President Obama recently unveiled his federal budget for fiscal year 2013. It’s a comprehensive plan that details, agency by agency, the changes that the President would like to see made in their respective budgets. It’s a plan that not only sets forth an agenda for the coming year, but one that the President is billing as a blueprint for an economy that is “Built to Last.” It lays out some specific proposals but also lays out some larger ones that demonstrate, philosophically, the way the President believes the country should move forward. I’d like to go over some of the details now.
The President’s budget is an annual submission to Congress that sets forth the President’s recommendation for funding levels for the entire federal government. The budget is comprised of the administration’s plans for both spending and revenue for the following fiscal year. The fiscal years for the Federal budget begin on October 1st for the following year. So fiscal year 2012 began October 1st 2011, fiscal year 2013 begins October 1st 2012, and so on. This current budget is for fiscal year 2013.
Typically, Presidents submit their budget proposals for the upcoming year in early February, to give Congress plenty of time to review it, debate it, and vote on it. And the reason the President has to submit the budget to Congress, is because federal agencies cannot spend money unless and until those funds are appropriated to them. In our system, only Congress has the “power of the purse” as it is known, and it’s granted to it by the Constitution.
Once submitted to Congress, the budget makes its way through the various budget and appropriations committees being changed and revised as those committees see fit. It is then put to a vote in both the House and the Senate. When the House and the Senate agree on a final version of the budget, it is sent to the President for his signature. If he signs the bill, it becomes law and the budget goes into effect. If he vetoes it, Congress must pass and send another bill to the President to avoid a shutdown of the federal government.
Now Presidential budgets are usually significant because more so than any other document, they paint a total picture of the President’s vision for the country. Because Federal funds are not unlimited, tough decisions need to be made about which programs get funded and by how much. So in this way, presidential budgets show us, with a good level of detail, the President’s priorities. And because the budgets are so closely aligned with the President’s priorities, the budget approval process usually becomes politically charged. And in an election year, even more so.
So this year promises to be no different. President Obama has proposed a budget that has the usual, straightforward, budgetary modifications. But he also includes some major budget initiatives that, it would seem, he hopes will highlight some of the differences between himself and the Republican party, on the way the country should move forward. Let’s go over some of the highlights now.
First off, there’s education. The President’s budget increases funding for the Department of Education by 2.5%, or $1.7 billion. It sets a goal of having the largest proportion of college graduates in the world by 2020. It provides $850 million for the President’s Race to Top program, which is a competitive program that awards states grants for improving measures of student performance; For example, closing achievement gaps, and improving graduation rates.
The budget provides $260 million in funding for science, technology, engineering and mathematics programs, for students in grades K-12. This initiative includes $80 million dollars devoted to prepare 100,000 new teachers who specialize in these fields.
The plan also slightly increases the maximum Pell Grant award, and would suspend an increase in interest rates on student loans which are scheduled to double this summer. It would also make a tax credit for college tuition permanent.
Another area worth highlighting is the Department of Energy. For that department, the plan also increases funding levels over last year, by 3.2% up to a total of $27.2 billion. The plan proposes $2.3 billion for the office of renewable energy. Funds that will go toward research, development and commercialization of clean energy solutions, which the President believes are America’s energy solutions of the future.
The plan proposes devoting funds totaling $5 billion to the Office of Science, which conducts Research & Development in the areas of physics, materials and chemistry. Part of this funding will also go toward investments in national assets such as national supercomputers.
The plan makes an overall investment of $421 million in fossil energy Research & Development. Part of those funds will be directed to research on developing America’s natural gas resources.
In addition to the allocation of funds, the budget for the department of energy proposes to eliminate some spending as well. The plan proposes cutting about $4 billion worth of subsidies to oil and gas companies. The plan contends that while resources are so scarce, we should not be devoting what little resources there are to companies that are among some of the most profitable in the world. Rather, we should be devoting them to technologies and initiatives that will drive future growth.
Yet another area worth mentioning is the budget’s plan on infrastructure:
-The budget proposes a 6-year, $476 billion surface transportation package. The package is meant to revitalize and modernize the nation’s infrastructure.
-The budget provides more than $1 billion for the implementation of Next Generation air traffic control systems throughout the nation’s airports.
-It would also provide $47 billion over 6 years toward the development of high speed rail as part of a nationally integrated high speed rail system.
- There is also an additional $50 billion allocated for investments to be made this year in critical infrastructure projects, such as improving the country’s roads, bridges, transit systems and border crossings. This initiative, along with the others mentioned, are designed to spur job growth in industries where it is much needed, such as construction.
