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Focusing largely on new priorities because of the terrorist attacks on Sept. 11, President Bush’s budget for 2003 is expected to tighten domestic spending while increasing funds for defense, homeland security and bioterrorism. The budget, set to be released on Feb. 4, will, in all likelihood, mark a return to deficit spending.

At a breakfast with reporters on Jan. 16, Office of Management and Budget (OMB) Director Mitch Daniels indicated that homeland security would roughly double under the President’s budget. Such an increase would translate into about a one percent overall increase for the rest of the discretionary budget, which includes education.

Discretionary vs. Mandatory Spending


Congress allocates approximately $1.5 trillion dollars each fiscal year in the federal budget process. Approximately $700 billion, or one-third of the budget is “discretionary.” This designation allows Congress to determine the funding levels on a yearly basis depending on the amount of money available.

The rest of the budget is spent on entitlements such as Social Security and interest on the national debt and which are considered mandatory. It is automatically spent unless Congress changes eligibility requirements or benefit levels through legislation.


One early controversy in the Bush budget involves an increase of approximately 15 percent for National Institutes of Health, compared to a three to four percent increase for most other federal civilian agencies. This commitment serves as a follow-up to Bush’s promise to double the federal medical research budget over the next five years.

While most of Capitol Hill anxiously waits for the release of the President’s budget, those in the know have circled Jan. 31 as the real starting point for this year’s budget battle. On that day, the nonpartisan Congressional Budget Office (CBO) is set to revise its 10-year surplus/deficit estimates.

Earlier this year, Senate and House Budget Committee Democrats each released their own estimates that showed the CBO $5.6 trillion, 10-year surplus from a year ago had shrunk to between $1.4 billion to $2.4 trillion. Both sets of figures project deficits until at least 2004.

Did You Know?


Congress created the Congressional Budget Office during a clash with President Nixon. During the 1972 election campaign, President Nixon asked Congress for authority to cut federal spending at his own discretion so as to stay under a proposed $250 billion ceiling for FY 1973. After Congress refused to agree to such an open-ended grant of authority, Congress and Nixon clashed sharply over the President’s aggressive impoundment of, or refusal to spend, appropriated monies.

Congress passed the Congressional Budget and Impoundment Control Act of 1974 to limit the President’s power over the federal purse. The Act created the House and Senate Budget Committees to coordinate the congressional consideration of the budget, and established the Congressional Budget Office as a source of nonpartisan analysis and information relating to the budget and the economy.

 The Federal Budget
(Estimates Based on the Proposed 2002 Budget)

bush budget

As seen in the graph above, almost 70 percent of all federal tax dollars go to pay for five “big ticket” items: Social Security, Medicare, Medicaid, Defense, and interest on the accumulated national debt from past years. Only 2.5 percent of the federal budget is allocated to help educate 53 million students in schools and colleges across the country.

The rest of the expenditures (30 percent) are a combination of a long list of mandatory and discretionary programs. Examples from this list include: health care research, agricultural supports, drug enforcement efforts and energy subsidies.

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