Bush boosts defense spending; deficit to reach $307B
President Bush submitted a $2.23 trillion fiscal 2004 budget to Congress Monday, calling for big increases in defense and homeland security programs as well as more tax cuts to stimulate the flagging economy.
"The budget for 2004 meets the challenges posed by three national priorities: winning the war against terrorism, securing the homeland and generating long-term economic growth," Bush wrote in the introduction to the five-book budget proposal.
Overall, the fiscal 2004 plan would increase discretionary budget authority by $782 billion, or 4 percent, while outlays would total $819 billion. With 11 fiscal 2003 appropriations bills still unfinished, Bush's fiscal 2004 budget calculates increases using the $752 billion cap on discretionary spending the president wants Congress to impose on fiscal 2003 spending bills.
Mandatory spending-including Social Security, Medicare, Medicaid and other programs-for fiscal 2004 would total $1.188 trillion, while taxes would be reduced $1.3 trillion over the next 10 years, a number that presumes making the Bush tax cut of 2001 permanent and enacting a separate economic growth plan this year. While that stimulus plan has been estimated at $674 billion, Bush's budget today suggests it may be $615 billion. In addition, the budget assumes Congress will enact a $400 billion prescription drug benefit under Medicare.
Because it includes the cost of enacting various tax cut proposals, OMB estimates the fiscal 2003 unified deficit will be $304 billion. For fiscal 2004, OMB says the unified deficit will be $307 billion, shrinking to $190 billion in fiscal 2008, for a five-year total of $1.084 trillion.
The deficit would be about 2.7 percent of the GDP in fiscal 2004, but is projected to shrink to 1.4 percent by fiscal 2008. Excluding Social Security surpluses, the on-budget deficit in fiscal 2004 would total $482 billion, and would fluctuate through fiscal 2008 for a five-year total of $2.14 trillion. Meanwhile, publicly held debt would total $4.17 trillion in fiscal 2004 and grow to $5 trillion in fiscal 2008, staying between 36 percent and 37 percent of GDP through the five-year period.
The fiscal 2004 discretionary budget authority total of $782 billion represents a $30 billion increase over the estimated total for fiscal 2003. Of the projected spending increases, nondefense homeland security spending would receive a 5.5 percent increase, for a total of $28 billion, while defense spending would see a boost of 4.2 percent for a total of $380 billion, although that figure does not include the cost of a possible war with Iraq. The war would be funded instead through a separate budget amendment Congress would consider as part of a supplemental spending package.
Aside from defense and homeland security, the rest of the discretionary budget would increase $374 billion, or 3.8 percent. Many domestic programs would have a lean year under the budget, with most agencies' spending increases proposed at about 2 percent.