Along with the president's proposed 2006 federal budget, the White House also released a mission statement articulating his administration's fiscal priorities: "We are funding efforts to defend the homeland from attack. We are transforming our military and supporting our troops as they fight and win the Global War on Terror. We are helping to spread freedom throughout the world. We are promoting high standards in our schools, so that our children gain the tools they need to succeed. We are promoting the pro-growth policies that have helped produce millions of new jobs and restore confidence in our economy. And we are taking additional action to enforce spending discipline."
The official budget released by the White House contains little mention of either the record federal deficit or the tax cuts President Bush gave wealthy Americans during his last term. Instead, the administration focuses its attention on the reduction of the federal deficit as a percentage of the GDP and cuts in "non-security discretionary spending" as examples of their spending restraint.
But critics of the budget have pointed out that the rise in military spending and decrease in all other areas translates into direct funding cuts and program elimination for the state programs that depend on the federal dollars.
The Office of Management and Budget lists the federal budget priorities as "strengthening the Armed Services and homeland defense, promoting economic and educational opportunities, and fostering compassion."
These priorities, however, must be in accordance with the president's two guiding fiscal principles.
"The president committed to spend what was needed to win the War on Terror and protect the homeland, and committed to enforce spending restraint everywhere else."
The call to reduce the deficit and eliminate waste and inefficiency in government spending is standard political fare at both the federal and state levels. But problems often arise over what constitutes waste and/or inefficiency.
The cost of war
With national security its No. 1 priority, the Bush Administration plans to continue dramatic increases in military funding. However, like previous years, the 2006 budget proposal includes no funding for the wars in Iraq or Afghanistan.
Critics point out that when those figures are included, the president's claims of fiscal responsibility and budget reduction are dubious at best.
In addition to the $90 billion in expected costs for the war in Iraq this year alone, the federal budget includes an additional $35 billion "to reorganize the total Army forces and increase the number of active Army combat brigades by 30 percent."
There are also proposals for $3.5 billion to implement the Global Posture Initiative, $1.5 million "to encourage sound economic and governance policies in the developing world," $4.2 billion for the Department of Health and Human Services to address the threat of bio-terrorism, $600 million for a Targeted Infrastructure Program in the Department of Homeland Security and an additional $555 million in FBI funding.
The increased military funding seems at odds with proposed decreases in funding for homeland security programs.
Overall, the federal budget cuts state and local Homeland Security Funding by $420 billion, or 11 percent.
For Hoosiers, this includes a $21.4 million decrease in homeland security funds for providing police, firefighters and emergency management teams with the training and equipment they need to keep communities safe from terrorism in the state of Indiana.
Daniels has recently revamped the state's Homeland Security Program, and considers the federal funding cuts something to take in stride.
"Our real challenge is to spend whatever new money we get well; something I don't think we've done as best we can to this point," he said. "It's a simple fact that the nation's money should be spent where the threat is the greatest. We have needs and concerns here, but they aren't the same as someplace like New York City."
The federal budget also short-changes Indiana's nearly 600,000 veterans of the current wars in Iraq and Afghanistan, as well as previous tours of duty.
Despite a request of a $3.5 billion budget increase by the Department of Veteran's Affairs, the 2006 budget provides only 25 percent of that increase.
While the White House claims, "We are transforming our military and supporting our troops as they fight and win the Global War on Terror," the budget reflects a slightly different reality.
President Bush has proposed raising the co-payment charge for veterans' prescription drugs from $7 to $15 per prescription. There is also a proposal to impose a new $250 annual "user fee" for veterans needing to use government health care programs.
And a recent promise by the president to increase death benefits for the families of the servicemen and -women killed in action is not included in this budget, nor are the promised pay raises for senior enlisted personnel, junior officers and warrant officers - the troops the military most needs to retain.
Spending restraint everywhere else
After the costs of war, the federal budget has little room left for growing or improving programs many Hoosiers rely on.
Education is perhaps the biggest casualty. One out of every three programs slated for cuts in the president's new budget concerns education, or a total of 48 education programs - and their funding of $4.3 billion.
It also provides $13.1 billion less in national funding for the No Child Left Behind Program than originally promised. In Indiana, public schools will be under-funded by $167 million dollars next year, though they will continue to be held 100 percent accountable for the success or failure of students on standardized testing despite the dramatic decrease in funds.
The White House claims the new budget includes a $28 billion increase for college student aid programs through 2015, including the "retirement of the Pell Grant shortfall," an increase in the maximum Pell award
by $500 over five years and "additional benefits to student borrowers."
But this budget actually under-funds Pell Grants by $6.6 billion and falls well short of Bush's State of the Union Address promise to increase the value to $5,100 per student. In Indiana, Pell Grants will be under-funded by $124.3 million, approximately $1,000 for each of the state's 97,329 qualified students.
Though the new budget is praised for "promoting the pro-growth policies that have helped produce millions of new jobs and restore confidence in our economy," Indiana will see many real cuts in economic development and job training.
Indiana has lost 68,200 manufacturing jobs under President Bush. Despite this, his administration proposes to cut the Manufacturing Extension Partnership by 60 percent while cutting an additional $22.6 million in job training funds for Indiana. The proposed federal budget also cuts $26.5 million from the state's vocational education programs.
Again, Daniels remains optimistic and committed to Indiana businesses and the economy. "Our No. 1 priority remains economic development and incentives."
The White House goals of improving health care and fostering compassion seem at odds with the goal to take "additional action to enforce spending discipline."
In Indiana, 179,000 have lost their health insurance under the Bush Administration, joining the 5 million Americans nationwide.
Eight hundred and forty thousand Indiana residents are now on Medicaid, 1 in 7 residents, including 25 percent of all Hoosier children.
But the Bush budget seeks to reduce Medicaid spending by $45 billion over the next 10 years by shifting the costs to the states.
This includes a cut of $853 million in Medicaid funding for a budget of more than $4.65 million, or 11 percent of the state budget.
Daniels sees the challenge as one of limiting expenses rather than increasing funding: "Every state is seeing the biggest increase in Medicaid spending. The challenge is to slow the rate of growth."
Indiana faces some of its most significant budget challenges during this legislative session as the General Assembly works on state financing for the next two years.
Given the cuts in federal spending and the state's budget deficit, Hoosiers should be prepared for the changes ahead. Cuts in homeland security, veterans' benefits, economic development, job training, education and health care are imminent and some would argue necessary.
The final federal budget is in the hands of Congress. As Daniels points out, they are ultimately the ones responsible.
"The president sets the total spending level," the governor explains. "But he respects the right of Congress to make adjustments. Keep in mind the president has never vetoed any of the spending bills Congress has sent him."