The rest of the federal government, however, is on a diet, according to Bush’s 2003 budget proposal sent Monday to Capitol Hill that would see exporters paying for overseas promotions and less money for anti-sweatshop enforcement.
Importers of apparel and textiles should be happy the White House wants to spend $313 million toward the years-long construction and $1.5 billion cost of a new Customs cargo-processing computer that’s sorely needed, up from $307 million being spent this year. The current computer is prone to blackouts, which have caused cargo backups at the ports.
Securing funding for the Automated Commercial Environment, as the computer is called, has been iffy. Last year was the first time ACE received meaningful financing from Congress. This year, ACE got a boost from the war on terrorism since Customs stores in its data bank names of people entering the country. Moreover, the Bush administration has dropped the Clinton presidency’s push to levy a user fee on importers and exporters to pay for ACE.
“This means the government is finally committed to building ACE and [is] committed to doing it on a timely basis,” said Jonathan Gold, director of international trade policy for the International Mass Retail Association.
The administration also wants Customs to receive $3.2 million next year for an importer-agency cargo security program created after Sept. 11. The Customs Trade Partnerships Against Terrorism, which covers importers of textiles and apparel, is designed to keep terrorist weapons from being stowed in cargo. The program sets out security protocols for importers and ocean carriers to secure cargo from the factory to delivery. After Sept. 11, Congress allocated $8.3 million to start the program, with 21 Customs employees.
The President’s budget for the fiscal year that begins Oct. 1 calls for government spending to rise 3.7 percent over 2002, but military spending would go up about 14 percent to $48 billion, the largest increase since the Reagan administration’s defense buildup 20 years ago. Homeland security would get $37.7 billion, up from this year’s $20 billion.
In order to afford more defense, the administration is cutting into several domestic programs.
In a statement, Bush defended cuts in education, health, highway, job training and other programs as part of a “bold agenda for government reform” that will use a new performance rating to eliminate government waste. Bush’s budget also reflects the economic slowdown, which has seen four years of government surpluses vanish. The President’s 2003 budget projects an $80 billion deficit.
Carl Steidtman, chief economist at Deloitte Research, said the proposed increase in military spending would have a positive effect on the economy that “will be relatively small,” compared to the larger economic impact created in the 1960s by the Vietnam War military buildup and that experienced during World War II.
As for Bush’s proposed $591 billion in tax cuts over 10 years, contained in his 2003 budget, Steidtman said the decreases would have little immediate effect since they are spread out over many years. “If these tax deductions were accelerated, it would have an effect. Consumers would have more money and they would go out and spend it,” Steidtman said.
The 2003 budget is an administration wish list and now goes through arduous debate on Capitol Hill where lawmakers will issue the final product. Other tidbits in Bush’s proposal affecting the business of fashion include:
Levying $10 million in user fees for unspecified International Trade Administration export promotion services, which includes domestic apparel and textile programs. The amount of user fees or how they would be assessed were not available.
A reduction of $9 million to $173 million for funding the Labor Department’s Wage and Hour Division, responsible for scouting U.S. workplaces, including apparel contractors, for sweatshop abuses. Details of the proposed cutbacks weren’t forthcoming. Overall the Labor Department’s budget would be trimmed by $1 billion to $11.4 billion, which includes a $600 million cut in job training and other services for the unemployed. Officials described the cutback as being due to a revamping of state-run training programs and a surplus of funding for some of these efforts.
A Federal Trade Commission budget increase of $16 million to $178 million. Some of the money will be used to launch a national “do-not-call” list to curb unwanted telemarketers, a move retailers are opposing.
A U.S. Trade Representative’s Office budget increase of $2.2 million to $32.3 million. The USTR is heading up the administration’s ambitious trade negotiating agenda, which includes free trade agreements with the Americas, Chile individually and Singapore. l Extending a tax break widely used by retailers, called the Work Opportunity Tax Credit. The credit, used to hire disadvantaged employees, expired in December and Bush proposes renewing it until Jan. 1, 2004.