February 14, 2011

The Bloated Federal Government Unveils $3.73 Trillion Budget for 2012

Highlights of Obama's $3.73 Trillion Budget

By 2021, Obama projects that $844 billion out of the $5.7 trillion federal budget would go toward paying interest on the government's debt. Such interest payments would exceed the size of the entire federal budget in 1983.

February 14, 2011

AP - A look at what President Barack Obama has requested in his $3.73 trillion budget for the 2012 fiscal year beginning Oct. 1.

Agency: NASA

Spending: $18.7 billion

Percentage Change from 2011: 0.9 percent decrease

Discretionary Spending: $18.7 billion

Highlights: Obama's space budget is about the same as the previous year, avoiding the major proposed cuts other agencies are facing, partly because of the long planned retirement of the space shuttle fleet. With Obama continuing a Bush administration decision to stop flying the 30-year-old shuttles, NASA can then shift the couple billion dollars it has been spending yearly to launch shuttles to other projects. However, NASA will have to spend more than half a billion dollars on a pension plan payment for private company workers who helped launch the shuttle.

It's how that other money will be spent that has already put Obama's NASA on a collision course with Congress. Obama wants to spend $850 million to help private companies develop their own space taxis that will eventually replace the shuttle and the Russian Soyuz as the way to get astronauts to the International Space Station. Congress has repeatedly tried to cut commercial crew spaceship aid. On the other side, Congress has ordered NASA to speed up development of a heavy-lift rocket to get astronauts out of Earth's orbit and on the way to an asteroid, the moon and Mars. NASA has put $1.8 billion in its budget proposal for that, but said they cannot build the rocket in time for a 2016 launch as Congress wants.

NASA continues to wrestle with the overbudget James Webb Space Telescope, which eventually will replace the Hubble telescope, cutting $64 million from the budget as it tries to get costs under control. The agency is still trying to figure when it will be launched and what its total cost will be.

Agency: Veterans Affairs

Spending: $129 billion

Percentage Change from 2011: 4.5 percent increase

Discretionary Spending: $58.8 billion

Highlights: More than 2.2 million service members have deployed for war since the Sept. 11 terrorist attacks. The budget proposal would provide $208 million in aid to caregivers who are family members of the severely wounded from the recent wars. It's part of a law signed last year by President Barack Obama. It would invest $183 million to help jumpstart VA's effort to reduce its massive claims backlog that's left veterans waiting months or years for a benefit check by starting to implement a paperless claims system. It would invest $939 million to help expand services for homeless veterans through private and public partnerships. It also would provide $6 billion for programs targeting the mental health needs of veterans, including those with traumatic brain injury. The proposed budget would cut spending for construction. House Veterans' Affairs Chairman Jeff Miller, a Republican, has promised to do a thorough review of spending at the VA.

Agency: Transportation

Spending: $128.6 billion

Percentage Change from 2011: 68 percent increase

Discretionary Spending: $13.4 billion

Highlights: Obama is calling for spending $556 billion over six years for highway, transit and passenger rail construction, as well as safety programs. That includes $53 billion for high-speed trains in addition to the $10.5 billion already committed for train projects. High-speed rail is one of Obama's signature programs, but the budget proposal puts him on a collision course with House Republicans. They voted last week to cut $1 billion for fast trains from the current budget.

The last long-term government transportation construction program expired on Oct. 1, 2008. The administration and Congress have kept the program limping along through a series of short-term extensions that included dipping into the general treasury for funds. What's not in the president's budget is an increase in federal gasoline and diesel taxes to pay for construction. Obama's deficit commission recommended as much as a 15 cent increase phased in over several years. Both the White House and congressional leaders see a gas tax increase as a political nonstarter.

To help pay for highway and transit construction, the administration proposes using $30 billion of the $556 billion as seed money to start up a national infrastructure bank that would make loans to major transportation projects.

Industry and labor have been pushing for increased spending on road, rail and transit projects to help generate jobs and reduce costly traffic congestion. Two blue-ribbon commissions have predicted nightmarish congestion without a major national effort to repair and improve the nation's transportation system.

