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Thread: The 2012 Fiscal Year Federal Budget

  1. #1
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    The 2012 Fiscal Year Federal Budget

    [QUOTE=CNN]Painful cuts in $3.7 trillion budget

    WASHINGTON (CNNMoney) -- President Obama on Monday unveiled a $3.7 trillion budget request for 2012 that proposes painful cuts in many government programs but fails to address the largest drivers of the country's long-term debt: Medicare, Medicaid and Social Security.

    The budget takes a big bite out of domestic spending and would slash deficits by $1.1 trillion over the next decade, according to White House estimates.

    Two-thirds of those deficit cuts would result from spending reductions, while a third would come from an increase in tax revenue, according to senior administration officials.

    "I'm convinced that they only way we can make these investments in our future is if our government starts living within its means," Obama said.

    And that means cuts to hundreds of domestic programs. For example, he is proposing to slash funding for the low income heating assistance program.

    "It's a tough decision and we didn't make it lightly," White House budget director Jacob Lew told CNN's "American Morning" on Monday. "The program was never designed to meet all needs."

    But even as it trims deficits, the president's budget would add $7.2 trillion to the debt held by the public between 2012 and 2021.

    Obama's 2012 budget is sure to stoke the debate over how to get the government's fiscal house in order.

    On the president's right, Republican lawmakers are calling for even deeper cuts and hankering for a fight now over 2011 spending. At the same time, many Democrats and liberal advocates are expected to lash into the administration for the depth of some of his proposed cuts.

    Sen. Jeff Sessions of Alabama, the ranking member on the Senate Budget Committee, told "American Morning" the budget cuts are nowhere near deep enough to reduce the deficit or the interest payments on the debt.

    He said the "$1 trillion reduction is insignificant and does not get us off on the right course. We are facing a fiscal crisis."

    Strategic investments - and cutbacks: Broadly speaking, the president's request calls for a mix of spending proposals aimed at boosting U.S. competitiveness and belt-tightening intended as a "down payment" on serious deficit reduction.

    In some cases, the added investment and belt-tightening happen in the same program.

    For instance, Obama's budget wants to make permanent the recent increase in the level of Pell Grants to $5,500 a year to help 9 million students afford college and graduate school.

    But to pay for that proposal, Obama would eliminate the grants for summer school and limit their use to the regular school year. He also proposed that interest on federal loans for graduate students start accruing during school; currently, the interest tab doesn't start running until after graduation.

    Overall, Obama called for a five-year freeze on non-security discretionary spending, which the White House estimates will save more than $400 billion over 10 years.

    Non-security domestic spending only makes up about 12% of all federal spending, and deficit hawks lament that both the White House and Republicans have focused all of their attention in this area rather than address the country's big debt drivers, which are spending on the entitlement programs and defense.

    Half of all agencies will see funding reduced from 2010 levels, according to the administration. And altogether, there will be more than 200 terminations, savings and reductions of programs totaling $33 billion in the first year.

    Among his proposals for strategic investments, Obama called for three green energy initiatives:

    1 million electric cars on the road by 2015;
    a doubling of the share of electricity that comes from clean energy sources by 2035;
    and a 20% reduction in building energy use by 2020.
    To help pay for these initiatives, the president called on Congress to eliminate 12 tax breaks for oil, gas and coal companies. The White House estimates those changes would raise $46 billion over a decade.

    While the president's budget doesn't reduce the debt, it does start to stabilize annual deficits around 3% of the economy by the middle of the decade. That's the point where the country's annual spending doesn't add to the debt.

    But high deficits will still accrue in the years after 2015 because of the interest owed on debt that has already accrued. For instance in 2017, the administration estimates there will be a $627 billion deficit -- all of which will be interest payments due.

    And because the president's budget does not address how to curb the growth in entitlement spending, there is little chance it would stabilize deficits beyond the next 10 years. A senior administration official described the 2012 budget request as a "firm foundation to take the next step."

    On Social Security, a lightning-rod program that budget experts say faces serious longer-term problems, the president uses the budget to "lay out his principles" on how to strengthen the program in the future.

    What could go wrong: Obama's budget request is essentially a blueprint of his fiscal priorities -- the programs he would like to fund or cut, the new investments he would make and how he would pay for it all.

