The Bush Budget
Subject Federal Budget
Topic Fiscal Policy
Key Words Budget Deficit, Budget Surplus, GDP
News Story

President Bush unveiled a $2 trillion federal budget that offers a modest rise of 4 percent in overall spending. The Bush plan provides the biggest percentage increase to education, health, international affairs, veterans' benefits and national defense. Transportation, energy, natural resources and environment, agriculture, and community and regional development received the largest cuts. In general, the budget offers modest changes to governmental programs, deferring potentially more dramatic shifts in public spending to next year.

The budget document estimates revenues to be $2.2 trillion and expenditures $2 trillion, providing for a budget surplus of $230 billion. The administration identified a number of programs that it labeled ineffective or ripe for review. Some of these programs, such as the $162 million Wetlands Reserve program, will be eliminated this year. Other programs will be cut in the future.

The Bush budget demonstrates an approach to government that conservatives have favored. It provides greater latitude to the states over an array of activities. It also evidences an increased reliance on user fees to help pay for functions. The budget incorporates all of the initiatives Bush had promised during his campaign, such as state-run prescription drug subsidies for the poor and elderly, as well as new education policies. Spending on the National Endowment for the Arts and National Endowment for the Humanities would be frozen. Under the President's plan overall growth in spending will fall to 3.7 percent next year and 2.5 percent in 2004 and 2005. Keeping government spending to proposed levels will enable the administration to provide $1.6 trillion in tax relief over the next decade - one of the President's prime objectives.

(Updated May 1, 2001)

1. President Bush presented the Administration's proposed budget to Congress. What happens next? Describe the process that produces a federal budget for the U.S.
2. What are the principal sources of federal government revenues? Expenditures?
3. What determines the size of the federal budget surplus?
Source Glenn Kessler and Amy Goldstein, "First Bush Budget Makes Modest Cuts," The Washington Post, April 10, 2001.

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