Dateline: 02/04/02

Addressing America's "new realities" since the Sept. 11 attacks President Bush sent to Congress a $2.1 trillion 2003 Budget Proposal including $379 billion for defense spending and promising to return the word "deficit" to the federal spending lexicon. 

If approved as-is by Congress, the 2003 will result in the first federal deficit in the last five years and, at least temporarily, put the president's plans to reduce the national debt on hold. The White House Office of Management and Budget projects a $106 billion deficit for 2002, $80 billion in 2003 and $14 billion in 2004, with a balanced budget returning by 2005. In addition, OMB projects the national debt will increase to $3.6 trillion before starting to shrink again in 2005.

Calling it "a plan to fight a war we did not seek, but a war we are determined to win," President Bush' Budget Proposal to Congress includes funding increases for the war on terrorism, homeland defense and economic recovery.

Here are some of the highlights from the 2003 Budget Proposal:

Military Spending and Homeland Defense
To support the war on terrorism, military spending would increase by 12 percent to $379 billion. The administration has stated that annual military spending may reach $451 billion by 2007. A few of the detailed expenditures include: 

• $70 billion for development of new weapons systems
• $1.1 billion to convert existing free-fall bombs into laser-guided "smart bombs"
• $7.8 billion for research, development, testing, including the development of a minimal missile defense system in Alaska by 2004.
• $1 billion for development of improved pilotless spy aircraft
• $11.2 billion for continued development of advanced tactical jet aircraft
• $1 billion to correct problems with the crash-plagued Marine V-22 Osprey helicopter/airplane system
• $8.6 billion for construction of five new ships, including two destroyers and one nuclear submarine
• $920 million for improvements to the Defense Department's satellite communications system
• Additional raises for military personnel

Spending for homeland defense would increase by 111 percent to $37.7 billion with major expenditures including $5.9 billion to combat bioterrorism and $10.6 billion for increased border security.

Economic Recovery
The Bush administration's fight to stimulate the economy will require the help of Congress, where Bush hopes to win approval of an additional $344 billion to extend last year's $1.3 billion, 10-year tax cut package through 2012.

Addressing members of Congress who contend that the economy has improved and would continue to recover by itself, the president's Budget Proposal warns, "By taking action to reinvigorate growth in both the short-and long-term, we can thwart the terrorists' efforts to undermine our economy and our well-being ... The recent recovery of business and consumer confidence is still fragile and could be shattered by any adverse shocks."

Some other features of the proposed economic stimulus program include:

• An additional $510 billion in tax cuts over the next 10 years
• Leasing petroleum exploration and drilling rights in Alaska's National Arctic Wildlife Preserve
• A $190 billion, 10-year program to modernize Medicare and provide a prescription drug benefit for senior citizens

Budget Cuts and Cutbacks
To help balance the costs, the president's budget cuts funding for may discretionary government programs.

• Cutbacks in the budgets of the Forest Service, EPA and Corps of Engineers
• $9 billion cut from highway construction and renovation programs
• Increases of only about 9 percent for non-discretionary programs like Social Security and Medicare benefits

Next Step in the Process
The House and Senate must now consider the president's Budget Proposal, amending it as they see fit in order to pass a final unified Budget Resolution. The Budget Resolution will then serve as the guideline lawmakers will refer to as they consider the 13 appropriations, or spending bills that make up the actual annual federal budget. Under the Congressional Budget and Impoundment Control Act of 1974, Congress should complete the Budget Resolution by April 15. [See: Federal Budget Timeline]