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A NOTE TO READERS

Once in a long time, an established publication presents itself in a new format, and the occasion requires an explanation to readers grown accustomed to the old form. The President's 2003 Budget represents such a change.

The first differences you may notice are merely presentational, all aimed at enhancing readability. This budget attempts to simplify information, to reduce the use of jargon, and to illustrate its contentions more liberally with charts, tables, and real-life examples. Color and photographs appear for the first time.

But these changes are incidental compared to a fundamental difference in emphasis. The President's Budget for 2003 seeks to inaugurate an era of accountability in the conduct of the nation's public business. It takes the first step toward reporting to taxpayers on the relative effectiveness of the thousands of purposes on which their money is spent. It commences the overdue process of seriously linking program performance to future spending levels. It asks not merely "How much?"; it endeavors to explain "How well?”

These changes have been called for by good government advocates for decades. A 1949 commission headed by the 31st President, Herbert Hoover, first introduced the term "performance-based budgeting." Subsequent Presidents launched efforts to get better results from government. During the 1990s, the Congress passed several statutes aimed at enhancing government's attention to performance. The Government Performance and Results Act (GPRA) in 1993 directed the executive branch to undertake the measurement of effectiveness and to reflect the answers in budget choices. As Senator John Glenn said several years later, "The ultimate goal of GPRA is to use program performance information to guide resource allocation decisions. I repeat that. Use program performance information to guide resource allocation decisions. That is the important connect."

In an initial and admittedly exploratory way, this document responds to these longstanding demands, proposing to reinforce provably strong programs, and to redirect funds in many cases from programs that demonstrably fail, or cannot offer evidence of success.

Real scrutiny of results and real accountability in government were long overdue, in any case. But they are absolutely essential at a time when national security requirements mandate significant new spending. Defeating international terrorism and defending Americans in our homeland are imperative duties of the federal government, above and beyond all its other activities. We must provide for these increases and fund other necessary programs without letting total spending rise unacceptably. We must demand proof of value from programs of lesser priority.

The information on which program ratings are based is far from perfect, and some conclusions may prove erroneous over time. The Administration invites a spirited discussion and welcomes additional data, as well as suggestions about how to measure performance better throughout the federal government.

Bringing accountability to government goes beyond performance-based budgeting. President Bush has ordered that his appointees take responsibility for improving the day-to-day management of the government with which they are entrusted.

To that end, the President directed the creation of a reform agenda, aimed at attacking the worst shortcomings of the government he inherited. This budget includes the first agency report cards, assessing the starting point of each department in these problem areas. Reports on the progress of each agency in improving from these baselines will be provided regularly to the President and to the public.

Finally, the 2003 Budget parts ways with Washington's six year experiment with 10 year forecasting. Previous budgets' attempts to look out a decade in the future have varied wildly from year to year. But 2001 showed finally how unreliable and ultimately futile such estimates are.

The economic slowdown was already well underway, but its severity could not be known when the last budget was transmitted. The tragic events of September 11th ensured that the downturn became a recession, and added the inescapable new spending requirements of a two-front war. Unemployment rolls at home rose at the same time that long-neglected military needs required attention to begin what will be an ongoing campaign against terror.

Revised economics alone knocked 30 percent from the hoped-for 10 year surplus. Recognizing the uncertainty of long-term projections, the Administration in its 2002 Budget had set aside $1 trillion, or 18 percent, of the estimated surplus as a contingency reserve, but even this precaution was not enough to cover the drop in forecasted revenue caused by the poor economy.

For continuity purposes, the 2003 Budget updates 10 year estimates at the overall level, but puts the appropriate focus on five year figures. Beginning with this budget, agency totals and supporting details are projected for the five years that the law requires.

Taken together, the above changes produce a very different sort of budget, one the Administration hopes will inform its readers in new ways, while broadening the healthy debate that always attends this document. Going forward, let the question we debate be not just "What will the federal government spend?" but also "What will the federal government achieve?"

BUDGET HIGHLIGHTS

A Budget to Fight War and Recession:

• Places highest priority on war against terrorism overseas and at home;

• Incorporates the bipartisan approach to economic stimulus that assists
unemployed workers and fosters job creation;

• Reforms the budget to focus on results instead of dollars spent; and

• Funds high-priority initiatives while moderating growth in the rest of government.

Protecting the Homeland

• Equips and trains first responders (firefighting, law enforcement, emergency medical personnel) to respond to potential future threats ($3.5 billion in grants).

• Counters the threat of bioterrorism with enhancements in hospitals and other public health systems ($1.2 billion), research and development ($2.4 billion), pharmaceutical and vaccine stockpile ($400 million), and a national information network for better detection of biological attacks, as well as natural disease outbreaks ($392 million).

• Secures our borders through improved tracking of the entry and exit of non-U.S. citizens (+$350 million), more than doubles the number of Border Patrol agents on the northern border, and enhances Customs Service and Coast Guard operations and equipment.

