President Bush today released his budget for fiscal 2005. The $2.3 Trillion spending plan represents 3.9% growth over the current year. The administration estimates the deficit in fiscal year 2005 will be $521 Billion. It projects the deficit will be reduced by more than half, to $237 billion, by fiscal year 2009.

The Budget proposal assumes the Gross Domestic Product will grow by slightly more than 5% in fiscal 2005 and sustain growth levels above 5% right through fiscal 2009, the last year for which estimates are made.

Under the President’s plan, deficit reduction would be achieved by due to increased revenues resulting from economic growth and by holding total spending growth below the projected growth in GDP.

Here are the highlights of the President’s proposed budget:

Tax Cuts

Make permanent the tax cuts enacted in 2001 and 2003.

Defense Spending

Increase by 7% to $401.7 Billion

Homeland Security

Increase by 10% to $40.1 billion.

Other Discretionary Spending

Increase by .5%. This represents a real cut of 4.5% as compared to GDP growth.

Within non-defense/non-homeland security discretionary spending, here are the major initiatives:

Medicaid

The budget drops last year's proposal to allow states the option to accept a “block grant”.

Head Start

Increases spending by $169 million, including $45 million for a demonstration program to promote better coordination of existing programs.

TANF

The Budget renews the administration’s call for TANF reform as proposed last year.

Title I Education

Increase by 8% or $1 billion.

Special Education (IDEA)

Increase by 10% or $1 billion.

Pell Grants

Increase by 7% or $856 million.

Community Development Block Grants

Cut by 6% or $316 million.

Housing Certificates

Increase by 3% or $500 million. Change to dollar-based, from unit-based certificates.

Abandoned Mine Reclamation

Restructure program to increase by 19% the number of acres reclaimed per year. Focus on states with greatest reclamation need.

Department of Justice State & Local Assistance

Cut by 32% or $959 million.

Job Training

Level funding for WIA programs and an assumption they will be consolidate. New spending of $250 million for community college training initiative and $ 50 million pilot of Personal Re-employment Accounts.

Highways

No change in funding from fiscal 2004.

Transit

No change in funding from fiscal 2004.

Aviation

Increase FAA spending by less than 1% or $100 million.

Amtrak

Cut by about 1/3 to $900 million. Renew proposal for restructuring of the railroad.

US Army Corps of Engineers

Cut construction budget by 18% or $ 311 million.

State and Tribal Assistance Grants/SRF

Cut by 17% or $ 675 million, including a cut of 37% or $ 492 million in Clean Water State Revolving Fund capitalization.

NASA

Increase outlays by 12% or $ 1.8 Billion

We will be back to you with more detailed analysis of the President’s budget shortly.