    But the request is just that -- a request. And it's one that Congress can accept, reject or modify.

    Indeed, Republicans may well reject Obama's budget out of hand.

    And some of his proposals are likely to be a tough sell politically. For instance, he wants to limit the value of itemized deductions for families making more than $250,000 a year. He has made the same proposal before, and it went nowhere.

    What's new with this budget is the context. He calls for the money raised by limiting deductions to pay for protecting the middle class from the Alternative Minimum Tax for three years. Lawmakers pass so-called AMT patches regularly but rarely pay for them.

    Even if Obama's budget is adopted wholesale -- which it won't be -- the estimates for deficit reduction may or may not pan out depending on how close to reality the administration's forecasts for unemployment, interest rates and economic growth prove to be.

    In any case, Obama's 2012 budget is only the first step in a convoluted process that involves no less than 40 congressional committees, 24 subcommittees, countless hearings and a number of floor votes in the House and Senate.

    If all goes well, a formal federal budget for government agencies will be in place by Oct. 1, the start of the 2012 fiscal year. Because Congress never passed a budget for fiscal year 2011, however, the government has been running on funding from a so-called continuing resolution, which expires on March 4. [/QUOTE]

    And

    [QUOTE=FOXNews]Obama Sends $3.7 Trillion Budget to Congress

    President Obama sent Congress a $3.73 trillion budget Monday, a spending plan for 2012 that projects $1.1 trillion in deficit savings over the next decade but also continues adding to the national debt for years to come.

    Republicans, who are still trying to cut billions out of this year's budget, slammed the proposal after giving it a quick analysis Monday morning. The top Republicans on the House and Senate budget committees said it would push $8.7 trillion in new spending while piling another $13 trillion onto the debt over the next 10 years.

    "In this critical test of leadership, the president has failed to tackle the urgent fiscal and economic threats before us," House Budget Committee Chairman Paul Ryan, R-Wis., said in a statement.

    The president, visiting a school in Baltimore, said his budget reflects "tough choices and sacrifices." Obama said more will need to be done to address long-term shortfalls but described his spending plan as a "down payment" toward that effort.

    "If we're going to walk the walk when it comes to fiscal discipline, these kinds of cuts will be necessary," he said.

    White House Budget Director Jack Lew hit the news shows early to defend the president's proposal, saying the budget makes "real cuts" while investing in priority programs.

    "You've got to start somewhere," Lew told Fox News. He said the long-term plan is to draw down the deficit to a point that can stabilize the debt. According to officials, the goal is to make sure the debt stops increasing as a share of the economy by the middle of the decade.

    "By the middle of the decade, we're paying our bills," Lew said.

    Senior administration officials said Obama would achieve two-thirds of his projected savings through spending cuts, including a five-year freeze on many domestic programs. The other one-third 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.

    But the projected savings would be dwarfed by the $7.21 trillion in cumulative deficits over that 10-year period.

    "We have no plan in this budget to pay down debt or ever come close to balancing it," Alabama Sen. Jeff Sessions, ranking Republican on the Senate Budget Committee, told Fox News.

    The new estimates project the deficit for the current year will surge to an all-time high of $1.65 trillion, reflecting a sizable tax-cut agreement reached with Republicans in December. From there, the deficit in 2012 would dip to $1.1 trillion, giving the country a record four straight years of $1 trillion-plus deficits.

    Though administration officials say the president will fulfill his pledge of cutting the deficit he "inherited" in half by the end of his first term, his 10-year projections show the figure persistently hovering above the already-high $458.6 billion deficit on the books in 2008, former President George W. Bush's last full year in office. Obama's 2012 budget projects the imbalances never falling lower below $607 billion.

    "How is that living within your means?" Sessions said Monday.

    David Walker, former U.S. comptroller general and head of the Comeback America Initiative, released a statement saying the plan was missing "concrete proposals and specific timelines" for addressing the nation's structural deficits.

    "The failure of President Obama's fiscal 2012 budget to provide a path forward to address the nation's structural deficits is a major disappointment," he said.

    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.

    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.

    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 but the effort drove the deficits higher because lawmakers did not find offsetting savings.

    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.

    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.

    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." [/QUOTE]

  2. #2
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    The President is leading on the budget like he lead on Universal Health Care, he punted to Congress.

