Setting the Wrong Priorities: An Analysis of the President's 2007 Budget

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Executive Summary

President Bush's 2007 budget sets the wrong priorities for the nation. The federal budget is a concrete embodiment of policy choices, and the budget that the president has put forward runs counter to many of our nation's longest and deepest held beliefs.

The report below analyzes many provisions in the president's budget proposal. Some of the findings include:

• The budget proposes to continue the downward spiral from record surpluses to massive deficits. In 2000, the federal government was running a surplus of 2.4 percent of GDP, or $236 billion. In just a few short years, deficits have returned, and for 2006 deficits are estimated to be 3.2 percent of GDP, or about $423 billion, according to the president's budget.
• The president proposes to reduce Medicare funding by $36 billion through provider payment cuts and through increasing premium payments for some higher-income Medicare beneficiaries. The budget also calls for further reductions in Medicaid funding.

• The budget proposes to cut $276 million from the Centers for Disease Control and Prevention budget, eliminating the $99 million block grant for preventive health and health services and cutting $34 million in funds for health promotion.
• The president's budget proposes a 3.8 percent cut in the Department of Education's fiscal year 2007 budget. While the president has proposed several new education initiatives, they are more than offset by the underfunding of No Child Left Behind and other important programs.
• The president's budget proposes to cut funding for science and technology by approximately $600 million; to cut funding for the Environmental Protection Agency by more than $300 million; and to short-change renewable energy funding.
• The Bush administration proposes "on-budget" national security funding of at least $541.5 billion for fiscal year 2007, a substantial increase over the estimated $521 billion for fiscal year 2006.
• The president has requested an 11 percent increase in the International Affairs budget, a long overdue recognition of the importance of diplomacy, democracy and development to building a more safe and prosperous world. Yet the budget also underfunds African Union peacekeeping.
• The net increase in funding for non-defense homeland security programs (excluding some TSA fees), is a modest 3.3 percent, and much of the funding should be reallocated to more effective programs.
• The budget also proposes a number of tax changes that would reduce revenue by $1.7 trillion over the next 10 years. Extending the tax cuts from 2001-2004, including those that overwhelmingly benefit people at the top of the income distribution, represents the majority of these changes.
• The overall outlook would be significantly worse if necessary changes were made to the Alternative Minimum Tax and if additional spending for Iraq were included in the final projections.

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