Last month, the President announced his plan to balance the budget by FY 2005, cut taxes for middle-income Americans, and increase investments in education and training.
The President's plan builds upon the policies of the Administration's first two and one-half years that cut the deficit, created seven million jobs, controlled interest rates and inflation, expanded trade to create more high-wage jobs, and rewarded work by cutting taxes for 15 million families. The President is also building on his efforts to create a new kind of government, one that creates opportunity, not bureaucracy, and provides the tools that average Americans need to build better lives for themselves and their families.
The President's plan to balance the budget within a reasonable period of time would protect Medicare and Medicaid, invest in education and training and other priorities, and provide a targeted tax cut to help middle-income Americans raise their children, save for the future, and pay for postsecondary education.
To reach balance, the President would eliminate wasteful spending, streamline programs, and end unneeded subsidies; take the first serious steps toward health care reform; reform welfare to reward work; and cut non-defense discretionary spending, aside from the President's investments, by 22 percent in real terms.
The Administration wants to work with the Congress on the important goal of balancing the Federal budget but continues to have grave concerns about the approach outlined in the Congressional Budget Resolution. That plan balances the budget too quickly--over seven years--and provides for a huge tax cut, the benefits of which would flow disproportionately to the wealthy. To reach balance under these conditions, the congressional plan cuts deeply into Medicare and Medicaid and cuts virtually everything else--including investments in education and training, in science and technology, and in other areas that would help raise average living standards in the future.
The following tables provide a brief overview of the President's 10-year balanced budget plan. The Administration is currently carrying on the difficult process of updating the 10-year estimates for revisions in economic assumptions, technical reestimates, and legislation enacted since the release of the February budget. These updated estimates, along with other required information, will be transmitted in two weeks.
Table 1. A COMPARISON OF DEFICIT REDUCTION PLANS
(Seven-year totals compared to OMB capped baseline, in billions of dollars)
--------------------------------------------------------------------------------
1996 Confer- President's
Budget House Senate ence Plan
--------------------------------------------------------------------------------
Spending:
Discretionary\1\.................. -198 -463 -522 -490 -201
Department of Defense--military.. ........ 43 -24 8 -3
Other............................ -198 -506 -497 -498 -198
Mandatory......................... -44 -669 -626 -620 -202
Medicare:
Extenders....................... -28 -28 -28 -28 -28
Additional cuts................. ........ -255 -222 -237 -99
Increased benefits.............. ........ ........ ........ ........ 27
Medicaid......................... 1 -189 -177 -184 -54
Health reform (net, including
extenders)...................... ........ ........ ........ ........ -152
Farm............................. -3 -17 -12 -13 -4
Veterans......................... -6 -6 -10 -6 -6
Civil service.................... ........ -3 -7 -1 ........
Poverty.......................... -2 -128 -113 -112 -38
Spectrum......................... -5 -15 -25 -14 -14
Other............................ -1 -28 -31 -25 13
Net interest...................... -27 -272 -321 -280 -169
Revenues........................... 94 340 161 250 96
Corporate subsidies................ ........ -25 ........ ........ -25
--------------------------------------------------------------------------------
\1\President's plan includes major increases in key education and training
programs.
--------------------------------------------------------------------------------
Table 2. PROPOSED YEAR-BY-YEAR SAVINGS IN THE PRESIDENT'S PLAN
(In billions of dollars)
-----------------------------------------------------------------------------------------------------------------------------
Category 1996 1997 1998 1999 2000 2001 2002 2003
2004 2005
-----------------------------------------------------------------------------------------------------------------------------
Baseline deficit................... -201 -218 -209 -221 -229 -235 -240 -248
-255 -266
Entitlements....................... 8 13 19 25 35 45 60 69 81 95
Medicare savings.................. 4 6 10 16 23 30 39 45 55
67
Medicaid savings.................. 4 4 6 7 9 11 13 15 17 19
Health coverage................... ........ -3 -4 -4 -5 -5 -5 -6 -6 -7
Welfare reform.................... 2 4 5 6 6 7 7 8 8 8
Other............................. -1 2 2 1 1 2 6 7 7 7
Discretionary...................... 13 11 14 25 35 46 57 72 86
101
Department of Defense--military... * * * ........ ........ * 2 10 18
27
Other............................. 12 11 14 25 35 46 55 62 67 74
Interest........................... 2 5 12 22 34 46 61 79 97 117
Corporate subsidies................ 1 2 3 4 5 5 5 6 6 6
Revenue changes................... -3 -11 -12 -16 -21 -23 -24 -25 -23
-25
-----------------------------------------------------------------------------------------
Deficit (-) or surplus............. -181 -198 -173 -161 -142 -117 -82 -47 -9
28
-----------------------------------------------------------------------------------------------------------------------------
*$500 million or less.