    The man is smart politically savy and absolutely gutless.

  3. #3
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    [QUOTE=Winstonbiggs;3958836]The President is leading on the budget like he lead on Universal Health Care, he punted to Congress.

    The man is smart politically savy and[B] absolutely gutless.[/[/B]QUOTE]

    Listening this morning on CNBC , it was compared to basically doing nothing. This represents less than 1/4 of what was propsed to him by committee.

    They called it an absolute lack of leadership.

  4. #4
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    Department by Department breakdown:

    [url]http://www.whitehouse.gov/omb/budget/Overview/[/url]

  5. #5
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    yeah yeah the right wing is sad Obama didn't make terrible cuts that would cost him the election. Gee what a shock.

  6. #6
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    [QUOTE=bitonti;3958853]yeah yeah the right wing is sad Obama didn't make terrible cuts that would cost him the election. Gee what a shock.[/QUOTE]

    You can't get SS, Medicare and Serious military cuts without bipartisan support and you can't get that without Presidential leadership.

    We need to get the deficit under control before it destroys our ability to borrow and inflates the middle class into ruin.

  7. #7
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    Some light reading on Inflation.

    [url]http://en.wikipedia.org/wiki/Inflation[/url]

    [url]http://en.wikipedia.org/wiki/Inflation_in_the_Weimar_Republic[/url]

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    [QUOTE=bitonti;3958853]yeah yeah the right wing is sad Obama didn't make terrible cuts that would cost him the election. Gee what a shock.[/QUOTE]

    Almost everyone, regardless of political persuasion, believes we should bump up the social security age to keep with the advances in modern medicine.

    Almost everyone, regardless of political persuasion, believes we could cut a good chunk out of the military - 78$ Billion over 10 years is nothing (7.8 billion a year out of a 500+ billion dollar a year program).

    These are not the height of Bush jr times (03-07) where we had half the country with their head in the sand and there was no possibility of compromise.

    Obama could have cut some military spending and raised the SS age and probably been praised for it - instead, we get these non-cuts and dumping of the debate on the congressional floor, as opposed to using the bully pulpit to say "this is what we need to do".

  9. #9
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    [QUOTE=SafetyBlitz;3958968]Almost everyone, regardless of political persuasion, believes we should bump up the social security age to keep with the advances in modern medicine.

    Almost everyone, regardless of political persuasion, believes we could cut a good chunk out of the military - 78$ Billion over 10 years is nothing (7.8 billion a year out of a 500+ billion dollar a year program).

    These are not the height of Bush jr times (03-07) where we had half the country with their head in the sand and there was no possibility of compromise.

    Obama could have cut some military spending and raised the SS age and probably been praised for it - instead, we get these non-cuts and dumping of the debate on the congressional floor, as opposed to using the bully pulpit to say "this is what we need to do".[/QUOTE]

    It's hard to make massive cuts to our military budget because tons of jobs are tied to it. Obama's not going to do that, especially now with all the flack he's gotten (much of it justified) for not concentrating enough on job creation.

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    [QUOTE=SafetyBlitz;3958968]
    Obama could have cut some military spending and raised the SS age and probably been praised for it [/QUOTE]

    there's nothing Obama can do that will result in him getting praise from the GOP... Including using the White House as a bully pulpit to tell congress what to do. I understand the frustration behind this budget but politically it was a smart move, if Congress wants cuts so bad they can make em. it's a negotiation and this is the opening bid.

    I dont think the right wing really has the stomach for cuts. when the GOP had 6-8 years of Bush II to reign in spending... what did they do? they are great at campaigning, lousy at governing.

    it should also be noted that TAXES MUST BE RAISED. there's no cuts to a 3.7T budget that result in balance with a 2.2T tax income. So in 2013, when taxes go up, the budget will look prettier i'm sure. remember it was a GOP "compromise" to get the Bush tax cuts extended another 2 years... that went straight to the deficit and in the long term, won't last.
    Last edited by bitonti; 02-14-2011 at 02:13 PM.

  11. #11
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    Republican Budget Cuts vs Republican Tax Cuts

    [IMG]http://images2.dailykos.com/images/user/191280/gopdebtpriorities.png[/IMG]

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