The budget proposal also would reduce funds for airport construction by $1.1 billion — nearly a third — by eliminating grants to large and medium hub airports. In exchange, it would give larger airports the power to increase the fees charged to airline passengers. Passengers pay a fee for each airport they pass through, including when they change planes. Currently, airports are allowed to charge up to $4.50, although not all of them do. The airline industry is opposed increasing airport fees, which are added to the ticket price passengers pay.

Agency: State

Spending: $73.6 billion

Percentage Change from 2011: 0.7 percent decrease

Discretionary Spending: $58.9 billion

Highlights: Hillary Rodham Clinton's State Department is spared major cuts hitting other government agencies, with a decrease of less than one percent from the previous year. The budget proposal maintains significant funds for programs in Afghanistan and Pakistan as well as Iraq, where U.S. diplomats will face serious challenges as American troops continue to withdraw.

The proposed budget calls for slight increases in global development assistance and the Peace Corps but also foresees reductions for development funds in Africa and Latin America. It would eliminate direct military assistance for five countries and military training programs for nine countries to focus those funds on front-line states with strategic significance, the department said. It also would reduce economic assistance for east European and Central Asian countries.

Despite the overall cut and only modest increases in some programs, the department's budget is targeted for slashing by the GOP-controlled House. Clinton has been making the rounds on Capitol Hill seeking support for the proposal, arguing that it is a critical time for America to project global leadership and not retreat.

Agency: Defense

Spending: $727 billion

Percentage Change from 2011: 5.8 percent decrease

Discretionary Spending: $671 billion

Highlights: The Pentagon's proposed budget for 2012 includes more than $117.8 billion to cover the costs of the wars in Iraq and Afghanistan, a decrease from the nearly $160 billion for 2011. That change provides the bulk of the budget decrease for the department and would be the smallest amount spent on the wars since 2006.

Congress' failure to pass a 2011 budget, however, has complicated matters, prompting Defense Secretary Robert Gates to accuse lawmakers of dumping a crisis on his doorstep. The Pentagon is restricted to spending at 2010 budget levels, jeopardizing the military's effort to send more surveillance and attack drones into Afghanistan, as well as stymieing plans to buy a new Navy submarine, Army combat helicopters and other major weapons systems, according to the services.

Gates has rolled out a broad plan to scale back defense spending by $78 billion over the next five years, by shrinking the size of the Army and Marine Corps, cutting some military weapons, increasing health care premiums for military retirees and their families, and trimming administrative costs.

Agency: Interior

Spending: $11.8 billion

Percentage Change from 2011: 4.4 percent decrease

Discretionary Spending: $12 billion

Highlights: Obama's budget provides about $12 billion for Interior, roughly the same as the current year. The budget would increase spending for oversight of offshore oil and gas drilling, in response to the BP oil spill. The proposal includes $500 million to restructure the new Bureau of Ocean Energy Management, Regulation and Enforcement, which was formed after the April spill in the Gulf of Mexico, the worst offshore oil spill in the nation's history. The money would allow the agency formerly known as the Minerals Management Service to hire hundreds of new oil and gas inspectors, engineers, scientists and others to oversee industry operations; conduct detailed engineering reviews of offshore drilling; and more closely review oil spill response plans.

The budget also would increase spending for land and water conservation. Savings are achieved through decreases in spending for the U.S. Geological Survey, construction programs for national parks and wildlife refuges and some tribal programs.

The budget supports development of new solar, wind, and other alternative energy sources.

Agency: Justice

Spending: $30.9 billion

Percentage Change from 2011: 5.1 percent decrease

Discretionary Spending: $20.9 billion

Highlights: The proposed Justice Department budget focused on financial crime and the ongoing threat of terrorism inside the United States.

In the national security arena, the department has proposed substantially improving intelligence gathering by supporting a high-value interrogation group targeting terrorist suspects.

