NPR reporters analyze the president's 2013 budget proposal:
Overview
As NPR's Scott Horsley reported Monday morning, President Obama's 2013 budget calls for hundreds of billions of dollars in new federal spending aimed at spurring economic growth. Many of the proposals are recycled from the American Jobs Act that Obama put forward in September. Most of those plans have languished in a divided Congress, and the president's budget is likely to do the same.
NPR's Scott Neuman reports that the spending plan "aims to trim $4 trillion from the deficit over the next decade, while boosting spending to programs to stimulate the still-ailing U.S. economy."
"At a time when our economy is growing and creating jobs at a faster pace, our job is to keep things on track," Obama told an audience at a Northern Virginia community college. "I am proposing some difficult cuts that, frankly, I wouldn't be proposing if I didn't have to."
Horsley notes that the plan calls for $140 billion in research and development spending, including $2.2 billion for advanced manufacturing. Obama also wants to invest $476 billion over six years in transportation infrastructure, financed in part with money that will no longer be needed in Iraq and Afghanistan.
The president's budget renews his call for higher taxes on the wealthy, Horsley reports. That includes an end to Bush-era tax cuts for families earning more than $250,000 a year, limited tax deductions for high earners, and the so-called "Buffett Rule," which would ensure that millionaires pay a minimum tax rate of 30 percent.
All told, Horsley says, the budget proposes $1.5 trillion in new tax revenue over the coming decade. That includes a new $61 billion tax on big banks and $41 billion in additional taxes on fossil fuel producers.
Pentagon
The Pentagon is proposing a 6 percent overall spending decrease in its 2013 budget. Those cuts will rely heavily on a big drop in troop strength, according to the proposed budget released by the White House on Monday.
By 2017, the Army will lose 72,000 soldiers, the Marines will lose 20,000, and there will be 6,200 fewer sailors and 4,200 fewer airmen. Plans to hand the biggest reductions to the Army and Marines are in line with the Pentagon's plans to create a more mobile force, with less focus on major conflicts as the two major wars the U.S. has been fighting end. The Army and Marine Corps still will be larger than they were in 2001.
At the same time, the Pentagon is ramping up funding for its newest priorities: becoming more active in the Pacific and the Middle East. To that end, the military will maintain the current bomber fleet, and the carrier fleet of 11 ships. Army and Marine Corps forces in these two regions will also remain strong.
The Pentagon says it will protect funding for upgrades to the Global Positioning System (GPS) and other space-based systems that enhance surveillance and communications. But the military will be phasing out a defense weather satellite system and a successor to the U.S. spy plane known as Global Hawk Block 30, which were deemed too expensive.
The Pentagon was at pains to point out that service members will not take the brunt of these cuts. The budget is only calling for increases in things such as pharmacy copays and health care enrollment fees for some retirees. Though pay raises will slow in the future, the budget for 2013 calls for a 1.4 percent increase. The Pentagon says personnel costs make up one-third of the military budget, but cuts in benefits will only contribute about 10 percent of the savings for 2013.
-- Larry Abramson
Foreign Affairs
Updated at 3:15 p.m.:The Obama administration is proposing $51.6 billion for the State Department and the U.S. Agency for International Development. While advocates are pleased to see this commitment to diplomacy and development, they worry about cuts in global health, and humanitarian and refugee assistance.
A big part of the budget is for the Overseas Contingency Operations in Iraq, Afghanistan and Pakistan, though the $8.2 billion request is less than last year, and the State Department recently announced that it will be scaling back its huge diplomatic mission in Iraq by cutting costs associated with contractors. In Iraq, the Obama administration is requesting $4.8 billion for next year, which is about 10 percent less than last year.
The administration is requesting another $1.3 billion for Egypt. State Department spokeswoman Victoria Nuland says security assistance has been a good investment over the years, though she has been warning that it will be hard to disburse all of this year's aid unless Egypt ends a crackdown on U.S. democracy-promotion groups.
The new budget includes $770 million for a new Middle East and North Africa Incentive Fund to support economic reforms in the wake of popular uprisings.
"The Middle East is reinventing itself before our eyes," says Deputy Secretary of State Thomas Nides. "The demands on us have never been higher. And you will see all of that in this budget request."
-- Michele Kelemen
Education
President Obama's 2013 education budget totals $69.8 billion in discretionary spending. The bulk of that money is for Pell Grants for needy college students, K-12 school reforms, Title I funding for disadvantaged students, special education and early childhood education.
Two new education initiatives are unprecedented in funding and scope:
The biggest is an $8 billion fund to train 2 million workers in health care, transportation, information technology and advanced manufacturing. In a new partnership with businesses, community colleges will expand career centers, designed to meet employers' needs in high-skilled, high-growth industries. The three-year fund will also support small-business entrepreneurs and paid internships for low-income community college students.
The other new initiative is an $80 million competitive grants program to train 100,000 new teachers. The money would go to four-year colleges to provide innovative teacher training programs in science, technology, engineering and math. These are areas in which the United States faces significant teacher shortages.
