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CONGRESS STRUGGLES UNDER TIGHT FEDERAL SPENDING LIMITS: Size of Education Investment At Stake

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"President Bush hasn't proposed a stimulus plan. Instead, he has put forward an irresponsible, ineffective, ideologically driven wish list."

As the new Congress settles into town, its first order of business is finishing the leftover appropriations bills that remain from last year. However, much like last year, members of Congress still find it difficult to adhere to President’s budget constraints for fiscal 2003.

In the House of Representatives, Labor-HHS-Education Appropriations Subcommittee Chairman Ralph Regula (R-OH) introduced a bill that complies with the President’s level by reducing the President’s increases for Title I and special education. In the Senate, Senate Appropriations Committee Chairman Ted Stevens (R-AK) met the overall White House targets, but was able to include a $1.7 billion increase for education by introducing a bill that cut several homeland security accounts as well as some education programs under No Child Left Behind.

In an effort to keep the promise to fully fund the No Child Left Behind Act, Sens. Tom Harkin (D-IA)Edward Kennedy (D-MA), and Joseph Lieberman (D-CT) were joined by 40 of their Democratic colleagues in asking President Bush to support their amendment to increase education spending by $7.7 billion over last year. Such an increase would match the funding increase for education that Congress and President Bush agreed to in 2001. The amendment was offered to the omnibus spending bill for 2003 but failed by a vote of 51 to 46. Sen. Zell Miller (D-GA) was the only Democratic Senator who voted against the amendment.

However, the Senate did approve an amendment offered by Senator Judd Gregg (R-NH) that provided a $5 billion increase education funding by a vote of 52 to 45. The Gregg amendment is paid for by making an across-the board cut of 1.3 percent for all programs in the omnibus bill, including education. The overall education increase, after the Gregg amendment, is about $5.2 billion (including Stevens increase).

Chart: Comparison of Kennedy Amendment to President Bush's economic spending package

President Bush Proposes $674 Billion Economic Package

While Congress negotiates final spending levels for fiscal 2003, President Bush is preparing for the release of his fiscal 2004 budget on Feb. 3. Many experts agree that the President’s proposed budget for fiscal 2004 will reflect a new, wartime path that will likely freeze domestic spending, including education, while providing increases for homeland security and defense spending. Although the President announced in his radio address on Jan. 4 that he would increase Title I funds by $1 billion, that increase may come at the expense of other education programs.

In addition to homeland security and defense spending, another key issue for President Bush is his 10-year, $674 billion economic plan. Democrats, and even some Republicans were quick to balk at the size of the President’s proposal and portray it as another tax cut overwhelmingly skewed toward the rich. Sen. Joseph Lieberman (D-CT), who recently joined others in announcing his candidacy for the Democratic presidential nomination, challenged the true intent of the Bush economic plan: “President Bush hasn’t proposed a stimulus plan. Instead, he has put forward an irresponsible, ineffective, ideologically driven wish list.”

Many private-sector budget forecasters have said that the President’s economic plan combined with a war with Iraq could push the federal budget deficit to $350 billion or more, which, in sheer dollar terms would dwarf the $290 billion record set in the last year of President George H.W. Bush’s Administration. Taken with the $1.35 trillion tax cut, the current $674 billion economic package means that the President has proposed more than $2 trillion in tax breaks during his two years in the White House.

A study by The Brookings Institution found that the top 1 percent of Americans, those with incomes of $317,000 or more, would get 28.3 percent of Bush’s tax cut, an average benefit of $24,428, or a 3.5 percent increase in income. The 20 percent of Americans in the middle, those earning $21,000 to $38,000, would get 6.1 percent of the benefit of Bush’s plan, an average benefit of $265 or an increase in income of 0.9 percent.

In a speech at a company in Alexandria, Va., President Bush argued that his economic plan would provide substantial benefits for small businesses and moderate-income families: “You hear a lot of talk in Washington, of course, that this benefits so-and-so or this benefits this, the kind of the class warfare of politics,” he said. “Let me just give you the facts that, under this plan, a family of four with an income of $40,000 will receive a 96 percent reduction in federal income taxes.”

Read the complete report, The President’s Tax Proposal: First Impressionsby The Brookings Institution

A chart looking at the President’s proposed economic plan as well as two alternatives, along with further analysis, is available from OMB Watch.

 

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