President Bush discusses his new budget plan as Secretary of the Treasury Henry Paulson (left) looks on at the White House.
Ron Sachs/Getty Images
Ron Sachs/Getty Images
President Bush discusses his new budget plan as Secretary of the Interior Dirk Kempthorne (left) and Secretary of the Treasury Henry Paulson (center) look on at the White House.
Ron Sachs/Getty Images
President Bush on Monday released what will surely be the most scrutinized budget of his presidency to date, a $2.9 trillion package that includes big increases for defense spending, corresponding cuts in popular domestic programs and an assumption that tax revenues will continue to grow.
The president's budget director, Rob Portman, said he and the president were proud to present a balanced budget with no tax increases. But the budget they have offered — if adopted — would not break even until 2012, and then only without any substantial costs of fighting in Iraq and Afghanistan after 2009.
The costs of those two wars are grabbing the headlines. The president is asking for nearly a quarter trillion dollars over the next 20 months. This is on top of a regular Pentagon budget of nearly half a trillion for fiscal 2008.
Portman said the budget projection for fiscal 2009 would include a $50 billion "allowance" for these two wars, given the uncertainty of the situation. President Bush was quick to say this smaller amount – and the absence of Iraq costs from the budget projections after 2009 – did not imply a timetable for U.S. withdrawal from the conflict.
But some reversal of the war-cost trend appeared integral to the strategy for reaching a balanced budget by 2012. The president's budget plan projects a fiscal year 2007 deficit of $244 billion and a nearly identical figure for 2008. Three years after the end of Mr. Bush's second term, his budget projects a surplus of $61 billion.
Reaching balance would also require an uninterrupted stream of good news on the economic front, where strong tax collections have recently helped reduce what had been record-high annual deficits.
The other element in the president's drive toward a surplus is spending restraint, which many conservatives have maintained was missing in the first six years of the Bush regime – even with Republican majorities in Congress.
But the targets for cutting will find staunch defenders in Congress. The Bush budget would change reimbursement formulas and other policies to limit growth in Medicare, Medicaid and other entitlement spending over the next five years to save nearly $100 billion – with about two-thirds of that amount coming from Medicare.
The vast majority of the numbers and policies embodied in the president's budget are routine, non-discretionary and automatic (if not necessarily non-controversial). But the remaining details will bring months of conflict between the president and Congress, which is now under full Democratic control for the first time in the Bush presidency.
Afghanistan and Iraq
By Jackie Northam
For the current fiscal year, President Bush will request an additional $100 billion in supplemental funding for the wars in Iraq and Afghanistan; $70 billion has already been approved. For fiscal year 2008, which begins in October, the president will ask for an additional $145 billion for the wars. However, White House spokesman Tony Fratto warned that the projection for 2008 was like to change.
The president's budget also includes $50 billion for the Iraq and Afghanistan wars in 2009, and no money after that year.
The war costs are only part of the Pentagon's budget request. The president is asking for an additional $481 billion to be used for the Defense Department's base budget. Officials say this is to ensure that the U.S. military maintains its combat readiness and will help support service members and their families. It also goes toward weaponry, and the 2008 budget — which represents an 11.3 percent increase from the 2007 budget — includes no cancellations of major weapons programs.
This defense budget request signals a change in how the administration is funding the wars in Iraq and Afghanistan. Until now, most of the funding came through supplemental or emergency spending bills, which don't provide precise details of where or how the money is being spent. Many Democrats and others have long protested this type of funding. Now the administration says it will be transparent and provide more details about the defense budget.
By Larry Abramson
The education budget, viewed from the Bush administration's point of view, is essentially flat: $56 billion, the same amount that was appropriated last year.
The president has focused on shoring up his administration's landmark No Child Left Behind Act, which is due to be reauthorized by Congress as soon as this year. The White House wants to devote an additional $1.2 billion to Title I, the part of the education budget that is aimed at improving the performance of low-income children. This comes in response to complaints from educators that No Child Left Behind has demanded better performance from low-income kids, without providing the resources to achieve that goal.
The president also wants to devote $500 million to "School Improvement Grants," which would allow the lowest-performing schools to develop turnaround strategies. And in a move certain to spark an outcry in Congress, the president is proposing $300 million in vouchers that would allow families in failing public schools to move to private schools, or to public schools in other districts.
