the Healthy Forests
Initiative, including activities authorized under the Healthy Forests Restoration Act that will improve forest
and rangeland management, restore lands to their more natural conditions and beauty, and reduce the
risk of catastrophic wildfires.