Expands Tax Cuts, Increases Defense and Homeland Security Spending
On February 4, President Bush sent Congress a $2.1 trillion budget proposal for fiscal year 2003. The proposed budget provides significant increases for defense and national security – and pays for these hikes by cutting or freezing spending on a host of critical domestic programs. Under the President’s budget, discretionary spending would rise by nine percent, with a build-up in defense programs and homeland security initiatives accounting for most of the increase. Overall growth for programs not included in these two categories would be limited to two percent, falling well-short of the 3.8 percent increase needed to keep pace with inflation.

In addition to providing a staggering $379 billion for the Pentagon and $37.7 billion for national security, the Bush budget also contains costly tax cuts. Most significantly, the proposal would make permanent the tax cuts enacted last year, now set to expire in 2010. The budget also contains business tax cuts and popular extenders as well as tax credits to purchase health insurance. The Administration estimates the total cost of the proposed tax cuts at $665 billion over the ten-year period from 2003 to 2012. A recent analysis by the Center on Budget and Policy Priorities, however, indicates that accounting gimmicks mask the proposals’ true costs. According to the Center, costs are likely to reach $1 trillion over the ten-year period.

The Bush budget projects an $80 billion deficit for fiscal year 2003 – a return to deficit spending for the first time since 1997. Democrats assert that the President’s budget will substantially increase deficit spending over the next ten years, and require the use of Social Security and Medicare Trust Fund surpluses to fund day-to-day government operations. In addition, several programs that are vital to low-income people and other vulnerable populations will be cut.

For example, President Bush’s budget freezes funding for the Temporary Assistance for Needy Families (TANF) program at $16.5 billion – the level it has been funded at since 1997. Without increases for inflation, the real value of the block grant has declined by 13.5 percent since 1997. Under the President’s budget request, its purchasing power will continue to erode, inhibiting states’ efforts to maintain vital services for low-income families.

The Bush budget also freezes funding for the Social Services Block Grant (SSBG) at $1.7 billion annually over the next five years. SSBG funds crucial programs for the elderly, disabled and other vulnerable populations. The Child Care and Development Fund (CCDF) is also frozen, ending the yearly increases the program has received since the implementation of TANF.

Under the President’s budget, job training programs would be cut by $682 million. Youth Opportunity Grants alone would be cut by $181 million, an 80 percent reduction from current spending levels. In addition, the Low-Income Home Energy Assistance Program (LIHEAP) stands to receive $1.7 billion in FY 2003, $300 million less than the FY 2002 funding level.

Significant partisan disagreements over spending priorities make it uncertain as to whether the House and Senate will be able to agree on a budget resolution this year. Appropriators in each body could use their own chamber’s resolutions to guide spending decisions, but passing conference reports without a unified budget will be difficult.

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