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 and Co.
According to some longtime budget experts, 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.
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.
One of the document’s heaviest blows lands on the Agriculture Department, which gets plowed 3 percent or about $700 million as Obama phases out farm subsidies. That move, along with plans to reduce subsidies to crop insurance companies, would save the federal government about $32 billion over the next decade.
The Environmental Protection Agency loses $105 million, or about 1.2 percent. The White House cuts aid to states’ waste-management – including hazardous waste sites - as well as eliminates programs the agency deems duplicative and “underperforming.” Despite those cuts, the White House seeks to provide the agency an extra $15 million for a program to maintain and restore the Chesapeake Bay.
The Defense Department’s 2013 budget signals what could be the first in a series of defense spending cuts. The White House agreed to cut $487 billion from the defense budget over the next ten years as part of last summer’s debt ceiling deal. Under the 2013 proposal, the defense budget minus Afghanistan war costs would shrink by about 1 percent, or by about $5.1 billion and Pentagon spending on wars abroad would fall by 23 percent in the wake of the final U.S. troop withdrawal from Iraq last December and plans to exit Afghanistan by 2014. The request asks Congress to begin two new rounds of base closures in 2013 and 2015, building on announcements last month that the Army and Marine Corps would shed about 90,000 troops over the next decade.
The Department of Homeland Security’s funding heyday may be drawing to a close for the first time in the agency’s nearly eight-year existence with cuts of 0.5 percent, or $191 million. Core functions like Immigration and Customs Enforcement and the U.S. Secret Service would be protected, but the Transportation Security Administration would sustain cuts of nearly $300 million. Nearly $32 billion in new fees would be levied against airlines and passengers to cover air traffic and security costs.