nearly 57% versus a static estimate, which could result in a substantially smaller impact on the deficit over the period. Enforcing Budget Discipline Expiration of the Budget Enforcement Act on September 30, 2002, and the Senate's failure to pass a budget resolution last year, left little means to control federal spending. A temporary extension of the 60-vote requirement for Budget Act points of order and the pay-as-you-go point of order will expire on April 15, 2003. The Committee-reported resolution restores and strengthens budget discipline by establishing enforceable caps on discretionary spending for 2003, 2004, and 2005. The spending caps are set at levels consistent with the President's request, and are enforced with a 60-vote point of order. The Committee-reported resolution reinstates a 60-vote point of order against advance appropriations exceeding levels provided in 2001 and 2002, and reinforces the existing 60-vote point of order against non-defense emergency appropriations. The Committee-reported resolution also extends the pay-as-yougo point of order to limit any mandatory spending increases or revenue decreases in excess of those provided for in the budget resolution. Winning the War on Terrorism The Committee-reported resolution provides a $400.1 billion defense budget for 2004 that will enable our military to continue waging an aggressive and global war on terrorism. The Committee-reported resolution does not include any assumption for military costs associated with disarming Iraq, since the President has not yet requested such resources. Strengthening and Improving Medicare The Committee-reported resolution proposes to invest $400 billion over 10 years to strengthen, improve, and modernize Medicare including access to a prescription drug benefit, enhanced benefits for medical care, catastrophic coverage and assistance to low-income beneficiaries. Leaving No Child Behind The Committee-reported resolution provides $12.684 billion for Title 1 Grants to Local Education Agencies (a $1 billion increase or 8.6 percent). The Committee-reported resolution also provides for $10.077 billion for Special Education Grants to States (a $1.205 billion increase or 13.6 percent) which takes total funding for this program to 20 percent of average per pupil expenditures. Rejecting Tax Increases The Committee-reported resolution assumes that the major components of the bipartisan tax relief enacted in 2001 are not allowed to expire in 2010, as the Congressional Budget Office is required to assume under budget baseline rules. The Committee notes that if Congress allowed these tax cuts to expire, American taxpayers would face a $134 billion tax increase in 2011 and would pay $602 billion in higher taxes by 2013. The Congressional Budget Office has estimated that allowing these tax cuts to expire would also lower GDP by about half a percent by 2013. Providing for Other Priorities Homeland Security: The Committee-reported resolution provides the full amount of the President's request for homeland security spending to secure the nation's borders, train and equip first responders, protect critical infrastructure, guard against bio-terrorism, and improve intelligence analysis and coordination. Funding for the new Department of Homeland Security would grow from $21.3 billion in 2003 to $27.1 billion in 2004, an increase of 27.5 percent. Uninsured: The Committee-reported resolution proposes to modernize Medicaid by giving states choice and flexibility, incentivizing them to revolutionize health care for the poor as they have with welfare and children's health insurance. The Committee-reported resolution also provides $50 billion in a reserve fund for proposals to make health insurance more affordable and accessible to uninsured Americans. AIDS Relief: The Committee-reported resolution provides $450 million in 2004, and an additional $22 billion over 10 years, to slow the global spread of HIV/AIDS and deliver treatment to millions of infected people in developing countries. Veterans: The Committee-reported resolution provides $30 billion in discretionary spending for veterans benefits and services in 2004, a $3.4 billion increase or 12.9 percent over 2003. HOMELAND SECURITY FUNDING It is likely that one area of focus for policymakers in the budget and appropriations process this year will center on the question of the appropriate level of funding for homeland security. Many will want to make comparisons of the levels of resources dedicated to such activities across the budget and over time. Such comparisons will be difficult to make because of the newness of the activities and resulting data limitations. This section provides a context for thinking about these issues and provides a framework for data comparisons. History of Tracking Homeland Security Funding Even before September 11, 2001, the Office of Management and Budget (OMB) had been informing the Congress on the levels of funding provided to combat terrorism, both at home and abroad. Pursuant to Section 1051 of the Fiscal Year 1998 National Defense Authorization Act (P.L. 105–85), OMB has been required for the past four years to submit an Annual Report to Congress on Combating Terrorism. Collecting reliable and consistent data for this report has been a challenge for OMB because, historically, agencies did not report activities to combat terrorism as distinct from other programs. Instead, such funding was embedded in larger "host" programs in agency budget requests. Following the terrorist attacks, the 2002 Annual Report to Congress on Combating Terrorism, as well as the President's 2003 Budget, began to highlight homeland security activities as a subset of U.S. efforts to combat terrorism worldwide, defining them as those activities that occur within the United States and its territories. According to the definition in both the report and the budget, such activities include efforts to detect, deter, protect against and, if needed, respond to terrorist attacks. Since this definition of homeland security focused on activities within the United States, the costs associated with fighting terrorism overseas were included in a separate category. In addition, in a departure from past practice, OMB began to include funding associated with border and aviation security in its definition of the homeland security portion of funds to combat terrorism. The President's 2004 Budget and Homeland Security Funding After the creation of the Department of Homeland Security by the Homeland Security Act of 2002 (P.L. 107–296), and in light of increased focus on homeland security activities