Now for Defense: the budget proposes a decrease of about $5 billion or 1 percent of the total budget. The budget proposes significant cuts in the size of the military while maintaining funding in some key areas such as cyber security, special operations forces, and unmanned aircraft. The plan advances the President’s goal of achieving almost $487 billion in savings from the Defense Department by the year 2021.
The plan reflects a beginning of a draw down in the size of the military over the next 5 years, as well as scaling back operations in Afghanistan, and bringing operations to a close in Iraq. It proposes reducing or eliminating altogether some weapons systems such as the F-35 Joint Strike Fighter and the C27 Airlift Aircraft. It also offers servicemen and women a 1.7% basic pay raise, the full increase authorized under current law.
Now, the last area I’d like to mention is that of taxes. The President’s budget proposes about $1.7 trillion in new taxes. This number would be achieved in large part, by ending the Bush tax cuts for households earning more than $250,000. It would also be achieved by instituting what has become known as the Buffet rule. The Buffet rule, named after billionaire warren buffet, states that households earning more than $1 million should not pay a lower tax rate than middle-income households. Wealthy households would see their tax rates rise, to make them more comparable to middle income tax rates. The plan also calls for raising the tax rate on dividends to bring them more in line with tax levels for ordinary income, and for doing away with the alternative minimum tax.
With these new revenues along with the other spending cuts detailed in the plan, it’s the President’s goal to cut the deficit by $4 trillion over the next 10 years. This plan, according to the administration would be a down payment on that goal.
Now when it comes to the single biggest drivers of our national debt: Social Security, Medicare and Medicaid, the President’s budget largely takes a pass. On Social Security, the plan offers a slight increase over last year’s budget level, and devotes funds toward preventing fraud and abuse, as well as efforts to cut waste and improve efficiency. But it goes no further than that, and offers no major plans or initiatives for dealing with the long term issues with regards to Social Security.
With Medicare and Medicaid, the plan takes a similar tack. It doesn’t address the long term debt or deficit problems, and doesn’t propose any structural changes to the programs. It does propose initiatives that serve to incentivize wellness and preventive care, rather than costly tests and needless procedures. And it also supports reforming the reimbursement system to Medicare providers, which has been a long debated issue. But it doesn’t go too much further than that.
So those are the main highlights of the plan. It was greeted with much scorn by Republicans on Capitol Hill (as you might imagine). Many of them declared the budget “dead on arrival.” Their main complaints are that the budget does nothing, they say, to address long term deficit problems. They also chastise the President for failing to uphold his promise to cut the deficit in half by the end of his first term. They point out that this budget projects a deficit for the next year of over one trillion dollars, marking the 4th straight year of deficits above that mark.
Senate Minority Leader Mitch McConnell, a Republican, is quoted as saying, “Once again, the president is shirking his responsibility to lead and using this budget to divide.” He also says this budget, “isn’t really a budget at all; it’s a campaign document.”
None of this of course, comes as a surprise to The President, or Congressional Democrats. They know that the budget in its current form has no chance of passing through Congress and becoming law. In fact, Harry Reid, Senate Majority Leader, has already said he will not bring the budget to the Senate floor for a vote. A rather telling decision in that it shows how little support the budget has in the Senate.
Now, the Republican claims are not without merit. The President did promise to cut the deficit in half by the end of his first term, and it doesn’t look as though he’s going to be able to keep that promise. And this will be the 4th straight year of trillion dollar deficits for the country, an unprecedented mark. But when they accuse the President of caring more about the election than putting forth serious long term solutions. And when they say that this is not a serious budget, but rather a campaign document, I’m tempted to remind the Republicans of the age-old adage: You reap what you sow.
At the very beginning of the President’s term, it was Congressional Republicans who decided their number one goal was to make this President a one-term president. They decided they were going to view every decision they made through the lens of, not doing good for the country, but through the lens of the 2012 election. Are they surprised then, that the President has started viewing his decisions not through the lens of finding common ground with Republicans, but through the lens of the 2012 election as well?
That is the real problem with the politics of obstructionism. It encourages parties not to work together, but to thwart each other. Not to work toward progress, but to stall each other. And the people caught in the middle are not the elected officials practicing this strategy, but the American people.
This President has failed to meet certain goals in his first term, some of which were goals he himself set for his administration. But the Republican strategy of obstructionism has contributed to those failures. And for that reason, they are complicit in them. If Republicans believe they are going to escape all of the blame come Election Day they may be leaving themselves open for bit of a surprise. The only way to truly escape it is to stop the politics of obstructionism and get back to doing what’s the best for the country.