Obama’s budget: Winners and losers
The White House’s 2013 budget request is the first that has to follow the terms of last year’s debt-ceiling deal. That means it’s the first year that domestic discretionary spending — the money for agencies that Congress funds each year — gets strictly capped. So what’s the damage?
First, let’s define terms. “Nondefense discretionary spending” is a relatively small part of the budget, about 18 percent. It’s not Social Security. It’s not Medicare. It’s not the Pentagon. It’s not farm subsidies or highway bills. But it is just about everything else. It’s the Veterans Health Administration. It’s medical research at the National Institutes for Health. It’s low-income housing assistance. And it’s all getting squeezed. Two years ago, the White House predicted that such domestic spending would amount to $477 billion in FY 2013. After the debt-ceiling deal, the White House is asking for just $410 billion — a full 14 percent less. And there are clear winners and losers here.
Overall, domestic discretionary spending is set to decline from an estimated $450 billion in 2012 to $410 billion in 2013, as required by the debt-ceiling deal. So how would the White House divvy up that $40 billion in cuts? Here’s a look:
The biggest losers: The heaviest discretionary cuts in the budget would hit the Justice Department (the White House asks for $8.9 billion less for 2013, or 33 percent less than 2012); Health and Human Services ($6.6 billion, or a 8.4 percent cut); Housing and Urban Development ($2.9 billion, or a 7.5 percent cut); the Labor Department ($1.2 billion, or 9 percent); the Treasury Department ($0.6 billion, or 4.5 percent); and the Army Corps of Engineers ($0.3 billion, or 6 percent). Also facing cuts in the budget request are the Environmental Protection Agency, NASA, and the Department of Agriculture.
The biggest winners: A few agencies would actually see their discretionary spending boosted under President Obama’s proposal. For the Education Department, the White House is requesting a $2.4 billion increase — or 3.5 percent more than what was appropriated in 2012. The National Science Foundation would get a $0.4 billion boost, or 5.7 percent increase. The Commerce Department would get a $0.3 billion boost, or 3.8 percent. The Energy Department would see a small hike of $0.3 billion, or 1.9 percent.
By and large, the themes here are pretty consistent. There’s a fair bit more money for R&D, education, and programs that promote exports. For instance, the Energy Department would get a small increase in funding for clean-energy development (although overall outlays for the agency are way below last year, as the stimulus winds down). On education, the White House wants to expand the “Race to the Top” program so that states would have incentives to reform early childhood and college programs as well as K-12. Likewise, the National Science Foundation gets a 5 percent increase for R&D. Funding for IRS enforcement would go up from $11.9 billion to $12.8 billion, which the White House argues would be a cost-effective way of closing the deficit.
On the other hand, some of the offsetting cuts would be pretty large, although Obama’s budget tries to frame the savings as tolerable. Various agencies would have to make do with less. The EPA, for example, is getting its third cut in as many years. The housing department will cut programs for people with disabilities and decrease the rental-assistance benefit (other programs, such as vouchers for homeless veterans, would see an increase). The Community Services Block Grant, a poverty-reduction program administered by the states, is seeing its budget cut by 50 percent in order to — as one White House official puts it -- “target funding for the highest-performers with demonstrable impacts.”
Meanwhile, in some cases, President Obama’s budget document claims the cuts are less severe than they appear at first glance. To take one example, the Justice Department’s discretionary budget authority is drastically down from 2012, but the budget claims that the agency itself will only see a bit less money in practice — with offsets coming from things like a proposed change to the Crime Victim’s Fund.
Over the long term, however, the White House predicts that these agencies’ budgets will keep shrinking in the coming years, once you adjust for inflation and the fact that the U.S. population continues to grow. That $410 billion for domestic discretionary this year? It will shrink to $331 billion in 2021, taking inflation and population into account. The federal government will have to do a lot more with a whole lot less in the coming years.