NPP Analyses Obama’s FY 2012 Budget Request

February 18, 2011

By Jo Comerford

On February 14, the White House released the Obama Administration’s budget request for Fiscal Year 2012, which begins on October 1, 2011. As expected, the estimated $3.7 trillion FY2012 request contains a number of critical policy and fiscal goals, including:

  • Reducing the government’s annual deficit by placing a five-year freeze on so-called “non-security” discretionary spending, while eliminating a series of fossil fuel-related tax breaks and projecting an end to the Bush-era tax cuts for the wealthiest Americans in 2012;
  • Investing in education, with a goal of training more than 100,000 new science, technology, engineering and math teachers over the next decade;
  • Rebuilding the nation’s infrastructure with a substantial infusion of federal funds into high-speed rail, nationwide wireless, the creation of a National Infrastructure Bank, and a $28.6 billion (68%) increase in highway planning and construction; and
  • Promoting clean energy technology with the goal of one million electric vehicles on the road by 2015.

“Non-Security” Discretionary Spending

The Administration proposes saving $400 billion over the next decade by freezing “non-security” discretionary spending. To achieve this, many federal programs with a direct impact on the states are facing significant cuts:

  • Social Services Block Grant: Frozen at FY2010 levels
  • Community Development Block Grant: $1.3 billion cut (25%)
  • Low Income Home Energy Assistance Program: $2.5 billion cut (56%)

Historical data for these and other programs are available in our on-line database.

What About Defense?

Meanwhile, defense spending, which accounts for roughly 58 percent of discretionary spending and 20 percent of total federal spending (both based on FY 2011 estimates), will continue to grow, albeit at a slower pace than in recent years.

The Administration proposes funding reductions of $78 billion over the next five years within the Department of Defense. The $553 billion base-line Department of Defense request is approximately 3% higher than current funding levels. This figure does not include funding for nuclear weapons or $117.6 billion for the U.S. wars in Iraq and Afghanistan.

Over the next five years, real growth at the Pentagon will gradually shrink but, unlike some programs within non-security discretionary spending, it is projected to keep pace with inflation.

“Defense” Spending vs. “Security” Spending

Historically, the discretionary spending discussion has been framed as defense v. non-defense. This year, it is a discussion about security v. non-security. Security spending is a much broader category which includes defense spending, funding for homeland security ($44 billion in the FY2011 request) and veterans benefits ($57 billion in the FY2011 request).

By way of example, the chart below shows defense spending as 58% of all requested FY2011 discretionary spending (left bar) and security spending as 66% of the total (right bar).

This means that the projected freeze and subsequent savings on non-security discretionary spending in FY2012 will have to be absorbed by an even smaller percentage of the overall discretionary budget.

Discretionary Spending:
Comparing “Defense” and “Security-Related” Spending in FY2011

New NPP Releases on the Horizon

As part of NPP’s annual analysis of the President’s proposed budget, we will begin releasing detailed materials by February 18th. We will also be updating our web-based materials to reflect the newly released figures.

NPP’s Fiscal Year 2012 budget analysis will include:

  • A two-page fact sheet with an analysis of all proposed spending for Fiscal Year 2012, including both mandatory and discretionary programs, federal revenue sources, and deficit/debt data;
  • A narrative analysis of the major policy and fiscal changes in each area of federal spending;
  • A three-year span of state-level data for federal assistance programs like Head Start, Community Development Block Grants and WIC, focusing on funding for education, health care, energy and the environment;
  • Updates to NPP’s “Trade-offs” database; and
  • Updates to NPP’s Budget Briefs and Charts on our “Federal Budget 101” web page.

NPP will also offer a series of short and engaging webinars on the FY2012 President’s budget, the impact on the states, and on the Continuing Resolution process for FY2011. Click here to register.

We welcome your thoughts, comments and questions.  Please feel free to be in touch with me at (413) 584-9556 or jo@nationalpriorities.org or visit us on Facebook to share your thoughts. Φ

Jo Comerford is the Executive Director of the National Priorities Project. The National Priorities Project (NPP) makes complex federal budget information transparent and accessible so people can prioritize and influence how their tax dollars are spent.

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