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The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
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The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
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The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
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The President's Budget for Fiscal Year 2013
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The President's Budget for Fiscal Year 2013
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The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
The President's Budget for Fiscal Year 2013
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The President's Budget for Fiscal Year 2013

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Budget of the United States Government, Fiscal Year 2013 contains the Budget Message of the President, information on the President’s priorities, budget overviews organized by agency, and summary …

Budget of the United States Government, Fiscal Year 2013 contains the Budget Message of the President, information on the President’s priorities, budget overviews organized by agency, and summary tables.

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  • 1. FISCAL YEAR 2013BUDGETOF THE U.S. GOVERNMENTOFFICE OF MANAGEMENT AND BUDGETBUDGET.GOV
  • 2. FISCAL YEAR 2013BUDGET OF THE U.S. GOVERNMENTOFFICE OF MANAGEMENT AND BUDGET BUDGET.GOV Scan here to go to our website.
  • 3. THE BUDGET DOCUMENTS Budget of the United States Government, Fiscal grams and appropriation accounts than any of the other Year 2013 contains the Budget Message of the President, budget documents. It includes for each agency: the pro- information on the President’s priorities, budget over- posed text of appropriations language; budget schedules views organized by agency, and summary tables. for each account; legislative proposals; explanations of Analytical Perspectives, Budget of the United the work to be performed and the funds needed; and pro- States Government, Fiscal Year 2013 contains analy- posed general provisions applicable to the appropriations ses that are designed to highlight specified subject ar- of entire agencies or group of agencies. Information is also eas or provide other significant presentations of budget provided on certain activities whose transactions are not data that place the budget in perspective. This volume part of the budget totals. includes economic and accounting analyses; information AUTOMATED SOURCES OF BUDGET INFORMATION on Federal receipts and collections; analyses of Federal spending; information on Federal borrowing and debt; The information contained in these documents is avail- baseline or current services estimates; and other techni- able in electronic format from the following sources: cal presentations. Internet. All budget documents, including documents The Analytical Perspectives volume also contains sup- that are released at a future date, spreadsheets of many plemental material with several detailed tables, including of the budget tables, and a public use budget database tables showing the budget by agency and account and by are available for downloading in several formats from the function, subfunction, and program, that is available on Internet at www.budget.gov/budget. Links to documents the Internet and as a CD-ROM in the printed document. and materials from budgets of prior years are also pro- Historical Tables, Budget of the United States vided. Government, Fiscal Year 2013 provides data on budget Budget CD-ROM. The CD-ROM contains all of the receipts, outlays, surpluses or deficits, Federal debt, and budget documents in fully indexed PDF format along with Federal employment over an extended time period, gener- the software required for viewing the documents. The ally from 1940 or earlier to 2013 or 2017. CD-ROM has many of the budget tables in spreadsheet To the extent feasible, the data have been adjusted to format and also contains the materials that are included provide consistency with the 2013 Budget and to provide on the separate Analytical Perspectives CD-ROM. comparability over time. For more information on access to electronic versions Appendix, Budget of the United States of the budget documents (except CD-ROMs), call (202) Government, Fiscal Year 2013 contains detailed infor- 512-1530 in the D.C. area or toll-free (888) 293-6498. To mation on the various appropriations and funds that con- purchase the budget CD-ROM or printed documents call stitute the budget and is designed primarily for the use of (202) 512-1800. the Appropriations Committees. The Appendix contains more detailed financial information on individual pro- GENERAL NOTES 1. All years referenced for budget data are fiscal years unless otherwise noted. All years referenced for eco- nomic data are calendar years unless otherwise noted. 2. Detail in this document may not add to the totals due to rounding. 3. Under the President’s Government consolidation proposal announced on January 13, 2012, a number of agencies and programs would be consolidated into a new department focused on supporting the growth of American business and the resulting job creation, with the goal of improving services and reducing costs. The specific proposal to create the new department will be submitted to the Congress once the consolida- tion authority requested by the President is enacted. The Administration’s budget proposal, including the request in this Budget and agencies’ supporting materials, is presented in terms of the existing agency struc- tures, and appropriate adjustments will be submitted once consolidation authority is enacted. U.S. GOVERNMENT PRINTING OFFICE, WASHINGTON 201016-090041-9 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 90000 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 I S B N 978-0-16-090041-9 900419
  • 4. Table of Contents PageThe Budget Message of the President .......................................................................................................1Building a Strong Economy ........................................................................................................................9Cutting Waste, Reducing the Deficit, and Asking All to Pay Their Fair Share......................................23Investing in Our Future ...........................................................................................................................47Department of Agriculture .......................................................................................................................65Department of Commerce .........................................................................................................................71Department of Defense .............................................................................................................................77National Intelligence Program .................................................................................................................85Overseas Contingency Operations ...........................................................................................................89Department of Education .........................................................................................................................93Department