President Bush believes that the best way to hold down deficits
is to promote pro-growth policies and control government
spending. His budget holds the overall increase in government
spending to 4% -- the same amount as the paychecks of America's
Key Points on The President's FY 2004 Budget
Strengthening the Economy: The President's budget includes his jobs
and economic growth plan to speed the pace of America's economic
recovery and get more Americans back to work.
- The plan provides broad,
fair and permanent tax relief to 92 million Americans who will keep an
average of almost $1,100 more of their own money.
- The President's plan accelerates income tax rate reductions, the elimination of the marriage penalty, and the increase in the child tax credit from $600 to $1000. A family of 4 with income of $40,000 would see their federal income taxes fall from $1,178 to $45.
- To boost investor confidence, and help
nearly 10 million seniors who receive dividend income, the President's
plan will end the unfair double taxation of dividends.
- The President's
plan also provides new incentives for small businesses to grow and
invest. Under his plan, small businesses that purchase equipment to
expand will get assistance through an increase in the expensing limits
from $25,000 to $75,000.
- The budget provides $3.6 billion over the
next two years for the President's plan for new Re-employment Accounts,
which will provide eligible unemployed workers the assistance they need
to find a new job.
Winning the War on Terrorism: To address the needs of America's
military and protect our nation, the budget provides $380 billion for
our nation's military, a $15 billion or 4.2% increase.
Securing the Homeland: The President's budget provides $41 billion
for total homeland security spending. Excluding Department of Defense
spending, the budget includes $35 billion for homeland security, a $2.5
billion or 7.6% increase that more than doubles funding over the past
two years. The budget includes:
- $890 million as a first installment
of new funds for Project BioShield to secure new vaccines against
smallpox, anthrax, and botulinum toxin.
- $829 million for the DHS'
Information Analysis and Infrastructure Protection Directorate
providing brand new capabilities to access analyze and integrate threat
- $500 million to assess the nation's critical
infrastructure (e.g. nuclear power plants, water facilities,
telecommunications networks) and ensure our highest priority
vulnerabilities are addressed.
Modernizing Medicare with Prescription Drug Coverage: The
President's budget proposes to invest $400 billion over 10 years to
strengthen and improve Medicare with prescription drug coverage.
Excellence in Education: Last year, the President signed into law
historic education reforms through the No Child Left Behind Act. The
budget provides unprecedented levels of education funding to help
strengthen America's schools. It includes $53.1 billion for education
programs, an increase of $2.8 billion from FY 2003 and an increase of
$3.2 billion over FY 2002. This funding represents an increase of 47%
over FY 2000 and a 131% increase in education spending over the last 8
years. The budget includes $1.9 billion more for Pell Grants. The
Budget strongly supports the No Child Left Behind Act with:
- $1 billion more for Title I assistance in high-poverty areas
- $1 billion more for special education
increases for reading and early childhood learning programs
Strengthening Health Care: The budget provides $89 billion in
health care tax credits to expand access to health care. It also
proposes the creation of new tax-free savings accounts which could be
used for health care needs and long-term care.
Improving the Environment: The President's budget builds on his
strong commitment to protecting our environment through new technology,
conservation, and responsible stewardship. It includes:
- $1.7 billion
over the next five years for the hydrogen fuel initiative and FreedomCAR programs
for hydrogen fuel cell research and development to enable the next
generation of automobiles to be pollution free.
- Full funding for the
Land and Water Conservation Fund ($900 million).
- $2.7 billion for
conservation programs under the new farm bill.
- A $150 million increase
to accelerate Superfund cleanups.
Promoting Compassion: The President's budget includes proposals to
help extend the America's compassion to helping our neediest neighbors
at home and abroad. It includes:
- Funding for the Emergency Plan for
AIDS Relief, a five-year, $15 billion initiative to turn the tide in
the global effort to combat the HIV/AIDS pandemic. This virtually
triples U.S. funding to fight the international AIDS pandemic.
- $450 million over three years to bring mentors to more than 1
million disadvantaged students and to the children of prisoners.
- $200 million as part of a three-year, $600 million federal
treatment initiative to help addicted Americans find needed
treatment from the most effective programs, including
faith-based and community-based organizations. This will make
treatment available to help 300,000 more Americans combat their
addiction over the next three years.
Budget Discipline: The best way to counter deficits is through
stronger economic growth and spending discipline in Washington. This
budget would hold spending growth to 4%, no faster than the growth of
the average American families' paycheck.
- The President is committed to balancing the budget as fast as
possible and consistent with national priorities.
- Deficits are
manageable in historical terms at 2.7% of GDP. This is
appropriate in light of the war on terrorism, the continuing
effects of the stock market on revenues, and economic needs.
- The budget would be in double digit deficit if had there never
been a tax cut in 2001. The budget returned to deficit because
of war, recession and emergencies associated with the terrorist
attacks of September 11th.
- Long-term interest rates have
dropped to 40-year lows even as the budget returned to deficit,
and interest on the debt is very low. Currently, the federal
government pays only 8 cents on the dollar, as compared to a
recent high of 15 cents in 1996.
Budget Basics for FY 2004
Total government spending in FY 2004 will be $2.2 trillion, a
4.2% increase over 2003 levels.
Discretionary government spending will increase by 4%, comparable
to the growth in family budgets, and enough to allow the federal
government to meet its important priorities.
The fastest growing major category of discretionary spending is
homeland security at 5.5%. Defense grows at 4.2%. The total of
all other discretionary spending grows at 3.8%, funding important
priorities such as education, health, energy and the
The President's budget increases non-defense homeland security
funding by 7.6%.
Economic assumptions are in line with CBO and private sector
projections. Because of uncertainty in revenue levels, the
Administration made an additional downward adjustment in revenues
of $25 billion in 2003 and $15 billion in 2004.
Total tax and other revenue collections will be $1.9 trillion in
2004, a 4.7% increase.
A combination of the need to fund new priorities and a cautious
forecast produces a deficit that peaks in 2004 at $307 billion,
and declines thereafter to $190 billion by 2008.
The FY 2004 deficit is expected to be about 2.7% of GDP,
manageable and modest by historical standards. It declines to
1.4% of GDP by 2008.
Publicly-held debt is 36.9% of GDP in 2004, well below average
post-World War II levels, and declines to 36.4% by 2008.
While the deficit rises in 2003, the interest cost on the federal
debt declines to 8% of total spending, the lowest level as a
percentage of total outlays in over 20 years. Interest expense
remains below 10% over the next 5 years.
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