• Meets aviation security requirements by continuing the renewed commitment to federal air marshals, hiring 30,000 new federal airport security workers, and installing explosive detection equipment ($4.8 billion).

Winning the War on Terrorism Abroad

• Supports 250,000 forward-deployed troops and the 1.1 million here at home with a total defense budget of $369 billion (a 12 percent increase), plus $10 billion more if the war against terrorism requires it.

• Meets new threats by making investments in transformational activities such as unmanned combat aerial vehicles ($146 million), precision munitions ($1.2 billion), and intelligence enhancements.

• Aids countries fighting terrorism abroad ($3.5 billion), expands anti-terrorism and security training for other countries ($121 million), and expands efforts to diminish the threat of the proliferation of nuclear and biological weapons ($1.5 billion).

Returning to Economic Vitality

• Re-proposes a bipartisan approach to economic stimulus that assists unemployed workers and provides tax incentives to boost economic growth.

• Moderates the growth of discretionary spending, excluding national and homeland security requirements, to two percent.

• Balances the budget by 2005 without endangering the war against terrorism and homeland security efforts and without raising taxes.

Governing with Accountability

• Incorporates the President's five management reforms into agencies' budgets and plans: strategic management of human capital, competitive sourcing, E-Government, financial management, and budget and performance integration.

• Includes a Management Scorecard to measure progress on these five management reforms. • Shifts the budget's focus from how much is being spent to what is being accomplished.

• Begins integration of performance measures in the budget process, rates programs based on their effectiveness, and shifts resources to more effective programs.

• Incorporates the President's Freedom to Manage Initiative and seeks reprogramming and reorganization authority to better align programs and resources.

Funds Other Priority Initiatives while Moderating the Growth in Spending

• Education. Funds the No Child Left Behind Act, including $1 billion for the Reading First Initiative and a $1 billion increase to help low-income students meet new reading and math standards. Also funds a historically high level of funding for special education ($8.5 billion).

• National Institutes of Health (NIH). Meets commitment to double funding from 1998 levels, proposing $27.3 billion in 2003.

• Community Health Centers. Funds 1,200 new or expanded sites to serve an additional 6.1 million patients by 2006.

• Medicare Prescription Drugs. Provides a prescription drug benefit in a modernized Medicare program, and takes immediate steps to begin improving Medicare benefits, including assistance with prescription drug costs and better coverage options for seniors (+$190 billion over 10 years).

• Health Insurance. Initiates a refundable tax credit to subsidize up to 90 percent of the cost for low and middle income Americans who do not have employer coverage ($89 billion over 10 years).

• Breast and Cervical Cancer Screening. Includes a $9 million increase for the Center for Disease Control and Prevention's breast and cervical cancer program to expand screening services for low-income women.

• Compassion. Funds the President's Compassion and Faith-Based Initiatives ($6 billion annually when fully phased-in of new charitable giving tax credits, $100 million for the Compassion Capital Fund, $10 million for Maternity Group Homes, $25 million for Mentoring Children of Prisoners, and $20 million for a Responsible Fatherhood Initiative).

• WIC. Serves 7.8 million women and children through the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) program ($4.8 billion in 2003).

• Food Stamps. Restores eligibility for many legal immigrants.

• Low-income weatherization. Assists an additional 18,000 low-income families ($277 million in 2003-a 20 percent increase).

• Job Corps. Supports 122 residential training centers ($1.5 billion in 2003).

• Housing. Includes a new tax credit for low and middle income Americans for up to 50 percent of the cost of constructing a new home or rehabilitating an existing home.

• USA Freedom Corps. Funds the President's new USA Freedom Corps Initiative.

• Stewardship. Fully funds the Land and Water Conservation Fund (over $900 million) and maintains commitment to eliminate the National Park Service maintenance backlog by 2006. Provides record high funding for National Wildlife Refuges (+$54 million).

• Environmental Protection. Provides record funding levels for the Environmental Protection Agency's operating budget and its state program grants.

• Science and Technology. Provides a record high request for science and technology efforts at $57 billion (a nine percent increase).

Agriculture. Funds a farm bill that will provide a solid safety net for all farmers and ranchers, expand markets abroad, and increase resource conservation to enhance our environment (+$73.5 billion over 10 years).

• Energy. To reduce dependence on imported oil, funds a new Freedom CAR and a new Coal Research Initiative and proposes $9.1 billion in tax incentives over 10 years to develop alternative technologies, including renewable electricity generation, residential solar energy systems, and hybrid and fuel cell vehicles.

• International Drug Control. To destroy the crops and labs that produce cocaine at its sources, funds the Andean Counterdrug Initiative ($731 million).

• Drug Treatment. Supports 52,000 additional drug abuse treatment slots.

• Election Reform. In line with the recommendations made by former Presidents Carter and Ford, provides $1.2 billion over three years to assist states with the acquisition of new voting machines, voter education, and poll worker training.

• Tax-Filing. Improves the convenience and eliminates the cost of electronic filing for citizens with simple tax forms.

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