of Energy ............................................................................................................................101Department of Health and Human Services .........................................................................................107Department of Homeland Security ........................................................................................................117Department of Housing and Urban Development ................................................................................123Department of the Interior .....................................................................................................................131Department of Justice.............................................................................................................................137Department of Labor ..............................................................................................................................143Department of State and Other International Programs .....................................................................151Department of Transportation ...............................................................................................................157Department of the Treasury ...................................................................................................................163Department of Veterans Affairs .............................................................................................................169Corps of Engineers—Civil Works ...........................................................................................................173Environmental Protection Agency .........................................................................................................177National Aeronautics and Space Administration ..................................................................................183National Science Foundation..................................................................................................................187Small Business Administration..............................................................................................................191Social Security Administration ..............................................................................................................195Corporation for National and Community Service ...............................................................................199Summary Tables .....................................................................................................................................203OMB Contributors to the 2013 Budget ..................................................................................................247
  • 5. THE BUDGET MESSAGE OF THE PRESIDENT To The Congress of The UniTed sTaTes: America was built on the idea that anyone who is willing to work hard and play by the rules, canmake it if they try—no matter where they started out. By giving every American a fair shot, askingeveryone to do their fair share, and ensuring that everyone played by the same rules, we built thegreat American middle class and made our country a model for the world. Today, America is still home to the world’s best universities, most productive workers, and mostinnovative companies. But for many Americans, the basic bargain at the heart of the AmericanDream has eroded. Long before this recession hit, there was a widespread feeling that hard work had stopped payingoff; that fewer and fewer of those who contributed to the success of our economy actually benefitedfrom that success. Those at the very top grew wealthier while everyone else struggled with paychecksthat did not keep up with the rising cost of everything from college tuition to groceries. And as aresult, too many families found themselves taking on more and more debt just to keep up—oftenpapered over by mounting credit card bills and home equity loans. Then, in the middle of 2008, the house of cards collapsed. Too many mortgages had been sold topeople who could not afford—or even understand—them. Banks had packaged too many risky loansinto securities and then sold them to investors who were misled or misinformed about the risksinvolved. Huge bets had been made and huge bonuses had been paid out with other people’s money.And the regulators who were supposed to prevent this crisis either looked the other way or did nothave the authority to act. In the end, this growing debt and irresponsibility helped trigger the worst economic crisis sincethe Great Depression. Combined with new tax cuts and new mandatory programs that had neverbeen paid for, it threw our country into a deep fiscal hole. And millions of hardworking Americanslost their jobs, their homes, and their basic economic security. Today, we are seeing signs that our economy is on the mend. But we are not out of the woodsyet. Instead, we are facing a make-or-break moment for the middle class, and for all those who arefighting to get there. What is at stake is whether or not this will be a country where working peoplecan earn enough to raise a family, build modest savings, own a home, and secure their retirement.This is the defining issue of our time. This Budget reflects my deep belief that we must rise to meet this moment—both for our economyand for the millions of Americans who have worked so hard to get ahead. We built this Budget around the idea that our country has always done best when everyone gets afair shot, everyone does their fair share, and everyone plays by the same rules. It rejects the “you’re 1
  • 6. 2 THE BUDGET MESSAGE OF THE PRESIDENTon your own” economics that have led to a widening gap between the richest and poorest Americansthat undermines both our belief in equal opportunity and the engine of our economic growth. Whenthe middle class is shrinking, and families can no longer afford to buy the goods and services thatbusinesses are selling, it drags down our entire economy. And countries with less inequality tend tohave stronger and steadier economic growth over the long run. The way to rebuild our economy and strengthen the middle class is to make sure that everyonein America gets a fair shot at success. Instead of lowering our standards and our sights, we need towin a race to the top for good jobs that pay well and offer security for the middle class. To succeedand thrive in the global, high-tech economy, we need America to be a place with the highest-skilled,highest-educated workers; the most advanced transportation and communication networks; and thestrongest commitment to research and technology in the world. This Budget makes investments thatcan help America win this race, create good jobs, and lead in the world economy. And it does so with the understanding that we need an economy that is no longer burdened byyears of debt and in which everyone shoulders their fair share to put our fiscal house in order. WhenI took office 3 years ago, my Administration was left an annual deficit of $1.3 trillion, or 9.2 percentof GDP, and a projected 10-year deficit of more than $8 trillion. These deficits were the result of aprevious 8 years of undertaking initiatives, but not paying for them—especially two large