-----------------------------------------------------------------------------------------------------------------------------
Table 3. PROPOSED YEAR-BY-YEAR TOTALS FOR THE PRESIDENT'S PLAN
(In billions of dollars)
-----------------------------------------------------------------------------------------------------------------------------------------------
Category 1995 1996 1997 1998 1999 2000 2001 2002
2003 2004 2005 10-year
total
-----------------------------------------------------------------------------------------------------------------------------------------------
Outlays:
Discretionary:
Department of Defense--military.. 261 251 247 245 250 259 266 272
272 272 272 2,605
Other............................ 289 292 299 298 297 296 295 296 300
305 310 2,989
-----------------------------------------------------------------------------------------------------------
Subtotal, discretionary......... 550 542 545 543 548 555 561 568
572 577 582 5,594
-----------------------------------------------------------------------------------------------------------
Mandatory:
Health:
Medicare........................ 154 172 186 199 213 227 243 260 282
304 326 2,411
Medicaid........................ 88 92 100 109 117 127 138 150 163
177 193 1,367
Other........................... ........ ........ 3 4 4 4 4 5 5 5 6
40
-----------------------------------------------------------------------------------------------------------
Subtotal, health............... 243 264 290 312 334 358 386 415 450
486 524 3,818
Other............................ 508 536 570 597 628 660 691 720 754
791 830 6,776
-----------------------------------------------------------------------------------------------------------
Subtotal, mandatory............ 751 800 860 908 962 1,018 1,076 1,135
1,204 1,278 1,355 10,594
-----------------------------------------------------------------------------------------------------------
Net interest...................... 234 255 266 272 278 281 283 283 280
277 273 2,749
-----------------------------------------------------------------------------------------------------------
Total, outlays.................... 1,535 1,597 1,671 1,723 1,787 1,854 1,921 1,986
2,056 2,132 2,210 18,937
-----------------------------------------------------------------------------------------------------------
Receipts.......................... 1,346 1,416 1,473 1,550 1,626 1,712 1,804 1,904
2,009 2,123 2,238 17,856
-----------------------------------------------------------------------------------------------------------
Deficit (-) or surplus............ -189 -181 -198 -173 -161 -142 -117 -82
-47 -9 28 -1,081
-----------------------------------------------------------------------------------------------------------------------------------------------
Table 4. PROPOSED DISCRETIONARY SPENDING BY FUNCTION
(In billions of dollars)
-----------------------------------------------------------------------------------------------------------------------------------------
Budget Authority
Function 1995 1996 1997 1998 1999 2000 2001 2002
2003 2004 2005
-----------------------------------------------------------------------------------------------------------------------------------------
050 National defense................. 262.7 258.2 253.9 260.2 266.8 276.5 286.9
286.9 287.4 287.5 287.6
150 International affairs............ 20.1 21.2 19.8 19.4 19.1 18.7 18.2 17.9
17.8 17.8 17.8
250 General science, space and tech-
nology......................... 16.8 17.2 16.7 16.4 16.2 16.1 16.1 15.9 16.1
16.1 16.0
270 Energy........................... 6.1 5.7 5.1 5.0 4.8 4.3 4.4 4.4 5.4
5.5 5.6
300 Natural resources and environment 20.5 21.7 20.8 20.1 19.8 19.5 19.4
19.4 19.5 19.6 19.6
350 Agriculture...................... 4.0 4.0 3.9 3.7 3.6 3.5 3.6 3.6 3.6
3.6 3.6
370 Commerce and housing credit...... 3.5 3.5 3.5 3.4 3.1 5.2 3.2 3.1
3.2 3.4 3.3
400 Transportation................... 11.8 37.1 38.5 37.9 34.9 34.2 34.2 34.2
34.3 34.4 34.6
450 Community and regional develop-
ment........................... 8.6 9.3 8.3 8.2 8.2 8.2 8.2 8.3 8.3 8.3
8.3
500 Education, training, employment
and social services............ 39.7 44.1 45.3 46.3 47.1 48.1 49.3 50.5
51.7 53.1 54.5
550 Health........................... 22.7 23.7 23.3 23.7 24.1 24.5 24.9 25.3
25.8 26.3 26.8
570 Medicare......................... 3.0 3.2 3.2 3.2 3.2 3.1 3.1 3.1 3.1
3.1 3.1
600 Income security.................. 27.5 33.2 32.7 43.5 39.0 38.2 41.4 43.9
45.7 47.5 49.1
650 Social security.................. ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
700 Veterans benefits and services... 18.3 19.3 18.8 18.4 18.0 17.6 17.3
17.8 18.7 19.4 20.1
750 Administration of justice........ 18.2 21.8 22.4 23.1 24.3 24.7 23.5 22.4
22.8 23.2 23.5
800 General government............... 11.2 13.6 12.4 12.2 12.1 12.0 12.0 13.0
13.1 13.1 13.2
920 Allowances....................... -0.5 -0.4 1.3 1.1 1.1 1.0 1.0 1.0 1.0
1.0 1.0
950 Undistributed offsetting receipts ........ ........ ........ ........ -0.5 -0.5 -0.5 -0.5 -0.5
........ 0.2
--------------------------------------------------------------------------------------------------
Total, discretionary............. 494.2 536.5 529.9 545.9 544.8 554.8 566.5 570.3
577.1 583.0 588.1
-----------------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------------
Outlays
Function 1995 1996 1997 1998 1999 2000 2001 2002
2003 2004 2005
-----------------------------------------------------------------------------------------------------------------------------------------
050 National defense................. 272.1 261.5 257.2 254.9 260.2 268.3 275.7
281.1 281.6 282.3 282.7
150 International affairs............ 21.4 20.9 20.9 20.7 20.0 19.2 18.6 18.2
17.9 17.8 17.7
250 General science, space and tech-
nology......................... 15.8 16.7 16.7 16.4 16.1 16.1 16.0 15.9 16.0
16.0 16.1
270 Energy........................... 6.5 6.2 5.8 5.4 5.0 4.3 4.3 4.4 5.2
5.4 5.6
300 Natural resources and environment 21.5 21.4 21.2 20.9 20.3 19.7 19.8
19.6 19.6 19.6 19.7
350 Agriculture...................... 4.2 4.1 4.0 3.8 3.7 3.6 3.7 3.7 3.7
3.7 3.7
370 Commerce and housing credit...... 3.7 3.3 3.5 3.5 3.3 5.2 3.3 3.2
3.3 3.4 3.4
400 Transportation................... 38.7 38.2 37.6 37.3 37.6 36.4 35.7 35.2
35.2 35.1 35.1
450 Community and regional develop-
ment........................... 11.9 10.0 9.9 9.0 8.5 8.3 8.2 8.2 8.2
8.3 8.3
500 Education, training, employment
and social services............ 40.0 40.4 44.0 45.3 46.3 47.2 48.2 49.4
50.5 51.8 53.2
550 Health........................... 22.6 23.3 23.3 23.5 23.8 24.2 24.6 25.0
25.5 26.0 26.5
570 Medicare......................... 2.9 3.2 3.1 3.2 3.2 3.1 3.1 3.1 3.1
3.1 3.1
600 Income security.................. 38.9 38.9 40.2 40.8 42.0 41.9 42.5 43.6
44.9 46.1 47.3
650 Social security.................. 2.4 3.1 3.2 3.0 3.0 2.9 2.9 2.9 2.9
2.9 2.9
700 Veterans benefits and services... 18.2 19.1 18.9 18.5 18.2 17.8 17.7
18.0 18.5 19.2 19.9
750 Administration of justice........ 17.0 19.5 21.5 22.7 23.6 24.4 24.6 23.3
22.6 23.1 23.4
800 General government............... 12.9 12.8 12.7 12.6 12.4 12.0 11.9 12.5
12.5 12.6 12.8
920 Allowances....................... -0.4 -0.4 1.4 1.2 1.1 1.0 1.0 1.0 1.0
1.0 1.0
950 Undistributed offsetting receipts ........ ........ ........ ........ -0.5 -0.5 -0.5 -0.5 -0.5
........ 0.2
--------------------------------------------------------------------------------------------------
Total, discretionary............. 550.2 542.1 545.1 542.8 547.7 555.2 561.4 568.0
571.8 577.4 582.4
-----------------------------------------------------------------------------------------------------------------------------------------
Table 5. PROPOSED CHANGES TO MANDATORY OUTLAYS BY FUNCTION
(In billions of dollars)
-----------------------------------------------------------------------------------------------------------------------------------------
7-year 10-year
total, total,
Function 1996 1997 1998 1999 2000 2001 2002 2003 2004
2005 1996-2002 1996-2005
-----------------------------------------------------------------------------------------------------------------------------------------
International affairs........ -0.1 -0.1 ........ ........ ........ ........ ........ ........ ........ ........ -0.1
-0.1
Energy....................... 0.4 0.9 1.2 1.6 1.5 1.6 1.6 1.6 1.6 1.6
8.8 13.6
Natural resources and
environment................. -* * 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2
0.8 1.4
Agriculture.................. -0.4 -0.7 -0.7 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6 -0.6
-4.3 -6.1
Commerce and housing credit.. -* 0.1 0.2 0.2 0.2 0.2 0.2 0.2 0.2
0.2 1.0 1.6
Transportation............... -* -* -* -0.1 -0.1 -0.1 -0.1 -0.1 -0.1 -0.1
-0.4 -0.5
Community and regional
development................. * * 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
0.5 0.8
Education, training,
employment, and social
services.................... -0.6 -1.0 -1.3 -1.1 -1.2 -1.2 -1.4 -1.7 -1.8 -1.9
-7.9 -13.3
Health....................... -3.7 -1.4 -2.2 -3.2 -4.9 -6.4 -8.1 -10.0 -11.7 -13.3
-30.0 -64.9
Medicare..................... -3.3 -5.5 -9.2 -15.5 -22.5 -29.9 -38.3 -44.8 -53.9
-65.9 -124.2 -288.8
Income security.............. -1.8 -4.2 -5.3 -5.8 -6.5 -6.8 -7.5 -7.9 -8.2 -8.6
-37.9 -62.5
Social security.............. -* -* -* -* -* -* -* -* -* -* -*
-*
Veterans benefits and
services.................... -0.1 -0.1 -0.2 -1.3 -1.4 -1.5 -1.6 -1.7 -1.8 -1.9
-6.2 -11.5
Administration of justice.... ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........ ........
General government........... -* 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1
0.3 0.5
Undistributed offsetting
receipts.................... -1.0 -4.8 -3.8 -0.4 -0.4 -1.4 -5.1 -5.6 -5.5 -5.5
-17.0 -33.5
-----------------------------------------------------------------------------------------------------------
Total, mandatory............ -10.8 -16.6 -21.1 -26.0 -35.7 -45.9 -60.4 -70.0 -81.3
-95.6 -216.4 -463.3
-----------------------------------------------------------------------------------------------------------------------------------------
*$50 million or less.
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