Obama’s Budget: What You Need To Know

Allison Kade
Posted

Obama's BudgetSee, even the president has to budget. Earlier this week, President Obama presented a $3.7 trillion budget blueprint with his plan to cut our gigantor national debt—at the same time as he tries to maintain vital government programs. His proposal still has to pass Congress, and the Republicans are busy coming up with their own plan in the meantime.

Both are mostly political statements at this stage, since either plan will require a lot of compromise before it passes. If Obama’s plan did pass as is, the deficit would decrease to $1.1 trillion next year. This is a big deal because we all pay for the deficit–heavily–through our taxes. According to the president’s estimates for the proposed budget, the deficit would quickly fall soon after the first year, landing at about $600 billion per year through 2018.

So, here’s a summary of the major changes in President Obama’s proposal and what it could mean for you:

  • EducationCut: Year-round Pell Grants, which provided college aid to 8.9 million students in 2010, and other student aid funding. Increase: Education by 11% overall, even though, as The Washington Post says,  ”new federal spending would not come close to offsetting education cuts expected at state and local levels” even if the president wins approval for all his proposals (which is doubtful).
  • TransportationCut: Large construction grants for airports. Increase: High-speed and intercity rail services, as laid out in a new transportation bill.
  • EnvironmentCut: Funding for the Environmental Protection Agency (took a big hit: 13% cut from 2010 budget).
  • Community programs Cut: Community development programs that fund projects like housing, sewers and streets, and economic development.
  • DefenseCut: Defense spending in total. Increase: Spending in cybersecurity.
  • Big CompaniesCut: Subsidies for oil and gas companies (he wants to end them). Cut: President Obama wants to create new taxes on hedge fund managers and a $30 billion fee for financial institutions to help repay taxpayers for the big TARP bailout. Increase: Corporate research and development.
  • TechnologyIncrease: A new network that’s supposed to bring high-speed internet to 98% of Americans.
  • WomenIncrease: Child care funding at the Department of Health and Human Services, HIV care, teen pregnancy prevention, child support enforcement, help for victims of domestic violence.

Obama also proposes to condense many duplicative or inefficient programs in education, transportation, and other sectors.

How this could impact you…

  • If you receive Pell Grants to help pay for education expenses: No more year-round grants, which used to let students in accelerated programs receive two Pell Grants in one year. (Normal Pell Grants will still exist.)
  • If you’re a professional or grad student, you may lose that interest-free period on your Stafford student loans when you’re in school and the grace period afterward. Undergrad Stafford loans will still be subsidized, but the debt burden on grad students would go up.
  • Plane tickets may get slightly more expensive—the cap on the “passenger facility charge” that we pay on each flight segment may rise from the current $4.50 to $7 because the government wouldn’t be subsidizing airport construction as much.
  • If you’re in a lower income bracket and live in a wintery Northern state, you may feel the chill from the cuts on heating assistance.
  • Middle income families will be protected from tax increases, while high income families (household incomes over $250,000) will feel income and estate tax increases.
  • You may notice infrastructure and community projects slow down (fewer housing projects, sewers, etc.).
  • That said, you may see high-speed and intercity trains in the future, which would be pretty incredible.
  • More Americans may gain access to high-speed internet.

Commentators speculate on whether the president’s middle-of-the-road stance and avoidance of some big issues like tax cuts and choosing other programs to get the axe is a sign that he’s pandering for reelection. Others view these measures as setting a groundwork for the real discussions.

Regardless, setting national budget priorities shows where an administration places the most emphasis–the impression we get is of a president struggling to maintain programs like Social Security and education even while reducing the deficit by hesitantly cutting into spending like defense and Medicare. For more insight, check out The Washington Post’s interactive showing how budget spending priorities have changed over various administrations since Reagan.

The next step in the budget-creation process is for Congress to duke it out and come up with a final version of the Budget Resolution by April. Nothing’s set in stone yet, so don’t be shy to share your opinion with your representatives: Email your House Representatives and Senators.

Suddenly, deciding how to split our money between entertainment and dining out seems a whole lot simpler.

  • JEB

    Thank you for outlining the proposed budget this way. It makes it so much easier to cut through all the jargon and media babble to actually make sense of how this will affect real people. Thanks!