tax cuts anda new Medicare prescription drug benefit—as well as the financial crisis and recession that made thefiscal situation worse as revenue decreased and automatic Government outlays increased to counterthe downturn. We have taken many steps to re-establish fiscal responsibility, from instituting a statutory pay-as-you-go rule for spending to going through the budget line by line looking for outdated, ineffective,or duplicative programs to cut or reform. Importantly, we enacted the Affordable Care Act, whichwill not only provide Americans with more affordable choices and freedom from insurance companyabuses, but will also reduce our budget deficits by more than $1 trillion over the next two decades. As economic growth was beginning to take hold last year, I took further steps to put our Nation ona fiscally sustainable path that would strengthen the foundation of the economy for years to come. InApril of 2011, I put forward my Framework for Shared Prosperity and Shared Fiscal Responsibilitythat built on the 2012 Budget to identify $4 trillion in deficit reduction. During negotiations overextending the debt ceiling in the summer, I presented to congressional Republicans another balancedplan to achieve $4 trillion in deficit reduction. Finally, in September, I sent my Plan for EconomicGrowth and Deficit Reduction to the Joint Select Committee on Deficit Reduction, which detailed away to achieve $3 trillion in deficit reduction on top of the $1 trillion already achieved in the BudgetControl Act of 2011 that I signed into law the previous month. I also made sure that this plan covered the cost of the American Jobs Act—a set of bipartisan,commonsense proposals designed to put more people back to work, put more money in the pocketsof the middle class, and do so without adding a dime to the deficit at a time when it was clear thatglobal events were slowing the economic recovery and our ability to create more jobs. Unfortunately,Republicans in Congress blocked both our deficit reduction measures and almost every part of theAmerican Jobs Act for the simple reason that they were unwilling to ask the wealthiest Americans topay their fair share. In the year ahead, I will continue to pursue policies that will shore up our economy and our fiscalsituation. Together with the deficit reduction I signed into law this past year, this Budget will cut the
  • 7. THE BUDGET FOR FISCAL YEAR 2013 3deficit by $4 trillion over the next decade. This will put the country on a course to a level of deficitsbelow 3 percent of GDP by the end of the decade, and will also allow us to stabilize the Federal debtrelative to the size of the economy. To get there, this Budget contains a number of steps to put us ona fiscally sustainable path. First, this Budget implements the tight discretionary spending caps that I signed into law in theBudget Control Act of 2011. These caps will generate approximately $1 trillion in deficit reduction overthe next decade. Building on reductions we already have made, this will result in a cut in discretionaryspending of $42 billion since 2010 when higher levels of Federal spending were essential to providea jumpstart to the economy. Meeting the spending targets in this Budget meant some very difficultchoices: reforming, consolidating, or freezing programs where we could; cutting programs that werenot effective or essential and even some that were, but are now unaffordable; and precisely targetingour investments. Every department will feel the impact of these reductions as they cut programs ortighten their belts to free up more resources for areas critical to economic growth. And throughout theentire Government, we will continue our efforts to make programs and services work better and costless: using competition and high standards to get the most from the grants we award; getting rid ofexcess Federal real estate; and saving billions of dollars by cutting overhead and administrative costs. Second, this Budget begins the process of implementing my new defense strategy that reconfiguresour force to meet the challenges of the coming decade. Over the past 3 years, we have made historicinvestments in our troops and their capabilities, military families, and veterans. After a decade ofwar, we are at an inflection point: American troops have left Iraq; we are undergoing a transition inAfghanistan so Afghans can assume more responsibility; and we have debilitated al Qaeda’s leadership,putting that terrorist network on the path to defeat. At the same time, we have to renew our economicstrength here at home, which is the foundation of our strength in the world, and that includes puttingour fiscal house in order. To ensure that our defense budget is driven by a clear strategy that reflectsour national interests, I directed the Secretary of Defense and military leadership to undertake acomprehensive strategic review. I presented the results of the review, reflecting my guidance and the full support of our Nation’smilitary leadership, at the Pentagon on January 5. There are several key elements to this newstrategy. To sustain a global reach, we will strengthen our presence in the Asia Pacific region andcontinue vigilance in the Middle East. We will invest in critical partnerships and alliances, includingNATO, which has demonstrated time and again—most recently in Libya—that it is a force multiplier.Looking past Iraq and Afghanistan to future threats, the military no longer will be sized for large-scale, prolonged stability operations. The Department of Defense will focus modernization on emergingthreats and sustaining efforts to get rid of outdated Cold War-era systems so that we can investin the capabilities we need for the future, including intelligence, surveillance and reconnaissancecapabilities. My Administration will continue to enhance capabilities related to counterterrorismand countering weapons of mass destruction, and we will also maintain the ability to operate inenvironments where adversaries try to deny us access. And, we will keep faith with those who serveby giving priority to our wounded warriors, servicemembers’ mental health, and the well-being ofmilitary families. Adapting our forces to this new strategy will entail investing in high-priority programs, such asunmanned surveillance aircraft and upgraded tactical vehicles. It will mean terminating unnecessaryand lower-priority programs such as the C-27 airlift aircraft and a new weather satellite andmaintaining programs such as the Joint Strike Fighter at a reduced level. All told, reductions in thegrowth of defense spending will save $487 billion over the next 10 years. In addition, the end of our
