Im sure this will stir up alot of debate, but id love the discussion.

The President’s top priorities are winning the war, protecting the homeland and generating economic growth and jobs, and he has continued to lead boldly on these priorities. However, the lagging economy and weak stock market caused revenues to decline further, which explains the biggest change in the budget position, followed by the costs of the war and the economic growth plan. Although large in nominal terms, these deficits are manageable and the Administration plans to cut the deficit in half in a few years through a combination of economic growth and spending restraint. Thanks to the President delivering on a 3rd consecutive growth plan and other factors, the economy seems poised for a strong recovery.

 

Budget projections from the Federal Budget Submission
Fiscal Year 2003     
304 Billion

Fiscal Year 2004     
307 Billion

Fiscal Year 2005     
208 Billion

Fiscal Year 2006     
201 Billion

Fiscal Year 2007    
178 Billion

Fiscal Year 2008     
190 Billion

At the end of Fiscal Years 2004-08
1.08 Billion



The Deficit Is Manageable. The deficit is manageable given the shocks our economy has endured (recession, terrorist attacks, revelation of corporate scandals, and a weak market). At 4.2% of GDP, it is well below the 1983 peak modern-day deficit of 6% (it’s not even in the top five). In fact, it is the same or smaller than deficits following similar recessions. These deficits are not hurting the economy right now, as interest rates are at 45-year lows. 

Cut the Deficit With Economic Growth and Spending Restraint. The fundamentals – lower taxes, a positive outcome in Iraq, strong housing markets, record low interest rates, renewed consumer confidence, low inflation -- are in place for a strong recovery and job growth. Tax refund checks are on the way. A strong economy and spending restraint will cut the deficit by more than half. Economic growth creates surpluses, not the other way around.

Tax Relief is Helping the Economy Recover. Economists generally agree that the 2001 tax relief helped combat the recession, and that the latest growth and jobs package will help spark investment, recovery and job creation. Now is exactly the wrong time to raise taxes.

The Need for Spending Discipline. The President’s budget holds growth in discretionary spending below 4% (less than half the growth rate of recent years) because government spending should not grow faster than family income. In fact, spending growth outside of defense and homeland security has been slowed from 6.0% in FY02, to 4.7% in FY03, to a proposed 2.0% in FY04 (compared to a near 15% spike in FY01). The President’s budget would also re-impose spending caps and pay-as-you-go requirements to help slow spending further.

Recession, Plunging Revenues and the War – Not Tax Relief – Brought Back the Deficit.  

The overwhelming reason for the change in deficit from the February projection continues to be the impact of the recession and previously weak market on tax revenues. Revenues dropped for three years in a row, which hasn’t happened in the U.S. since the 1920s. The recession and its revenue effects erased 100% of the projected FY 2002 surplus. 

The response to the attacks of September 11th resulted in unanticipated but necessary spending of roughly $180B to prosecute the war on terrorism (including Operation Iraqi Freedom), build a robust homeland security system, and rebuild New York. Both parties overwhelmingly supported this additional spending.

If there had been NO TAX CUTS, not in 2001, 2002, or 2003, the budget would be in triple digit deficits today ($278B in 2003).