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Highlights of the $3.73 Trillion Budget Request for 2012

February 15, 2011

WASHINGTON—President Barack Obama released a $3.73 trillion budget for fiscal-year 2012 Monday where he sought to balance two competing and conflicting agendas: dramatic cuts to federal spending while also investing in programs to improve U.S. competitiveness.

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

Summary: Homeland Security gets $44 Billion with a priority on naked body scanners.  The Transportation Department gets over a half Trillion dollars for new highway and rail construction, including $53 billion for high-speed trains.  $500 million will go to the new Bureau of Ocean Energy Management and Enforcement (See my article on LOST.) and NIST, the group that dropped the ball on the Sept. 11th investigation will be getting $764 million, roughly a 17% increase from last year.


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 over budget 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. fight a war.

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 plan would impose new fees and higher royalty rates for oil and gas drillers to generate about $3 billion over 10 years. The plan would establish user fees for processing drilling permits and inspections of drilling operations. A fee also would be levied on new, non-producing oil and gas leases “to encourage more timely production,” the department said.

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.

Agency: Homeland Security

Spending: $44.3 billion

Percentage Change from 2011: 1.8 percent increase

Discretionary Spending: $879 million

Highlights: Obama’s proposed homeland security budget would provide money to purchase 275 full-body imaging machines for airports. These machines have been criticized by privacy advocates who say the images are too explicit. Aviation and cargo security remain a top administration concern as terrorists continue to target both for attacks. The president also asked for more funds for federal air marshals than he requested the previous year. And the budget proposal includes money to hire 300 more Customs and Border Protection officers to screen passengers and cargo.

Grant funding for state and local law enforcement along the southwest border would be cut by $10 million, despite continued security concerns posed by Mexican drug cartel violence. Obama also proposed cutting more than $450 million to consulting and professional service contracts and called for reduced spending on travel, printing and supplies.

The budget also calls for funds to replace aging equipment in the Coast Guard, Immigration and Customs Enforcement and Customs and Border Protection.

Agency: Agriculture

Spending: $145.6 billion

Percentage Change from 2011: 1.5 percent decrease

Discretionary Spending: $23.9 billion

Highlights: The Obama administration is hoping to capitalize on the strength of the agricultural economy by reducing subsidies to wealthy farmers. The budget proposes capping direct payments — subsidies paid to farmers regardless of how much they grow — by $2.5 billion.

According to USDA, net farm income has jumped an estimated 27 percent — or $16.8 billion — in the last year. Direct payments have been targeted for cuts because, unlike other farm subsidies, they are not based on the market and are paid to farmers regardless of yield or earnings. But Congress has strongly rejected similar proposals from Obama and President George W. Bush in past years. Southern lawmakers in particular oppose cutting those subsidies because cotton and rice crops grown in that region are more expensive to grow.

The president’s budget also proposes saving money by streamlining rural housing assistance programs, merging U.S. Forest Service programs and cutting research grants and research construction projects.

Obama’s proposal would direct an additional $56 million to research projects that reflect administration priorities. That includes nutrition and obesity research, a priority for first lady Michelle Obama, and research on food safety, bioenergy, food security and climate change.

Nutrition would also get a boost. The budget proposes repaying $2.2 billion that was cut from food stamp accounts to pay for a child nutrition bill that was signed into law last year. The administration is also proposing an additional $35 million to bring grocery stores to low-income communities.

Agency: Environmental Protection Agency

Spending: $8.8 billion

Percentage Change from 2011: 11.2 percent decrease

Discretionary Spending: $9 billion

Highlights: With Congressional Republicans determined to slash the Environmental Protection Agency’s budget, Obama’s 11 percent cut meets them part of the way. The bulk of the savings comes from grants that help states upgrade sewage treatment plants and drinking water systems — infrastructure improvements that Obama has sought budget increases the last two years, and that in 2009, he wanted to triple.

The budget also eliminates an $80 million program that paid for technologies to clean up dirty diesel engines. In a 2009 report to Congress, the EPA highlighted the success of the clean diesel effort, saying that it removed tons of pollution and resulted in massive public health benefits.

The GOP wants EPA’s budget cut by a third, or $3 billion, and specifically targets the agency’s efforts to reduce the pollution blamed for global warming.

Obama pushes back on global warming. His budget specifically leaves enough money for the agency to carry out a pledge to reduce greenhouse gases from vehicles sold through 2016, as well as lay the groundwork for standards farther into the future.

The proposal maintains a program that helps boost the energy efficiency of home appliances which Republicans have put on the chopping block.

And it seeks a $306 million increase, well above historical levels, to help states comply with a host of new air pollution regulations that Republican leaders in the House say will kill jobs, and in some cases, want to overturn.

Agency: Health and Human Services

Spending: $886.8 billion

Percentage Change from 2011: 1 percent decrease

Discretionary Spending: $82.2 billion

Highlights: Obama’s budget would stave off steep Medicare cuts to doctors for two more years, heading off severe disruptions for seniors if medical providers were to start abandoning the program.

The budget also calls for an additional $740 million for biomedical research at the National Institutes of Health at a time of cutbacks across the government. And Obama is forging ahead with his health care overhaul despite a repeal push by Republicans. New spending to expand health insurance coverage would be more than offset by taxes and reductions elsewhere, so the overhaul is estimated to reduce deficits by $230 billion over 10 years.

The price for heading off the Medicare cuts of more than 20 percent to doctors is $54 billion over 10 years. Until recently lawmakers merely added the cost of such relief to the deficit. But Obama proposes to pay for it with health care cuts elsewhere.

States would take the biggest hit, more than $18 billion over 10 years, under a proposal to limit a financing tactic they use to draw more federal Medicaid money. Drug companies would get squeezed for about $11 billion over 10 years under proposals to speed the introduction of generics. How those specific ideas will fare in Congress is unclear.

The Medicare cuts to doctors are required under a 1990s budget law that lawmakers have routinely waived. The latest reprieve runs out at the end of this year, and lawmakers consider replacing it a must-do item. Obama wants a permanent fix, but that would cost another $315 billion through 2021.

Agency: Labor

Spending: $108.8 billion

Percentage Change from 2011: 27.2 percent decrease

Discretionary Spending: $12.8 billion

Highlights: The majority of budget cuts at Labor would come from a decrease in spending on unemployment insurance programs. That’s because the administration is forecasting a lower average unemployment rate of 8.6 percent for 2012, down from 9.6 percent in 2011. If that prediction is accurate, fewer people would claim unemployment benefits, saving about $37 billion.

The budget also would cut in half an $825 million program that helps train older workers for jobs and community service programs. The entire program would be transferred to the U.S. Department of Health and Human Services, where it can be better coordinated with other similar programs for seniors.

At the same time, the budget continues to increase spending for enforcement of workplace health, safety and wage laws. The Occupational Safety and Health Administration would see a 4 percent increase and the department’s Wage and Hour Division would see a 6 percent increase. The department is requesting another $33 million to help reduce the large case backlog of mine safety cases, a major focus after the explosion last year at the Upper Big Branch mine in West Virginia that killed 29 workers.

The administration also plans to nearly double spending from $25 million to $47 million on the effort to crack down on employers who misclassified workers as independent contractors. The agency says worker misclassification not only cheats employees out of wages they deserve, it lets businesses avoid paying taxes on unemployment insurance, social security and Medicare.

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