"1. The President's budget sets a new, record-setting deficit of $427 billion. It wipes out the $5.6 trillion surplus President Bush inherited from President Clinton just four years ago. The budget pretends to reduce the deficit in half over five years, but it doesn't even start. The President's budget omits the cost of the war in Iraq and Afghanistan ($80 billion), the true cost of making the Bush tax cuts permanent ($1.6 trillion), modifying the Alternative Minimum Tax which is hitting increasing numbers of middle class taxpayers ($774 billion), or the $4.5 trillion cost of his Social Security plan.
2. The President's budget calls for making his past tax cuts permanent and for enacting new tax cuts for the wealthy. Much of the Bush 2001 and 2003 tax cuts would be made permanent under the budget, including the permanent repeal of the estate tax on multimillionaires. But, a closer look at the Administration's budget shows it imposes $5.3 billion in new, regressive taxes. The budget calls for increases in so-called "user fees" and excise taxes, as well as $1.6 trillion in new tax cuts over 10 years, much of them for the wealthy.
3. The President's budget is a disaster for state and local governments. Most states have just emerged from three straight years of record deficits and are finally getting back on their feet. Medicaid and education are the fastest growing expenditures for state and local governments, and now federal aid in these areas would be slated for big cuts. In addition, huge cuts are made in other federal grants to the states, cities and counties. The Bush budget plan simply passes the buck to the states and cities.
- Cuts Medicaid: President Bush's budget cuts and shifts at least $60 billion in Medicaid costs to the states over 10 years. This level of cuts will almost certainly push hard-pressed states to eliminate coverage for a substantial number of low-income people, increasing the ranks of the uninsured and underinsured. The magnitude of the cuts will also increase the already heavy uncompensated care burdens for hospitals and other providers. For administration of Medicaid, the plan proposes a cap on expenses.
- Cuts Education: Almost one-third of the domestic programs the President targets for cuts are in education, with funding reductions totaling $1.3 billion. He has proposed total elimination of 48 programs, including Drug-Free Schools State Grants, Educational Technology State Grants, the Perkins Loan program for students with exceptional financial need and the Even Start family literacy program. Adult education would be cut by 63 percent.
- Deep Cuts in Federal Grants Will Squeeze States and Localities: Grants to state and local government for all programs other than Medicaid would decline by $10.7 billion or 4.5 percent, after adjusting for inflation. By 2010, the cuts will be much bigger.
4. The President's budget calls for drastic cuts in many federal programs and services which will harm millions of children, seniors, and working adults. Defense, foreign aid and homeland security funding are all increased, while other domestic spending is drastically reduced. Given expected inflation, this would mean a cut, in real terms, of 14 percent by 2010. The budget also reduces or eliminates 150 programs, block granting and slashing vital public services for a wide range of needs. The cuts are especially harmful for job training, community development programs, social services, veterans' health care, law enforcement, housing, election reform assistance to the states, and child care. At the same time, the budget calls for far-reaching changes in the congressional budget process that will hide the true costs of the Bush tax cuts, make it easier to pass new tax cuts, and impose spending caps on most domestic spending. "
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