  • Leda

    Thanks so much for outlining this! I really hope the increase for “child support enforcement” goes through. My child’s father is behind more than $3500 and, as yet, they still haven’t put it on the court docket. People think it’s hard for parents to get away with not paying child support, but, believe me, it’s not.

  • Neu Ideas

    I do think you have done a pretty good job writing about a complicated subject. More needs to be done so busy people can get a sense of what is going on, and your newsletter is more helpful than not. nnHowever, your italicized “decrease” in our President’s budget is misleading. That number is over 10 years. Yes, ten years. And while two-thirds of the $1.1 trillion in deficit reductions would come from spending cuts, the balance would come from tax increases or the elimination of existing tax breaks. Maybe not all bad, but let’s call it was it is.nnToday it was announced that “at $1.65 trillion, the administration’s projection for the 2011 deficit is significantly larger than the $1.48 trillion estimated by the non-partisan Congressional Budget Office a few weeks ago. In fiscal year 2010, the deficit was $1.29 trillion.”nnWhat few people know is that the interest on our debt payment (the money we borrow because we overspend) will almost be as much as our defense spending in the year 2021. This can’t happen!nnCuts are tough for everyone, and the economy won’t be like this forever. But we do need to have a hard look at what is necessary and what is not. Our President suggests we cut heating oil subsidies to low income people, yet spend $53 billion on high speed rail. Really?!? We need more common sense and less partisanship. nnIn fact, I bet I could pick the most liberal person, and get him/her in a room with the most conservative person, and tell them they only have X amount of dollars to spend and they would agree on 80% of a budget. Pass that, then agrue about the extras….nn

    • naenay

      I like the budget. I can see the trade off between oil subsidy cuts and intercity high speed rails. you’re comparing apples to oranges. The trade is instead of the airports, we have high speed rails which can benefit those who may need the oil subsidy by having a way to travel to a higher paying job and possibly migrating.

      • RoseRiveter

        I totally agree. I’ve always thought that one thing modern Europe has over America is how easy it is to travel. Due to my boyfriend’s flying phobia we took a train from DC to Orlando. It was incredibly uncomfortable, lasted 2 days, and would have cost something like $350 each way had it not been for his mother’s ability to get it for free. With TSA as it is, flying is getting to be more and more inconvenient as well. As far as the whole “how do people get around once they’re there?” well, the same way they do with planes. There’s taxis, buses, Zipcar, local metros, etc. If there isn’t then having these rails would be incentive for the local governments to expedite the process.

      • RoseRiveter

        I totally agree. I’ve always thought that one thing modern Europe has over America is how easy it is to travel. Due to my boyfriend’s flying phobia we took a train from DC to Orlando. It was incredibly uncomfortable, lasted 2 days, and would have cost something like $350 each way had it not been for his mother’s ability to get it for free. With TSA as it is, flying is getting to be more and more inconvenient as well. As far as the whole “how do people get around once they’re there?” well, the same way they do with planes. There’s taxis, buses, Zipcar, local metros, etc. If there isn’t then having these rails would be incentive for the local governments to expedite the process.

      • RoseRiveter

        I totally agree. I’ve always thought that one thing modern Europe has over America is how easy it is to travel. Due to my boyfriend’s flying phobia we took a train from DC to Orlando. It was incredibly uncomfortable, lasted 2 days, and would have cost something like $350 each way had it not been for his mother’s ability to get it for free. With TSA as it is, flying is getting to be more and more inconvenient as well. As far as the whole “how do people get around once they’re there?” well, the same way they do with planes. There’s taxis, buses, Zipcar, local metros, etc. If there isn’t then having these rails would be incentive for the local governments to expedite the process.

  • Anonymous

    See event though cutting the Pell Grant seems bad, really it’s not. Even though I received the Pell Grant I still couldn’t get enough loans and grants to finish college. Thank god my mom taught me to be independent and even without that degree I still managed a full time job in an industry I love. In the mean time I agree spending should increase on the child care system especially in terms of prevention education. Though I will say the idiots who don’t think the spending on the rail system is needed have NEVER taken public transit in LA before. It’s bad over here and they don’t nearly have enough money for it. Not to mention the rail system would cut down on car usage and decrease pollution. Though, I don’t think liberals will be happy with the EPA. It seems when cuts are made the EPA always get’s hit and I am all for environmental protection, but why them. Well it should be interesting to see what happens. Thanks for the article it’s always good to know what’s going on with our national budget and banks as well.

