The Budget Plan: An Opening Move in a Bigger Game
On February 14, President Obama announced his budget blueprint for federal fiscal year 2012 (which starts on October 1, 2011) and beyond. According to the White House, the budget proposal:
- Freezes for five years the funding level of domestic discretionary programs (all non-entitlement programs that are appropriated each year, like Food Stamps, aid to education, and many social programs), which will produce a $400 billion deficit reduction and the lowest level of this kind of spending (as a percentage of the economy) since Eisenhower was president.
- Over the next decade, reduces the deficit by over $1 trillion, with two-thirds of the reduction coming from spending cuts.
- Ends the Bush-era tax breaks for high-income earners.
- Promotes electric cars, clean electricity, and reduced energy use in large buildings.
- Preserves maximum Pell grants, but cuts year-round and graduate school aspects of the Pell program.
- Supports 100,000 new science, technology, and math teachers and imports the Race to the Top competitive concept into funding for early childhood education, universities, school districts, and job training.
- Expands surface transportation improvements and broadband installation.
- Makes 200 funding terminations or cuts totaling $33 billion in FY12, including cutting Community Development Block Grants by $300 million and the Low Income Home Energy Assistance Program (LIHEAP) by $2.5 billion.
- Cuts $78 billion from the Pentagon’s spending plan over the next five years, which results in zero real growth for defense spending.
There are many, many more features to the budget announcement. This is just the Administration’s blueprint. It is subject to dozens of hearings in Congress, many committee votes, and ultimately a number of floor votes on appropriations bills, all of which are aimed at producing a final budget before next October 1. That is a feat that rarely happens in recent years; indeed, Congress never passed a budget for the current year, and the government is operating on continuing resolutions.
The Center on Budget and Policy Priorities, usually a strong supporter of domestic spending priorities, has released a statement emphasizing the importance of the deficit reduction aspects of the President’s plan and supporting most of the austerity measures (other than the LIHEAP cut). But critics on the left are unhappy with the domestic spending cuts that they feel could have been funded by deeper defense cuts or higher taxes on the wealthy.
On the other hand, the reaction from the Republican-controlled House has criticized the Administration’s plan for not cutting enough. The Republicans’ own proposal continues the tax cuts for the wealthy and would impose cuts to vital programs that are several orders of magnitude larger and wider than those in the Obama plan.
The cavernous divide between the Administration’s proposal and the House Republican proposal sets up the budget debate for the coming year. Since the election gave control of the House to the Republicans, it will be impossible to pass a budget without them. That and the magnitude of the deficit are the twin realities facing the Administration. The situation seems ripe for a showdown next fall. In fact, the House Republicans are spoiling for a fight even before that—in the next few weeks they are threatening to withhold passage of an expansion of the national debt limit, as hostage for current year budget cuts. In the past, the debt limit has been sacred ground that even the most doctrinaire legislators have left out of the partisan games. Default on our debts and international pariah status has never before been an option, but now we have a new breed of zealots who do not seem to care about that.
In that context, the President’s plan can be seen as an early gambit in the struggle to win over the majority of the public— that is, to win the center. If a showdown comes, which side will the public perceive to be responsibly tackling the deficit while protecting important priorities, and which side will be perceived as irresponsibly extreme?
The Administration’s suggested cuts to programs that help low-income people are deeply concerning and should be re-thought. But budgets are also about values and the big picture national direction. The big picture struggle in this budget involves starkly different approaches to the deficit, national revenues, and the ongoing role of government spending in the creation of jobs, opportunity, and social justice. It is hard to overstate the importance of this larger struggle as the country heads into a watershed election season in 2012. The President’s budget plan is a move in a game that is much bigger than one year’s budget.
