Budget 2012: Obama vs. House Republicans

February 14, 2011

Politico

DAVID ROGERS

Monday’s release of President Barack Obama’s new 2012 budget paints a stark contrast between his vision of government and that of House Republicans — and the urgency that each side to face reality before they stumble together into a government shutdown next month.

The flood of numbers from the White House comes even as the House is preparing to debate the GOP’s own government-wide spending plan for the last seven months of this fiscal year. Never before has Washington seen two such complete budgets aligned at once — like two planets trying to eclipse one another yet both dwarfed by the larger systematic problems around them.

As part of his domestic spending freeze, Obama would roll back the Environmental Protection Agency’s budget by $1.3 billion. House Republicans would double that cut to $2.7 billion. Obama would save the Pell Grant program for low-income college students even it means reneging on past initiatives.

Republicans would step back and let the maximum grant fall by 15 percent — a huge blow to students from the poorest families.

Even in areas where both parties have come together in the past, the differences are now measured in billions, not millions. Obama is proposing almost $7.8 billion for the National Science Foundation, for example; House Republican cuts would take the NSF back to about $6.5 billion. And the almost $10 billion gap in foreign aid and State Department funding represents a real retreat by the GOP from the activism of President George W. Bush, let alone Ronald Reagan.

The House GOP has been hankering for this fight almost from the first hour the polls closed in November. Yet what began as a fight over spending has evolved into more of a raw power play.

Deep cuts are proposed in federal aid to historically black colleges — almost as though to taunt Obama, the nation’s first black president. Extraneous legislative issues have been added — making a quick compromise more difficult. And even as they propose to defund Obama’s health care reforms, Republicans are using mandated appropriations from the same law to back fill their cuts.

At the same time, Obama’s budget will disappoint many of his own supporters who wanted a more aggressive posture on deficit reduction — and reining in the growth of government benefit programs. With a new farm bill on the horizon, the president appears to make no major effort to cut billions in annual subsidies — at a time of soaring farm income. And while he finds $62 billion in Medicare savings over 10 years, this is quickly exhausted in just two years by the need to pay for physician reimbursements.

“We need a much more robust package of deficit and debt reduction over the medium- and long-term, said Senate Budget Committee Chairman Kent Conrad (D-N.D.) “It is not enough to focus primarily on cutting the non-security discretionary part of the budget, which accounts for just 12 percent of spending this year. Instead, we need a comprehensive long-term debt reduction plan. … It must include spending cuts, entitlement changes and tax reform that simplifies the tax code, lowers rates, and raises more revenue.”

Indeed, for the current year, the White House projects a deficit of more than $1.6 trillion — even higher than the Congressional Budget Office forecast. But outlays would actually drop in 2012 and stabilize in the $3.7 trillion range as deficits fall to $1.1 trillion in 2012, then $768 billion in 2013.

The stakes are enormous.

Almost halfway through this fiscal year, the entire government is operating under a temporary resolution set to expire March 4, and the Treasury expects its borrowing authority to be exhausted less than three months later. The House is proposing $60 billion in immediate cuts from the continuing resolution that has funded the government since Oct. 1. And much will turn on a Senate luncheon on Tuesday at which Democrats must begin to come to grips with how much more they want to cut this year in response to the House.

That said, this budget more than any of his prior efforts seems to force tough choices that better define the man himself.

Obama most resembles a soldier deciding what he must carry and what will weigh him down too much when he jumps into a hot landing zone, and that’s very much where he is — jumping into a Congress that is itself a hot LZ in which House Republicans and their tea party allies are already tearing up his 2011 budget as well as his new ideas for the year ahead.

Trying to stem the tide, the president said his budget already includes $1.1 trillion in 10-year deficit reductions, two-thirds of which would come from domestic spending. But that figure pales in comparison with the recommendations from his bipartisan fiscal commission in December, and if moderate Democrats bolt this week, it will throw all the president’s numbers out of kilter.

