    [Budget of the United States Government]
    [II. Budget Highlights]
    [From the U.S. Government Publishing Office, www.gpo.gov]

    [[Page 7]]

                             II.  BUDGET HIGHLIGHTS

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                            A New Approach to Budgeting

    Moderate Growth in Government and Fund National Priorities:

        Moderates recent rapid growth in spending, while funding
                national priorities, paying down the debt, and providing tax
                relief.

        Strengthens and reforms education, granting the Education
                Department the largest percentage spending increase of any
                Department (11.5 percent increase in 2002).

        Saves the entire Social Security surplus ($2.6 trillion) and
                commits to reforming the program.

        Spends every penny of Medicare tax and premium collections
                over next 10 years only on Medicare. Modernizes and reforms
                Medicare.

        Restores commitment to military personnel and begins
                transition to a 21st Century force structure.

        Champions compassionate conservatism by supporting the
                critical role that faith-based and community organizations
                play in helping people at the local level.

    Debt Reduction: Achieves historic levels of debt reduction, retiring the maximum amount of debt possible over 10 years ($2 trillion).

    Tax Relief: Lets taxpayers keep roughly one-fourth of the surplus they produced ($1.6 trillion over 10 years).

    By the Numbers:

        Allocates projected $5.6 trillion surplus over 10 years.
                Breakdown of surplus:
                --Saves all of Social Security surplus ($2.6 trillion) for
                  Social Security.
                --Provides $1.6 trillion in tax relief over 10 years.
                --Creates an unprecedented $1.4 trillion reserve for
                  additional needs, debt service, and contingencies.

        Produces a $231 billion total surplus in 2002.

        Reduces historically high income tax burden.

        Moderates recent explosive growth in discretionary spending to
                4.0 percent growth in 2002, an increase of $26 billion over
                2001.

        Moderates growth in spending by making reductions in one-time
                spending, unjustified programs, duplicative programs, and
                programs that have completed their mission in 2002.

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                     A New Approach to Budgeting--Continued

    Initiative Highlights:

       K-12 Education. Increases funding for
               elementary and secondary education by $1.9
               billion in 2002 over 2001 funding.

       Reading. Fully funds President's Reading
               First initiative, including Early Reading
               First, at $975 million in 2002, more than
               tripling funding for reading.

       Medicare. Sets aside $153 billion over the
               next 10 years for the Immediate Helping
               Hand initiative and Medicare
               modernization.

       National Institutes of Health (NIH).
               Continues commitment to double NIH, by
               providing a $2.8 billion increase for NIH,
               the largest annual funding increase in
               NIH's history.

       WIC. Funds the Special Supplemental
               Nutrition Program for Women, Infants, and
               Children (WIC) at 7.25 million individuals
               a month, maintaining current program
               level.

       Conservation. Provides the highest ever
               request for the Land and Water
               Conservation Fund - fully funding the
               program at $900 million.

       Energy Assistance. Nearly doubles the
               existing Weatherization Assistance Program
               providing an increase of $1.4 billion over
               10 years.

       Community Health Centers. Launches a
               doubling of the number of people served by
               Community Health Centers by adding 1,200
               sites.

       Provides tax relief to all Americans who
               pay income tax.

       Reduces the marriage penalty.

       Ends the death tax.

       R&D tax credit. Permanently extends the
               research and development (R&D) tax credit.

       Tax incentives. Provides other tax
               incentives for education, farmers, the
               disabled, health care, the environment,
               and charitable purposes.

       National Defense. Provides a $14.2 billion
               increase in Department of Defense spending
               in 2002 to begin to arrest the decline in
               national security, including $1.4 billion
               for military compensation to improve
               quality of life and reenlistment and
               retention of military personnel, $2.6
               billion for research and development for
               new technologies (including missile
               defense alternatives), and $400 million to
               improve housing for our military members
               and their families.

       International security. Improves embassy
               security overseas, adding $1.2 billion.

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