Funding for community colleges, teachers and career academies is a one-time, mandatory request.
-- Claudio Sanchez
Aid For The Poor
The president proposes cuts in a few programs for the poor that he has targeted before, arguing that the budget-reduction pain needs to be shared. Among the largest proposed cuts is $452 million in the Low Income Home Energy Assistance Program (LIHEAP), which helps low-income families pay their heating bills.
The budget notes that the $3 billion requested for LIHEAP is higher than the amount the president requested last year because of rising energy costs. But the program has bipartisan backing, especially in New England states. And a large group of lawmakers is pushing to get LIHEAP spending back to the level it was a couple of years ago, close to $5 billion.
The president has also called for a $329 million cut in the $1.7 billion Community Services Block Grant program, which helps fund local programs intended to alleviate poverty. These might include things such as job training and tax preparation services. The budget would also make minor trims in Job Corps and in a program to provide affordable housing for low-income individuals with disabilities. The administration argues that some of these trims are part of an effort to make programs more efficient and accountable.
The budget calls for $3 billion in Community Development Block Grants, the same level that Congress enacted this year. However, the program, which helps local governments pay for affordable housing and other development projects, has been cut substantially in recent years. Funding for homeless assistance programs would go up about $300 million under the president's budget.
The budget would provide more than $7 billion in food assistance for low-income women, infants and children, and anticipates spending more than $100 billion next year on other food and nutrition programs, including food stamps — also known as SNAP benefits.
Programs to help low- and moderate-income Americans appear to have escaped serious cuts, in part because they've been cut so much already. There are many on Capitol Hill who think there's still a lot of spending waste — more tightening is likely as lawmakers try to further reduce the size of government. But anti-poverty groups will continue making the argument that now is not the time to weaken safety net programs relied upon by many Americans, and they've had some success in recent budget fights.
-- Pam Fessler
Homeland Security
Added at 3:15 p.m.: President Obama's budget would make a small trim in Homeland Security spending. The president proposes $39.5 billion for the agency, a decrease of 0.5 percent or $191 million less than what was enacted last year. Most of the savings come from cuts in administrative costs, including overtime and travel.
The budget would increase spending on border security and cybersecurity. There's also money for new explosives detection systems at U.S. airports. The Coast Guard would get funds for a new cutter and ice breaker to replace aging vessels "well past their service life."
More than $6 billion would be set aside for FEMA's disaster relief fund, which covers the anticipated costs of natural disasters like hurricanes and tornadoes. Other FEMA grants would be eliminated. The administration also says it will take measures to speed spending of some $9 billion in FEMA grant money already in the pipeline to "grow the economy now."
The budget also continues current administration policy of focusing immigration enforcement efforts on identifying and removing illegal immigrants who are criminals. For those judged low risk, the administration says it is enhancing the "Alternatives to Detention" program — such as electronic monitoring — which costs significantly less than detention.
-- Brian Naylor
Space
Added at 3:15 p.m.: Scientists who use NASA spacecraft to study Mars were expecting bad news from NASA's 2013 budget, and they got it. With the exception of the Mars Science Laboratory, which is already on its way to Mars, and a mission to sample the Martian atmosphere scheduled for launch next year, NASA is re-evaluating its long-term Mars strategy. In practical terms, that means pulling out of two missions planned in cooperation with the European Space Agency for later this decade.
The news wasn't all bad for space science. NASA's proposed budget for 2013 is $17.7 billion, essentially flat compared with 2012. But that will still allow spending $628 million on the James Webb Space Telescope to keep it on track for launch in 2018. There's also $1.8 billion for research and new spacecraft for studying Earth.
The space agency will continue to send astronauts and supplies to the International Space Station at a cost of $3 billion. The budget proposal also contains $2.9 billion for a new deep-space crew capsule and a heavy-lift rocket for future human exploration missions.
-- Joe Palca
Transportation
Added at 4:35 p.m.:President Obama's proposed transportation budget continues the administration's emphasis on rebuilding the nation's infrastructure both as an end in itself and as a way to promote job growth. The president proposes $74 billion in transportation spending, an increase of 2 percent from current levels — although considerably less than the president requested a year earlier. Within the overall budget is a $476 billion, six-year surface transportation plan, which the administration says will "pave the way for long-term economic growth."
The spending would be paid for with part of what the administration calls the "peace dividend," half the funds saved from ramping down the wars in Iraq and Afghanistan. (The other half would be used to reduce the national debt.)
In a conference call with reporters, Transportation Secretary Ray LaHood said the proposal allows for "nation-building right here at home."
The spending plan includes a $50 billion infusion this year that "jump-starts job creation" by funding improvements in roads, bridges, transit systems, border crossings, railways and runways.
It also includes continued spending on high-speed railroads, improved pipeline safety, and $1 billion for "NextGen" modernization of the nation's air traffic control system.
The House and Senate are each expected to begin floor debate this week on their own transportation bills, both of which include significantly less funding than the administration proposes.
