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President Outlines FY2002 Budget; Details to Follow

On February 27, President Bush addressed a joint session of Congress to outline his FY2002 budget. While an outline and summary of the budget was presented to Congress on February 28, the traditional budget documents and full details of the proposal will not be released until April 3.

During his hour-long speech, the President set forth his agenda, focusing on education, Medicare, Social Security, and tax cuts. Saying that education is his top priority, he detailed several of his education proposals, including tripling funding to help children learn to read and increasing funding to train and recruit teachers.

The President also proposed to double the Medicare budget over 10 years, while protecting the Social Security surplus and paying down the national debt. In addition, he outlined his tax cut proposal, which would lower tax rates, reduce the marriage penalty, double the child tax credit, and repeal the estate tax.

“My budget has funded a responsible increase in our ongoing operations. It has funded our nation’s important priorities. It has protected Social Security and Medicare. And our surpluses are big enough that there is still money left over,” he stated, adding: “I hope you will join me in standing firmly on the side of the people. You see, the growing surplus exists because taxes are too high and government is charging more than it needs. The people of America have been overcharged and, on their behalf, I am here asking for a refund.”

Senate Minority Leader Tom Daschle (D-SD) and House Minority Leader Richard Gephardt (D-MO) delivered the Democratic response to the President’s address. Rep. Gephardt agreed with the President’s top priority—education—but disagreed with several aspects. “Like most Americans, we do not support spending public money for private school vouchers, and we will never support a reduction in the federal commitment to under-served children and communities,” he stated.

Sen. Daschle added, “By paying down the debt, we’ll also keep interest rates low—which will mean real savings for every American family. We agree with the President. We want a significant tax cut this year. But we want a different kind. A tax cut that is part of a responsible budget, that lets us pay off the debt, and invest in America’s future. One that is fair to all Americans.”

Agency Highlights
While details surrounding specific programs will not be available until April, the following are highlights pertaining to programs affecting women and families as stated in the President’s budget outline.

Department of Agriculture: The President’s budget would fully fund the 7.25 million individuals that are projected to be enrolled in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) in 2002.

Department of Education: The President’s budget plan proposes a Reading First program, which would be funded at $5 billion over five years. The program would seek to ensure that all children can read by the time they enter third grade. Additionally, the budget proposes to reform Head Start “by making school readiness—pre-reading and numeracy skills—Head Start’s top priority.” Additionally, the budget proposal would provide $2.6 billion for states to improve teacher quality and $150 million for charter schools. Additionally, the budget proposal would increase funding for special education.

Under the President’s budget proposal, two education programs—the Safe and Drug-Free Schools and Communities program and the 21st Century Community Learning Centers—would be streamlined into one program. According to budget documents, this would allow school districts to “support drug and violence prevention activities as well as after-school programs in safe, enriched environments.”

Additionally, the budget proposal would give states greater flexibility to spend funds that had been previously allocated for school modernization. Under the President’s budget, states could redirect the $1.2 billion appropriated in FY2001 for school modernization to three areas: special education, school renovation, or technology. Also, proposed FY2002 funding could be used to meet other “pressing needs” for local school districts.

The budget proposal would provide a $1 million increase in Pell Grants, as well as add a new mandatory spending initiative to expand teacher student loan forgiveness programs to provide greater benefits to math and science teachers. The proposal would expand the current student loan forgiveness limits from $5,000 to $17,500 for math and science majors who teach those subjects in high-need schools for five years.

The budget proposal also would establish a tax deduction for out-of-pocket classroom expenses (up to $400) incurred by teachers.

The President’s budget proposal calls for annual testing and proposes financial incentives and consequences for schools that improve or fail to improve student achievement. Additionally, the budget proposes a requirement that schools publish performance report cards, an expansion of school choice opportunities, an expansion of charter school options, an expansion of Education Savings Accounts from the current $500 annual contributions limit to $5,000, and a tax exemption for qualified pre-paid tuition and savings plans.

Department of Health and Human Services: Under the President’s budget proposal, funding for the National Institutes of Health would be increased by $2.8 billion over FY2001, bringing FY2002 funding to $23.1 billion. Funding for community health centers also would be increased by $124 million, which would support a new multi-year initiative to increase the number of community health centers by 1,200.

