REFERENCE CENTER:
EMAIL UPDATES:
Appropriated Programs
Appropriated programs, also known as "discretionary" programs, are those controlled by the annual appropriations process. President Bush's budget provides $660.6 billion in budget authority for appropriated programs for 2002, which is $2.8 billion below the level needed, according to CBO, to maintain purchasing power for these programs at their 2001 levels.2 However, as is explained below, the cut to domestic appropriations is much larger than the $2.8 billion overall cut.
The 2002 Appropriations Picture
Taking the Bush budget numbers at face value, the domestic portion of appropriated programs is cut $6.8 billion below the 2001 level. As Table 5 indicates, this occurs because the non-defense portion bears the entire burden of the $2.8 billion overall cut and then must be cut an additional $4.0 billion to accommodate the increase for defense and international affairs.
|
Table 5: Comparing the President's Budget
for 2002 Appropriated Programs to CBO's Estimate of Amounts
Needed to Maintain Purchasing Power at 2001 Levels
(discretionary budget authority in billions) |
|||
|
Bush Budget
|
CBO Estimate
|
CBO Estimate Budget Above/Below
|
|
| Defense |
325.1
|
321.7
|
+3.4
|
| International |
23.9
|
23.2
|
+0.7
|
| Domestic |
311.7
|
318.5
|
-6.8
|
| Total Appropriations |
660.6
|
663.4
|
-2.8
|
| Numbers may not add due to rounding. | |||
However, the level for appropriated programs includes an emergency reserve fund that totals approximately $62 billion over ten years, including $5.6 billion for 2002. See The National Emergency Reserve below for further discussion. This new fund is only to be tapped to provide funding to respond to major natural disasters such as earthquakes, hurricanes, and floods. There is no such reserve for 2001. To obtain an apples-to-apples comparison of the budget with 2001 levels of funding for ongoing programs, one should exclude the $5.6 billion fund from 2002 and those 2001 emergencies that do not represent ongoing programs but are rather true one-time-only costs.3
|
Table 6: A Domestic Appropriations
Comparison
The Bush 2002 Budget vs. 2001 Freeze Level (Discretionary Budget Authority in Billions) |
||||
| Bush Budget | 2001 Freeze | Dollar Increase | Percent Increase | |
| Gross Level | 311.7 | 305.2 | +6.2 | 2.1% |
| Less Emergencies | -5.6 | -1.7 | na | na |
| Adjusted Level | 306.1 | 303.5 | +2.6 | 0.9% |
As Table 6 indicates, when an adjustment for emergency funding is made, domestic appropriations are actually only $2.6 billion (0.9 percent) more than the 2001 freeze level. This level for domestic appropriations is $10.9 billion (3.4 percent) less than the level needed, according to CBO, to maintain purchasing power at the 2001 level.4
The "Four Percent Increase is a Mirage"
The media widely reports that the President's budget increases appropriated programs by 4.0 percent. Unfortunately, these reports have created several widespread misperceptions about the President's budget.
|
The National Emergency Reserve The President's budget establishes a "National Emergency Reserve" to cover the costs associated with natural disasters such as earthquakes, floods, and hurricanes. The budget includes $5.6 billion for this fund for 2002, and $61.9 billion over the ten year period (2002 - 2011). If natural disasters do not occur in any given year, or if the fund is not fully utilized, the fund may not be used for other purposes. While sensible in concept, the budget is silent on what happens if costs associated with natural disasters exceed the funding in the reserve in a given year. The House Republican budget resolution, which is based on the Administration's proposal, implies that any excess for emergencies would have to be offset by other appropriated programs. If this is indeed the intent of the Administration's proposal, finding offsets to fund emergencies is not only poor public policy, but could greatly delay the emergency assistance. |
First, while the 4.0 percent increase is true in nominal terms for overall appropriations (defense, international, and domestic programs), it is not true for domestic appropriations. In fact, as discussed above, the President's budget increases nominal budget authority for discretionary appropriations by less than one percent compared to the 2001 freeze level. Even if one does not adjust for emergencies, domestic appropriations only increase 2.1 percent.