  • 8. 4 THE BUDGET MESSAGE OF THE PRESIDENTmilitary activities in Iraq and the wind-down of operations in Afghanistan will mean that the countrywill spend 24 percent less on overseas contingency operations (OCO) this year than it did last year,saving $30 billion. I also am proposing a multi-year cap on OCO spending so that we fully realize thedividends of this change in policy. Third, I believe that in our country, everyone must shoulder their fair share—especially those whohave benefited the most from our economy. In the United States of America, a teacher, a nurse, or aconstruction worker who earns $50,000 a year should not pay taxes at a higher rate than somebodymaking $50 million. That is wrong. It is wrong for Warren Buffett’s secretary to pay a higher tax ratethan Warren Buffett. This is not about class warfare; this is about the Nation’s welfare. This is aboutmaking fair choices that benefit not just the people who have done fantastically well over the lastfew decades, but that also benefit the middle class, those fighting to get into the middle class, and theeconomy as a whole. In the Budget, I reiterate my opposition to permanently extending the Bush tax cuts for familiesmaking more than $250,000 a year and my opposition to a more generous estate tax than we hadin 2009 benefiting only the very largest estates. These policies were unfair and unaffordable whenthey were passed, and they remain so today. I will push for their expiration in the coming year. Ialso propose to eliminate special tax breaks for oil and gas companies; preferred treatment for thepurchase of corporate jets; tax rules that give a larger percentage deduction to the wealthiest twopercent than to middle-class families for itemized deductions; and a loophole that allows some of thewealthiest money managers in the country to pay only 15 percent tax on the millions of dollars theyearn. And I support tax reform that observes the “Buffett Rule” that no household making more than$1 million annually should pay a smaller share of its income taxes than middle-class families pay. Fourth, to build on the work we have done to reduce health care costs through the AffordableCare Act, I am proposing more than $360 billion in reforms to Medicare, Medicaid, and other healthprograms over 10 years. The goal of these reforms is to make these critical programs more effectiveand efficient, and help make sure our health care system rewards high-quality medicine. What itdoes not do—and what I will not support—are efforts to turn Medicare into a voucher or Medicaidinto a block grant. Doing so would weaken both programs and break the promise that we have madeto American seniors, people with disabilities, and low-income families—a promise I am committed tokeeping. Finally, to address other looming, long-term challenges to our fiscal health, I have put forwarda wide range of mandatory savings. These include reductions in agricultural subsidies, changes inFederal employee retirement and health benefits, reforms to the unemployment insurance system andthe Postal Service, and new efforts to provide a better return to taxpayers from mineral development.Drawn from the plan I presented to the Joint Select Committee on Deficit Reduction, these mandatoryproposals would save $217 billion over the next decade. Reining in our deficits is not an end in and of itself. It is a necessary step to rebuilding a strongfoundation so our economy can grow and create good jobs. That is our ultimate goal. And as we tightenour belts by cutting, consolidating, and reforming programs, we also must invest in the areas that willbe critical to giving every American a fair shot at success and creating an economy that is built to last. That starts with taking action now to strengthen our economy and boost job creation. We need tofinish the work we started last year by extending the payroll tax cut and unemployment benefits forthe rest of this year. We also need to take additional measures to put more people back to work. That
  • 9. THE BUDGET FOR FISCAL YEAR 2013 5is why I introduced the American Jobs Act last year, and why I will continue to put forward many ofthe ideas it contained, as well as additional measures, to put people back to work by rebuilding ourinfrastructure, providing businesses tax incentives to invest and hire, and giving States aid to rehireteachers and first responders. We also know that education and lifelong learning will be critical for anyone trying to compete forthe jobs of the future. That is why I will continue to make education a national mission. What onelearns will have a big impact on what he or she earns: the unemployment rate for Americans with acollege degree or more is only about half the national average, and the incomes of college graduatesare twice as high as those without a high school diploma. When I took office, I set the goal for America to have the highest proportion of college graduates inthe world by 2020. To reach that goal, we increased the maximum annual Pell Grant by more than$900 to help nearly 10 million needy students afford a college education. The 2013 Budget continuesthat commitment and provides the necessary resources to sustain the maximum award of $5,635. Inthis Budget, I also propose a series of new proposals to help families with the costs of college includingmaking permanent the American Opportunity Tax Credit, a partially refundable tax credit worthup to $10,000 per student over 4 years of college, and rewarding colleges and universities that actresponsibly in setting tuition, providing the best value, and serving needy students well. To help our students graduate with the skills they will need for the jobs of the future, we arecontinuing our effort to prepare 100,000 science and math teachers over the next decade. To improveour elementary and secondary schools, we are continuing our commitment to the Race to the Topinitiative that rewards the most innovative and effective ways to raise standards, recruit and retaingood teachers, and raise student achievement. My Budget invests $850 million in this effort, whichalready has been expanded to cover early learning and individual school districts. And to prepare our workers for the jobs of tomorrow, we need to turn our unemployment systeminto a re-employment system. That includes giving more community colleges the resources they needto become community career centers—places that teach skills that businesses are looking for rightnow, from data management to high-tech manufacturing. Once our students and workers gain the skills they need for the jobs of the future, we also need tomake sure those jobs end up in America. In today’s high-tech, global economy, that means the UnitedStates must be the best place in the world to take an idea from the drawing board to the factory floorto the store shelves. In this Budget, we are sustaining our level of investment in non-defense researchand development (R&D) even as overall spending declines, thereby keeping us on track to doubleR&D funding in the key R&D agencies. We are supporting research at the National Institutes ofHealth that will accelerate the translation of new discoveries in biomedical science into new therapiesand cures, along with initiatives at the Food and Drug Administration that will speed the approvalof new medicines. We make important investments in the science and research needed to tackle themost important environmental challenges of our time, and we are investing in fields as varied ascyber-security, nano-technology, and advanced manufacturing. This Budget also puts an emphasis onthe basic research that leads to the breakthroughs of tomorrow, which increasingly is no longer beingconducted by the private sector, as well as helping inventors bring their innovations from laboratoryto market. This Budget reflects the importance of safeguarding our environment while strengthening oureconomy. We do not have to choose between having clean air and clean water and growing the economy.
