Cliff, from Brimfield, Ohio writes:
Director Kaplan: How many years out does the President look when it comes to priorities and policies in the budget process? I would think that this year and next years priorites and policies would already be in place. And in the implementation process. Thank YOU

Joel Kaplan
In developing the annual budget, we estimate the five-year impact of the President’s proposed policies. For programs subject to the annual appropriations process, we generally develop proposals and estimates just for the upcoming year. Right now, Congress is working on the Budget for fiscal year 2006, which actually begins this October. This fall (September 2005), OMB will start work on the fiscal year 2007 Budget, which won’t begin for another year. Keeping track of fiscal years gets a little confusing (at least it did for me when I first started). For our entitlement and other mandatory spending programs, such as Medicaid, and for proposed changes in tax policies, we develop estimates of the impact of these policies over a 10-year period.

Andres, from Austin, Texas writes:
Is prsident George W. Bush going to raise the income to those working in government? If yes, it the raise going to meet the needs of the lower income working person?

Joel Kaplan
Hi Andres. Working in the Bush White House, I’ve got a lot of good friends from Austin, Texas, as you might imagine.

We’ve got a talented, dedicated workforce here in Washington, and we want to make sure that individuals who work hard and produce results for the American people are rewarded. Soon, the Administration will be proposing reforms to our Civil Service system to make sure we have the ability to retain, motivate, and reward good Federal employees.

Over the past four years, Federal employees have received substantial increases in compensation. Federal civilian employees received total average cumulative pay increases of 17.5 percent during the first four years of President Bush’s administration. The President’s 2006 Budget proposes a 2.3 percent increase for next year.

Moshe, from Lakewood, New Jersey writes:
How will Mr. Bush help HUD get more funding in the coming year? Here in Lakewood, there is an almost 5 year waiting list to get enrolled What will the federal government be doing to help us out over here? Thank you for your time.

Joel Kaplan
President Bush has made expanding homeownership opportunities a priority, particularly for first-time, minority, and low income buyers. At the same time, he is committed to dismantling the barriers to homeownership and to providing housing assistance to those most in need.

Today, more Americans have achieved the dream of homeownership than at any time in our Nation’s history: 69 percent of households own their homes. For the first time ever, in 2004, a majority of minority households own their own homes.

The President’s FY 2006 Budget supports the Administration’s ambitious goals of increasing homeownership by building on the successes of the last four years, and continuing to build dynamic partnerships with faith-based and community organizations across America.

The Administration is also working to make rental assistance programs more effective. The Administration has proposed to simplify the housing voucher program and give more flexibility to Public Housing Agencies to administer the program to better address local needs. These changes would provide a more efficient and effective program to help low-income families more easily obtain decent, safe, and affordable housing.

William, from New Jersey writes:
If the USA cannot grow herself out of the huge national debt, what dire consequences will befallen the average person who is working hard and finding it hard to make ends meet?

Joel Kaplan
That’s a great question. Today’s numbers show we’re doing well at addressing our near-term deficit problem, and we’re on track to more than achieve our goal of cutting the deficit in half. But the nation does face a serious long-term budget challenge – the unfunded obligations in Social Security, Medicare, and Medicaid – and it’s imperative that we attack the problem while we have the opportunity and time to do so. If we don’t act, the average person will see his taxes go up or his benefits slashed sometime in the not-too-distant future.

President Bush is working with Congress to enact reforms that address Social Security $11 trillion in unfunded obligations—promises the system has made but which it can’t keep. His plan will strengthen Social Security’s finances for the future, while making it a better deal for today’s young workers. These reforms would allow benefits for future generations to grow with inflation, but would also make sure that the benefits of low-income seniors grow even faster, so that they do not have to retire into poverty.

Overcoming the near-term fiscal effects of recession, terror attacks, and war will be a significant achievement, but rest assured that the President is committed to meeting the long-term fiscal threats as well.

Robert, from New York writes:
How does the White House plan to balance the budget when it is not taking in enough revenue? It seems the trickle down theory is not bringing the type of revenue needed. Also, the White House keeps touting the greatness of the tax cuts, yet, these cuts have acutualy put more Americans in AMT. My wife a I got slammed last year, along with thousands of other families. What is the White House going to about AMT?

Joel Kaplan
What we see in the numbers released today is that the President’ program of pursuing pro-growth economic policies, especially tax relief, and spending restraint is working. The deficit is falling even faster than we had earlier projected. Tax relief proposed by the President and enacted by the Congress reduced income tax rates, raised incentives for small businesses to invest in new equipment, dramatically reduced the tax rate on dividends and capital gains, and phased out the death tax. This was exactly the right prescription for our economy, and the result has been restored growth, job creation, and strong investment. The economy has created 3.7 million jobs since May of 2003, and the unemployment rate is now 5.0%--lower than the average rate of the 1970s, 80s, or 90s.

