Early lines on '05 budget

February 05, 2004

Early this week, President Bush presented a $2.4 trillion federal budget proposal for the 2005 fiscal year beginning in October. The budget includes increased expenditures for defense and national security - and a projected record deficit of $521 billion this year and $364 billion next year.

As Public Agenda, a nonpartisan opinion research organization, points out, the debate over the budget is a complicated one, partly because it is fragmented: There is not one overall budget bill presented to Congress. Taxes usually are enacted in one piece of legislation, while spending is covered in 13 appropriations bills for various departments.

Think tanks have been quick to open the debate. Here is a sampling of what they have to say.

Public Agenda

"Creating the federal budget is an exercise in making choices, often choices that will make a dramatic impact on individual Americans. ... And choices made now can have implications for years to come. What happens to the federal budget can determine how much your take-home pay will be, whether you can get a college loan or a home mortgage and how secure your retirement will be, not to mention the indirect impact on the quality of your local schools, roads and police. ...

After decades of annual deficits, the federal government finally showed a budget surplus [in 1998]. While the deficit had been around since the early 1970s, it skyrocketed in the 1980s when President Reagan and the Democratic Congress enacted spending increases, particularly for a military buildup, as well as tax cuts. The balanced budget in 1998 was credited in large part to a surging economy in the mid-1990s that boosted tax revenues.

But when the economy weakens, so do tax revenues. More people are unemployed, investments are sluggish and consumers put off major purchases - all of which decrease the amount the government gets in taxes. This affects all levels of government. It's no coincidence that state governments are facing even more serious budget problems than the federal government."

The Cato Institute

(promotes limited government, individual liberty, free markets)

"Although defense spending has increased in response to the war on terrorism, President Bush has made little attempt to restrain nondefense spending to offset the higher Pentagon budget. Nondefense discretionary outlays will increase about 31 percent during President Bush's first three years in office. Congress has failed to contain the administration's overspending and has added new spending of its own. It is clear that Republicans have forfeited any claim of being the fiscally responsible party in Washington.

Looking ahead, Republicans need to rediscover the reforming spirit that they brought to Washington after the landmark 1994 congressional elections. Fiscally conservative Democrats should challenge big-spending Republicans and work to cut unneeded programs from both the defense and nondefense parts of the budget.

In command of the White House, Senate and House of Representatives, Republicans are primarily responsible for the current budget mess, and it is Republicans who have the power to pare back spending to get the federal budget under control once again."

Center on Budget and Policy Priorities

(interested in issues affecting low- and middle-income people)

"Under the budget, tax cuts, especially for the most well-off, emerge as the administration's highest priority. The most striking feature of the budget is the administration's penchant for ever more tax cuts.

This is so even though the budget itself projects that federal revenues in 2004 will be at their lowest level since 1950, measured as a share of the economy, and even though the budget data show that the decline in revenues is the principal factor behind the unprecedented shift in the past three years from robust surpluses to large deficits.

This raises the question: Should providing people who make over $1 million a year with average tax cuts exceeding $100,000 a year be the nation's highest priority?"

The Century Foundation

(formerly the Twentieth Century Fund, based on the idea that government is an instrument of the people)

"The president's budget proposal puts forward a half-dozen new or expanded tax breaks targeted mainly toward low- and middle-income taxpayers. Could this at long last be the compassionate side of conservatism promised during the 2000 campaign? If so, the president owes a philosophical debt to Marie Antoinette.

At first glance, the proposed tax breaks sound like leftover items from President Clinton's wish list: a refundable credit (i.e., even low-income people who owe little or no taxes would get a subsidy) for the purchase of health insurance; expanded deductions for high-deductible and long-term care insurance premiums; a new extra personal exemption to home caregivers of family members; a charitable contribution deduction for non-itemizers; enhanced deductibility of out-of-pocket classroom expenses; and a tax credit for residential solar energy users.

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