  • 10. 6 THE BUDGET MESSAGE OF THE PRESIDENTBy conserving iconic American landscapes, restoring significant ecosystems from the Everglades tothe Great Lakes, and achieving measurable improvements in water and air quality, we are workingwith communities to protect the natural resources that serve as the engines of their local economies. Moreover, this Budget continues my Administration’s commitment to developing America’sdiverse, clean sources of energy. The Budget eliminates unwarranted tax breaks for oil companies,while extending key tax incentives to spur investment in clean energy manufacturing and renewableenergy production. The Budget also invests in R&D to catalyze the next generation of clean energytechnologies. These investments will help us achieve our goal of doubling the share of electricity fromclean energy sources by 2035. By promoting American leadership in advanced vehicle manufacturing,including funding to encourage greater use of natural gas in the transportation sector, the Budgetwill help us reach our goal of reducing oil imports by one-third by 2025 and position the United Statesto become the first country to have one million electric vehicles on the road by 2015. We also areworking to decrease the amount of energy used by commercial and industrial buildings by 20 percentto complement our ongoing efforts to improving the efficiency of the residential sector. And we willwork with the private sector, utilities, and States to increase the energy productivity of Americanindustries while investing in the innovative processes and materials that can dramatically reduceenergy use. It is also time for government to do its part to help make it easier for entrepreneurs, inventors,and workers to grow their businesses and thrive in the global economy. I am calling on Congressto immediately begin work on corporate tax reform that will close loopholes, lower the overall rate,encourage investment here at home, simplify taxes for America’s small businesses, and not add a dimeto the deficit. Moreover, to further assist these companies, we need a comprehensive reorganizationof the parts of the Federal Government that help businesses grow and sell their products abroad. Ifgiven consolidation authority—which Presidents had for most of the 20th century—I will propose toconsolidate six agencies into one Department, saving money, and making it easier for all companies—especially small businesses—get the help they need to thrive in the world economy. Finally, this Budget advances the national security interests of the United States, including thesecurity of the American people, the prosperity and trade that creates American jobs, and supportfor universal values around the world. It increases funding for the diplomatic efforts that strengthenthe alliances and partnerships that improve international cooperation in meeting shared challenges,open new markets to American exports, and promote development. It invests in the intelligence andhomeland security capabilities to detect, prevent, and defend against terrorist attacks against ourcountry. As we implement our new defense strategy, my Administration will invest in the systems andcapabilities we need so that our Armed Forces are configured to meet the challenges of the comingdecade. We will continue to invest in improving global health and food security so that we addressthe root causes of conflict and security threats. And we will keep faith with our men and women inuniform, their families, and veterans who have served their Nation. These proposals will take us a long way towards strengthening the middle class and giving familiesthe sense of security they have been missing for too long. But in the end, building an economy thatworks for everyone will require all of us to take responsibility. Parents will need to take greaterresponsibility for their children’s education. Homeowners will have to take more responsibility whenit comes to buying a house or taking out a loan. Businesses will have to take responsibility for doing
  • 11. THE BUDGET FOR FISCAL YEAR 2013 7right by their workers and our country. And those of us in public service will need to keep finding waysto make government more efficient and more effective. Understanding and honoring the obligations we have to ourselves and each other is what has madethis country great. We look out for each other, pull together, and do our part. But Americans alsodeserve to know that their hard work will be rewarded. This Budget is a step in the right direction. And I hope it will help serve as a roadmap for how wecan grow the economy, create jobs, and give Americans everywhere the security they deserve. BaraCk oBamaThe WhiTe hoUse, feBrUary 13, 2012.
