CSE on the Bush ’04 Budget: “The Good and the Ugly”

President Bush’s new 2004 budget proposal includes tax cuts and important reforms and begins to slow the rapid growth in government over the past three years. CSE President Paul Beckner commented:

“The President’s budget is a significant turn away from the spending bonanza of the past few years. He’s right to focus on spending restraint, and also on the crisis in Medicare, which is the greatest looming threat to U.S. fiscal stability.”

The Good

”President Bush is applying the brakes to a massive run-up in government spending. Although some of the increased spending over the past year is related to the war on terrorism, domestic spending is out of control. In this budget, Bush finally makes some hard choices between different budget priorities.” Some of the plan’s positive elements:

• Tax cuts that repeal the dividend tax and accelerate income tax rate cuts.

• The promise of Medicare reform that creates competition and incentives to innovate.

• School choice vouchers to break up the public school monopoly in Washington, D.C.

• Social welfare spending at HUD, Labor, and HHS mostly grows with inflation.

The Ugly

“With proposed expenditures of $2.23 trillion in fiscal 2004, the federal government will still be too big and spend far too much. While President Bush’s budget is the first step in the right direction, we’ve got a long way to go to return the federal government to an appropriate size and scope. There is also substantial new spending in education, veterans, and agriculture that needs a closer look.

“Even four percent overall growth in discretionary spending is still too much, particularly at a time when economic growth is flat and coming off of nine percent growth in the budget last year. At the very least, the federal budget shouldn’t grow faster than overall economic growth.”

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