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Record deficit is proposed.

President George Bush sent Congress a $1.52 trillion budget last week with provisions for increased foreign aid, but disinvestment in America's communities. The budget would increase this year's federal deficit to $399 billion and seek a deficit next year of over $350 billion.

The administration's budget calls for deep cuts in priority municipal programs; mandated, but unfunded federal tax increases on cities and towns; preemption of one of the most fundamental rights and responsibilities of local governments; and record short and long term federal deficits and borrowing.

The proposal calls for selected increases in some programs affecting cities and temporary extension of thee, NLC-supported expiring tax provisions: municipal mortgage revenue bonds, low income housing tax credits, and targeted jobs tax credits. The biggest domestic increases are for space exploration, education, and the Head Start program.

It calls again for Congress to help reduce the federal deficit by imposing limits on non-seeds and needs-tested entitlement programs, including Medicaid and Medicare, but excluding Social Security.

The administration budget urges Congress to rely on tens of billions of dollars worth of tax subsidies to help the economy out of the recession and comparable tax cuts and subsidies to stimulate long term economic growth. It proposes to pay for the tax cuts through cuts in needs-tested entitlement programs, accounting gimmicks, and increased long term deficits and debt.

The budget urges Congress to cut the current projected $1.5 trillion in national defense spending by about 3 percent over the next five years but rejects using any of the savings to invest in the nation's communities. It would leave Pentagon spending for the foreseeable future at far higher levels than domestic reinvestment and far higher levels than any of the nation's economic competitors.

The budget proposes no funds to assist the nation's communities with economic conversion, but indicates the President would be willing to re-write the 1990 budget agreement to permit the defense cuts or so-called peace dividend to be used to pay for upper and middle income tax cuts--in return for even further restrictions on domestic discretionary investment in the future of the nation's cities and towns. The budget proposes no provisions to help fiscally strapped states and local governments to recover from the lingering national recession.

For the nation's community leaders, the budget proposes:

[section] a $500 million cut in the Community Development Block Grant (CDBG) program;

[section] a $1.8 billion cut in small community and rural development grants and loans;

[section] an $800 million cut in the new HOME state and local housing block grant program;

[section] a 20 percent in public transportation, and public infrastructure cuts of up to $20 billion in highway and public transportation investment over the next 5 years;

[section] a $7.9 billion mandatory Medicare tax on states and local governments and their employees;

[section] a provision giving HUD the authority to set up a major new bureaucracy to preempt any local land use or zoning municipal ordinance, fee, or regulation as a pre-condition to any HUD grant, loan, or guarantee;

[section] a proposal to cash in a number of state and local categorical programs, including the municipal wastewater construction grants program, into a state block grant or revenue sharing program without any requirement for consultation with local governments;

[section] elimination of EDA and the Community Services Block Grant programs; and,

[section] cuts in job training assistance, and deep cuts in low income fuel heating and refugee assistance.

For the nation's community leaders, the budget will force the Congress to balance between consumption versus investment, investing in the future versus paying for the past, and whether federal tax cuts are a wiser investment of public funds and trust than investment in the nation's future.
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Title Annotation:George Bush budget proposal
Author:Shafroth, Frank
Publication:Nation's Cities Weekly
Date:Feb 3, 1992
Previous Article:Nation hears Bush address NLC issues.
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