The President’s Fiscal Year 2013 Budget and Its Critics

It’s probably a weird thing to say considering the number of pages the thing consumes, but President Obama’s $3.8 trillion FY2013 budget proposal really doesn’t present anything new. The broad outline of the proposed budget has been known for some: $500 billion in cuts to defense spending over the next ten years; $217 billion in reductions to a variety of federal programs; reductions of $360 billion in Medicare and Medicaid costs over 10 years; and a tax hike on the wealthiest Americans. The proposals total $4 trillion in deficit reduction over the next ten years from the combined effects of spending cuts and tax hikes.

On the other side of the ledger, the President proposes spending $800 billion on jobs, highways and bridges, schools, student aid and manufacturing research, with some $300 billion proposed for this year alone.

Virtually all of these goals have been proposed before and rejected by Congressional Republicans who object to the tax hikes on high earners and to any additional spending to stimulate the economy. Republican leaders have pronounced the president’s proposed budget ‘dead-on-arrival.’

A fair reading of how the proposal will play out should come soon, with the debate over continuing the payroll tax cuts that expire at the end of February. Then there’s the coming debate over raising the federal debt limit.

Bloomberg News has noted several specific proposals:

Obama’s plan would impose $156 billion in new or expanded government fees including higher Medicare premiums for wealthier beneficiaries beginning in 2017.

Big financial institutions would face $61 billion over 10 years in a “Financial Crisis Responsibility Fee” to help pay for the bank bailout program and a home-mortgage refinance initiative.

Obama would end credits and deductions that help subsidize the oil and natural gas industries, for a savings of $41 billion over a decade.

Depreciation rules on corporate purchases of aircraft would be abolished, for a savings of $2 billion over 10 years.

Spending cuts over a decade include $278 billion in farm subsidies, federal workers’ retirement plans and the Pension Benefit Guarantee Corp., which insures company pensions.

The budget proposes to cut payments to Medicare providers by $268 billion.

It would also cut $51 billion out of Medicaid, the joint federal-state health care program for the poor, in part by clamping down on what critics call an accounting gimmick used by state governments to shift program costs to Washington.

The budget anticipates war costs will fall next year by about one-quarter to $97 billion. It would be the first time since 2004 that annual costs have dipped below $100 billion.

The Pentagon would receive $525 billion, about $5 billion less than last year. Funding for the F-35 Joint Strike Fighter, the military’s costliest weapons program, would fall by $1.6 billion.

The Environment Protection Agency would shrink by 2 percent to $8.3 billion.

The Department of Housing and Urban Development would fall by 7.5 percent. Agriculture would take a 3 percent cut.

The Department of Education, which would see a 3.5 percent increase to $69.8 billion.

The Department of Veterans Affairs would see a 4 percent increase, to $61 billion, in part because of growing medical care costs.

Short-term jobs programs get $350 billion including additional infrastructure spending, extending unemployment benefits and increasing aid to cash-strapped state governments.

Additionally, about $52 billion in tax relief for small businesses and a six-year $476 billion highway construction bill.

Paul Ausick