skip to main content

House and Senate Committees Hear Testimony on the President’s FY2005 Budget

Office of Management and Budget (OMB) Director Joshua Bolten outlined the President’s FY2005 budget before the House Budget Committee on February 3, and before the Senate Budget Committee on February 5. He began by stating that the FY2005 budget “continues to support and advance three overriding national priorities: winning the war on terror, protecting the homeland, and strengthening the economy.” Mr. Bolten explained that the budget would increase defense spending by 7 percent, increase homeland security spending by 10 percent, and hold the growth in total discretionary spending for all other programs to 3.9 percent.

Mr. Bolten also summarized the President’s proposal for new statutory budget enforcement mechanisms, including a cap on discretionary spending for five years through 2009; a pay-as-you-go requirement for new mandatory spending, under which any proposed increase for mandatory spending must be offset by a reduction in mandatory spending; and a requirement of 60 votes or more in the Senate to expand entitlement programs, such as Medicare and Social Security. Congress must approve the proposal for it to take effect.

Testifying on behalf of the Brookings Institution, Dr. Peter Orszag pointed out flaws in the President’s economic recovery plan. He focused his comments on the President’s proposal to make the 2001 and 2003 tax cuts permanent stating that it “would reduce revenues by about $2 trillion” and “would increase the deficit by $1.7 trillion over the next decade.”

Treasury Secretary John Snow testified before the House Ways and Means Committee on February 3, and before the House Budget Committee on February 4. He highlighted the President’s plan to cut the $521 billion deficit in half by FY2007. “Holding the line on spending while ensuring that our country is safe and our most important needs, from jobs to health care, are met will achieve deficit reduction when coupled with all-important economic growth,” he stated.

Henry Aaron of the Brookings Institution criticized the President’s plan arguing that it will increase financial difficulties in the states where cutbacks have already been made in health care and education spending. He also noted, “The long-term cost of the tax cuts enacted in 2001 and 2003 is three times the cost of closing the seventy-five-year deficit in Social Security and more than sufficient to close not only that deficit but also that in Medicare Hospital Insurance. Given the choice, the American public might well prefer to devote at least some part of the revenues that will be generated as the tax cuts expire to reforming and restoring balance in Social Security and Medicare.”

Join us for our upcoming economic briefing on women-owned small businesses!RSVP
+