Second, while inflation has been modest, it still exists and erodes the purchasing power of many programs. Families plan long-term budgets assuming college tuition costs or gasoline prices will increase, and the government must be cognizant of rising costs in its budgeting as well. Again, as explained above, when domestic programs are compared to the level needed, according to CBO, to maintain purchasing power at the 2001 level, the President's budget actually cuts funding for domestic programs by 3.4 percent.
Third, as is explained in Winners and Losers in the President's Budget below, the President's budget cuts the remaining domestic programs even further after taking into account the increases provided for the Health and Education and Training functions. Over the ten year period (2002 - 2011), the budget cuts these remaining domestic programs by a cumulative total of more than $150 billion.
Finally, there is a widespread misperception that the 4.0 percent increase continues over the course of the ten year budget proposal (2002 - 2011). This is incorrect. Even using the flawed methodology the Administration uses to calculate the 2002 increase, all appropriated programs only increase an average of 2.3 percent per year in nominal terms over the 2002 - 2011 period.
|
Table 7: Winners and Losers in the Bush Budget Appropriated Programs in
the President's Budget |
|||
|
Amount Budget is Over/Under 2001 Level of
Purchasing Power
|
|||
| Function |
2002
|
2002-2006
|
2002-2011
|
| National Defense |
3.4
|
22.9
|
69.7
|
| International Affairs |
0.7
|
3.5
|
8.1
|
| General Science, Space |
-0.2
|
0.2
|
1.8
|
| Energy |
-0.5
|
-1.7
|
-1.1
|
| Natural Resources and Environment |
-2.6
|
-16.8
|
-44.6
|
| Agriculture |
-0.1
|
-0.3
|
-1.4
|
| Commerce and Housing Credit |
-2.8
|
-15.2
|
-23.3
|
| Transportation |
-2.1
|
-9.8
|
-23.7
|
| Community and Regional Development |
-1.3
|
-6.3
|
-13.9
|
| Education and Training |
1.0
|
9.2
|
24.8
|
| Health |
1.2
|
22.9
|
54.3
|
| Medicare |
-0.0
|
-0.8
|
-4.0
|
| Income Security |
-2.0
|
-6.2
|
-8.3
|
| Social Security |
-0.1
|
-0.8
|
-2.7
|
| Veterans |
0.0
|
-2.3
|
-11.6
|
| Administration of Justice |
-1.5
|
-5.7
|
-17.8
|
| General Government |
0.2
|
-1.1
|
-6.6
|
| Subtotal, Domestic Appropriations** |
-10.7
|
-34.5
|
-78.1
|
| Subtotal, Domestic Except Health and Education and Training |
-12.9
|
-66.5
|
-157.1
|
| *Adjusted for appropriate emergencies. **The CBO baseline does not distribute the 0.22 percent across-the-board reduction contained in the 2001 appropriations. If this reduction were included, the total domestic appropriations reduction would be $32.2 billion over the 2002 - 2006 period and $73.1 billion over the 2002-2011 period. Note: Numbers may not add due to rounding. |
|||
Winners and Losers in the President's Budget
Table 7 compares the President's request to the levels needed, according to CBO, to maintain purchasing power at the 2001 level. Since the President establishes a new National Emergency Reserve, the CBO levels have been adjusted to exclude emergency funding that represents true one-time-only costs rather than ongoing programs for comparability purposes. In the table, positive numbers indicate increases, negative numbers indicate cuts.
|
New User Fees in the Budget The budget includes a total of $2.3 billion in user fees over the 2002 - 2006 period to offset appropriated programs. In the past, Congressional Republicans charged that such user fees are "taxes"on the public, and criticized user fee proposals by the last Administration. It is therefore ironic to see the new Administration propose some of the same user fees. To the extent that Congress rejects these user fees, then the total funding for appropriated programs must either be increased to compensate for the loss of the funding generated by the user fees or appropriated programs must be cut. |
As the table indicates, the budget cuts a total of $78.3 billion from domestic appropriations over the next ten years. However, as the table also indicates, two domestic functions, Education and Training and Health, are increased above the 2001 level by a cumulative total of $25 billion and $54 billion, respectively, over the ten year period (2002 - 2011). If these two functions are excluded, then the remaining domestic programs are cut by a cumulative total of more than $150 billion over the ten year period (2002 - 2011).5 For 2002, the cut to remaining domestic program is $13 billion (6.2 percent) compared with the level needed to maintain purchasing power at the 2001 level.