For higher education, the administration is responding to years of stagnant support for grants to lower-income college students with a major increase in Pell Grants, which go to the neediest students. Under the proposed budget, the maximum Pell Grant would jump from the current $4,050 to $4,600 in fiscal year 2008, climbing to $5,400 by 2012. The change follows criticism of the Republicans' decision to freeze Pell Grants for the past five years.
Colleges and universities have long pushed for a boost in Pell Grants, but they are disappointed in the president's proposal. Educators note that, while the White House 2008 budget would raise Pell Grants, it would also eliminate $770 million for Federal Supplemental Educational Opportunity Grants, which serve a similar need. Critics also note that the increase in Pell Grants is not so dramatic, once you consider that the new Democratic leadership in Congress has already agreed to raise these grants to $4,300.
The Democratic leadership in Congress took issue first with the size of the education budget. Democrats say that the president's $56 billion proposal amounts to a cut in funding, since the new Congress is currently in the process of approving a "continuing resolution" that would devote $57.5 billion to education for fiscal year 2007.
Democratic leaders also say that the additional funding for No Child Left Behind falls far short of what is needed to support schools struggling to comply with the law. Educators note that the $1.2 billion increase in Title I funding is focused on expanding the No Child law to high schools (the law currently concentrates on mandating higher standards in lower grades). Critics say that means that K-8 schools will continue to face an unfunded mandate, as they try to administer testing required by the law.
By Christopher Joyce
The Department of Energy would see an overall increase of about 3 percent in its budget under President Bush's proposal. Given that Congress is usually deeply divided on energy issues, much of what the president is proposing will get run through the wash-and-rinse cycle before Congress approves any of it.
The president wants a lot of new money for research into building new kinds of nuclear power plants and reprocessing spent nuclear fuel so it can be reused. There's also a 37 percent increase in funding for developing cleaner ways to burn coal.
True to his State-of-the-Union promise, the president would spend more on turning corn and other forms of "biomass" into fuel to replace gasoline — the new budget asks for 20 percent more funding. Solar power spending stays flat, however. Spending on new kinds of hydrogen-fueled cars and power sources gets a 10 percent boost.
Oil and gas research gets zeroed out, although the president wants the government to buy a lot of oil to increase the size of the Strategic Petroleum Reserve. One form of alternative energy the president would zero out: geothermal power, which generates energy from steam created by the heat in the Earth's interior.
The words "climate change" or "global warming" do not appear in the DOE budget documents, although reference is made to limiting greenhouse gases (the major cause of climate warming). And there is new spending on learning how to strip carbon dioxide, the main greenhouse gas, out of coal and bury it underground to keep it out of the atmosphere.
Environmental Protection and Parks
By Elizabeth Shogren
The president's proposed budget has no new major initiatives for the Environmental Protection Agency (EPA). But it would cut the agency's funding by about $500 million, primarily by cutting funding to state and local governments for drinking-water and sewer-infrastructure programs.
The president wants to increase funding to $35 million for EPA programs to clean up diesel engines, up from $7 million in 2006. He also would provide $29 million to help clean up the Chesapeake Bay watershed, and $35 million to help clean up harmful industrial pollutants in the sediments of the Great Lakes.
Over at the Interior Department, the White House is proposing to boost spending on National Parks. President Bush is challenging the public to donate $100 million to support the parks, and promises to provide dollar-for-dollar matching funds. He also would increase funding for general operations of the parks by $250 million, which will provide money for all sorts of improvements, including an additional 3,000 seasonal rangers to parks around the country.
By Rachel Martin
Since 2001, President Bush has been touting his faith-based initiative and related programs in very public ways, and he has typically made some reference to at least one faith-based program in his State of the Union address.
Not so this year. Some experts speculate that the war in Iraq and other foreign policy issues have so dominated the president's agenda in the past year that faith-based programs have fallen off the radar, or at least off the political platform.
Other former administration officials say the president has stopped pushing the faith-based initiative to avoid rocking the boat with a new Democratic majority in control of Congress. His proposed 2008 budget reflects a similar note of caution.
Some programs will see a budgetary boost, others a cut. Overall, experts say it's about funding programs that have proven effective and reducing funding for those that haven't. Here are the proposed 2008 budget allocations for a few of the core programs:
$191 million for abstinence education. That's an increase of $28 million over last year. The money would be used to make additional awards to community-based programs that teach and encourage abstinence among adolescents ages 12 to 18. Of all the faith-based grant programs, this could be the most controversial.
$75 million for the Compassion Capital Fund, which provides training and technical assistance for grassroots faith-based and community-based organizations. That's a reduction of $25 million from the 2007 budget.
