The following one-page table summarizing President's Bush's 2004 proposal compares it to the 2003 federal budget.
Generally, the President's 2004 budget proposal focuses on the priorities of: 1) protecting the nation from foreign threats and terrorists through defense and homeland security increases; and 2) helping the economy get back on track by reducing taxes. To balance those costs, the President would hold non-defense, non-homeland security spending to a 3.8 percent increase, which is significantly less than the 8 to 10 percent annual increases over the past three years. This would leave the 2004 budget deficit at $307 billion, or 3% of the Gross Domestic Product.For a wartime budget in a slow-growing economy, that is a relatively small budget deficit (by comparison, 1980s budget deficits reached 6 percent of the GDP or the equivalent of $604 billion today).
Overall spending is projected to grow by 4.2 percent, while revenue is expected to grow 4.7 percent.Most discretionary spending increases are concentrated in defense, homeland security, education, veteran's aid, and foreign aid.The President is also proposing Medicare and Medicaid reforms that will slightly increase 2004 mandatory spending.
On the revenue side, the proposal to accelerate the scheduled income tax rates reductions, marriage penalty elimination and the child tax credit expansion, as well as the proposal to end double taxation of dividends and provide business tax relief, are estimated to reduce revenues by $111 billion in 2004. A new White House proposal to simplify and expand tax-free savings and retirement accounts for families would actually increase revenue by $11 billion in 2004.
Brian Riedl is the Grover M. Hermann fellow in federal budgetary issues at The Heritage Foundation.