February 2, 2004 | WebMemo on Federal Budget
President Bush's 2005 budget proposal would restrict significant spending increases to a few targeted programs and freeze spending for most other programs. While the President's budget would eliminate some unnecessary programs, it is no sweeping reassessment of federal spending.
While most programs would see only slight increases or decreases in spending, the President's budget includes 65 proposed program terminations. While a start, these 65 programs averaged just $75 million each in the 2004 budget, and their termination would save only $4.9 billion. These terminations generally fall into three categories:
Halving the Deficit
As promised, the President's budget would cut the deficit in half by 2009. This would be accomplished by expanding discretionary spending by an average of 0.7 percent annually over the next five years and by assuming a more modest tax cut agenda, such as fixing the Alternative Minimum Tax only through 2006.
Realistically, though, halving the budget deficit will likely require real entitlement reforms in areas such as the 2002 farm bill and the 2003 Medicare drug bill. It is vital that any supplemental appropriations - such as those that will fund operations in Iraq and Afghanistan in 2005 - and any higher-than-expected entitlement costs be offset by larger reforms in both mandatory and discretionary programs. Closing down lower-priority agencies, consolidating duplicative programs, and privatizing poorly administered programs should be part of a sweeping reassessment of federal spending.
Brian M. Riedl is Grover M. Hermann Fellow in Federal Budgetary Affairs in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation.