04 February 2002

Fact Sheet on Fiscal 2003 Budget Proposals

Washington -- President Bush's budget for the fiscal year beginning October 1 (FY2003) calls for flattening spending on most domestic programs while sharply increasing funds for national defense, border security and a few selected favored programs.

The big winners, if the president's budget priorities are supported in Congress, would be the Defense Department, Customs Service, Federal Aviation Administration, Coast Guard, Justice Department and Federal Emergency Management Agency.

Bush proposes $378,622 million for the Defense Department in FY2003 compared to about $332,994 million allocated for the current fiscal year and just $312,979 million in the previous year.

Bush's 2003 budget projects $2,048,000 million in revenues, up 5.2 percent from the current year's estimate of $1,946,000 million, and $2,128,000 million in spending, up 3.7 percent. The Bush budget projects the first budget deficit in five years for the current fiscal year and continuing deficits in 2003 and 2004 before surpluses resume.

Following are additional highlights from the fiscal 2003 budget proposals:

BUDGET TOTALS

Revenues: $2,048,060 million Outlays: $2,128,230 million -------------------- Budget deficit: -$80,170 million

DEFICIT REDUCTION

The U.S. budget was in surplus from 1998 to 2001 following 29 consecutive years of deficits. The budget is projected to move into deficit this year through 2004, eventually moving into surplus again in 2005. Following are recently estimated or proposed deficit and surplus figures, in millions of dollars:

1994 -203,275 1995 -164,007 1996 -107,510 1997 -21,990 1998 69,179 1999 125,522 2000 236,392 2001 127,104 2002 (estimate) -106,184 2003 (proposed) -80,170

FEDERAL SPENDING

Up $75,910 million, or 3.7 percent, from 2002.

REVENUES

Up $101,924 million, or 5.2 percent, from 2002.

DISTRIBUTION OF PROPOSED SPENDING, FY2003 (percent)

Social Security 22 Non-defense discretionary 19 Medicaid and Medicare 18 National defense 17 Means-tested entitlements and other mandatory spending 14 Net interest on national debt 9 Emergency Response Fund 1

SOURCES OF REVENUE (percent)

Individual income taxes 49 Social insurance taxes 37 Corporate income taxes 10 Excise taxes and customs duties 3 Other 1

DEFENSE AND HOMELAND SECURITY SPENDING

Overall spending for defense would climb by $48,000 million, the largest increase in two decades. It includes purchases of a new generation of fighter jets, more precision munitions, accelerating development of pilotless planes, investment in new combat communications systems, a 4.1-percent hike in military pay and $7,800 million for missile defense research.

Spending to ensure U.S. residents' safety at home would nearly double to $37,700 million. This would include: 1,700 million for research on developing vaccines, tests, and therapies to fight anthrax and other biological agents; $420 million to study bioterrorists and ways to fight the use of biological agents; $300 million to increase the national stockpile of antibiotics; $99 million to enhance the safety of the nation's food supply; $4,800 million for aviation security; $3,500 million for emergency rescue workers and equipment; $10,600 million to improve surveillance at the nation's borders; $380 million to track the entry and exit of immigrants; and $720 million to improve communication between different federal agencies and state jurisdictions.

NEW NON-DEFENSE PROPOSALS -- The Andean counterdrug initiative would get a 14-percent increase in funds to help train a second anti-drug brigade in the Colombian army.

• U.S. Department of Agriculture funding would drop nearly 3 percent; agricultural subsidies would decrease while spending for food security would increase.

• Highway programs would be trimmed by $9,000 million.

• Federal payments to hospitals would be cut by $9,000 million.

• Revenue gains of $1,200 million would be realized by leasing drilling rights in Alaska's Arctic National Wildlife Refuge.

• Aid to Jordan would climb from $225 million in fiscal year 2002 to $448 million, of which $198 million would be in the form of weapons and $250 million in economic support assistance.

• Legal immigrants would have their eligibility to food stamps, a nationwide food subsidy program, restored.

• Labor Department funds would be cut by 3.5 percent, reflecting reductions in job training and job search programs.

• Tax relief would total $591,000 million, including a $344,000 million cost for extending credits and rate reductions that were part of last year's congressionally passed tax cut. Other tax proposals include tax rebates of up to $600 for low-income people, tax relief for corporations, credits for energy conservation, and tax credits to help low-income people afford health insurance and buy first homes.

DEFICITS AND SURPLUSES AS A PERCENTGE OF GDP

During World War Two, the U.S. budget deficit as a percentage of gross domestic product (GDP) reached as high as 30.3 percent. The post-1946 record high of 6.0 percent was reached in 1983. The largest surplus in the post-war period was 4.6 percent in 1948. From 1993 to the 2003 proposals, the path is:

Deficit/Surplus Fiscal year as percent of GDP

1993 -3.9 1994 -2.9 1995 -2.2 1996 -1.4 1997 -0.3 1998 0.8 1999 1.4 2000 2.4 2001 1.3 2002 (estimate) -1.0 2003 (estimate) -0.7

U.S. GOVERNMENT SPENDING AND REVENUES AS PERCENT OF GDP

Spending Revenues as percent as percent Fiscal year of GDP of GDP

1993 21.5 17.6 1994 21.1 18.1 1995 20.7 18.5 1996 20.3 18.9 1997 19.6 19.3 1998 19.1 19.9 1999 18.7 20.0 2000 18.4 20.8 2001 18.4 19.6 2002 (estimate) 19.8 18.8 2003 (estimate) 19.5 18.8