A CITIZEN’S GUIDE TO THE FEDERAL BUDGETTABLE OF CONTENTSTHE BUDGET MESSAGE OF THE PRESIDENTA BIRD’S EYE VIEW OF THE BUDGETChart -- Sources of Funds for Federal Spending in 2003Chart -- Inflation-Adjusted Spending & Revenue GrowthChart -- How Your Tax Dollars Are Spent in 2003Table -- Budget TotalsBUDGET HIGHLIGHTS FOR FISCAL YEAR 2003A COMMAND FOR PERFORMANCETable -- Executive Branch Management ScorecardTHE ECONOMY AND THE BUDGETChart -- Actual vs. Estimated Surpluses & DeficitsGLOSSARYFISCAL YEAR 2003 A CITIZEN’S GUIDE TO THE FEDERAL BUDGET BUDGET OF THE UNITED STATES GOVERNMENTTABLE OF CONTENTS The Budget Message of the President…………………………….…..…………..….…… 1 A Bird's Eye View of the Budget…………………………………………….…...……… 3 Budget Highlights for Fiscal Year 2003………………………..………..…….……….… 7 A Command for Performance……………………………………………….…………… 11 The Economy and the Budget……………………………………………….…………… 15 Glossary……………………………………….………………………………..………… 17 iTHE BUDGET MESSAGE OF THE PRESIDENT To the Congress of the United States: Americans will never forget the murderous events of September 11, 2001. They are for us what Pearl Harbor was to an earlier generation of Americans: a terrible wrong and a call to action. With courage, unity, and purpose, we met the challenges of 2001. The budget for 2003 recognizes the new realities confronting our nation, and funds the war against terrorism and the defense of our homeland. The budget for 2003 is much more than a tabulation of numbers. It is a plan to fight a war we did not seek—but a war we are determined to win. In this war, our first priority must be the security of our homeland. My budget provides the resources to combat terrorism at home, to protect our people, and preserve our constitutional freedoms. Our new Office of Homeland Security will coordinate the efforts of the federal government, the 50 states, the territories, the District of Columbia, and hundreds of local governments: all to produce a comprehensive and far-reaching plan for securing America against terrorist attack. Next, America’s military—which has fought so boldly and decisively in Afghanistan— must be strengthened still further, so it can act still more effectively to find, pursue, and destroy our enemies. The 2003 Budget requests the biggest increase in defense spending in 20 years, to pay the cost of war and the price of transforming our Cold War military into a new 21st Century fighting force. We have priorities at home as well—restoring health to our economy above all. Our economy had begun to weaken over a year before September 11th, but the terrorist attack dealt it another severe blow. This budget advances a bipartisan economic recovery plan that provides much more than greater unemployment benefits: it is a plan to speed the return of strong economic growth, to generate jobs, and to give unemployed Americans the dignity and security of a paycheck instead of an unemployment check. The plan also calls for maintaining low tax rates, freer trade, restraint in government spending, regulatory and tort reform, promoting a sound energy policy, and funding key priorities in education, health, and compassionate social programs. It is a bold plan—and it is matched by a bold agenda for government reform. From the beginning of my Administration, I have called for better management of the federal 1government. Now, with all the new demands on our resources, better management is needed more sorely than ever. Just as the No Child Left Behind Act of 2001 asks each local school to measure the education of our children, we must measure performance and demand results in federal government programs. Where government programs are succeeding, their efforts should be reinforced—and the 2003 Budget provides resources to do that. And when objective measures reveal that government programs are not succeeding, those programs should be reinvented, redirected, or retired. By curtailing unsuccessful programs and moderating the growth of spending in the rest of government, we can well afford to fight terrorism, take action to restore economic growth, and offer substantial increases in spending for improved performance at low-income schools, key environmental programs, health care, science and technology research, and many other areas. We live in extraordinary times—but America is an extraordinary country. Americans have risen to every challenge they have faced in the past. Americans are rising again to the challenges of today. And once again, we will prevail. George W. Bush February 4, 2002 2A BIRD’S EYE VIEW OF THE BUDGET No enterprise on Earth is larger than the U.S. government. This year more than $2 trillion will be spent to attempt to meet not only the desires and needs of its citizens, but some of those of governments and people around the world. As the President noted in his Budget Message, the fiscal year 2003 Budget is focused on providing the funds needed to win the war against terror both at home and abroad and to restore our nation’s economy. This year’s budget, like any good budget, is a plan for spending money effectively to accomplish well-defined goals. To undertake such a momentous exercise, the President presents to Congress early each February his budget proposal for the U.S. government for the following year. Usually before spring becomes summer, Congress makes initial decisions about how funds set aside for spending will be divided among activities such as defense, education, and transportation. Then work begins on the budget’s details. Before spelling out where a budget’s funds go, though, there should be an understanding about the source of funds: you and your fellow taxpayers. As the chart titled Sources of Funds for Federal Spending in 2003 shows, income taxes from individuals supply the biggest portion of revenues for the U.S. Treasury. From their paychecks, citizens also directly supply half the funds destined for Social Security, as well as a portion of Medicare’s costs. One way or another, Americans also pay most of the largely hidden taxes the U.S. government collects from sales of the use of gasoline, alcohol, tobacco, telephones, and products that harm the