Obama’s ‘Campaign’ Budget: The Winners and Losers
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The Fiscal Times
February 14, 2012

President Obama took the wraps off his new budget yesterday, and you could almost hear a collective sigh of relief from departments that escaped the scalpel and groans from agencies that took a big hit. 

Obama’s budget is unlikely to be taken seriously, let alone passed.  His own party leader, Harry Reid, reminded everyone that a budget emerged and passed last August during the debt ceiling negotiations.  (Forgive us for reminding you.)  And Senate Minority Leader Mitch McConnell, said the president’s budget was a “charade” and a “campaign document.” 

So let’s look at this 256-page document as a statement of belief rather than intention.  Invariably, winners are spared the ax, and losers think the White House has been sold to McKinsey. 

According to some longtime budget experts, the taxpayers stand the most to lose from this budget.  Investing more heavily in education and job training are worthy causes “but unfortunately, all that needs to be paid for,” said Steve Bell, director for economic policy at the Bipartisan Policy Center and also a former Senate Budget Committee staff director.  “By leaving Medicare and Social Security reform out of this, we take ourselves a year closer to insolvency in Medicare and extreme stress on the Social Security system… and instead squeeze the smallest part of the budget.  That doesn’t make much sense to me.”  

In Obama’s 2013 budget blueprint, national security, defense and agriculture bore the brunt of budget cuts, while education, clean energy and housing assistance were set as priorities. 

Here’s a brief synopsis of which government agencies reap gains in Obama’s 2013 budget proposal, and which may need to brace for a haircut. 

Winners

The Treasury Department’s budget rises by about 7 percent, or by about $570 million, as the agency’s resources shift more heavily toward the Internal Revenue Service-- hardly a surprise when Americans are cheating on their taxes to the tune of at least $450 billion. The Internal Revenue Service budget would rise by almost $1 billion, while most of the department’s other agencies including the Alcohol and Tobacco Tax and Trade Bureau and Community Development Financial Institutions Fund would keep virtually the same funding from last year.

Large financial institutions, which were bailed out, pick up the tab.  The White House calls for the banks that received government funds under the 2008 Troubled Asset Relief Program (TARP) to pay the government $61 billion to help cover the costs—which are now projected at $68 billion.  Another, more minor, savings mechanism is to start making nickels and pennies with less expensive materials, which the White House says would save $75 million in one year. 

The Energy Department sees its funding increase by about 3.2 percent, or by about $854 million, as the White House seeks to pump money into research and development, green energy, and high-level manufacturing programs.  

As is the case with his past budget, Obama replaces $4 billion in annual tax breaks for oil and gas companies with tax incentives for clean and renewable energy manufacturers. He provides an additional $522 million for companies who utilize renewable energy sources and an additional $174 million to promote an advanced manufacturing program.

The Department of Housing and Urban Development sees its funding rise by about 3.2 percent, or about $1.4 billion, in an effort to preserve low-income housing assistance.   The request maintains a program to provide rental housing aid to about five million low-income households and substantially ramps up a program called Project Rebuild which supplies local nonprofits with grants to knock down or redevelop foreclosed properties. 

The Education Department – which is on some Republicans’ cut list -- grows by about 2.5 percent over last year, or about $1.7 billion.  The increase includes creation of a three-year $8 billion fund to assist community colleges in providing training and coursework in fields where U.S. companies’ labor demand is the highest, including transportation, health care, and certain types of manufacturing.  Half of that funding would come from the Education department and the other half from the Labor department.  The Pell Grant program, which helps poor students and the Race to the Top, which supports state and local efforts to reduce achievement gaps in schools, are also winners.