What's in Obama's Budget?
The headline from the Obama administration’s $3.83 trillion budget for 2011, released Monday, is a record deficit of $1.56 trillion—but what else is in the mammoth document? The Daily Beast breaks down 10 key takeaways.
The headline from the Obama administration’s $3.83 trillion budget for 2011, released Monday, is a record deficit of $1.56 trillion—but what else is in the mammoth document? The Daily Beast breaks down 10 key items, and who's losing out. Plus, read Matthew Yglesias's take on the politically scandalous ways Democrats need to crack down on the budget.
1. Continued Unemployment
President Obama has made jobs his No. 1 priority, but his budget projects a high unemployment rate into 2012, when he’ll be up for reelection. According to the budget numbers, unemployment will be 9.8 percent at the end of this year. It will fall to 8.9 percent by the end of 2011 and 7.9 percent by the end of 2012.
2. Tax Hikes on the Wealthy
The White House’s 2011 budget plans on allowing the Bush tax cuts from 2001 and 2003 to expire on families earning more than $250,000 a year. It also seeks to close a loophole that allows investment-fund managers to treat their income as capital gains, and therefore have to pay only a 15-percent rate—a move the administration says will generate $24 billion in new revenues over 10 years.
3. The Financial Crisis Responsibility Fee
In January, Obama promised taxpayers to help recoup their bailout dollars by imposing a fee on the largest banks. Obama’s budget creates a “Financial Crisis Responsibility Fee.” The fee aims to compensate taxpayers “fully” for the $117 billion they’re projected to lose. It will be imposed on financial firms with over $50 billion in assets, last at least 10 years, and be based on each firm’s size and exposure to debt.
4. Ending NASA’s Moon Program
Obama’s budget drops NASA’s plan to return to the moon, instead turning space transportation over to commercial companies. NASA gets a $6-billion boost, but that money will be focused on science, not space exploration.
5. Body Scanners in Airports
The budget includes up to $734 million to install up to 1,000 new Advanced Imaging Technology screening machines and new explosive detection equipment in airports in 2011.
6. Cap and Trade Is Missing
Another sign that climate-change legislation is on the White House’s backburner: Obama has dropped cap and trade (a system of economic incentives for reducing greenhouse-gas emissions) from 2011’s budget. In last year’s budget, the White House projected cap and trade would generate $646 billion in revenue from 2012 to 2019. That figure is omitted from the new budget.
7. Eliminate Tax Breaks for Oil Companies
The 2011 budget asks Congress to eliminate $36.5 billion in subsidies for oil and gas companies. Obama sought to end the subsidies in last year’s budget as well, but they remained after loud objections from oil and gas companies.
8. Small Steps on Health Care
With his health-care reform initiative stalled in Congress, Obama is using his 2011 budget to take small steps to improve the nation’s health-care system. These include increasing the use of cheaper, generic medicines and electronic medical records. It also backs steps to lower the cost of Medicare.
9. Whither Fannie Mae and Freddie Mac?
For the second year, Obama’s budget leaves Fannie Mae and Freddie Mac—and their $6.3 trillion in liabilities—off the federal balance sheet. In order to stay afloat in the current fiscal year, the companies could need $54.4 billion from the U.S. Treasury, and another $23 billion for the fiscal year beginning in October. In 2008, White House budget director Peter Orszag criticized the Bush administration for leaving the companies off the 2008 rescue budget, saying “the degree of federal control over Fannie and Freddie is so strong, we are incorporating them into the federal budget.”
10. Prosecuting Gitmo Detainees
Although it looks like the Obama administration has abandoned plans to try the 9/11 planners in New York City, the 2011 budget includes $73 million for the Justice Department to transfer, prosecute, and incarcerate the detainees held at Guantánamo Bay in 2011. It is short on details however, though the budget also includes $273 million to buy an Illinois prison to keep Gitmo detainees.