and funding, OMB realized that it needed to define and to distinguish the funding for homeland security activities from the funding for all other activities in the budget. Defining such funding in budget accounts would not only allow funding for the Department of Homeland Security to be differentiated between its homeland and non-homeland security components, but would also allow OMB to track the myriad of homeland security activities that are not contained within the Department of Homeland Security. OMB developed its work on this tracking capability as part of the President's 2004 Budget request, but has not officially presented the details of this effort to Congress. Below is a table detailing how the President's 2004 Budget has defined net (including offsetting collections) homeland security budget authority (BA) for the actuals for 2002, for the enacted level for 2003, and for the President's request for 2004. OMB ESTIMATE OF NET HOMELAND SECURITY FUNDING 1 Defense homeland security funding falls in 2004 due to one-time force protection investments in 2003. One common misunderstanding about the homeland security activities in the President's budget is that those activities are exclusively within the purview of the new Department of Homeland Security. Such an assumption is misleading and incorrect. As the above table highlights, two-thirds (or $18.7 billion) of the $28.2 bil lion requested for nondefense homeland security activities in the President's 2004 Budget comes under the Department of Homeland Security. But the other one-third ($9.6 billion) of nondefense homeland security activities is requested for other agencies, chiefly the Department of Health and Human Services (13%), the Department of Justice (8%), and the Department of Energy (5%). Another confusing misperception is that all of the funding for the Department of Homeland Security is for homeland security activities. This is also not correct. In addition to the funding in the Department of Homeland Security that is for homeland security activities, there is also funding in the Department that is NOT for homeland security activities. For example, the President's 2004 budget includes $26.7 billion in net discretionary BA for the Department of Homeland Security. Of that total, only $18.7 billion (as shown on the above table), or 70%, of the funding for the Department in that year is for homeland security activities, whereas the other 30% is for activities that are not defined as homeland security. The Congressional Budget Office and Homeland Security Funding OMB has invested time and effort to develop the tools to distinguish between the funding for homeland security activities and the funding for all other activities in the budget. To date, the Congressional Budget Office (CBO) does not have parallel capabilities. While CBO often follows OMB's lead on matters of how to display items in the budget, OMB did not share the product of its efforts in time for CBO to match the reporting capability in CBO's analysis of the President's 2004 budget. As a result, Congress must currently rely largely on OMB for information about funding for homeland security. In its reestimate of the President's budget and latest baseline, CBO is only able to provide information on funding for the Department of Homeland Security itself. CBO cannot, however, distinguish which funds within the Department of Homeland Security are only for homeland security activities, and CBO cannot identify other homeland security activities that are not in the Department. In the coming months, it is likely that CBO will develop matching tools in order to help Congress define and distinguish the funding for homeland security activities from the funding for all other activities in the budget. Until then, there is a constraint on the information that is available about funding for homeland security activities. The President's 2004 Budget and Funding for the Department of Homeland Security Below is a table detailing CBO's estimate of the total net discretionary funding requested for the Department of Homeland Security for the actuals for 2002, for the enacted level for 2003, and for the President's request for 2004. CBO ESTIMATE OF NET DISCRETIONARY FUNDING FOR THE DEPARTMENT OF HOMELAND SECURITY [Budget authority, dollars in billions] The Committee-reported resolution for 2004 for the Department of Homeland Security assumes the President's request of $27.1 billion in discretionary funds for 2004. CBO's estimate of $27.1 billion for 2004 is more than $400 million larger than OMB's comparable estimate of $26.7 because CBO and OMB have different estimates of the offsetting collections from discretionary airport security fees. CBO and OMB also have more than $700 million in differences in their estimates of the mandatory offsetting collections, largely for immigration and customs fees. Some of the highlights in the Committee-reported resolution for funding for the Department of Homeland Security in 2004 include: Border and Transportation Security Division • The Bureau of Customs and Border Protection consists primarily of Border Patrol officers and inspectors from the Immigration and Naturalization Service (INS), the Customs Service, and the Agriculture Quarantine and Inspection (AQI) program. The main focus of the Bureau is to enforce the laws regarding admission of foreign-born persons into the United States, and to ensure that all goods and persons entering and exiting the United States do so legally. The Committee-reported resolution assumes $5.6 billion in net discretionary funds in 2004 for these activities, an increase of $809 million or 16.9 percent over 2003. The non-homeland security activities in the Bureau include funds for trade services such as trade enhancement, tariffs, and trade efficiency. • The Bureau of Immigration and Customs Enforcement will be made up of investigative and other enforcement personnel from the Customs Service, INS, and the Federal Protective Service. The focus of this Bureau will be the enforcement of immigration and customs laws within the United States, as well as investigation into activities such as fraud, forced labor, trade agreement noncompliance, smuggling and illegal transshipment, and vehicle and cargo theft. Additionally, the Federal Protective Service will provide security at federal buildings. For 2004, the Committee-reported resolution assumes $1.4 billion in discretionary funds, an increase of $316 million or 27.9 percent over 2003. The non-homeland security activities in this Bureau include monies that are mostly for trade investigations. |