$50 million restored for Mentoring Children of Prisoners. Last year, that program was budgeted at $40 million.
$98 million to fund grants that expand access to treatment and recovery-support services.
The above core programs fall under the Health and Human Services budget. But the president's faith-based initiative incorporates programs from a cross-section of government agencies, notably the Department of Housing and Urban Development. In the proposed '08 HUD budget, the administration has tagged $575 million dollars for a program to help elderly people secure housing — an increase of $30 million from last year. Under the program, funding is awarded on a competitive basis to nonprofit organizations, many of them faith-based.
Food and Drug Administration
By Joanne Silberner
The president is calling for nearly $2.1 billion for the Food and Drug Administration. That's just a bit more than the $2 billion the agency is expected to go through this year.
The budget includes an increase of $11 million for work on drug-safety issues, a category that has brought the agency a lot of criticism lately. And it assumes that Congress will approve several new "user fees." Already, manufacturers of brand-name drugs have to pay to get the agency to consider their products. If Congress goes along with the new budget, manufacturers of generic drugs would also have to pay. And companies that fail a routine FDA inspection would have to pay for a re-inspection.
If the president gets his wishes, the FDA would bring in a total of $444 million of its $2.1 billion proposed budget from the companies that it regulates.
By Julie Rovner
President Bush's fiscal 2008 budget seeks balance in much the same way that Willie Sutton sought his wealth: by going where the money is. In this case, much of the money – nearly $600 billion in fiscal 2008 – is going to Medicare and Medicaid, the huge health-care entitlement programs for the elderly and disabled and the poor, respectively.
But the president's proposal to reduce Medicare and Medicaid spending by a combined $102 billion over the next five years has already provoked outrage from groups representing health-care patients and providers alike. The plan would reduce annual inflation increases for hospitals, nursing homes, hospices and other health-care providers, while boosting premiums for more beneficiaries with higher incomes.
The budget does propose additional money for the State Children's Health Insurance Program, which is up for renewal this year. But the $5 billion in new money is well short of the $13 billion analysts say is needed to maintain the current 6.6 million children now on the rolls. The budget also says the president wants to "refocus SCHIP on low-income, uninsured children below 200 percent of the federal poverty level," even though at least 16 states cover roughly a half-million children above that income level.
Most of the cuts to other health programs are ones the president has proposed in the past – and even Republican-led Congresses have refused to make. They include deep reductions in programs to train doctors and other health professionals; subsidies to children's hospitals for the cost of graduate medical education; and elimination of a block grant that funds a variety of preventive health-care services.
The National Institutes of Health would get a small increase under the president's budget – $232 million – but that was still not enough to prevent research groups from complaining that scientific research was being shortchanged.
By Pam Fessler
President Bush has requested an 8 percent increase in the Department of Homeland Security's budget, for a total of more than $46 billion. Much of the additional money would pay for tighter security at the border (see immigration summary). But the president would also like to see large increases for the Coast Guard and transportation security.
The Coast Guard budget would get an additional $788 million as the latest installment in its $24 billion plan to upgrade its entire fleet of ships and planes. The money would allow the agency to complete its acquisition of four large cutters, according to the administration. But lawmakers are upset by the program's spiraling costs and design flaws, and the request is certain to get intense scrutiny on Capitol Hill.
The Transportation Security Administration would get an additional $224 million to upgrade its screening operations, including taking over the verification of passengers' identities, something now handled by the airlines. However, privacy concerns continue to dog the program, called Secure Flight, and it's unclear how much progress TSA will be able to make in the coming year.
The Federal Emergency Management Agency would get a reduction next year. But most of that is due to the big increase it received earlier to deal with the aftermath of hurricanes Katrina and Rita. The administration says an additional $100 million would be available to help the agency reorganize so that it's better equipped to handle future disasters.
Funding for grants to state and local governments would be about a billion dollars less than the amount provided this year. But an additional billion dollars would be available through another grant program to help first responders upgrade their communications equipment.
The budget does not reflect changes Congress might approve this year as part of a bill to implement the remaining recommendations of the commission that investigated the Sept. 11 attacks. These include a requirement for more screening of cargo on airplanes and ships.
By Jennifer Ludden
As in recent years, the president's budget includes increased funding for interior and border enforcement against illegal immigration. This budget designates $778 million to hire 3,000 new Border Patrol agents; it is part of a plan to double the number of agents to 18,000 by the end of Mr. Bush's term.