    • Neu Ideas

      No need for names. Portland Oregon has a great light rail system, and I do use it on occasion to get downtown. Very easy to use. However, high speed trains take away dollars from the real problems of moving people, for instance new, more environmentally friendly buses. You can’t move a rail system when you put it in, but you can move a bus route. nnThe Portland ara spent $300+ million dollars on a high speed rail going from Beaverton to about 30 miles south. Basically, only one car in the train operates, as the ridership is not what it was projected to be. How many buses could they have purchased to make a commute easier on people. Or just didn’t spend. Making smart choices is the key.nnAlso, most of the dollars seems to being spent on the Eastern seaboard, not in LA. I lived in LA and yes the traffic is bad. Cities should plan for mass transit, as Portland has done. Prime example- Seattle. Awesome city, horrible traffic.

  • Nao

    This is great! So much easier to understand. Thanks!

  • naenay

    I think the cuts are necessary. our previous president decided to increase spending drastically by entering a very expensive war for which we have no results and cutting taxes. what a bone-head. I think its a good proposal. if need be, people in need of oil subsidies can go buy blankets and socks instead OR buy a space heater. it was only a mere 50 bucks anyway…

    • Twistingstar

      Cutting the oil subsidies is actually a big deal in NE. Space heaters can only do so much in -10 and topping weather and when electricity goes because wires snap in the cold a lot of houses are built to be heated by the stove. Not only that but have you ever seen the effect of a space heater on a eectricity bill? They started the gas subsidy because they kept finding old people dead of the cold in their homes

  • Meghan

    High-speed trains only make sense when the cities that are being connected have strong local public transportation as well. There are plans in Ohio to connect Cleveland, Columbus, and Cincinnati. I have lived in Cleveland and Columbus where there is barely any logical local public transportation. How are the passengers going to get around these cities when they get off the trains? It will be a complete waste of money.

  • http://twitter.com/JSWardell Jody Wardell

    Despite the President’s rhetoric of restraint, his budget would push spending, taxes, and debt to historic levels, placing America’s economic future at grave risk. The President’s budget proposes:

    ~ Permanently expanding the federal government by 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;
    ~ Raising taxes by $1.6 trillion over the next decade;
    ~ Running a $1.6 trillion deficit in 2011—the highest in American history in nominal dollars, and the highest since World War II as a percentage of GDP;
    ~ Borrowing 43 cents for each dollar spent in 2011;
    ~ Doubling the national debt over pre-recession levels;
    ~ Dumping an additional $66,000 per household of debt into the laps of our children and grandchildren; and
    ~ No significant reforms to Social Security, Medicare, and Medicaid.

    Before the recession, Washington spent $25,000 per household annually. President Obama has already pushed spending above $30,000 per household, on its way past $35,000 within the next decade[2] (even higher if not counting the budget’s many spending gimmicks). The President’s budget fails to meet his own pledge to cut the deficit in half during his first term.
    After an election in which voters expressed disgust with business-as-usual spending and deficits, President Obama has proposed more of—almost exactly—the same.

    Learn more facts here: http://tinyurl.com/4a56yg2

  • http://twitter.com/JSWardell Jody Wardell

    Despite the President’s rhetoric of restraint, his budget would push spending, taxes, and debt to historic levels, placing America’s economic future at grave risk. The President’s budget proposes:

    ~ Permanently expanding the federal government by 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;
    ~ Raising taxes by $1.6 trillion over the next decade;
    ~ Running a $1.6 trillion deficit in 2011—the highest in American history in nominal dollars, and the highest since World War II as a percentage of GDP;
    ~ Borrowing 43 cents for each dollar spent in 2011;
    ~ Doubling the national debt over pre-recession levels;
    ~ Dumping an additional $66,000 per household of debt into the laps of our children and grandchildren; and
    ~ No significant reforms to Social Security, Medicare, and Medicaid.

