iOn Feb. 13, 2012, President Barack Obama released his $3.8 trillion fiscal year 2013 (FY13) budget, which over the next decade offers $4 trillion in deficit cuts, including $517 billion in mandatory savings. The budget projects a FY13 deficit of $901 billion or 5.5 percent of the gross domestic product.
The President's budget seeks more money for education, infrastructure, and manufacturing, while increasing taxes on upper income Americans and many corporations. It would need to become law before any cuts or savings could be implemented.
The President's budget outlines his priorities, while serving as a blueprint for Congress to consider when writing the annual appropriations bills. The immediate reaction to the President's budget has demonstrated that spending and taxes are likely to be the sources of many political battles leading up to the November election. FY13 begins on October 1st of this year, so Congress must reach a spending agreement before then to avoid a government shutdown. Below is an overview of the President's budget by key departments.
Defense: Budget provides $525.4 billion in discretionary funding, a decrease of 1 percent, or $5.1 billion below the 2012 enacted level. Over the next 10 years, the Department of Defense will spend $487 billion less than was planned in the 2012 budget. This is a 5 percent reduction.
Education: Budget provides $69.8 billion in discretionary spending, which is 2.5 percent, or $1.7 billion, above the 2012 enacted level. It includes $8 billion for the Departments of Education and Labor to support State and community college partnerships with businesses to improve access to job training and build skills of American workers; $850 million for Race to the Top initiatives; and various other provisions.
Energy: Budget provides $27.2 billion in discretionary funds, a 3.2 percent increase above the 2012 enacted level. This request includes increased funding for priority areas such as clean energy, research and development to spur innovation, and advanced manufacturing. Savings would be achieved by $41 billion cuts to fossil fuel subsidies over the next 10 years, low priority and low performing programs, and by concentrating resources on full utilization of existing facilities and infrastructure.
Health Care: Budget provides $76.4 billion, or $0.3 billion above the 2012 funding level. Proposal includes funding for the National Institutes of Health at $31 billion while implementing new grant management policies to increase the number of new research grants.
Homeland Security: Budget provides a decrease of 0.5 percent or $191 million, below the 2012 enacted level. Proposal makes $853 million in cuts to administrative categories but provides $650 million to fund important research and development advances in cyber security, explosives detection, and chemical/biological response systems.
Tax: Budget provides a plan to raise more than $1.5 trillion over the next decade through tax reform, including the expiration of tax cuts for single taxpayers making over $200,000 and married couples making over $250,000; allow the 2001 and 2003 high-income tax cuts to expire and return the estate tax to 2009 parameters; and incorporating the so-called "Buffett Rule," which would require households earning more than $1 million to pay at least 30 percent in income taxes.
Transportation: Budget provides $74 billion in discretionary and mandatory budgetary resources, an increase of 2 percent, or $1.4 billion, above the 2012 enacted level. The proposal has a six-year $476 billion surface reauthorization plan to modernize the country's transportation infrastructure.