The President’s budget also would increase funding for substance abuse treatment services by $111 million. Additionally, $400 million would be allocated to a new Healthy Communities Innovation Fund Initiative. The initiative would fund innovative local programs targeting areas of health risk, including “programs to promote comprehensive care through integrated state health care delivery systems for women and children.”

Under the budget proposal, $505 million would be allocated in FY2002 for the Promoting Safe and Stable Families program. The $200 million increase over last year would be used to “help states keep children with their biological families, if safe and appropriate, or to place children with adoptive families.” An additional $60 million increase would be provided for education and training vouchers to youth who age out of foster care, which would be funded through the Independent Living Program.

The Child Care and Development Block Grant (CCDBG) would receive $2.2 billion in FY2002. The President’s budget would create a new $400 million after-school certificate program that would provide grants under CCDBG for states to assist parents in obtaining after-school childcare.

The President’s budget also proposes to spend $315 million over five years to promote responsible fatherhood. According to budget documents, “the President is determined to make committed, responsible fatherhood a national priority.” The budget proposes $60 million in FY2002 for grants to “faith-based and community organizations that help unemployed or low-income fathers and their families avoid or leave cash welfare, as well as to programs that promote successful parenting and strengthen marriage.”

Additionally, the budget proposal includes $33 million for maternity group homes for teen mothers and their children.

Under the President’s budget, $156 billion over ten years would be allocated to Medicare modernization. In an effort to provide aid to needy Medicare beneficiaries, the President proposes the Immediate Helping Hand (IHH) program. According to budget documents, the IHH would provide funds to states to offer immediate, short-term coverage of prescription drugs to low-income seniors. Prescription drug coverage would be provided to seniors whose incomes are at or below 135 percent of the poverty line with no premium or co-payments. Partial coverage would be offered to seniors whose incomes are between 135 and 175 percent of the poverty line. The program also would provide catastrophic coverage for all seniors, regardless of income, whose out-of-pocket prescription drug costs exceed $6,000 per year.

Department of Housing and Urban Development: The President’s budget would increase funding for the Housing Opportunities for People With AIDS (HOPWA) program. The increase would support the expansion of eligible areas according to the Center for Disease Control and Prevention’s projections of AIDS cases.

Department of Justice: Under the proposed budget, funds for local grant assistance programs would be reallocated to fund other federal law enforcement priorities, such as the Violence Against Women Act.

Department of State: Funding for the U.S. Agency for International Development’s activities to combat global HIV/AIDS and to improve primary education in Africa would be increased under the President’s budget proposal.

Other Independent Agencies
National Science Foundation: The President’s budget proposed $200 million for a new Math and Science Partnership initiative to provide funding for states to work with institutions to strengthen math and science education in grades K-12.

Equal Employment Opportunity Commission (EEOC): Under the budget, the EEOC would receive $310 million, a $7 million increase over FY2001.

Legal Services Corporation (LSC): The LSC would be level-funded at $329 million under the President’s budget.

Other Major Initiatives
Debt Reduction: The President’s budget proposes to pay down the debt by $2 trillion over the next ten years.

Faith-Based Initiatives: Building on an executive order issued earlier this year, the budget proposes a number of initiatives to involve faith-based organizations, charities, and community groups in the delivery of services. According to budget documents, these initiatives include the creation of a Compassion Capital Fund to invest in charitable best practices; opening federal after-school programs to community groups, churches, and charities; the creation of a new pilot program for inmates nearing release; allowing faith-based and community groups to receive grants to aid the children of inmates; ensuring that faith-based and other non-medical programs have access to federal funding for drug treatment programs; establishing second chance homes for unwed teenage mothers; promoting responsible fatherhood; increasing the adoption tax credit from $5,000 to $7,500 and making it permanent; and expanding an effort to help low-income families avoid homelessness.

Social Security: In an effort to reform and modernize Social Security, the President’s budget proposes voluntary personal retirement accounts.

Tax Cuts: The budget also proposed a $1.6 trillion tax cut. This would be accomplished by changing the current tax rate structure. Currently individuals are taxed at rates of 15, 28, 31, 36, and 39.6 percent. The new structure would tax individuals at rates of 10, 15, 25, and 33 percent. Additionally, under the President’s plan, the child tax credit would be doubled from $500 to $1,000.

The budget also proposed to reduce the marriage tax penalty by allowing the lower-earning spouse to deduct 10 percent of the first $30,000 of income—up to $3,000. The President also proposed to eliminate the estate tax.

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