Dateline: May 10, 2001

With today's 53-47 approval in the Senate, the U.S. Congress has approved a compromise federal budget plan for fiscal year 2002 that includes most of the tax cuts proposed by President Bush while limiting government spending in several areas.

Approved 221-207 by the House yesterday, H. Con. Res. 83 -- the conference committee report on the $1.97 trillion fiscal 2002 budget plan offers $1.35 trillion in tax cuts over 11 years and caps spending increases for most federal programs at five-percent.

President Bush, who had originally proposed a $1.6 trillion tax cut and a four-percent spending increase limit, stated that he supports the compromise agreement approved today by the House.

Designed to boost the economy, the compromise tax cut plan calls for an immediate $100 billion in cuts or refunds this year and in 2002, with an additional $1.25 trillion in tax cuts offered in phases through 2011.

The phased-in tax cuts will come from reductions in income tax rates, reductions or repeal of the marriage tax penalty and estate taxes, and doubling the child tax credit. Bills providing for these cuts have already been approved by the House.

On the spending side
The compromise budget plan for fiscal 2002 calls for spending of about $667 billion for education, health care and similar discretionary programs requiring the annual approval of Congress and the president. The majority of the total $1.97 trillion budget will be spent on automatically approved programs like Social Security, veterans' benefits and interest payments on the national debt.

The approved spending of $667 billion is about $6 billion more than originally recommended by President Bush, but much less than the figure represented by the eight-percent spending increase proposed by the Congressional Democratic leadership.

Some $300 billion is allocated for improvements to the Medicare program and prescription drug benefits over the next 10 years, a significant increase over the $153 billion proposed by President Bush.

But wait, there's more
The budget resolution does not yet include funding requests from the Department of Defense. 

On Tuesday (May 1, 2001), President Bush called for continued development of the multibillion-dollar national missile defense program. Expenditures for missile defense development along with other anticipated Pentagon requests make it unlikely that Congress will be able to stay within the $1.97 trillion set by the budget resolution.

The budget resolution is not the final budget. It serves only as a set of guidelines to be used by Congress in creating the appropriations bills passed in the final phase of the federal budget process -- set by law to be concluded by Oct. 1, 2001.