The Overview section discusses some
of the more notable specific cuts in the budget, as does a separate
report, Bush Budget: Sacrificing
All Else to Tax Cuts, which can be found on the House Budget
Committee Democratic website: /www.house.gov/budget_democrats. In
addition, there is a discussion of the President's cuts in each
relevant function analysis within this report.
Changes from the February Budget Blueprint
The President's revised April budget for appropriated programs does differ from the February Budget Blueprint the President submitted to Congress. Table 8 displays the changes for appropriated programs for 2002, 2003, the five year total of the changes from 2002 - 2006, and the ten year total of the changes from 2002 - 2011. Positive numbers indicate increases from the February Blueprint, while negative numbers indicate decreases from the Blueprint.
As Table 8 indicates, the major changes for 2002 are in Functions 250 (General Science, Space, and Technology) and 400 (Transportation). These changes primarily correct an error contained in the February blueprint. After 2002, most functions receive increases over the 2003 - 2006 period and decreases over the 2007 - 2011 period. In total over the ten years (2002 - 2011), defense and non-defense appropriations have been revised slightly downward.
A letter from OMB states that these changes are not supposed to reflect policy changes, but rather are technical changes related to re-estimates of the President's policies. While this may be true, the fact is that the President's budget now has more funding for many appropriated programs in the near term relative to the February Blueprint, and less funding for many programs over the 2007 - 2011 period.
Conclusion
The level of appropriations in the Bush budget is unrealistically low. Even the Republican Chairman of the Senate Budget Committee said that "Some functions of government just can't take as big a cut as they're [the Bush Administration are] talking about." Defense funding in the budget is described as not a statement on policy but rather a placeholder until the Department of Defense completes a review of its needs. The budget protects some non-defense programs from cuts, and increases a select few others, but thereby requires a 6.2 percent cut to the remaining domestic programs for 2002 alone.
The Senate Budget Committee Chairman is right. These cuts are too large, and they will not be enacted. The budget assumes these cuts to make room for the Bush Administration's first priority: tax cuts. Even defense funding is secondary to this priority. However, if Congress approves the tax cuts but does not make these non-defense cuts, Congress jeopardizes the Social Security and Medicare surpluses.
Back
to Top
Next: Budget By Function
Previous: Jeopardizing the Future of Social
Security and Medicare
2 The budget asserts that $660.7 billion is equal to the OMB estimate of the level needed to maintain purchasing power at the 2001 levels. However, domestic appropriations are cut using either CBO or OMB estimates of the 2001 level of purchasing power. The following analysis relies on CBO estimates because Congress traditionally uses these estimates rather than OMB's estimates during the appropriations process. Back to text
3 Based on preliminary OMB data, the estimate of this amount is $1.7 billion for 2001. Back to text
4 These levels exclude mandatory contract authority for transportation programs that result in discretionary outlays. If this contract authority is taken into account, domestic appropriations are only $5.1 billion (1.5 percent) more than the 2001 freeze level, but which is $9 billion less than the level needed to maintain 2001 purchasing power. In addition, the CBO estimate of the level needed to maintain purchasing power at the 2001 level (baseline) may overstate the budget authority needed in Function 600 due to the Housing Certificate Fund (HCF). CBO may make a technical adjustment to the HCF baseline in conjunction with its reestimate of the President's budget later this Spring. Back to text
5 As the second footnote on Table 7 also explains, the CBO baseline does not distribute the 0.22 percent across-the-board reduction that was included in the 2001 appropriations to each individual function. Thus, the aggregate totals in Table 7 are somewhat overstated. The total domestic appropriations reduction is $32.2 billion over the 2002 - 2006 period and $73.1 billion over the 2002 - 2011 period including the effect of the across-the-board reduction. Likewise, the remaining domestic appropriation cut is somewhat overstated, but a precise figure cannot be determined since the across-the-board reduction for the Health and Education and Training functions cannot be specified. Back to text