There's also more money specifically for investigating smuggling, for prosecuting and deporting foreigners involved in gang activities, and for a voluntary computer program that lets employers check new employees' legal status.
New money will expand immigration enforcement to local communities. $26 million will go toward training 250 state and local law enforcement officers to arrest and detain suspects on immigration charges, something normally only federal officers can do.
While more and more towns are signing up for such programs, the concept is controversial. Some immigrant advocates and even police departments worry that such local enforcement will undermine their efforts at community policing. Less controversially, a $29 million increase in the budget will help screen foreign-born detainees in prison facilities — local, state and federal — and deport those with criminal records.
The budget allocates $1 billion for border "fencing and virtual barriers," part of the sweeping, hi-tech Secure Border Initiative DHS announced a year ago. This seems to confirm the administration has no intention of building a more-solid border wall, which is what many in the last Congress say they had in mind when they approved a border barrier.
Money is allocated for 950 extra detention beds, bringing the total to 28,540 such beds across the country in which to keep illegal immigrants who are arrested by DHS. For years, thousands of detained immigrants have been let go because there is simply no place to keep them. The Bush administration has made it a priority to increase detention space and so end this practice, which is known as "catch and release." But the number of available beds is still a tiny fraction of the hundreds of thousands of illegal immigrants arrested each year.
Finally, the budget assumes that a dramatic increase in fees just requested by U.S. Citizenship and Immigration Services will be approved. For the past five years, the agency has had an extra $100 million a year to help it reduce a staggering backlog of applications. That money runs out in 2008, at which point the agency will be forced to operate nearly exclusively on user fees.
By Ari Shapiro
State and local law-enforcement groups complain that the proposed budget cuts their funding by 75 percent. The Justice Department retorts that the president has requested the same amount of money as last year. In a way, they're both right.
The budget eliminates funding lines for a wide variety of law-enforcement programs: drug courts, prison rape prevention, cannabis eradication, mentally-ill offender programs and so on. The Justice Department says those programs and others will now all compete for one big bucket of money. But law-enforcement officials complain that the bucket is far too small for all the programs that are supposed to compete for it under the new budget.
One of the cutbacks that has upset lawmakers most affects a program called COPS—Community-Oriented Policing Services. At its peak in the 1990s, COPS had a $1.5 billion budget. Last year, the budget was stripped down to $500 million.
This year the president has asked for only $32 million for the program. Justice Department officials say the program achieved its mission, so money should now go to other projects. Law-enforcement groups say crime is rising across the country, which makes this a bad time to cut money for police officers on the streets.
By Frank Langfitt
The Bush administration wants to increase the Department of Labor's budget by about 8 percent, $3.7 billion. But as part of his proposal, the president also wants to eliminate a total of $1 billion in funding for job-training programs.
Labor Secretary Elaine L. Chao says her agency would consolidate spending and put $3.4 billion into what she calls Career Advancement Accounts. These personal-spending accounts would provide workers with up to $3,000 a year, money which they could use to pay for things such as training in new skills at a community college. Labor officials say the accounts could extend to 600,000 workers.
But Ross Eisenbrey, vice-president of the Economic Policy Institute, a pro-labor Washington think tank, says he's "pretty amazed" that the administration wants to cut training dollars at a time when workers are struggling with pressure from globalization and rapidly changing technology.
The budget proposal does call for some spending increases. It includes more money for safety inspectors following one of the deadliest years for coal miners. It would also increase spending for the inspector general's office to crack down on labor racketeering.
By Rachel Jones
Some advocates of the poor say the president's proposed 2008 budget manages to be both more and less of the same thing: more cuts and less funding, that is.
Low-income housing and anti-homelessness groups say major cuts to the Community Development Block Grant program and the Public Housing Capital Grant will only exacerbate America's affordable-housing crisis. The United States Conference of Mayors strongly objects to the administration's proposal to cut the CDBG budget by almost $1 billion. Public housing would get about a half-billion dollars less, and funding for the Section 8 housing voucher program for the poor would remain the same.
Though the administration is touting an increase in targeted federal spending on homelessness, housing advocates say the proposed cuts could negate any progress in that area.
Anti-hunger activists are up in arms about proposed changes to the Farm Bill, which includes the five federal nutrition programs. They say the budget would change the way food stamps are administered, which could cut eligibility for more than 300,000 people in low-income working families. Another proposal eliminates the Commodity Supplemental Food Program, which provides food for more than 450,000 low-income seniors.