The department also proposed continuing funding for the attorney general's financial fraud task forces, which have targeted more than 500 criminal and civil defendants over fraud schemes that have harmed more than 120,000 victims nationwide. Losses exceed $10 billion.

Agency: Commerce

Spending: $10.4 billion

Percentage Change from 2011: 13.9 percent increase

Discretionary Spending: $8.8 billion

Highlights: The proposed Commerce Department budget includes money to advance President Barack Obama's goals of pushing innovation among entrepreneurs, providing high-speed Internet access to more Americans and expanding exports to foreign nations.

The budget plan would boost funds for federal laboratories that promote innovation. The National Institute of Standards and Technology laboratories, which have helped develop image processing, smoke detectors and pollution-control technology, would receive $764 million under the plan, an increase of more than $100 million.

The proposal would attempt to bring high-speed wireless to rural America relying on $10 billion during the next several years to develop a national broadband network for public safety agencies and $5 billion to develop wireless broadband networks in rural areas. The administration would also promote exports with more than $500 million for the International Trade Administration.

The plan would cut funds for a grant program that helps public broadcasting stations bring educational and cultural programs to the public. It also would cut funds for a program established in 1999 that provides guaranteed loans to steel and iron ore companies.

Agency: Housing and Urban Development

Spending: $47.2 billion

Percentage Change from 2011: 15.5 percent decrease

Discretionary Spending: $41.7 billion

Highlights: The administration is recommending a 7.5 percent cut to the Community Development Block Grant program. States and cities use the money to build streets and sidewalks, provide water and build sewers, and make other infrastructure improvements in low-income neighborhoods. Many Republican lawmakers would like to scale the program back much more with one group calling for its elimination, saving about $4.5 billion annually. Mayors, already struggling to balance budgets, are fighting to maintain the program.

HUD's programs serve primarily the poor, elderly and disabled. It's likely to be one of the hardest hit as lawmakers and the administration look for savings. The president's budget recommends spending less to maintain and operate public housing complexes. It also calls for trimming by 15 percent the amount of money spent to build new housing for the elderly and disabled.

The administration is calling for a 28 percent increase in spending on a program that helps communities and non-profit organizations provide housing to the homeless.

Agency: Education

Spending: $68 billion

Percentage Change from 2011: 38.5 percent increase

Discretionary Spending: $77.4 billion

Highlights: Obama wants a major boost in education spending even as he calls for a five-year freeze on domestic spending. That puts him at odds with congressional Republicans pressing for deeper cuts aimed at reducing the nation's deficit.

In his State of the Union address, Obama said investing in education and innovation was vital for America's long-term economic growth and global competitiveness. He urged America to "out-educate" other countries.

The president is asking for $4.3 billion to improve teacher quality. Obama wants $900 million for a new round of funds for the Race to the Top initiative that the administration says has spurred critical school reforms. The competitive education grant program will be geared toward school districts, as opposed to awarding money to states as was done last year.

The president is seeking $350 million in a similar challenge fund for early-learning programs.

Obama is also asking for $80 million as part of a broader push to prepare 100,000 new math and science teachers in the next decade.

Obama's budget request comes as the administration and Congress seeks to rewrite the Bush-era No Child Left Behind law. Both agree on the need to revamp the education law that was passed on a bipartisan vote in 2001.

Agency: Energy

Spending: $27.2 billion

Percentage Change from 2011: 12.7 percent decrease

Discretionary Spending: $29.5 billion

Highlights: The budget proposes several spending initiatives designed to kick-start the president's goal for the nation to get 80 percent of its electricity from clean sources by 2035. It proposed boosts for energy sciences to discover new ways to use, store and produce energy, and for renewable energy such as solar, biofuels and geothermal. It would provide more than a half-billion dollars for the Advanced Research Projects Agency-Energy, which encourages transformational energy research. It would double the number of Energy Innovation Hubs to focus on technologies like battery and energy storage and new energy grid technologies.