    Before the recession, Washington spent $25,000 per household annually. President Obama has already pushed spending above $30,000 per household, on its way past $35,000 within the next decade[2] (even higher if not counting the budget’s many spending gimmicks). The President’s budget fails to meet his own pledge to cut the deficit in half during his first term.
    After an election in which voters expressed disgust with business-as-usual spending and deficits, President Obama has proposed more of—almost exactly—the same.

    Learn more facts here: http://tinyurl.com/4a56yg2

  • http://twitter.com/JSWardell Jody Wardell

    Despite the President’s rhetoric of restraint, his budget would push spending, taxes, and debt to historic levels, placing America’s economic future at grave risk. The President’s budget proposes:

    ~ Permanently expanding the federal government by 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;
    ~ Raising taxes by $1.6 trillion over the next decade;
    ~ Running a $1.6 trillion deficit in 2011—the highest in American history in nominal dollars, and the highest since World War II as a percentage of GDP;
    ~ Borrowing 43 cents for each dollar spent in 2011;
    ~ Doubling the national debt over pre-recession levels;
    ~ Dumping an additional $66,000 per household of debt into the laps of our children and grandchildren; and
    ~ No significant reforms to Social Security, Medicare, and Medicaid.

    Before the recession, Washington spent $25,000 per household annually. President Obama has already pushed spending above $30,000 per household, on its way past $35,000 within the next decade[2] (even higher if not counting the budget’s many spending gimmicks). The President’s budget fails to meet his own pledge to cut the deficit in half during his first term.
    After an election in which voters expressed disgust with business-as-usual spending and deficits, President Obama has proposed more of—almost exactly—the same.

    Learn more facts here: http://tinyurl.com/4a56yg2

  • http://twitter.com/JSWardell Jody Wardell

    Despite the President’s rhetoric of restraint, his budget would push spending, taxes, and debt to historic levels, placing America’s economic future at grave risk. The President’s budget proposes:

    ~ Permanently expanding the federal government by 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;
    ~ Raising taxes by $1.6 trillion over the next decade;
    ~ Running a $1.6 trillion deficit in 2011—the highest in American history in nominal dollars, and the highest since World War II as a percentage of GDP;
    ~ Borrowing 43 cents for each dollar spent in 2011;
    ~ Doubling the national debt over pre-recession levels;
    ~ Dumping an additional $66,000 per household of debt into the laps of our children and grandchildren; and
    ~ No significant reforms to Social Security, Medicare, and Medicaid.

    Before the recession, Washington spent $25,000 per household annually. President Obama has already pushed spending above $30,000 per household, on its way past $35,000 within the next decade[2] (even higher if not counting the budget’s many spending gimmicks). The President’s budget fails to meet his own pledge to cut the deficit in half during his first term.
    After an election in which voters expressed disgust with business-as-usual spending and deficits, President Obama has proposed more of—almost exactly—the same.

    Learn more facts here: http://tinyurl.com/4a56yg2

  • http://twitter.com/JSWardell Jody Wardell

    Despite the President’s rhetoric of restraint, his budget would push spending, taxes, and debt to historic levels, placing America’s economic future at grave risk. The President’s budget proposes:

    ~ Permanently expanding the federal government by 3 percent of gross domestic product (GDP) over 2007 pre-recession levels;
    ~ Raising taxes by $1.6 trillion over the next decade;
    ~ Running a $1.6 trillion deficit in 2011—the highest in American history in nominal dollars, and the highest since World War II as a percentage of GDP;
    ~ Borrowing 43 cents for each dollar spent in 2011;
    ~ Doubling the national debt over pre-recession levels;
    ~ Dumping an additional $66,000 per household of debt into the laps of our children and grandchildren; and
    ~ No significant reforms to Social Security, Medicare, and Medicaid.

    Before the recession, Washington spent $25,000 per household annually. President Obama has already pushed spending above $30,000 per household, on its way past $35,000 within the next decade[2] (even higher if not counting the budget’s many spending gimmicks). The President’s budget fails to meet his own pledge to cut the deficit in half during his first term.
    After an election in which voters expressed disgust with business-as-usual spending and deficits, President Obama has proposed more of—almost exactly—the same.

    Learn more facts here: http://tinyurl.com/4a56yg2