Bush slashes funds for key programs; the growing budget crunch may squeeze the middle class and business owners.As the fight over the federal budget intensifies, policy analysts forecast that deficits and spending trends will force the White House and Congress to make hard fiscal decisions that may hurt a broad swath of Americans--from emerging entrepreneurs to working families. The budget crunch is coming down hardest on discretionary domestic programs that many middle-class African Americans African American Multiculture A person having origins in any of the black racial groups of Africa. See Race. depend on such as small business development, Pell Grants The Pell Grant program is a type of post-secondary, educational federal grant program sponsored by the U.S. Department of Education. It is named after U.S. Senator Claiborne Pell and originally known as the the Basic Educational Opportunity Grant program. for college students, and job training, remarks Thomas Boston Thomas Boston (March 17, 1676 - May 20, 1732), was a Scottish church leader. He was born at Duns. His father, John Boston, and his mother, Alison Trotter, were both Covenanters. He was educated at Edinburgh, and licensed in 1697 by the presbytery of Chirnside. , professor of economics at the Georgia Institute of Technology Georgia Institute of Technology, in Atlanta, Ga.; coeducational; state supported; chartered 1885, opened 1888. It is a member school in the university system of Georgia. Significant among its facilities and programs are the Frank H. and member of the BLACK ENTERPRISE Board of Economists. "Spending for the war in Iraq, interest on the federal debt, and the huge trade deficit will combine to create upward pressure on interest rates that will be felt in middle-class households and small businesses that have to make loans above prime," says Boston. Richard Kogan, a senior fellow at the Center on Budget and Policy Priorities The Center on Budget and Policy Priorities (CBPP) is a non-profit think tank which describes itself as a "policy organization ... working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals. , a nonpartisan Washington, D.C.-based policy research institution, sees President George W. Bush's plan to make massive tax cuts that largely benefited the wealthy as a big contributor to the growing budget crunch and the steady flow of budgetary red ink red ink Health administration A popular term for financial losses. Cf in the Black. Despite an initial budget surplus, the administration ran a string of deficits in Bush's first term totaling nearly a trillion dollars, from $158 billion in fiscal year 2002, to $375 billion in '03, and $412 billion in '04. The net interest on the national debt at $160 billion, or 7% of federal spending, was relatively low in '04. However, by fiscal year 2014, Uncle Sam Uncle Sam, name used to designate the U.S. government. The term arose in the War of 1812 and seems at first to have been used derisively by those opposed to the war. Possibly it was an expansion of the letters "U.S. will be paying an estimated $441 billion in interest, or 11.5% of all spending. As fighting in Iraq continues, spending for national security is likely to rise beyond the $482 billion in '04, now one-fifth of the budget. The nonpartisan Congressional Budget Office The Congressional Budget Office (CBO) is responsible for economic forecasting and fiscal policy analysis, scorekeeeping, cost projections, and an Annual Report on the Federal Budget. The office also underdakes special budget-related studies at the request of Congress. projects spending for national security to be an estimated $501 billion in '05, not including additional requests by Bush. The U.S. Treasury U.S. Treasury Created in 1798, the United States Department of the Treasury is the government (Cabinet) department responsible for issuing all Treasury bonds, notes and bills. Some of the government branches operating under the U.S. Treasury umbrella include the IRS, U.S. Department's Final Monthly Treasury Statement reveals that the federal government spent a record $2.29 trillion in '04. But just six items made up more than 75% of total federal outlays--national defense, Social Security, Medicare, health, interest on the debt, and federal employee and military retirement (see chart). That leaves only a quarter of the budget to pay for a myriad of discretionary federal programs that many Americans rely upon. Kogan observes that the fastest growing federal programs are Medicare and Medicaid Medicare and Medicaid U.S. government programs in effect since 1966. Medicare covers most people 65 or older and those with long-term disabilities. Part A, a hospital insurance plan, also pays for home health visits and hospice care. . Social Security--if Bush's overhaul is approved--will skyrocket, requiring a projected $2 trillion in transitional costs. The costs of Medicaid and Medicare will begin to balloon in five to eight years when the baby boomers See generation X. start to retire no matter what action Congress takes. "At some point, Washington will have to decide if protecting Social Security and Medicare is worth raising taxes or cutting programs for everyone else," Kogan says. "Many social programs that support those most in need are being squeezed now, like Section 8 housing certificates and extended support for the unemployed."
Federal Spending for Six Big-Ticket Items for FY04
In Billions % of Fed.
of Dollars Spending
National Defense $482 21.0%
(incl. $27 billion for Homeland Security)
Interest on the National Debt (net) 160 7.0
Social Security 496 21.6
Medicare 269 11.7
Health (including Medicaid) 240 10.5
Federal Employee, & Military Retirement 90 3.9
Budget Subtotal $1,737 75.7%
Total Federal Spending for FY04 $2,292
Total Federal Revenues 1,880
Federal Deficit 412
SOURCE: FINAL MONTHLY TREASURY STATEMENT FOR FISCAL YEAR 2004,
THROUGH SEPT. 30, 2004, U.S. TREASURY DEPARTMENT.
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