The President's 2007 Budget continues the successful pro-growth policies that have encouraged robust economic growth and job creation. A strong economy, together with spending restraint, is critical to reducing the deficit. The Budget builds on last year's successful spending restraint by again holding the growth of overall discretionary spending below inflation, proposing to reduce non-security discretionary spending below the previous year's level, and calling for the elimination or reduction of programs not getting results or not fulfilling essential priorities. Like last year, the budget proposes savings and reforms to mandatory spending programs, whose unsustainable growth poses the real long-term danger to our fiscal health.
Continuing Our Economic Expansion
The Budget continues the President's pro-growth policies vital to our economy's continued expansion. With the full implementation of the President's tax relief plan in 2003, the Nation has added more than 4.7 million new jobs, productivity has increased at a 3 percent annual rate, homeownership has reached all-time highs, and the American economy is growing faster than other major industrialized nations.
Because America needs more than a temporary expansion, taxpayers need more than temporary tax relief. The Budget proposes to make permanent the tax relief enacted in 2001 and 2003, preventing a tax increase on families and small businesses.
The strength of our economy has produced rapid increases in the level of Federal receipts, which are critical to reducing the deficit. From 2004 to 2005, receipts grew 14.5 percent ($274 billion), or more than twice as fast as the economy itself. The Budget forecasts receipts to grow another $132 billion from 2005 to 2006, an increase of 6.1 percent.
Restraining Spending and Cutting the Deficit
Through continued pro-growth economic policies and spending restraint, the Budget keeps us on track to meet the President's goal of cutting the deficit in half by 2009. The Budget:
Again holds the growth of overall discretionary spending below inflation and again proposes to reduce non-security discretionary spending below the previous year's level.
Terminates or reduces 141 programs that are not getting results or not fulfilling essential priorities, for a proposed savings of $14.7 billion, building on last year's success in which savings of $6.5 billion were achieved in 89 of the President's proposals.
Requests that Congress give the President a Constitutional line-item veto. All savings from the line-item veto would be used for deficit reduction.
Projects the deficit will decline from its projected 2004 peak of 4.5 percent of GDP ($521 billion) down to 1.4 percent ($208 billion) in 2009, more than in half and well below the 40-year historical average deficit of 2.3 percent.
The Long-Term Fiscal Danger
The greatest threat to our fiscal health over the long-term comes from unsustainable growth in entitlement programs such as Social Security, Medicare, and Medicaid.
The Budget saves $65 billion over 5 years by slowing the future growth of entitlement spending.
In addition, it paves the way for further reforms that will be needed over the longer term to bring Medicare's finances in line with available resources.
The President will also continue to promote comprehensive reform of Social Security to place the program's finances on sustainable footing for future generations.
Focusing On National Priorities
The Budget focuses taxpayer resources on National priorities like the War on Terrorism, health care, energy research and strengthening our global competitiveness through improved math and science education and research.
Fighting the War on Terror. To give our troops the resources they need to fight terror and protect our Nation, the Budget increases defense spending by nearly 7 percent. This funding will maintain a high level of military readiness, develop and procure new weapon systems to ensure U.S. battlefield superiority, and support our service members and their families.
Defending the Homeland. Government-wide, non-defense homeland security funding, including fee-funded activities, increases by more than 8 percent. The Budget also provides resources to strengthen our borders with funding for 1,500 new border patrol agents, 6,000 new detention beds, 560 detention and removal personnel, and 257 attorneys to expedite removal of illegal immigrants.
Reducing Health Care Costs and Improving Access. The Budget makes health care more affordable and available with improvements to Health Savings Accounts, health information technology, and medical liability reform.
Reducing our Addiction to Foreign Oil. The Advanced Energy Initiative provides a 22-percent increase in research funding for cleaner, cheaper, more reliable energy: solar, wind, nuclear, zero-emission coal, batteries for hybrid and electric cars, hydrogen, and biomass - with the goal of replacing 75 percent of oil imports from the Middle East by 2025.
Strengthening our Competitiveness. The American Competitiveness Initiative commits $5.9 billion in FY2007, and more than $136 billion over 10 years, to increase investments in research and development, recruit new math and science teachers, encourage American innovation, and strengthen our nation's ability to compete in the global economy.
Promoting Compassion and Strengthening Families. The Budget continues to advance compassionate programs that are effective in addressing social concerns, including $322 million in targeted Faith-based and Community initiatives. These efforts fund the Helping America's Youth initiative, as well as other priority programs.
Delivering Results and Controlling Spending. The President proposes reforms to control spending and to ensure programs deliver greater results. The 2007 Budget:
Proposes statutory limits on discretionary spending, enforced by across-the-board cuts.
Proposes biennial budgeting, which would allow lawmakers to devote more time every other year to ensuring that taxpayers' money is spent wisely and efficiently.
Proposes creation of a Results Commission and a Sunset Commission to improve agency and program performance and reduce unnecessary costs to taxpayers.
Launches ExpectMore.gov to improve Federal program transparency and accountability and focus on results.