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The Bush Budget: Defense Wins Out Over Local Issues

WASHINGTON — President Bush sent Congress his proposed $2.23 trillion federal budget for 2004 Monday that provides no new money for fighting garment sweatshops and slightly expands funding for international trade programs, including export...

WASHINGTON — President Bush sent Congress his proposed $2.23 trillion federal budget for 2004 Monday that provides no new money for fighting garment sweatshops and slightly expands funding for international trade programs, including export promotion.

With a slowed economy and increased spending on fighting terrorism, the White House is calling for the federal government to be on an extra lean diet.

“I will insist on spending discipline in Washington,” Bush said in a message to lawmakers accompanying the fiscal blueprint.

The administration’s budget proposal, as expected, is weighed heavily on increasing money for national security. About half of the new money sought, or $15.3 billion, is earmarked for defense. Otherwise, most agencies under Bush’s plan would receive around 2 percent budget increases, about on par with inflation.

Bush’s fiscal plan — to be debated and changed in coming months by Congress — takes into account the President’s earlier economic stimulus plan for $670 billion in tax cuts. The proposal also calls for the federal deficit in 2004 to reach $307 billion, following the expected record-high deficit this year of $304 billion.

“The thing that strikes me the most is that they’re looking at a budget deficit projection in the range of $300 billion and how Wall Street and consumers are going to react to that,” said Steve Pfister, senior vice president of government relations at the National Retail Federation. “I don’t think it bolsters confidence.”

Businesses worry about lingering and large federal deficits because of potential effects on the economy, like higher interest rates and resulting increased costs and unemployment. There have been deficits ever since Bush took office, after four years of surpluses in the last years of the Clinton administration, due to congressional budget belt-tightening and a flush economy in the Nineties.

The deficit issue is a sensitive topic for Bush. On Monday, Mitch Daniels, director of the White House Office of Management and Budget, told reporters he expected deficits to be short lived.

Daniels touted how the U.S. economy, even as it flags, as being “the only positive force in the global economy.”

Although the GOP is now in charge of both the House and Senate, Bush’s budget isn’t guaranteed to pass unaltered. Its fate could easily mirror that of his 2003 budget, which Congress has changed and is still in the process of debating. Agencies are still being funded at 2002 levels.

This story first appeared in the February 4, 2003 issue of WWD.  Subscribe Today.

However, Bush’s budget is clearly bent on setting an example of austerity. For the first time, the administration is using what it calls “performance and management assessments” to measure agency effectiveness.

Among the items in Bush’s proposed 2004 budget related to the fashion industry, are:

Slightly increasing by three the 950-inspector workforce at the Labor Department that canvases garment contractors and other workplaces for federal wage and child labor violations. The agency’s Wage & Hour Division’s $161.3 million budget, however, would remain almost constant for the second consecutive year. Last year, the division collected $5.83 million in back wages owed U.S. garment workers, an increase of 27.3 percent against 2001. The number of garment workers receiving back wages increased 51 percent.

A proposed decrease of $13 million to $37 million in funding for an International Trade Administration program to agitate for foreign countries to lower trade barriers to U.S. goods. The program last year was touted by the Bush administration as a tool for promoting U.S. textile sales abroad.

An increase of $5 million to $37 million in funding for the Office of the U.S. Trade Representative, which is in the midst of pursuing various free-trade pacts, including one with five Central American countries it hopes to complete by year’s end.

Combining and extending two worker tax credits widely used by retailers when hiring economically disadvantaged workers. The $10,000 Welfare-to-Work Tax Credit and $6,000 Work Opportunity Tax Credit would make computing the credits simpler, while maintaining the same tax break.