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To the credit of key leaders, Congress stayed within budget limits and met key priorities. While the appropriations bills are not perfect, they honor the goals President Bush set last February: Overall discretionary spending in Fiscal 2005 will rise only 4%, the same as the average increase in American family income. The budget also provides substantial increases in funding for essential defense and homeland security needs.
Just as the president proposed, discretionary spending for nonsecurity programs will rise only about 1%, which is half the rate of inflation and the lowest rate of growth since the Republicans first took control of Congress in the mid-1990s.
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Does the success in passing disciplined spending bills this year mean that we can stop worrying about deficits? Definitely not. The deficit remains too large. But a stronger economy has created greater-than-expected tax revenues that have helped bring down the 2004 federal budget deficit from an earlier estimate of $521 billion, or 4.5% of gross domestic product, to $413 billion, or 3.6%. And if we can extend the budget progress made this week while sustaining pro-growth economic policies, we will remain ahead of pace to accomplish the president's goal of cutting the Federal budget deficit in half within five years. That would bring the deficit well below its 40-year historical average of 2.3% of GDP. Importantly, the Congress is showing that it can achieve this goal without resorting to tax increases, which would harm our economy.