-- Brian Naylor
Energy And The Environment
Added at 4:35 p.m.:The president's budget request reflects his continued emphasis on renewable and clean energy sources. He requested a 3 percent uptick for the Energy Department to $27 billion. That includes an increase of $527 million for programs to improve energy efficiency and promote the adoption of renewable power, such as a program that develops energy-saving strategies for manufacturing companies and another designed to make roof-top solar cost-competitive.
"We're very focused on saving money by saving energy," says Energy Secretary Steven Chu.
Obama has recently been calling for an "all-of-the-above" domestic energy push, but his budget repeats a proposal to cut $4 billion in subsidies for oil, gas and other fossil fuels, which Congress has yet to approve.
Industry groups and Republicans in Congress attacked this and other proposals in the budget that would charge new fees to the oil and gas industry on federal land.
The budget does highlight some additional funding for natural gas and oil production — about $50 million that would fund joint research by several agencies to understand and reduce the environmental, health and safety risks of producing natural gas and oil through an engineering practice known as hydraulic fracturing, or fracking. Companies inject huge quantities of water and chemicals to blast cracks into rock formations so the gas or oil can flow out.
"We will begin to assess potential impacts of hydraulic fracturing on air quality, water quality and ecosystems," EPA Administrator Lisa Jackson says.
Unconventional oil and gas developments are changing the face of domestic energy production. Already more than 60 percent of natural gas production comes from unconventional sources, according to Chu.
The Environmental Protection Agency was asked to take another cut in its budget, but just a small one. The president requests a 1 percent decrease in funds for the EPA. That would be the third year in a row that the agency was reduced. Jackson says there's enough in the budget to implement programs that cut greenhouse gas emissions and gasoline use by cars and reduce air pollution. By shifting money around, the agency is increasing funding to help companies comply with the pollution laws and more accurately report how much they are polluting, and the impact of that pollution on air quality near the industries.
The Interior Department's budget request was essentially flat, with a 1 percent increase. The president did propose additional funds for the new agencies that regulate and manage offshore oil production.
-- Elizabeth Shogren
Taxes And Social Security
Added at 4:35 p.m.:The 2013 budget notes the Social Security program is projected to exhaust its trust fund by 2036. The Obama administration also assumes Congress will approve a yearlong reduction by 2 percentage points in the Social Security payroll tax withholding for employees. The president's spending blueprint nonetheless spares this old-age and disability social insurance program from any cuts. Indeed, outlays for Social Security are projected to increase by more than $65 billion for the 2013 fiscal year, totaling nearly $883 billion.
Most taxpayers will not see their federal tax rates go up under the 2013 budget. But for the approximately 3 million taxpayers with annual household income above $250,000, income exceeding that amount will be subject to higher taxes. Obama proposes allowing the scheduled expiration at the end of 2012 of the Bush-era tax cuts for the top two brackets. Estate tax exemptions and rates would also return to 2009 levels. This would produce an extra $968 billion in revenue over the next decade. In addition, such wealthy households will only be able to claim itemized deductions for income up to the third-highest tax bracket of 28 percent. That limitation would add another $584 billion to Treasury's coffers over the next 10 years.
The FY2013 budget also proposes what Obama has called the Buffett Rule: namely, that those making more than $1 million a year pay no less than 30 percent of their income in taxes. The Buffett Rule would replace the Alternative Minimum Tax, which has required a fix every year to keep it from affecting middle-income earners.
And a loophole would be eliminated that allows hedge fund managers to claim profits as "carried interest," for which they've been taxed at the 15 percent capital gains tax rate rather than the generally much higher ordinary income tax rates. Capital gains tax rates would increase from 15 percent to 20 percent with the expiration at year's end of those particular Bush-era tax cuts.
-- David Welna
Health Care
Added at 4:35 p.m.:It's hard to imagine a budget whose total is nearing $1 trillion annually being called austere, but that's the case with this year's funding for the Department of Health and Human Services.
Most programs or agencies, including normally high-priority agencies like the National Institutes of Health, are set to see their funding frozen or cut slightly for the fiscal year that begins Oct. 1. The Centers for Disease Control and Prevention is only averting a large budget cut because the administration is diverting almost $1 billion from a public health prevention fund created by the 2010 health overhaul.
The bulk of the department's funding — and most of the proposed savings — are aimed at the huge twin health entitlement programs: Medicare for the elderly and disabled, and Medicaid for the poor.
And if the proposals to trim an estimated $364 billion from those two programs sound familiar, that's because they are. With few exceptions, the health care cost savers — which include boosting some required payments for Medicare beneficiaries and lowering what the programs pay for prescription drugs — were originally offered last fall. That's when the so-called congressional supercommittee was trying to come up with ways to reduce the deficit.
Congress didn't pay much attention to Obama's health proposals last year and probably won't this year, either. But with Medicare likely to be a major issue in this year's election, look for Republicans to use the budget proposals aimed at Medicare patients to blunt Democratic attacks based on the GOP budget plan passed in 2011. Both sides will try to convince seniors that the other side will try to make them pay more for their Medicare.
-- Julie Rovner
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