Best budget in a decade

President Bush's first budget is impressive, reasonable, and utterly unsurprising - in other words, exactly what you would expect from listening to the compassionate-conservative themes of his campaign.

If he were the right-wing ideologue many critics claim, he would have slashed spending at departments like Education and Housing and Urban Development. Instead, those are the departments that get the two biggest percentage increases. He hikes the Pentagon's budget modestly, and he becomes the first president in memory to propose cutting "corporate welfare" programs, including the Export-Import Bank and shipbuilding and auto subsidies.

As a fiscal conservative, Mr. Bush proposes reducing the debt owed by the government to the public by $2 trillion over 10 years - essentially retiring all the federal bonds that can be retired. Of the remaining $3.6 trillion in projected surpluses, he wants to use about half to reduce taxes and a big chunk ($153 billion) of the rest to establish a prescription-drug benefit for Medicare. The budget meets another campaign promise: guaranteeing the benefits of current Social Security beneficiaries (all 46 million of them), while reforming the program.

For fiscal 2002 (which begins Oct. 1, 2001), Bush wants the federal government to spend just under $2 trillion - an increase of $104 billion, or 5.6 percent, over the current year. Those are big numbers, not easy to grasp. But think of them this way: With 100 million households in the United States, federal spending comes to $20,000 per family - an increase of about $1,000 over spending during the current fiscal year.

As president, Bush tells Congress how he wants to divide up the money, but the legislators draw up the laws that direct the spending. The majority of spending is "mandatory" - that is, determined by strict rules laid out in laws passed long ago. This includes Social Security, Medicare, and farm programs. The rest is "discretionary" - or adjustable year to year. Total discretionary spending per family is about $6,600, of which $3,100 goes for defense. The most impressive part of the Bush budget is that it holds this discretionary spending to an increase of 4 percent (or $250 per family) - compared with increases averaging more than 6 percent for the past three years. He manages that increase by raising some programs and lowering others. The budget puts his political and philosophical priorities on display.

Three of the four departments getting the largest increases can be characterized as "social" - in the past, the darlings of Democrats, not Republicans. The Education Department gets the biggest hike, 11.5 percent. The budget at HUD would rise 6.7 percent; and at Health and Human Services, 5.2 percent, thanks mainly to a record $2.8 billion increase in spending at the National Institutes of Health, which searches for cures to diseases.

Bush also provides full funding for such programs as WIC, which serves the nutritional needs of 7.3 million women, infants, and children a month, and the Land and Water Conservation Fund (at $900 million). He triples funding for the Reading First Initiative ($975 million), doubles the number of people served under the Community and Migrant Health Centers program, offers $24 billion over five years for the health of underinsured kids and $46 billion for drugs for vulnerable seniors.

Yes, many programs beloved by Democrats are being trimmed - no surprise, since Republicans control the White House and Congress. Spending to save the world's tropical forests has been cut from $100 million to $13 million, and the Wetlands Reserve program of the Agriculture Department is zeroed out. Still, the Environmental Protection Agency's spending would be $56 million higher than President Clinton's last budget request. Bush's budget director, Mitch Daniels, said he tried to reduce or eliminate programs that weren't working and transfer funds to those that were. In keeping with the administration's style, the overall changes - other than the double-digit increase for education - have been modest.

Take the Pentagon. While details for the military budget won't be completed until next month, the president's outline calls for significant increases in military pay and benefits, as he promised during the campaign, but a $3 billion cut in weapons purchases. Overall, the military budget rises 4.8 percent. Meanwhile, the international-affairs part of the budget gets a 5.5 percent hike.

Making this sensible budget a reality won't be easy for Bush. After a drought of nearly a decade, the tide of spending has been rising - and the reason is not hard to fathom. Thanks to a flood of tax revenues into Washington, politicians at last have money to spend. In Clinton's last budget year, spending rose an incredible 8.6 percent - or about six percentage points more than inflation.

By setting aside half the surplus for Social Security and most of the remainder for debt retirement and tax cuts, Bush leaves little for wasteful spending. That's a smart move. Economically and politically savvy, moderate and compassionate, this is the best budget to be delivered to Capitol Hill in at least a decade.

James K. Glassman is a fellow at the American Enterprise Institute, host of www.TechCentralStation.com, and chairman of Progress for America, a group that advocates tax cuts and education reform.

(c) Copyright 2001. The Christian Science Monitor

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