WASHINGTON (Talon News) — President George W. Bush delivered his 2006 budget to Congress on Monday and called it a “budget that sets priorities,” namely winning the war on terror, protecting America’s homeland, and growing the economy. According to White House Budget Director Joshua Bolten, the budget is the first since the Reagan administration to propose a reduction in the “non-security discretionary category” of the budget.
It’s a budget that reduces and eliminates redundancy,” President Bush said following a meeting with his Cabinet. “It’s a budget that is a lean budget.”
The president said that this budget helps achieve the goal of “reducing the deficit in half over a five-year period.”
“Discretionary spending … will increase at a rate less than inflation,” Bush explained. “Plus, we’ve begun some reforms on the mandatory side. Congress needs to look at this budget and Congress needs to act on this budget in a fiscally responsible way.”
Budget Director Bolten said in a briefing on Monday that the proposed budget increases funding to strengthen America’s armed forces, improve homeland security, “promote economic opportunity, and foster compassion.”
“Last year’s budget initially projected a deficit of 4.5 percent of gross domestic product, GDP, in 2004, or $521 billion,” Bolten explained. “The president set out to cut this deficit in half by 2009. Largely because of economic growth generated by stronger revenues than originally estimated, and because the Congress delivered the spending restraint called for by the President, the 2004 deficit came in $109 billion lower than originally estimated. At 3.6 percent of GDP, the actual 2004 deficit, while still too large, was well within historical range and smaller than the deficits in nine of the last 25 years.”
Bolten said that the projected 2005 deficit will “come in at 3.5 percent of GDP, or $427 billion.” The budget director noted that if policies of “economic growth and spending restraint reflected in this budget” are maintained, the deficit is expected to decline in 2006 and each of the next four years.
“In 2006, we project the budget deficit to fall to 3 percent of GDP, or $390 billion,” Bolten added. “In 2007, the deficit is projected to fall further, to 2.3 percent of GDP, or $312 billion. By 2009 — that’s here — the deficit is projected to be cut by more than half from its originally estimated 2004 peak, to just 1.4 percent of GDP, which is well below the 40-year historical average deficit of 2.3 percent, and lower than the deficit level in all but seven of the last 25 years.”
The budget does not include future spending involved in the security and military efforts in Iraq. Bolten said that the administration intends to submit a supplemental appropriations request of approximately $81 billion, “primarily to support operations in Iraq and Afghanistan for the remainder of the fiscal year.”
Bolten added, “The 2006 budget spending and deficit projections fully reflect the outlay effects of this supplemental request, as well as the prior $25 billion supplemental bill already enacted by the Congress. However, the budget does not reflect the effect of undetermined but anticipated supplemental requests for ongoing operations in Iraq and Afghanistan beyond 2005.”
Another item not covered in the budget, but which has drawn much scrutiny from Democrats are the personal savings accounts proposed by President Bush in his plans to overhaul the Social Security system.
“The 2006 budget also does not reflect the effect of transition financing associated with the president’s proposal to create personal retirement accounts, as part of a comprehensive plan to permanently fix Social Security,” Bolten explained. “As the administration announced last week, the type of personal accounts the president is proposing will require approximately $664 billion in transition financing over the next 10 years, with an additional $90 billion in related debt service.”
Going further, Bolten said that the “transition financing” would result in a deficit in 2009 and 2010 of 1.7 percent of GDP, which is “still consistent with the president’s goal to cut the deficit in half by 2009, and still well below the 40-year historical average.”
It’s important to remember that this transition financing does not have the same effect on national savings, and thus on the economy, as does traditional borrowing,” Bolten said. “Every dollar the government borrows to fund the transition to personal accounts is fully offset by an increase in savings, represented by the accounts themselves. In addition, the transition financing does not represent new debt. These are obligations that the government already owes, in the form of future benefits.”
In meeting with reporters and addressing some of the proposed spending cuts, such as in Medicaid, farm subsidies, and portions of the student loan program, President Bush said that that important question to ask is whether or not a program achieves a “certain result.”
“Have you set goals, and are those goals being met?” Bush asked. “And the poor and disadvantaged absolutely ought to be asking that question, too. In other words, what is the goal of a particular program? And if that goal isn’t being met, the question ought to be asked, why isn’t the goal being met?”
Bush added, “And that’s the questions we’ve been asking. And after a while, we get tired of asking that question. So, finally, it is to take resources and direct them to programs that are working. And that’s what you’ll find in the education budgets and the health budgets, for example. And those are very legitimate questions, and the people deserve — deserve to have them answered, which this administration will answer in a forthright fashion.”