The WIC nutrition program for poor mothers and children would also take a hit. The budget proposal would limit automatic WIC eligibility for Medicaid recipients and reduce funding for nutrition education and other WIC services. It would also cut the Community Services Block Grant program, which covers the Community Food and Nutrition Program. That program helps fund anti-hunger and nutrition advocacy groups at the local, state and national level.
By Nell Boyce
The moon and Mars remain White House priorities in space. NASA would get $17.3 billion under the president's request—a 3 percent increase over the agency's 2007 request. (The agency's current budget is still under discussion in Congress, so it's hard to know if the new request would be a raise or a cut.)
The request includes $951 million to develop the next-generation Orion space vehicle, and $1.2 billion to develop the rocket that will launch it. Orion is supposed to start its first flight tests in 2014, four years after the space shuttle is retired.
Funding for science at NASA would stay relatively flat under the proposed budget: NASA is requesting just 1 percent more than last year, for a total of about $5.5 billion. Most of the cash would go to science projects such as the Phoenix Mars Mission, a robotic craft that will launch this August to study the history of water on Mars, and the Dawn Mission, which will launch this summer to go study two asteroids, Ceres and Vesta.
By Ron Elving
In foreseeing a balanced budget, the president's document assumes tax collections will be robust enough to cover the effects of extending the tax breaks Congress approved in 2001 and 2003. These breaks were to expire in 2010 and 2011, but the president wants them made permanent, and his budget assumes Congress will go along. The Congressional Budget Office has projected the costs of making these cuts permanent at $1.6 trillion over a decade.
Still another revenue issue finessed in the budget is the problem posed by the Alternative Minimum Tax. Intended as a backup tax on millionaires using exotic means to avoid taxation, the AMT has been affecting the returns of more and more taxpayers – particularly those of two-earner families with large mortgages in high-tax states.
Democrats have vowed to keep the AMT from hitting more middle-class families, and if they do so, it will affect the revenue stream. The budget released Monday includes only a one-year "patch" to limit the bite of the AMT through 2008.
By Kathy Schalch
The Department of Transportation has requested $67 billion for easing congestion, both on the roads and in the skies. Most of the money, about $42 billion, will go towards highway construction and associated safety programs. DOT wants $9.4 billion for mass-transit projects, with $1.3 billion of that specifically for commuter rails or similar projects in urban areas.
The DOT budget proposal creates a new, $175 million highway congestion initiative. It would channel money to local governments willing to take innovative steps to curb congestion. Demonstration projects might include mass transit, new, flexibly priced toll roads, Web updates for commuters, flexible work schedules, or other initiatives.
DOT's budget also takes aim at growing demands on crowded airports. The FAA wants to modernize the air-traffic control system and will soon announce details of its proposal. Its budget would provide almost $175 million for a new satellite navigation system, and more than $900 million for additional capital projects that will support the modernization program. DOT wants to revamp the system that funds air-traffic control as well, charging users according to what it actually costs the Federal Aviation Administration to provide air-traffic control and other services.
The president's call for new fuel-economy standards is also reflected in this year's budget request. The National Highway Traffic Safety Administration (NHTSA) is requesting an additional $600,000 for its CAFE (corporate average fuel economy) program, bringing its total budget to $1.9 million. It will soon ask Congress for the authority to change the program, setting fuel-economy targets for individual types of vehicles according to their size — rather than focusing on average fuel economy.
Air-quality programs would continue to receive just over $1 billion per year. This amount pays for projects designed to help meet air standards for ozone, carbon monoxide and particulate matter.
By Joseph Shapiro
The president's budget requests nearly $87 billion in fiscal year 2008 for the Department of Veterans Affairs. Most of the money would go to health care and disability compensation. The White House said that represents an increase of 77 percent over the VA's budget when Bush took office.
But some veterans groups said the increase is not as big as it looks — and not enough to care for troops returning from Iraq. The president asked for almost $3 billion more than last year to fund medical care for veterans. The White House proposes increasing the co-payment for medications from $8 to $15 per monthly prescription.
And there would be a new enrollment fee: It would cost $250-$750 a year to get care in the VA system. That enrollment fee would apply only to those whose disability is not a result of military service.
It's not the first time the Bush administration has proposed such a fee, which is unpopular with veterans. Such fees have been rejected in the past by Republican-controlled Congresses, and the Democratic Congress is expected to do the same.
Veterans groups say that even with the fees, the VA would be about $2 billion short of what it needs to provide current levels of health care to veterans.