  • 12. BUILDING A STRONG ECONOMY When the President took office, the economy that challenged the economic expansion: up-was losing over 700,000 private sector jobs a risings in the Middle East that sent oil pricesmonth, and experiencing the worst two quarters higher; an earthquake in Japan that preventedof growth since the end of World War II. Due to American auto and manufacturing companiesswift action taken by the President shortly af- from getting the supplies they needed to keepter taking office, the Nation avoided what could our factories producing; and widespread sover-have been a second Great Depression—and has eign debt concerns in Europe that roiled marketsnow experienced 22 consecutive months of pri- across the globe. In addition, the willingness ofvate sector job growth, with 3.2 million jobs cre- Republicans in Congress to risk the first defaultated. In just the first few months of 2009, the in our Nation’s history over the statutory debtPresident’s strong leadership produced a Recov- ceiling and the subsequent downgrade by Stan-ery Act to bolster American families against the dard & Poor’s of the long-term sovereign ratingworst of the crisis, as well as a rescue of the auto of U.S. Treasuries and other debt tied to the U.S.industry and the stabilization of our financial credit rating kept financial markets on edge andsystem which, together, prevented our economy appeared to rattle consumer confidence.from spiraling into a deep depression. In the face of these headwinds, the policies At the beginning of 2011, our economy was enacted by the President played a key role ingaining traction after enduring an historic reces- keeping the economy moving forward. Becausesion and coming back from the brink of a depres- of the policies that the President fought for, thesion. During the previous six quarters, real gross typical working family received a $1,000 payrolldomestic product (GDP) had grown at an aver- tax cut in 2011, and millions of Americans pound-age annual rate of 3 percent and, over the pre- ing the pavement looking for jobs could continuevious 12 months, the private sector had created to receive unemployment insurance (UI). This1.3 million new jobs. The financial system was no provided crucial insurance against headwindslonger in crisis. The credit and capital markets buffeting our economy.were functioning, and the cost of stabilizing thefinancial and automobile sectors was amounting While concerns lingered over the financial de-to a fraction of initial estimates. We subsequently velopments in Europe and the risk they posed tolearned that the recession was deeper than many the U.S. economy, the pace of real GDP growthexperts first thought: revised estimates showed increased in the second half of the year. Early inthat the economy contracted at an 8.9 percent 2011, job growth picked up and the unemploy-annualized rate in the last quarter of 2008, from ment rate fell, but progress slowed in the springan original projection of 3.8 percent, the largest and summer before picking up again in the fall.quarterly downward revision in history. A trio Overall, the unemployment rate fell over theof world events then created strong headwinds course of the year, from 9.4 percent in December 9
  • 13. 10 BUILDING A STRONG ECONOMY2010 to 8.5 percent in December 2011, and the over extending the debt ceiling during the sum-economy added 1.9 million private sector jobs in mer; and finally in the President’s Plan for Eco-2011. Over the last two months of 2011, consumer nomic Growth and Deficit Reduction that wasconfidence jumped, nearing its high prior to the presented to the Joint Select Committee on Defi-Japanese earthquake; housing starts were higher cit Reduction in September. It also is why thein November than they were in May; and after President proposed the American Jobs Act (AJA)declining in August, the manufacturing Purchas- last September, a plan to put more people backing Managers Index (PMI) has now increased to to work, put more money in the pockets of work-53.9, indicating an economic expansion. ing Americans, and do so without adding a dime to the deficit. This combination of tax cuts, in- Despite these encouraging signs, economic frastructure investments, and aid to those seek-growth was not strong enough to create a suffi- ing work would give the economy a needed boostcient number of good jobs for all of the Americans through this difficult time.who wanted to work or robust enough to restorefor the middle class the security and opportuni- Unfortunately, at each step, partisan dividesty they deserved. At the same time, our country and unwillingness by Republicans in Congressstill faced the consequences of years of fiscal ir- to ask the wealthiest among us to pay their fairresponsibility. When the President took office, he share through any revenue increases preventedinherited an annual deficit of $1.3 trillion and a comprehensive deficit reduction agreement orprojected deficits of trillions more in the years measures in the AJA to boost demand from beingthereafter. Driving these deficits were decisions enacted. Indeed, this lack of real progress on bothmade over the previous eight years not to pay for the AJA and deficit reduction actually became atwo tax cuts and a Medicare prescription drug drag in and of itself on an economy already strug-benefit. The deficits were then exacerbated by the gling to recover from a severe recession and bat-recession: the sharp decline in receipts, steep in- tling significant headwinds from events aroundcrease in automatic outlays to help those in need, the globe.and efforts needed to jumpstart economic growth. As we look forward, the challenges of this past Recognizing the challenges still facing the eco- year persist: to build an economy that will grownomic recovery, the Administration believes that robustly and create good jobs that pay well forshort-term efforts to boost economic growth and years to come, and to put the country on a sustain-job creation plus comprehensive, balanced efforts able fiscal path through deficit reduction that isto put the United States on the path toward fiscal balanced and asks all Americans to pay their fairstability were both needed. These are complemen- share. This Budget lays out the President’s visiontary policies: a growing economy is necessary for to accomplish both. It will take tough choices—long-term deficit reduction, and likewise, long- cutting waste as well as some valuable programsterm deficit reduction and fiscal sustainability is that we would not cut if not for the fiscal situ-necessary to maintain and strengthen economic ation. It will entail undertaking actions now togrowth for years to come. support and strengthen economic growth. And it will take reallocating resources to allow targeted That is why the President pursued significant, investments so that we have an economy basedbalanced deficit reduction throughout calendar not on speculation and bubbles, but one that isyear 2011: first, in his 2012 Budget; then, in the built on the solid foundation of an educated work-Framework for Shared Prosperity and Shared force, cutting-edge innovation, and world-classFiscal Responsibility released in April that built infrastructure.on the Budget to identify $4 trillion in deficit re-duction; next, in a similarly sized plan presentedto congressional Republicans during negotiations
