President Obama’s $3.8 Trillion Budget

Feb 1, 2010 6:00am

From Jake Tapper and Sunlen Miller

President Obama will send a $3.834 trillion budget to Congress today for Fiscal Year 2011.

By way of comparison, the FY2010 budget was $3.721 trillion; the FY2009 budget, presented by President George W. Bush, was $3.518 trillion.


The 2011 budget includes $1.415 trillion in discretionary spending and a $1.267 trillion budget deficit representing 8.3 percent of the gross domestic product.

A daunting number, the deficit represents a slight improvement from the FY 2010 budget when it was $1.556 trillion, representing 10.6 percent of GDP.


One reason for the slightly smaller projected deficit include the decision to let the Bush tax cuts of 2001 and 2003 expire for individuals making more than $200,000 a year and families making more than $250,000 a year. This tax increase, which will occur automatically, will bring in a projected $678 billion over the next decade, the administration says. The tax cuts are due to expire at the end of the 2010 calendar year.

The Obama administration will ask for the Bush 2001 and 2003 tax cuts to made permanent for individuals who make under $200,000 and families who make under $250,000.


Other potential savings include the proposed three-year spending freeze on non-security discretionary spending ($250 billion over 10 years); the proposed bank tax — called a financial crisis responsibility fee — to repay taxpayers for the Wall Street bailout ($90 billion over 10 years); and eliminating tax cuts and subsidies for oil, gas, and coal companies ($40 billion).

The budget also includes $20 billion in savings from various terminations and reductions in federal programs, such as eliminating the "Save America’s Treasures" and "Preserve America" grant programs at the National Park Service, eliminating the Advanced Earned Income Tax Credit, and terminating the Brownfields Economic Development Initiative.

Defense Secretary Robert Gates "will be putting increased emphasis on also moving forward on cancelling the C-17 purchases and alternative engine for the F-35," Orszag said.

“The President dispatched his budget staff to engage in the process of going line by line through the federal budget to look for ways we could save money – so that we can ensure that where there is waste, where there are duplicative programs, where there are programs that have outlived their usefulness, they are eliminated or reduced appropriately," said White House communications director Dan Pfeiffer.

“Even without any new policy changes," said Office of Management and Budget director Peter Orszag, "the recovery of the economy will reduce the deficit from roughly 10% of the economy in 2010 to about 5% of the economy by 2015.”


Gitmo Closure Funds: The President is requesting approximately $237 million for the federal government to purchase, modify, and operate the Thomson Correctional Center in Illinois, where the administration is planning on transferring the detainees currently at Guantanamo Bay. This is part of the Justice Department budget.

Funding for AfPak: The president is asking for $33 billion for a 2010 supplemental request for the surge of troops to Afghanistan, and $159.3 billion for 2011 to support ongoing overseas contingency operations, including funds to implement the President’s strategy for Afghanistan and Pakistan.

The Legacy of Abdulmuttalab: The president is proposing $734 million more be spent to support the deployment of up to 1,000 new Advanced Imaging Technology screening machines at airport checkpoints and for new explosive detection equipment for baggage screening; and more funding to increase the number of international flights covered by Federal Air Marshals.

Goodnight Moon: NASA will also experience some cuts, including a cancellation of the NASA Constellation program to develop spacecraft to replace the Space Shuttle with the goal of sending astronauts to the Moon and perhaps even Mars.  The president also wants to shift "the activity of NASA research into longer range R and D," Orszag said, such as "advanced robotics and other steps that will help to inspire Americans and not to just return a man or a woman to the moon but to undertake the longer range research — that could succeed in things like space flights to Mars."


The president proposes more than $300 billion in tax cuts over the next decade for individuals, families, and businesses. These include:

  • $100 billion for immediate job-creating investments in small business tax cuts, infrastructure, and clean energy (including a proposed $33 billion "Small Business Jobs and Wages Tax Cut" to spur hiring);
  • eliminating the tax on capital gains tax on new investments in small business;
  • extending for one year the provision in the stimulus bill allowing small businesses to immediately expense up to $250,000 of qualified investments;
  • increasing of the child care tax break for middle-class families; and
  • extending the "Making Work Pay Tax Credit" from last year, "because middle class families continue to suffer disproportionately during an economic downturn." Orszag said.

“We recognize that while we have made progress on jobs we have not made enough," said Pfeiffer. "There are still one in ten Americans looking for work. The president certainly doesn’t find that acceptable.”


As the President said during his State of the Union address, he is proposing a 6% increase in education spending, including

  • An up to $4 billion increase for programs authorized by the Elementary and Secondary Education Act;
  • $1.35 billion to continue the "Race to the Top" challenge; and
  • $17 billion more in Pell Grant funding.

Orszag said that the budget will expand research and development by $3.7 billion — for a total of $61.6 in civilian R&D — "to spur innovation by roughly 6% reaching a level of $60 billion in Fiscal Year 2011 and includes more than $6 billion in funding to spur clean energy. Both of which is intended to again move us towards that clean energy future and works in concert with the elimination of the subsidies of fossil fuels to move us aggressively there.”

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