This strong economy—fueled by tax relief--is now producing even greater revenues than we had earlier expected. As a result, the deficit is now forecast to fall from $412 billion or 3.6 percent of GDP, in 2004 to $333 billion, or 2.7 percent, in 2005. This is a decline of $94 billion from the Administration’s most recent forecast for the deficit, released this past February. At its currently forecast level, the U.S. budget deficit for 2005 would be smaller than the deficits in 15 of the last 25 years, and only slightly above the 40-year historical average of 2.3 percent.

As for the Alternative Minimum Tax, the Administration does believe that it’s a problem. It is a complex and unfair tax system that is built in to capture more and more American taxpayers. It does need to be reformed. The administration's approach on this is that it should be addressed in the context of fundamental tax reform that makes the system simpler, fairer, and easier to understand. Secretary of the Treasury John Snow has that underway. There is an advisory panel on fundamental tax reform that's to report to the Secretary of the Treasury soon, and we expect the AMT to be addressed in that context of fundamental tax reform.

Edwin, from Arlington, MA writes:
Hello Mr. Kaplan, I'm studying for the LSATs right now because I'd like to go to Harvard Law School like you. Can you please give me some advice on how to best prepare for it? Thank you

Joel Kaplan
Tough question. Perhaps you are confusing me with my long-lost cousin, Test Preparation guru Stanley Kaplan? (Sadly for my personal finances, we’re not really related).

I think the best thing you can do to prepare is to take lots of practice tests. It definitely helped me to take one of those test prep courses—I’ll bet you can do a lot of that online or on disc these days, which might save some money (that’s the OMB guy in me talking). Two nights before the test you should get a good night’s sleep; the night before I think I went to a movie to take my mind off of it.

Good luck—I’m sure you’ll do great.

Steve, from Rochester Michigan writes:
The Federal Government's budget forcasts vary widely depending on which organization is making the calculations. Wouldn't it make sense for the White House and all other organizations that make budget projections to provide a one page summary of the the major budget assumptions that go into the forcasts, and provide this information to the public in a standardized format?

Joel Kaplan
Thanks Steve. There are really only two organizations in D.C. that make budget forecasts for the Federal Government -- OMB for the Executive Branch and CBO (the Congressional Budget Office) for Congress, and you’re right, sometimes they do differ in their estimates and assumptions. We do include our major budget assumptions in our Budget, and in the Mid-Session review that we released today. We also present CBO’s assumptions alongside our own, and I believe CBO does the same when they publish their estimates. You can find our assumptions in our Budget (see Table 12-1 and 12-2, pages 191 and 193, respectively, /omb/budget/fy2006/pdf/spec.pdf).

Robert, from Milwaukee writes:
With nearly all of the higher than expected tax revenues resulting from higher corporate profits and greater capital gains from a housing bubble, why is the White House so confident that it can grow its way out of the deficit (or at least half way out)? Likewise, these projections don't include White House priorities such as making the tax cuts permanent (estimated to cost a trillion dollars over ten years), privatizing social security (which could be even more expensive. The White House has not provided details so exact estimates cannot be made), and the indefinite war in Iraq. Is this what the President means by the faith-based initiative?

Joel Kaplan
Thanks for joining us, Robert. The budget numbers we released today actually do include the deficit impact of the personal accounts President Bush has proposed as part of a comprehensive effort to strengthen Social Security. And, the budget numbers also assume the full extension of the tax relief that has been so critical in restoring growth and investment to the economy. What today’s numbers show is that this strong economy is bringing the deficit down even faster than we had expected when we released our Budget last February.

As for war costs, the updated budget projections we released today includes all of the costs from operations in Iraq and Afghanistan in 2005, and another $50 billion in 2006 that Congress assumed in its Budget Resolution. While we expect that we will need additional funding beyond that, we can’t estimate with any reliability what those requirements will be. We do know that our military is in the process of training and equipping Iraqi security forces, so that they can begin to take on more and more responsibility for their own security. As the President has made clear, though, you can be sure that the commanders and troops in the field will have the resources they need.

Tom, from Livonia, MI writes:
Wondering how the highway spending bill grew from approximate $236 Billion to $285 Billion. I recall this dollar figure from Feb. 2003. Boy, the wheels of Big 'G' sure works slow.

Joel Kaplan
When Congress first started considering a highway bill, some members were talking about a $375 billion bill. The bill the Senate passed last year came with a $318 billion price tag. So we are making good progress. The President hopes that Congress can quickly complete work on this bill and send him a package that is fiscally responsible, doesn't raise taxes, and avoids budget gimmicks. He’s confident they'll send him a bill he doesn't have to veto.

Paul, from Seattle writes:
Mr. Kaplan, Can you please explain why this administration seems to think that running huge budget deficits is "conservative" and not harmful to our country?I remember a time not that long ago, when "conservatives" were calling for a constitutional amendment which would require a balanced budget. If memory serves me, wasn't that during the tenure of Bush the elder?

And please don't blame the deficit on the tragedy of September 11.