  • 14. THE BUDGET FOR FISCAL YEAR 2013 11 Managing and Winding doWn form the economy to compete in the 21st Century. Urgent recovery efforts Approximately one-third of the Act’s funds were targeted to tax cuts for small businesses and 95 When the President took office the economy percent of working families. Another third waswas in free-fall. Real GDP was dropping at an used for emergency relief for those who bore theannual rate of 6.7 percent in the first quarter of brunt of the recession. For example, more than2009, after falling at an annual rate of 8.9 percent 17 million Americans benefited from extended orthe previous quarter. A seizure of credit markets increased unemployment benefits, and health in-in late 2008 caused companies to lay off workers surance was made 65 percent less expensive forand cut costs at an unprecedented rate. A steep laid-off workers and their families who relied ondecline in the stock market combined with fall- COBRA. The final third was invested in projectsing home prices led to an enormous loss of house- to create jobs, spur economic activity, and layhold wealth. Between the third quarter of 2007 the foundation for future sustained growth. Aidand the first quarter of 2009, the real net worth to State and local governments helped to closeof American households declined by 27 percent— budget shortfalls, supporting the jobs of morethe equivalent of more than one year’s GDP. than 650,000 teachers, firefighters, and police of-Americans reacted to this massive loss of wealth ficers. By the end of 2011, almost 95 percent ofby saving more instead of spending. The personal Recovery Act spending was obligated and 100savings rate spiked at 6.2 percent in the second percent of the tax relief had been provided. Near-quarter of 2009, after averaging only 2 percent ing the third anniversary of the Recovery Act, itthrough the end of 2007. This had the effect of is clear—and confirmed by independent analystsreducing consumer demand, a key driver of eco- ranging from the Congressional Budget Officenomic growth. The economy was in the worst (CBO) to private-sector forecasters—that thesedownturn since the Great Depression, with sig- swift and significant actions in the Recovery Actnificant risk that conditions could worsen. That bolstered economic growth and created or pre-is why the Administration took swift action to served millions of jobs.jumpstart economic growth and avoid a secondGreat Depression. Progress has continued with sustained efforts by the Administration to ensure that Recovery We now know that these efforts were even Act funds continue to be spent expeditiously andmore critical to the recovery than it appeared at in ways that create jobs and grow our economy,the time, as the decline we were in was deeper both now and in the future. In September 2011,than anyone, at the time, knew. Now, as we work the Administration directed Federal agencies toto build an economy that remains strong, sta- accelerate spending on the remaining Recoveryble and creating good jobs, the Administration Act funds for purposes that would create jobsis managing, and in some cases, winding down right away, and is working closely with States,these critical recovery efforts. Tribes, local governments, and others on these ef- forts. Since this effort began, agencies have spent approximately $17 billion in additional discre-The Recovery Act tionary funds, bringing the total amount of un- spent discretionary funds down to less than $60 Faced with the collapse of the economy, the Ad- billion. In addition, 2011 saw investment andministration took decisive action to bolster mac- work begin in earnest on a number of long-termroeconomic demand and jumpstart economic ac- initiatives that were funded through the Recov-tivity, thus breaking the back of a recession that ery Act and are critical to creating a 21st Centurywas spiraling out of control. The President moved economy and infrastructure. In particular, signa-rapidly, working with the Congress, and just 28 ture pieces of the Recovery Act dealing with highdays after taking office, signed into law the Recov- speed rail, broadband, clean energy, and healthery Act to create and save jobs, as well as trans-
  • 15. 12 BUILDING A STRONG ECONOMYinformation technology began to ramp up, paving financial system to prevent deep panic in everythe way for long-term economic prosperity. sector of our economy is now projected to be only one-fifth of the initially estimated cost. Reviewing the overall impact of the RecoveryAct, the White House Council of Economic Advis- The tasks ahead for TARP are to recover theers (CEA) estimates that the Recovery Act raised remaining investments in the financial sectorthe level of GDP by the end of 2011, relative to and auto industry in a manner that continues towhat it would have been absent intervention, by promote financial stability while also maximiz-between 2 and 2.9 percentage points. These es- ing the return for taxpayers. In addition, the Ad-timates closely parallel those of a wide range of ministration will continue to use TARP funds tooutside analysts, including CBO. The CEA also assist homeowners seeking to avoid foreclosure.estimates that the Recovery Act raised employ-ment relative to what it otherwise would havebeen by between 2.2 and 4.2 million jobs in the The Automobile Industrysame time frame. As a result of the President’s aggressive and effective intervention, we are seeing a notableThe Troubled Asset Relief Program turnaround in the automobile industry at a lower cost than originally estimated. In late 2008, the A central part of the response to the financial combination of an historic recession and finan-crisis was the implementation of the Troubled cial crisis pushed the American auto industryAsset Relief Program (TARP), which was estab- to the brink of collapse. Access to credit for carlished in the fall of 2008 under the Emergency loans dried up and motor