Sunday, April 17, 2011

President Obama Budget Proposal

Recently Rep. Ryan (WI-R) announced his proposal to reign in the deficit and this past week President Obama spoke to the Nation and laid out a vague look at his proposal. The entire speech can be seen here: Some things I found interesting after going back and reading the comments are:

  • "After nearly 2 years of job losses, America's businesses added more than one million jobs." – Is this President Obama finally admitting that his "stimulus" package failed to deliver? Remember that President Obama, and proponents, said we needed to go further into debt in order to create 3 million jobs and keep unemployment under 8%.
  • "We do this by investing in and reforming education and job training so that all Americans have the skills necessary to compete in the global economy." – Okay, great sound bite but will President Obama get serious like Gov. Walker of Wisconsin did with freeing up the strangle hold Unions have on municipal and state budgets?
  • "Growing the economy and spurring job creation by America's businesses, large and small, is my top priority. That's why, over the course of the last year, I pushed for additional measures to jump-start our economy: tax credits for businesses that hire unemployed workers; assistance to States to prevent the layoffs of teachers; and tax cuts and expanded access to credit for small businesses." Tax credits to hire unemployed workers? How about eliminating the health care mandate? As much as I appreciate the job of teachers, simply put not all of them are pulling their weight and need to be let go.
  • "I am proposing a 5-year freeze on all discretionary spending outside of security." The CBO has already stated that we cannot sustain the current budget so why freeze it in place?
  • "Moreover, for too long we have tolerated a tax system that's a complex, inefficient, and loophole-riddled mess." I agree with President Obama here. That is why we need total tax reform that scraps the current system and replaces it with a flat tax rate that also eliminates ALL tax credits and deductions. Going this route will address all three issues that President Obama has with the current system.
  • "In addition, I believe that we need to act now to secure and strengthen Social Security for future generations." True. One way we can sure up SSN by taking it out of the General Fund and putting it back into its original separate fund. Also, we ought to give those under 55 years old the option to opt out SSN and allowing their SSN tax to be invested privately.

Since President Obama's speech, President Obama has laid out his proposal ( Here are the highlights:

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


  • $148 billion for R&D overall; robust investment in biomedical research at NIH ($32 billion, a $740 million increase over 2010 enacted level, post-transfers); more than doubles energy efficiency research, development, and deployment funds; and continues our efforts to double investments in key basic research.
  • Supports the goals of: putting one million electric vehicles on the road by 2015; doubling share of electricity from clean energy sources by 2035; and reducing buildings' energy use by 20 percent by 2020.
    • Elimination of 12 tax breaks to oil, gas, and coal companies will raise $46 billion over 10 years to help pay for programs to reach these goals.
  • Simplifies, expands, and makes permanent R&D tax credit.
  • Establishes 20 new Economic Growth Zones, hard-hit areas that will receive expanded tax incentives to spur investment and employment.


  • Maintains maximum Pell Grant award, helping 9 million students afford college.
    • Paid for with more than $100 billion in savings, including eliminating year-round Pell and graduate student in-school loan subsidy.
  • Reforms K-12 school funding by supporting high standards, encouraging innovation, and rewarding success.
    • Consolidates 38 K-12 programs into 11 that emphasize competition and evidence of what works, while also eliminating 13 education programs outright.
  • Expands the Race to the Top concept to early childhood education, school districts, university funding, and job training.
  • Prepares 100,000 new science, technology, engineering, and math teachers.


  • As part of a six-year, comprehensive surface transportation bill at $35 billion per year, the Budget creates hundreds of thousands of jobs in the short term with a $50 billon up-front investment; establishes a National Infrastructure Bank to support projects of national importance; and brings access to high-speed rail to 80 percent of Americans within 25 years.
    • Consolidates 60 duplicative, often earmarked programs into five. Investment will only be made if bipartisan financing is found to ensure that it does not increase the deficit.
  • Builds a next-generation, wireless broadband network to bring high-speed Internet access to 98 percent of Americans, and establish an interoperable network for public safety.
    • Plan is fully paid for, and the sale of spectrum provides nearly $10 billion for deficit reduction.


  • 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 high-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.