- The Washington Times - Tuesday, February 4, 2003

In the midst of an economic soft patch, the ongoing war against international terrorism and the continuing adverse revenue effects from the bursting of the 1990s stock-market bubble, President Bush yesterday unveiled his blueprint for the 2004 budget year, which begins Oct. 1. Federal spending would total $2.23 trillion, reflecting an increase of $89 billion over 2003. Even with the full implementation of the president's economic growth package, which would reduce tax receipts by $111 billion in 2004, overall tax revenues are forecast to increase by $86 billion over 2003.
The projected 2004 deficit totals $307 billion. While large in absolute terms, a deficit of this size would still represent only 2.7 percent of gross domestic product (GDP). This is substantially lower than the size of the budget deficits (which, measured as a percent of GDP, ranged between 4 percent and 6 percent) that prevailed in the aftermath of the recessions of 1974-75, 1981-82 and 1990-91.
Even before the president released his budget, Democrats and the media relentlessly charged that the president was starving what have come to be viewed as sacrosanct domestic programs. Consider education, an area where the Bush administration has established spending priorities. For all the tears shed by self-styled education enthusiasts, one would hardly know that the federal government contributes only about 6 percent of funding for elementary and secondary education, which is overwhelmingly funded at the local and state levels. Nevertheless, the president's blueprint increases discretionary budget authority for education by nearly $3 billion, or by more than 5.5 percent. (Discretionary budget authority for defense rises by 4.2 percent.)
On the education front, spending for Title I grants to help educate low-income children will increase by $1 billion in 2004; since 2000, Title I spending will have increased by 56 percent. Spending for special education through the Individuals with Disabilities Education Act (IDEA) grants will increase by $1 billion for the second year in a row, reflecting a 27 percent increase over two years. Meanwhile, spending for need-based Pell Grants to pay for college tuition will increase by nearly $2 billion in 2004, or 17 percent.
One complaint we have with the Bush budget involves its unhelpful description of its leading "budget highlight." Under the category "tax relief and job growth," the administration repeats the assertion that its economic growth package would provide a "$1,083 average tax cut for 92 million Americans." While true, emphasizing the "average" tax cut is not useful in understanding the distribution of the tax cuts across income sectors. In fact, the president has a strong argument supporting the extensive tax relief his proposal would provide the middle class. As this page has demonstrated, middle-income families (especially those with children) would see their federal income-tax bills radically shrink, beginning this fiscal year. This is achieved by accelerating the implementation of the 10 percent bracket; eliminating the egregious marriage penalty, which forces tens of millions of married couples to pay an average of $1,400 more in income taxes than they would pay if they were cohabitating; lowering the 27 percent bracket by 2 percentage points; and immediately expanding the per-child tax credit from $600 to $1,000.
Given the real demands placed on the federal budget, one would be hard-pressed to see how a smaller deficit could be pursued in the near term. Following years of evisceration, spending for national defense needs to be augmented, especially in the current environment of international terrorism.
Republicans and Democrats will understandably bemoan the budget deficit. At the same time, if the past is any guide, many of these deficit-lamenters will be guilty of: (1) offering proposals that would increase the deficit; (2) opposing plans that would reduce it; or (3) demagoguing responsible efforts to reform current programs. As a public service, we will be reporting on the antics of such individuals in the months ahead.

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