**[DISCRETIONARY SPENDING:]{.underline}**

**[Background:]{.underline}**

-   In the last 7 years, non-defense discretionary spending has grown by
    66%

-   Over the past seven years, discretionary spending has grown at an
    average rate of 3 ½ times the rate of inflation \-- well beyond any
    increases in a family's budget. This growth in federal spending is
    unsustainable.

-   FY 2003 alone was a 9% increase in discretionary spending over FY02

-   Since 1996, the year of the first GOP-written Budget, funding for
    many Cabinet Departments has increased by far more than inflation
    (21% from 1996 to 2003):

    -   Agriculture: 27.5%

    -   Commerce: 40.2%

    -   Energy: 34.4%

    -   HHS: 94.7%

    -   HUD: 52.6%

    -   Interior: 45%

    -   State Department: 68.3%

    -   Labor Department: 23.8%

    -   Defense Department 43.7%

    -   Education: 131.9%

-   Federal spending is now greater than 20% of GDP.

-   Up until 1996, defense discretionary spending constituted the
    majority (sometimes by a 2 to 1 or more margin) of discretionary
    spending. After 1996, we spent less on defense than we spent on
    other domestic discretionary programs.

**[What the RSC Budget Does:]{.underline}**

-   The RSC budget freezes total discretionary spending for one year and
    then allows for a controlled acceleration in growth over the next
    decade.

-   After FY 2004 the budget allows discretionary spending to increase
    at half of the rate of inflation for two years, then at the
    approximate rate of inflation until 2013.

-   Under the RSC Budget, discretionary spending will not grower faster
    than inflation or the family budget.

-   The RSC Budget retains the President's defense spending numbers and
    the President's funding levels for homeland security. To pay for
    these increases, the RSC Budget reduces non-defense, non-homeland
    spending initially, and then allows for limited growth in the
    out-years.

-   Under the RSC Budget, defense will once again comprise the majority
    of overall discretionary spending.

> **[Can We Really Cut Non-Defense Spending:]{.underline}**

-   The Budget Committee proposal achieves 1% savings by looking for
    waste, fraud, and abuse. By all accounts, there is much more than 1%
    waste in government.

-   It is time that we do more than just look for wasteful spending. The
    government cannot pay for everything, and Congress must begin making
    choices. In short, we should reduce or eliminate funding for
    low-priority programs in order to increase funding for high-priority
    programs (like Defense and homeland security).

    -   Low Priority Programs Include:

> • Title X Family Planning
>
> • Corporation for Public Broadcasting
>
> • National Endowments for the Arts and Humanities
>
> • Legal Services Corporation
>
> • Advanced Technology Program
>
> • U.N. Funding
>
> • Foreign Aid
>
> Eliminating just some of these programs would save \$1.5 Billion, next
> year.

-   It is also time to stop business as usual in Washington. Every time
    you hear someone say we can't spend less on government programs than
    we spent last year, remember that they are endorsing the status quo.
    The status quo is not good for taxpayers. Consider the following
    from the National Commission on Public Service and the general
    Accounting Office:

> In the Federal Government, there are:
>
> • 35 food safety laws administered by 12 different agencies;
>
> • 541 clean, air, water, and waste programs in 29 different agencies;
>
> • 50 programs to aid the homeless in 8 different federal agencies;
>
> • 27 teen pregnancy programs in 9 different agencies;
>
> • 90 early childhood programs in 11 different agencies;
>
> • 163 different job training / employment programs;
>
> • 64 welfare programs;
>
> • 500 urban aid programs; and
>
> • 342 economic development programs in 13 different agencies.

**[MANDATORY SPENDING:]{.underline}**

**[Background:]{.underline}**

-   Mandatory Spending now constitutes 64% of the entire federal budget.

-   Mandatory spending funds everything from welfare, to payments to
    farmers, to health care.

