Revised June 1, 2004


by David Kamin, Richard Kogan and Robert Greenstein

PDF of report

Related Reports:
Administration's Budget Would Cut Heavily Into Many Areas Of Domestic Discretionary Spending After 2005

President's Budget Contains Larger Cuts In Domestic Discretionary Programs than Has Been Reported

OMB and CBO Computer Printouts

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Last week the Washington Post reported that the White House Office of Management and Budget has sent a memorandum to federal departments and agencies directing most of them to include widespread funding cuts in the fiscal year 2006 budgets that they submit to OMB this summer.  The memo directs agency heads to adhere to the funding levels for fiscal year 2006 that are contained in an OMB budget document issued in February, in conjunction with the President’s budget.  The budget document, which includes proposed funding levels for every budget account in the government for each year from 2005 through 2009, proposes cuts in nearly every domestic non-entitlement program in the federal budget in 2006 and subsequent years, except for homeland security programs.  The new OMB memorandum instructs agency heads that if they wish to request higher funding for any budget account in 2006 than the February OMB budget document includes, they must offset the additional funding with still deeper cuts in other programs in their agencies.

In the past few days, the White House has tried to deny these budget cuts are being planned and to dismiss the significance of both the new OMB memo to agency heads and the February OMB budget document.  The White House has claimed that the reduced funding levels for 2006 and subsequent years that are contained in the President’s budget have no meaning, are purely “formulaic,” and are no way an indication that the Administration is seeking these budget cuts.

These protestations are disingenuous.  They continue a pattern that began in February of the Administration seeking to disavow funding cuts contained in its budget for years after 2005.  The evidence is now abundant that funding cuts of this magnitude are what the Administration is seeking.

If these policies are adopted, the result will be significant budget cuts throughout the federal government, including cuts in some of the very programs the Administration has been claiming credit for proposing to increase in 2005.

The Administration is pushing these funding cuts alongside its proposals to make permanent the extension of costly tax cuts that disproportionately benefit high-income Americans and to erect additional tax cuts beyond the extensions.  Analysis by the Urban Institute-Brookings Tax Policy Center shows that tax cuts already enacted will deliver an average income tax reduction of $109,000 in 2006 to people with annual incomes of more than $1 million.  These “millionaires” by themselves are slated to receive a total of $32 billion in income tax cuts in 2006.  This $32 billion revenue loss substantially exceeds the $21 billion in savings the Administration seeks to secure in 2006 by cutting most domestic discretionary programs outside homeland security.

End Note:

[1] The overall figures cited here compare CBO’s estimate of the Administration’s funding levels with CBO’s “baseline,” which is the 2004 level adjusted for inflation.  Both we and CBO represent funding for highway and mass transit programs by the requested “obligation levels.”  We also use expenditure comparisons rather than budget authority figures to judge the size of the cuts in the housing voucher program.