Glancing at the 2012 Budget Plan from the White House


Wednesday January 11th, 2012   •   Posted by Stephanie Freedman at 11:43am PST   •  

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As we await the release from the White House of their 2013 budget later this month, I thought it would be interesting to look into the 2012 budget plan released by The White House nearly a year ago. The “Overview” claims:

Key Budget Facts

  • The Budget includes more than $1 trillion in deficit reduction—two-thirds of it from cuts—and puts the nation on a path toward fiscal sustainability so that by the middle of the decade, the government will be paying for what it spends and debt will no longer be increasing as a share of the economy.
  • The President meets his pledge to cut the deficit he inherited in half by the end of his first term.
  • Five-year non-security discretionary spending freeze will reduce the deficit by over $400 billion over the next decade and bring this spending to the lowest level since President Eisenhower sat in the Oval Office.
  • 10-year Deficit Reduction: $1.1 trillion, excluding war savings and not extending 2001 and 2003 tax cuts for high-income earners. Two-thirds are from spending cuts.
  • 2011 Projected Deficit: $1.645 trillion, 10.9 percent of GDP; 2012 Projected Deficit: $1.101 trillion, 7.0 percent of GDP; 2015 Projected Deficit: $607 billion, 3.2 percent of GDP; 2017 Projected Deficit: $627 billion, 3.0 percent of GDP

Responsibility

  • A five-year non-security discretionary spending freeze that will reduce the deficit by over $400 billion over the next decade and bring this spending to the lowest level since President Eisenhower sat in the Oval Office.
  • More than 200 terminations, reductions, and savings totaling more than $33 billion in savings for this year alone. Half of all agencies see their top line reduced from 2010 enacted levels.
  • Sample cuts: Community Development Block Grants by $300 million; LIHEAP in half or by $2.5 billion, Great Lakes Restoration Initiative by one-quarter or $125 million; more than $1 billion in grants to large airports; $950 million to states’ revolving funds for water treatment plants and other infrastructure.
  • Cuts $78 billion from the Pentagon’s spending plan over the next five years, bringing defense spending down to zero real growth. Including spending related to Iraq and Afghanistan, overall defense spending for 2012 is more than 5 percent below the 2011 request.
  • Pays for the first two-years of “doc fix”—which will prevent a nearly 30 percent cut in reimbursements to doctors in Medicare and keep them seeing patients—with $62 billion in new, specific health care savings, including recommendations from the Fiscal Commission and recent bipartisan proposals, that will strengthen program integrity and increase efficiency and accountability.
  • Pays for a three-year patch to prevent an increase in taxes on middle—class families through the Alternative Minimum Tax (AMT) by limiting the rate at which hig-income earners can itemize tax deductions. This would bring the rate back to where it was during the Reagan Administration.
  • The President has called on Congress to work with the Administration on corporate tax reform that will simplify the system, eliminate special interest loopholes, level the playing field, and lower the corporate tax rate for the first time in 25 years—without adding a dime to the deficit.
  • The President lays out his principles to strengthen Social Security and has called on Congress to work on a bipartisan fashion to keep this compact with future generations.
  • Includes important Fiscal Commission recommendations such as: federal civilian worker pay freeze, medical malpractice reform, PBGC reform, and a government reorganization initiative.

Reform

  • Cuts more than $2 billion in administrative overhead like travel, printing, supplies, and advisory contract services.
  • Embraces competitive grant programs based on the “Race to the Top” model applying it to programs from early childhood education through college; to allocate grants for transportation; to bring innovation to workforce training; and to encourage both commercial building efficiency and electric vehicle deployment.
  • Sets up a process to quickly dispose of excess and under-utilized federal real estate.
  • Starts a process to reorganize government so it is better able to serve the goal of a competitive America.
  • Encourages new “pay for success” bonds in areas where government programs have too often failed. Taxpayers will only pay the programs if they produce results.

There is a section discussing cutting all the inefficient programs, which alarmingly only promises $20 billion in savings each year. With our debt in the trillions, this number seems unsubstantial, but it’s a start. There is a nice interactive graphic that breaks down the respective budget. While this may look promising in theory, this budget needs a deeper look. With all the magnificently crafted rhetoric coming out of the White House these days, it is only natural for one to be skeptical.

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