-   Most estimates indicate that there are tens of billions of taxpayer
    dollars wasted every year in mandatory programs, including:

    -   More than \$8 billion in erroneous earned income tax payments

    -   Mismanagement of more than \$3 billion in Bureau of Indian
        Affairs Trust Funds

    -   Over \$2 billion in erroneous food stamp payments

    -   Last year alone, there were an estimated \$13.3 billion in
        improper payments under Medicare

    -   Two years ago there was over \$1 billion in un-issued medical
        bills for the Veterans Health Administration

**[What the RSC Budget Does:]{.underline}**

-   MEDICARE \-- Because the RSC Budget begins with the Budget
    Committee's base for Medicare (which includes funds for prescription
    drugs) but also requires additional savings in mandatory spending
    beyond the Budget Committee's proposal, any new entitlement must be
    accompanied by reforms to the underlying Medicare system, and those
    reforms must begin the process of controlling costs. The bi-partisan
    Breaux-Thomas Medicare Commission recommended a similar approach to
    providing prescription drugs in the context of overall Medicare
    reform.

-   The budget does [not]{.underline} cut mandatory programs and
    accommodates a controlled rate of growth each year over the ten
    years covered by the budget.

-   Holds mandatory spending increases (excluding Social Security) over
    FY 2003's actual level at 1.5% for one year. After FY 2004 it allows
    growth above the rate of inflation (3.1%) annually for the next four
    years. After year five it provides for growth at the annual baseline
    rate.

**[Can We Really Cut Non-Mandatory Spending:]{.underline}**

-   In 1995, the House - Senate Agreement on the Budget called for
    reducing mandatory spending by \$332 billion over five years
    relative to the baseline.

-   In 1996, the House - Senate agreement on the budget called for
    reducing mandatory spending by \$244 billion over five years
    relative to the baseline.

-   In 1981, the Democratic House approved a Budget reducing non-defense
    spending by \$226 billion over three years relative to the baseline.

**[TAX RELIEF:]{.underline}**

-   The RSC Budget accomodates all of President Bush's Economic Growth
    and Tax Fairness Act and makes the 2001 tax cuts permanent.

-   In addition the RSC Budget accommodates additional pro-growth tax
    cuts such as reducing the capital gains tax rate to 10%

-   In total the resolution calls for \$1.6 trillion in pro-growth tax
    relief over the next ten years (\$286 billion more than the Nussle
    budget)

-   Over ten years, the government will still collect over \$19 trillion
    in taxes.

-   Unlike the Nussle budget all tax relief would be under
    reconciliation, greatly helping its chance of getting through the
    Senate and signed into law.

-   The RSC Budget also prohibits tax increases to be used to pay for
    increased spending, a provision not included in other Budgets.

-   The RSC Budget also permits changes to be made to the Budget to
    reflect the economic impact of tax changes, helping ensure more
    accurate budgets.

**[Job Creation:]{.underline}**

-   Estimates prepared by the Heritage Foundation indicate that the
    President's Economic Growth Package will create about 1 million new
    jobs next year. The RSC Budget, by complementing the President's
    proposals with decreases in the capital gains tax, will create over
    1 million new jobs.

**[BALANCED BUDGETS:]{.underline}**

-   By controlling the growth in spending, the RSC Budget achieves
    overall balance in 4 years and achieves a balance excluding Social
    Security in ten years.

-   No other Budget achieves balance as quickly as the RSC budget.

> **[BUDGET ENFORCEMENT:]{.underline}**

-   The RSC Budget includes various budget enforcement mechanisms,
    including a new "tighter" definition of emergency spending. No
    longer will the Congress be able to avoid budget limits by declaring
    things like the Census an emergency. Several years ago the Congress
    declared funding for the 2000 Census an unanticipated emergency
    (which means we didn't have to pay for it within the budget), even
    though the census is mandated to occur every ten years by the
    Constitution and has occurred every ten years for over two
    centuries.

-   Includes a reserve fund for Social Security reform, should Congress
    act on needed reforms. However, the reforms must increase taxes and
    must include personal retirement accounts.

-   Requires House and Senate Appropriations Committees to establish
    joint subcommittee (known as 302(b)) allocations. This will help us
    speed up the appropriations process by ensuring that both the House
    and Senate are starting from the same set of numbers.