Bush Budget Cuts Small Programs, Projects Swelling Deficit

Strategic Insights -

President George W. Bush yesterday presented a budget that cut a swathe of small spending programs while projecting a swelling deficit for the current year of $521bn. The budget proposal echoed the State of the Union address in being devoid of large new initiatives. The White House said its priorities were continuing to fund defense and homeland security while restricting spending elsewhere. The budget aims to reduce the federal deficit by half in five years, a target that some lawmakers have questioned. Democrats attacked the budget for cutting spending while continuing to advocate for permanent tax cuts.

Key Takeaways:

  • The budget proposal cuts 65 small spending programs and eliminates 63 others to help reduce the federal deficit by half in five years.
  • The proposed cuts would save $4.9bn next year, equivalent to less than 1% of this year's deficit.
  • Some of the proposed cuts fell on areas with little support among the administration's Republican supporters on Capitol Hill, including environmental and housing programs.
  • The budget predicts the deficit falling to $364bn next fiscal year, but this does not include a planned supplemental budget for spending on military and security operations in Iraq.
  • The budget confirms the cost of recent reforms to Medicare at $540bn, rather than the previously estimated $400bn, over 10 years.
  • The Alternative Minimum Tax has been delayed with a temporary one-year fix.
  • Democrats have attacked the budget for cutting spending while continuing to advocate for permanent tax cuts.

Statistics:

  • The proposed budget projects a swelling deficit of $521bn for the current year.
  • The budget aims to reduce the federal deficit by half in five years.
  • The proposed cuts would save $4.9bn next year, equivalent to less than 1% of this year's deficit.
  • The budget predicts the deficit falling to $364bn next fiscal year.
  • The cost of the recent Medicare reforms is estimated at $540bn over 10 years.
  • The Alternative Minimum Tax has been delayed with a temporary one-year fix.

Sources:

  • [Washington]
  • [Editorial Comment, Page 18]