“The president has failed to tackle the urgent fiscal and economic threats before us,” said House Budget Committee Chairman Paul Ryan (R-Wis.), quickly dismissing Obama’s efforts. “Failing to heed the warnings of economists and the demands of the American people, the president’s budget accelerates our country down the path to bankruptcy.”

Obama, who visited schools in Maryland on Monday, is betting big on education spending — an 11 percent increase next year. The National Institutes of Health would grow by about $1 billion, even as old anti-poverty programs and heating assistance would be reduced.

Foreign wars, especially Afghanistan, drain him of $118 billion, but for the first time in many years, total expenditures for the Pentagon and military would begin to fall. And while Republicans ridicule his five-year cap on domestic spending, it has bred new restraint in him.

Last year at this time, the president wanted $1.85 billion for two of his public school reform initiatives. Now, the request is $1.2 billion — one-third less. Transportation would remain a priority, but he’s also proposing an ambitious consolidation of programs to discipline future spending under a single trust fund covering highways and passenger rail systems such as Amtrak in which his budget envisions long-range savings.

Watching from on high — sometimes slipping into the White House — are the leaders of last year’s debt commission: former Sen. Alan Simpson (R-Wyo.) and Erskine Bowles, a North Carolina Democrat and former White House chief of staff under President Bill Clinton.

Simpson is wont to throw rhetorical thunderbolts in hopes of stirring his former colleagues. Bowles quietly lunched last week with White House friends from the Clinton days, including Gene Sperling, director of the National Economic Council and the president’s chief White House economic adviser.
What will come from these discussions and a much larger bipartisan effort in the Senate is not certain. But appearing Sunday on CNN’s “State of the Union,” White House Budget Director Jack Lew opened the door to more talks along the lines of the commission report.

Here’s how the rest of the federal government fares in Obama’s budget:

DEFENSE: The Pentagon’s direct appropriations would grow to about $538 billion, compared with $516.2 billion under the draft CR prepared by House Republicans — a number generally agreed to by Democrats as well. An additional $118 billion is requested for overseas military operations, of which Afghanistan accounts for about $107 billion, compared with just $11 billion for Iraq.

As the total cost of the wars comes down — $157.8 billion is being provided this year — the number is crossing an important line. Year by year, the president’s budget forecasts that the total 2012 Pentagon expenditure will be about $656 billion, which compares to about $674 billion for 2011 even after cuts were made in his defense request.

EDUCATION: Total resources, counting discretionary spending for Pell Grants, would grow to $77.4 billion — an 11 percent increase over current funding, but far more than House Republicans envision in their CR.

The biggest single swing factor is the fate of the Pell program for low-income college students. After being slow to respond last year, the administration is committed to preserving the maximum grant of $5,550 while the House CR would underfund the program to a point where it would drop by $845, or 15 percent, to $4,705 next fall.

To help fill the gap, the administration would abandon a highly expensive and relatively new feature of Pell that rewards students with year-round aid if they accelerate their course load and go to summer school to finish their degrees faster. The costs for this so-called two-Pell initiative have far outrun prior estimates, and by cutting it off now, the administration would save an estimated $7.4 billion next year to help stabilize the core program.

ENERGY: Obama is seeking $29.5 billion for the department, a 12 percent increase over 2010 and one that put him at odds with the House GOP which would slash many of Energy’s programs. For the Office of Science, Obama wants $5.4 billion—an 8% increase but $1.4 billion more than the House GOP provides after cutting $893 million from current funding for science.

Housing and Urban Development: Total appropriations would drop by about $1.1 billion reflecting cuts in the public housing operating fund as well as community development block grants. A great favorite of mayors, the CDBG funds would be cut $300 million—a real reversal for a Democratic president. But in this case, Obama is again hugely outdone by House Republicans who first tried to protect most of the funding last week but then under pressure from tea-party supporters slashed it by almost $3 billion altogether, leaving about a third.

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