Thank you. Paul

Joel Kaplan
Hi Paul. This Administration has worked with Congress to provide the resources necessary to protect the United States while restraining spending elsewhere in the budget. As I mentioned in my response to Gary, this Administration has succeeded in bringing down the rate of growth in non-security discretionary spending each year of the President's first term. And the President has proposed an actual cut in that category of spending this year—the first time any President has proposed such a cut since the great conservative Ronald Reagan was in office.

Our economy—and our budget—did suffer a blow after 9/11, as well as from the collapse of the stock market in 2000, the recession that followed, and the revelation of corporate scandals. The President put in place policies that were directed at restoring the economy.

Gary, from Park Ridge, IL writes:
Director Kaplan, Many conservative Republicans have criticized President Bush for spending too much money on domestic programs and, thus, increasing the budget deficit. Can you please put the President's spending levels into some historical context? How do they compare to previous administrations?

Joel Kaplan
Good question Gary. In the last year of the previous Administration, what we call discretionary spending (the spending that has to be approved by Congress each year) on items not related to security grew by 15%. In President Bush’s first term, we succeeded in bringing that growth rate down every single year. This year, the President proposed an actual cut in non-security related discretionary spending—that’s the first time a President proposed to cut this type of spending since Ronald Reagan was President.

We also have to look at what people in Washington refer to as "mandatory" programs—the programs that grow on “autopilot” each year, even if the Congress doesn’t act. The President proposed savings and reforms in these programs this year as well, and Congress committed to saving $35 billion in these mandatory programs through an expedited process called reconciliation—something that hasn’t been done since 1997.

As today’s numbers show, over the next 5 years our budget picture will continue to improve and we’re in good shape. However, we have a long-term threat to our fiscal outlook from the unfunded obligations in our entitlement programs, like Medicare and Social Security. The President has proposed reforms to strengthen Social Security, which has made $11 trillion in promises it cannot afford to pay, and to make it a better deal for younger workers. It’s important for our long-term budget outlook for Congress to act on this proposal.

osborne, from jacksonville,fl. writes:
I am a student in the Upward Bound program, and would like the Upward Bound program is not in the budget?

Joel Kaplan
The President’s budget focuses on winning the war on terror, protecting our homeland, and growing our economy. It’s also a disciplined budget that focuses the taxpayer’s dollars on those programs that can demonstrate that they are getting results for the American people. While the budget does not provide funding for Upward Bound, it continues the President’s commitment to leaving no child behind by providing an unprecedented level of education funding – a 51% increase in federal K-12 spending since President Bush took office.

Wayne, from Eau Claire, WI writes:
The president has often touted that he has devoted millions of extra dollars to education. My friends, my family, and I are virtually all educators in Wisconsin. We are seeing public schools going bankrupt, quality of education declining, and programs being cut. I am wondering what percentage of these millions of dollars are going towards the creation, production, and scoring of mandated tests, as well as towards the promotion and execution of No Child Left Behind.

Please also note that it is a stab in the back every time Bush says on TV that schools are failing and every time he professes the success of NCLB. It appears that this administration does a lot of patting itself on the back, but does not converse with people from different viewpoints. Posting my entire question and message would be appreciated and respected.

Joel Kaplan
Thanks for your question—and thanks for the important work that you and your family do as educators. President Bush shares your commitment to providing a quality education for all children. Through the No Child Left Behind Act, historic levels of funding and support have been combined with an unprecedented commitment to making sure all children can succeed and learn, and holding schools accountable for teaching their students. With the President’s 2006 Budget, federal K-12 education spending has increased 51% since President Bush took office. The 2006 Budget includes a $603 million increase for Title I funding to provide grants to improve education in low-income communities and support education reforms, bringing Title I funding to a level 52% higher than when the President took office. Additionally, funding for Individuals with Disabilities Education grants grows by $508 million in the 2006 Budget, to a level 75% higher than at the beginning of President Bush’s administration.

Chanan, from New York, N.Y. writes:
The federal budget has swung from a $5 trillion projected surplus when President Clinton left to an almost equal deficit under President Bush. How do you respond to those who say this puts the lie to GOP claims of fiscal continence?

Joel Kaplan
Hi Chanan. During his first term, the President worked with Congress to meet historic challenges: a stock market collapse that began in spring of 2000, a recession on the doorstep when President Bush assumed office, revelation of corporate scandals, and, of course, the terrorist attacks of September 11th. These shocks to our economy took a real toll on our budget and caused revenues to decline for the three years in a row—the first time that has happened since the 1920s. To meet the economy's significant challenges, the President proposed and signed into law, in each year of his first term, major tax relief that fueled recovery, business investment and job creation. The strong economy the tax relief helped create is in turn responsible for the greater than expected revenues we reported today, and for bringing our deficit down even faster than we had projected.

The President and Congress have also devoted significant resources to rebuild and transform our military and to protect our homeland. While committing these necessary resources to protecting America, the President and Congress have focused on spending restraint elsewhere in the budget. We succeeded in bringing down the rate of growth in non-security discretionary spending each year of the President's first term. In this year’s Budget, the President proposed an actual cut in that category of non-security spending. Now we need to work with Congress to hold the line on spending, as well as to continue the tax relief that is helping our economy grow.