The White House, President George W. Bush Click to print this document

For Immediate Release
Office of the Press Secretary
February 8, 2006

Fact Sheet: President Bush Signs the Deficit Reduction Act

Today, President Bush Signed The Deficit Reduction Act Of 2005. This legislation restrains Federal spending and leaves more money in the hands of the American people. Earlier this week, the President proposed a disciplined Federal budget for 2007 to keep taxes low, fund critical priorities, and build on the Administration's record of restraining government spending.

Provisions Of The Deficit Reduction Act

The Deficit Reduction Act Is An Important Step Forward In Bringing Mandatory Spending Under Control. In the long run, the biggest challenge to the budget is mandatory spending - or entitlement programs like Medicare, Medicaid, and Social Security. Together, these programs are now growing faster than the economy and the population - and nearly three times the rate of inflation. By 2030, spending for Medicare, Medicaid, and Social Security alone will be almost 60 percent of the entire Federal budget. The annual growth of entitlement programs needs to be slowed to affordable levels, but these programs do not need to be cut. Through reforms that will reduce the annual growth of mandatory spending, the Deficit Reduction Act saves taxpayers nearly $40 billion over the next five years - about $300 per taxpayer.

Providing New Resources For Those With The Greatest Needs. The Deficit Reduction Act includes $1 billion in additional mandatory spending for the Low Income Home Energy Assistance Program (LIHEAP) to help low-income Americans pay heating bills; $2 billion in new funding to cover health care costs for Hurricane Katrina victims; and more than $1 billion in new funding for low-income disabled children.

Improving Federal Student Loan Programs And Increasing Benefits To Students. The Deficit Reduction Act cuts excess government subsidies to lenders and makes other reforms that will help reduce overall student loan costs by about $22 billion. This will save taxpayers $12 billion and increase student aid by $10 billion.

Reauthorizing Welfare Reform For Another Five Years. Welfare reform has proved a tremendous success over the past decade. By insisting on programs that require work and self-sufficiency in return for Federal aid, the Federal government has helped cut welfare cases by more than half since 1996. Building on this progress, the Deficit Reduction Act renews welfare reform so that even more families move from welfare to work, and includes a $1 billion increase in child care funding, as well as new grants to support healthy marriages and responsible fatherhood.

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