FY 2009 Budget

The Fiscal Year 2009 Budget was released by the President on February 4, 2008.  It contains the Administration's proposed federal spending plan for October 1, 2008 through September 30, 2009.  The budget was reviewed and debated at length, and as a member of the Senate Budget Committee, I advocated strongly for responsible spending in the face of this record budget.

The federal government must exercise fiscal responsibility in carrying out its budget.  As a member of the Senate Budget Committee, I strongly support reigning in federal spending and taking decisive steps to reduce the national debt.  This budget shows the difficulties that we face in the short and long terms.  The projected growth path for entitlement spending is unsustainable; with the pending retirements of those in the Baby Boom generation, the challenges will only increase.  We must find the best ways to deal with a slowing economy and the threats from entitlement growth without raising taxes or spending beyond our means.

Listed below are some highlights that may be of interest to you; please use the links that follow to learn more about the budget.

Highlights:

It is worth noting that this is the first time that the President has released his budget proposal electronically.  The FY 2009 budget balances in 2012 and 2013, reflecting small surpluses of $48 billion and $29 billion respectively.  For this year, the President’s budget assumes a $410 billion deficit (2.9% of GDP), fall to $407 billion (2.7% of GDP) in FY 2009.

Discretionary Spending:

• Non-Emergency:  For FY 2009, regular discretionary spending, the President’s budget includes $987.6 billion, nearly a 5% increase over FY 2008 levels.

• Defense:  The request includes $537 billion for defense activities, more than a 7% increase (figures do not include war funding).

• Non-Defense:  The request includes $450.8 billion, a 2.2% percent increase over 2008.  However, excluding international affairs spending and homeland security spending, the request for non-defense, domestic discretionary spending represents a 0.2% increase over the 2008 enacted level. 

• Emergency:  The request includes $75.8 billion in emergency appropriations for FY 2009.  This includes a $70 billion request for funding war efforts in Iraq and Afghanistan.  The remaining $5.8 billion in the emergency request for FY 2009 is labeled “Gulf Coast/Hurricane Recovery.”  These amounts would be for the Army Corps of Engineers of levee projects. 

• Program Elimination:  151 discretionary program reductions and terminations provide $18 billion in savings in FY 2009.

Mandatory Spending:

The President’s budget assumes $1.636 trillion in total mandatory spending for FY 2009.  The President’s proposals for changes to mandatory programs would produce nearly $174 billion in savings during FY 2009-2013.  This is a net figure, which includes both spending reductions and new spending.

• Medicare:  The Administration projects Medicare spending will total $420 billion in FY 2009, and without changes, would grow to $553 billion by FY 2013.  The budget includes $178 billion in reductions in Medicare in FY 2009-2013.  Under the President’s budget, the average annual growth rate over 5 years is expected to be 5%, a reduction of 2.2 percentage points from how Medicare would otherwise grow on average each year over the same time.  According to OMB, these Medicare savings would reduce the program’s $34 unfounded liability over the next 75 years. 

Revenues:

The budget assumes the permanent extension of the 2001 and 2003 tax relief, and a one-year patch (for tax year 2008) of the individual AMT.

Under the President’s budget, the level of receipts is projected to grow from $2.568 trillion in FY 2007 to $3.428 trillion in FY 2013, an increase of 33.5%.  As a share of GDP, revenues dip to under 18% of GDP in FY 2008, then rise to 18.8% of GDP by FY 2013. 

Useful Links:

• President's FY2009 Budget
• Transcript of Budget Briefing by OMB Director Jim Nussle, February 4, 2008
• Presentation Slides used by OMB Director Jim Nussle in February 4 briefing (PDF file)
• Senate Budget Committee Minority Overview and Analysis
• Senate Budget Committee Minority Analysis of the President's Budget:  Health and Major Entitlement Programs (PDF file)
• Senate Budget Committee
• Budget Points of Order (PDF file)
• Byrd Rule (PDF file)

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