The budget calls for $36 billion in loan guarantees to build new nuclear power plants (which was also in last year's budget), and $853 million to support nuclear energy, including research and development for technologies like small modular reactors. In an attempt to boost electric car use, the budget would transform the $7,500 tax credit into an instant rebate, and spend around $600 million for vehicle technologies.

The budget calls for cuts in several programs, such as the Office of Fossil Energy, by eliminating the Fuels Program, the Fuel Cells Program, the Oil and Gas Research and Development Program and the Unconventional Fossil Technology Program. It also would end operations at the Tevatron facility at Fermi National Laboratory in Illinois and close the Holifield Radioactive Ion Beam Facility at the Oak Ridge National Laboratory in Tennessee.

The president also wants to boost spending for the Energy Department's National Nuclear Security Administration, proposing around $12 billion, including $7.6 billion for Weapons Activities to maintain the nation's nuclear arsenal.

Agency: U.S. Army Corps of Engineers

Spending: $4.6 billion

Percentage Change from 2011: 6.1 percent decrease

Discretionary Spending: $4.6 billion

Highlights: The big budget increases that the Corps of Engineers saw following Hurricane Katrina are officially over. For the second year in a row, the administration has proposed cutting the agency's budget. This year's cut of about 6 percent puts its annual spending at $4.6 billion — almost exactly where it stood in 2005, before Katrina destroyed the levees around New Orleans and prompted a rush of new spending to shore up aging water infrastructure around the country.

The recent cuts have been eased by the $4.6 billion for civil works under the 2009 stimulus bill.

The administration proposes spending about a third of the 2012 budget on new construction projects, mostly for bolstering flood and storm damage protection, improving commercial navigation in rivers and harbors, and restoring ecosystems in critical areas such as the Chesapeake Bay, California Bay-Delta, Everglades, and Great Lakes. Another $2.3 billion would go toward operating and maintaining existing dams, waterways, floodwalls and other infrastructure.

Corps projects, such as deepening a harbor to allow for larger ships at a local port, can help drive a region's economy, and there is fierce competition in Congress for funds. In the past, the budget has been rife with earmarks, the locally directed spending dictates from lawmakers that are under fire from budget hawks. Despite recent no-earmarks pledges from Obama and House Republicans, lawmakers will likely again rewrite the corps budget to restore their own priorities.

Obama Unveils $3.73 Trillion Federal Budget for 2012

February 14, 2011

AP - President Barack Obama is sending Congress a $3.73 trillion spending blueprint that pledges $1.1 trillion in deficit savings over the next decade through spending cuts and tax increases.

Obama's new budget projects that the deficit for the current year will surge to an all-time high of $1.65 trillion. That reflects a sizable tax-cut agreement reached with Republicans in December. For 2012, the administration sees the imbalance declining to $1.1 trillion, giving the country a record four straight years of $1 trillion-plus deficits.

Jacob Lew, Obama's budget director, said that the president's spending proposal was a balanced package of spending cuts and "shared sacrifice" that would bring the deficits under control.
Appearing on ABC's "Good Morning America," Lew said that Obama's budget would "stand the test that we live within our means and we invest in the future."
Senior administration officials, who spoke on condition of anonymity in advance of the formal release of the budget, said that Obama would achieve two-thirds of his projected $1.1 trillion in deficit savings through spending cuts including a five-year freeze on many domestic programs.

The other one-third of the savings would come from tax increases, including limiting tax deductions for high income taxpayers, a proposal Obama put forward last year only to have it rejected in Congress.

The Obama budget recommendation, which is certain to be changed by Congress, would spend $3.73 trillion in the 2012 budget year, which begins Oct. 1, a reduction of 2.4 percent from what Obama projects will be spent in the current budget year.

The Obama plan would fall far short of the $4 trillion in deficit cuts recommended in a December report by his blue-ribbon deficit commission. That panel said that real progress on the deficit cannot be made without tackling the government's big three entitlement programs — Medicare, Medicaid and Social Security — and defense spending.

