President Barack Obama released a $3.73 trillion spending proposal for the 2012 federal budget Monday morning, signaling the beginning of a long process of budget battles between Democrats and Republicans on Capitol Hill.
National Journal puts the $3.73 trillion in perspective by breaking down the numbers. According to National Journal, $3.73 trillion in quarters would equal the weight of 3,430 Statues of Liberty. If the amount were dispersed equally, each American would receive $12,000. Or, if you preferred, you could buy the New York Yankees 2,331 times.
Prior to the release of the budget proposal, the national debt and budget cuts were already at the forefront of discussion in Washington, D.C.
After the Democrats failed to pass a budget blueprint in 2010, House Republicans inherited the task of continuing funding for the government through September, which is the end of fiscal year 2011. House Republicans proposed some cuts for the 2011 budget, but after conservative members demanded more last week, Republicans introduced $61 billion in cuts. Other issues like raising the debt ceiling are also being debated.
While pundits and politicians will spend the following days breaking down the budget, its important to remember that the presidents proposed budget â€” which, the LA Times reports, is $90 billion smaller than the one he offered last year â€” is only the first step in creating the 2012 budget.
According to the Center on Budget and Policy Priorities, the federal budget process begins with the presidents annual budget request. In the request, the president lays out priorities for federal programs and signals to Congress what spending and tax policy changes the president recommends. Congress, upon receiving the budget, will often hold hearings and then develop its own budget resolution.
A number of cuts, tax hikes and suggestions in the presidents budget proposal are sure to spark debates in both the House and Senate in the coming months.
For the truly curious, The Washington Post offers a detailed breakdown of the budget. The New York Times also offers graphics detailing the budget. However, a number of suggestions are already getting attention in the media.
Among other things, MarketWatch reports that Obamas proposal suggests eliminating the 2001 and 2003 tax cuts for families making more than $250,000 annually.
The budget would also take away oil and gas companies tax deductions and credits. Bloomberg reports that royalties paid to the U.S. by oil and gas companies for offshore production are forecast to rise by 68 percent under the budget as well.
Reuters also reports that the budget calls for cutting the number of years drug makers could exclusively market brand-name drugs from 12 years to seven. Obamas proposal would give the U.S. Federal Trade Commission power to block pay-for-delay deals that affect traditional, chemical drugs.
Under the proposal, NASA would face a five-year freeze on spending, leaving its budget at $18.7 billion. The Hill reports that funding for the Environmental Protection Agency would be cut by around $1.3 billion. Elsewhere, The Hill reports that the budget contains a plan to give consumers a $7,500 rebate for buying an electric vehicle.
The Washington Post reports that the Departments of Agriculture, Defense, Energy, Health and Human Services, Housing and Urban Development, Interior, Justice, Labor and State would join NASA and the EPA in experiencing some cuts.
However, the Departments of Commerce, Education, Homeland Security, Veterans Affairs and Transportation would all see increases in their budgets. According to the same Washington Post article, Transportation would see a 68 percent increase in its budget â€” far eclipsing the next largest increase, which is a 38.5 percent increase for education.
According to Bloomberg, proposed budget cuts would also reduce support for higher education by $89 billion over 10 years. Pell Grants would be impacted by the cuts, as the option of getting grants for both summer and regular school year classes would be eliminated.
The Associated Press also reports that the budget contains an increase in the airport passenger facility charge to help finance airport projects. Under the proposal, the charge would move from $4.50 to $7 to offset cuts in airport grants.
After Obama released his budget Monday, rhetoric from both sides of the aisle wasnt far behind.
House Majority Leader John Boehner, R-Ohio, said the budget would spend too much, tax too much, and borrow too much. According to Politico, Rep. Mick Mulvaney, R-S.C. called the budget detached from reality, while Rep. Scott Tipton, R-Colo. likened it to a gnat on the back of an elephant. Americans for Tax Reform called the budget "a 10-year, $1.5 trillion tax hike over present law.
On the other side of the aisle, House Minority Whip Steny Hoyer, D-Md., said the budget showed the tough choice we need to reduce spending and put our nations fiscal house in order.
According to The Washington Post, Senate Majority Leader Harry Reid, D-Nev., said in a statement that cutting our deficit by more than a trillion dollars in the next decade means not only cutting waste and excess, but also making tough choices about our priorities. President Obamas budget is a serious attempt to make those tough choices.
The major Republican criticism of the presidents budget proposal is that it fails to address substantial changes to Medicare, Medicaid or Social Security. According to a poll by The Hill, 77 percent of likely voters believe Social Security is in trouble. Additionally, a 2010 Gallup poll shows that three in four Americans believe the major entitlement programs will create major economic problems if no changes are made to them.
In January, the Congressional Budget Office said that Social Security will run permanent annual deficits until the funds are drained in 2037. Social Security will run a $45 billion deficit in 2011 alone.
Senate Minority Leader Mitch McConnell, R-Ky., didnt pull any punches from the Senate floor Monday, where he said the budget proposal says fulfilling the presidents vision of a future of trains and windmills is more important than a balanced checkbook. This budget was an opportunity for the president to lead. He punted.
After the president released his budget, the Wall Street Journal reported that House Majority Leader Eric Cantor, R-Va., said Republicans would include specific overhaul proposals for Medicare and Social Security in their 2012 budget proposal, which is due to be published this spring.
Politico reports that Cantor called the GOP budget a serious document that will reflect the type of path we feel we should be taking to address the fiscal situation, including addressing entitlement reforms.