The White House Monday unveiled a 2.128 trillion dollar budget proposal for the upcoming fiscal year that maintains a deficit as part of a plan to "fight war and recession."
The budget plan estimates that the US economy will grow at a sluggish rate of 0.7 percent in 2002 and ramp up to 3.8 percent in 2003.
The spending plan by President George W. Bush for the 2003 fiscal year starting October 1 is the first federal budget to top two trillion dollars and is an increase of 3.7 percent from the prior year.
"The budget for 2003 recognizes the new realities confronting our nation, and funds the war against terrorism and the defense of our homeland," Bush said in his budget message.
The budget calls for the biggest military buildup since the Cold War, with a 379 billion dollar defense budget to underwrite a war on terrorism that is now costing 27 billion dollars a year.
The proposed 2003 budget sets aside 27.2 billion dollars to cover the cost of the war next year, including 10 billion dollars for military contingencies.
"The reality is that the United States is now spending about three percent of our gross national product on defense," Defense Secretary Donald Rumsfeld said Sunday. "Back in the Kennedy and Eisenhower period, it was closer to 10 percent. In the Ford period, it was around five percent of our gross national product. Today, it's about three percent. It is certainly a percentage that our country can afford."
In the economic assumptions used for the budget, the White House said it sees inflation at the consumer level at a modest 1.8 percent in 2002, increasing to 2.2 percent next year.
Even though the growth forecasts were more sluggish than predictions by some private economists, the White House warned that its projections are based on congressional passage of an economic stimulus package, which has languished in Congress since last fall.
"If this does not occur, our growth estimates would be overstated" by 0.5 percent, the budget said.
On a fiscal year basis, the White House is forecasting a 106 billion dollar deficit for the current fiscal year ending September 30 and an 80 billion dollar deficit for the 2003 fiscal year starting October 1.
The White House forecast a surplus of 1.0 trillion for the 10-year period between fiscal 2003 and 2012. Last year, the administration forecast a 10-year budget surplus of 3.1 trillion dollars for the period from 2002-2011.
The administration forecast total receipts will rise to 2.05 trillion dollars next year, a 5.2 percent increase from the year earlier.
It also forecasts 3.379 trillion dollars in publicly-held debt for fiscal year 2007, or 25.1 percent of gross domestic product. This is down from 3.477 trillion in fiscal year 2002, or 33.6 percent of GDP.
Bush pledged to keep the deficits short-lived.
"If we make the right choices by stimulating growth and controlling spending, deficits will be small and temporary," the budget said, adding that the budget projects a return to balance by fiscal 2005.
While Bush's budget emphasized the needs of the wartime footing, his proposals are likely to face tough sledding in Congress because of cuts or small increases in domestic programs. He is also likely facing criticism for failing to keep the surpluses of prior years, with some blaming the massive 1.3 trillion dollar, 11-year tax cut he pressed.
The budget proposal is the first step in a long process of getting a budget enacted by October 1, the first day of the fiscal year 2003. It is a blueprint for spending that can be modified in the 13 spending bills that must be approved by Congress.
(China Daily Februray 5, 2002)