Obama concentrated his cuts in the one-tenth of the budget that covers most domestic agencies, projecting $400 billion in savings from a five-year freeze in this area. Some programs would not just see spending frozen at 2010 spending levels but would be targeted for sizable cuts.

Republicans, who took control of the House in the November elections and picked up seats in the Senate in part because of voter anger over the soaring deficits, called Obama's efforts too timid. They want spending frozen at 2008 levels before efforts to fight a deep recession boosted spending in the past two years.

They are scheduled to begin debating on Tuesday a proposal that would trim spending by $61 billion for the seven months left in the current budget year, which ends Sept. 30. They also have vowed to push for tougher cuts in 2012 and future years.
"Americans don't want a spending freeze at unsustainable levels," said Senate Republican leader Mitch McConnell. "They want cuts, dramatic cuts."
The president's projected $1.65 trillion deficit for the current year would be the highest dollar amount ever, surpassing the $1.41 trillion deficit hit in 2009. It would also represent 10.8 percent of the total economy, the highest level since the deficit stood at 21.5 percent of gross domestic product in 1945, reflecting heavy borrowing to fight World War II.

The president's 2012 budget projects that the deficits will total $7.21 trillion over the next decade with the imbalances never falling lower below $607 billion, a figure that would still exceed the previous deficit record before Obama took office of $458.6 billion in 2008, President George W. Bush's last year in office.

Administration officials project that the deficits will be trimmed to 3.2 percent of GDP by 2015 — one-third of the projected 2011 imbalance and a level they said was sustainable.

While cutting many programs, the new budget does propose spending increases in selected areas of education, biomedical research, energy efficiency, high-speed rail and other areas Obama judged to be important to the country's future competitiveness in a global economy.

In the energy area, the budget would support Obama's goal of putting 1 million electric vehicles on the road by 2015 and doubling the nation's share of electricity from clean energy sources by 2035.

The budget proposes program terminations or spending reductions for more than 200 programs at an estimated savings of $33 billion in 2012. Programs targeted for large cuts included Community Development Block Grants, trimmed by $300 million, while a program that helps pay heating bills for low-income families would be cut in half for a savings of $2.5 billion while a program supporting environmental restoration of the Great Lakes would be reduced by one-fourth for $125 million in savings.

The biggest tax hike would come from a proposal to trim the deductions the wealthiest Americans can claim for charitable contributions, mortgage interest and state and local tax payments. The administration proposed this tax hike last year but it was a nonstarter in Congress.

Obama's budget would also raise $46 billion over 10 years by eliminating various tax breaks to oil, gas and coal companies.

While Obama's budget avoided painful choices in entitlement programs, it did call for $78 billion in reductions to Pentagon spending over the next decade by trimming what it views as unnecessary weapons programs such as the C-17 aircraft, the alternative engine for the Joint Strike Fighter aircraft and the Marine expeditionary vehicle.

Administration officials said that the savings from limiting tax deductions for high income taxpayers would be used to pay for keeping the Alternative Minimum Tax from hitting more middle-class families over the next two years.

Another $62 billion in savings would be devoted to paying to prevent cuts in payments to doctors in the Medicare program over the next two years. Congress has for several years blocked the cuts from taking effect.

The budget will propose $1 billion in cuts in grants for large airports, almost $1 billion in reduced support to states for water treatment plants and other infrastructure programs, and savings from consolidating public health programs run by the Centers for Disease Control and various U.S. Forest Service programs.

The administration will also propose saving $100 billion from Pell Grants and other higher education programs over a decade through belt-tightening with the savings used to keep the maximum college financial aid award at $5,550, according to an administration official who spoke on condition of anonymity in advance of the budget's Monday release.

The surge in deficits reflect the deep 2007-2009 recession, the worst since the Great Depression, which cut into government tax revenues as millions were thrown out of work and prompted massive government spending to jump-start economic growth and stabilize the banking system.

Republicans point to still-elevated unemployment levels and charge the stimulus programs were a failure. The administration contends the spending was needed to keep the country from falling into an even deeper slump.

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