The budget of the U.S. government, the federal budget, directs how some $3 trillion will be spent and raised through taxes and fees. This is about one-fifth of the $15 trillion U.S. gross domestic product (GDP). How this money is spent – on what? – and how the taxes and fees are raised – who pays? – say a lot about our country. The federal budget is a concrete manifestation of our nation's priorities and values, and clearly reveals what the nation thinks is important. As people of faith living in a democracy we are obligated to learn about these budget choices, formulate our opinions about them, and make our views known. (We do provide more detailed information about the federal budget process.) We are called to speak out and express our values so that they, too, can be reflected in the federal budget. 

President George W. Bush has submitted his federal budget proposal for the fiscal year 2009 (October 2008 – September 2009). Its most important features are:

• big tax cuts that favor the wealthy,

• increased spending on the military and security,

• cuts in programs that provide everything from education to training for displaced workers and energy assistance for low-income households,

• large increases in the deficit and national debt.

Tax Cuts

In 2001 and 2003, under the urging of President Bush, Congress passed a series of tax cuts. These reduced taxes on personal income, estates, stock dividends, and capital gains. (Capital gains are the profits earned from the sale of stock, real estate – one’s principal residence is largely excluded from this tax – and other assets.) Nearly all these cuts are scheduled to expire by the end of 2010. However if the cuts made permanent, as Bush proposes, federal revenues will decline by some $2.4 trillion over the next ten years.[1] Over the next 75 years, the losses will be roughly three times the amount needed to fully fund Social Security for that period.[2] Most of the tax savings will flow to the wealthiest Americans. Tax Cut Benefits. For example, the one-fifth of households with the lowest incomes will receive an average tax cut of $45. Households with incomes over $1 million will average $162,000.[3]  

Increased Military Spending

Bush proposes record amounts of military spending next year, even thought his request for the wars in Iraq and Afghanistan – just $70 billion – is considered by experts to be far too little. By comparison, supplemental spending for the Iraq and Afghanistan wars will be about $200 billion this year. Bush budget projections beyond 2009 show no expenditures for these wars. Proposed funding for the Department of Defense, apart from Iraq and Afghanistan, is up 7.5% compared with 2008.[4] Total spending in support of military activities is one-quarter of the federal budget, over $750 billion. (Other organizations using more inclusive accounting measures find over half the federal budget is devoted to military spending.)  Spending for the Department of Defense, veterans’ affairs (excluding veterans’ pensions), atomic weapons, homeland security, and international security comprises nearly two-thirds of all discretionary spending. For more information see our page on military spending.

Cuts in Needed Programs

Bush proposes cuts in 151 non-military, domestic discretionary programs outside of homeland security. Domestic discretionary programs are core government functions including environmental protections; education; the federal courts, prisons, and law enforcement; agriculture; energy programs; poverty reduction; public health and safety; roads; and bridges. Adjusted for inflation, spending on these programs in 2009 would fall by about $20 billion compared with 2008. These cuts come on top of previous reductions during the last seven years of the Bush Administration. For more details on these program cuts see our page on discretionary spending.

A Rising Deficit

The costs of the massive tax cuts and rise in military spending more that offset the savings derived from cuts in non-military domestic discretionary programs. Therefore the deficit (the shortfall that occurs when annual revenues are less than annual expenditures) is projected to rise markedly. Last year, the 2009 deficit was projected to be $187 billion. The current budget proposal shows the gap to be over twice that amount, $407 billion. The deficit over the next five years is now estimated to be $585 billion, up nearly three-fold from last year’s projection. The five-year deficit balloons up even though Bush assumes there will be no spending for the wars in Iraq and Afghanistan after next year.[5]