vehicle sales plunged 40Economic Stabilization Act of 2008. TARP suc- percent. Auto manufacturers and suppliers dra-ceeded in helping to stop widespread financial matically curtailed production. In the year beforepanic and helped prevent what could have been President Obama took office, the industry sheda devastating collapse of our financial system. over 250,000 jobs. By late 2008, General MotorsThe Government’s authority to make new in- (GM) and Chrysler were on the brink of liquida-vestments through the program expired on Oc- tion, which would have inflicted immediate andtober 3, 2010, and TARP is now winding down. lasting damage to the country’s manufacturingThe U.S. Department of the Treasury (Treasury) and industrial base. It also would have producedhas already recovered more than three-fourths of a significant rise in both regional and nationalall the funds it disbursed, and the Government unemployment, and would have further damagedis now estimating the recovery of more funds for the financial system since automobile financingthe taxpayers and at a faster rate than predicted is a significant portion of overall financial activ-at the inception of the program. ity. Moreover, if these companies had gone out of business, the economy would have been forced As of November 30, 2011, Treasury has received deeper into recession and might have fallen into$318 billion in TARP repayments, interest, fees, a depression. The President made a difficult deci-and other income of the $413 billion disbursed. sion to provide support to GM and Chrysler onWhen it started, independent observers such the condition that they, and all of their stakehold-as CBO estimated that TARP would cost $350 ers, make the sacrifices necessary to fundamen-billion or more; CBO’s December 2011 estimate tally restructure their businesses and commit tois $34 billion, which assumes that $13 billion tough-minded plans to return to viability.will be spent through the housing programs. TheAdministration now estimates the cost of the The President’s decision to save GM and Chrys-program will be $68 billion, assuming that the ler was about more than those two companies. Itentire $45.6 billion set aside for housing initiatives was about standing behind the countless work-is utilized. In short, the price of stabilizing our ers, families, communities, and businesses—large
  • 16. THE BUDGET FOR FISCAL YEAR 2013 13and small—that depend on the automotive indus- for their families: find a good job, afford a home,try. The success of this policy has been dramatic. send their children to good schools, receive high-Both companies restructured and emerged from quality and affordable health care, and enjoy abankruptcy, and since then, the auto industry has secure retirement in their later years. Americans’created more than 100,000 new jobs, and Ameri- drive and ingenuity lie at the heart of this promisecan automakers are in the midst of their stron- and a growing economy makes it possible to real-gest period of job growth in more than a decade. ize these aspirations. Also critical are rules of theAmerican workers are back at the assembly line road laid down to make our markets and free soci-manufacturing high-quality, fuel-efficient, Ameri- ety work, and remove barriers so that no one hascan-made cars, capable of competing with manu- an unfair advantage and everyone can have a fairfacturers from around the world. In fact, General shot to go as far as their dreams and talents canMotors is now once again the world’s number one take them. To that end, we have a responsibilityautomaker. The impact of this resurgence goes to one another as neighbors and as Americans tobeyond directly making cars and car parts, and make sure that the basic protections are in placeaffects the entire supply chain of goods and ser- to enable families and businesses to thrive. Thesevices that contribute to the world’s largest man- include keeping our air and water healthy for ourufacturing activity. Companies that make steel, children, providing fairness in the workplace andtires, glass, aluminum products, machinery, and supporting those looking for work, ensuring thatafter-market products all rely on the continued products are safe and are represented honestly,success of the U.S. auto industry. Indeed, the re- and protecting Social Security and Medicare tosurgence of the American auto industry has been provide for citizens in life’s later years.at the heart of a quiet improvement in the overallmanufacturing sector—a key component of con- To add to this list, the Administration has un-structing an economy that is built to last and can dertaken two historic initiatives—health insur-create good jobs for years to come. Since Decem- ance and Wall Street reform—that will hold someber 2009, the United States has added 334,000 of the largest companies in the country account-manufacturing jobs, the first time the manufac- able and help give all Americans the security theyturing sector has had sustained job growth since need to ensure that an illness or ill-conceived1998. financial decision made by a firm hundreds of miles away will not bankrupt them or prevent For taxpayers this means that the assistance them from providing for their family. Over theextended to these companies is paying off. In May past year, the Administration has worked dili-2011, Chrysler repaid its outstanding loans to the gently to implement these new reforms, and toU.S. Treasury—a full six years before their sched- protect them from efforts to undermine and de-uled maturity. Chrysler was able to achieve this fund them. In the appropriations negotiationsmilestone by accessing the debt markets and rais- both at the beginning and end of 2011, the Ad-ing capital on more favorable terms than the U.S. ministration insisted on having the necessaryGovernment loans—another sign of its emerging funding to continue to implement health insur-strength as a private company. With that repay- ance and Wall Street reform, and stopped effortsment, Chrysler had returned $11.1 billion to the to use policy riders to undermine both of theseU.S. Government, which represents nearly 90 important initiatives, and their crucial protec-percent of the Federal support committed to the tions for American consumers and families.company. sUpporting and protecting Health Insurance Reform Middle-class faMilies The President signed into law the Patient The promise of America is that with hard work, Protection and Affordable Care Act (ACA) onAmericans can provide a solid, middle-class life March 23, 2010, enacting comprehensive health
  • 17. 14 BUILDING A STRONG ECONOMYinsurance reforms that will hold insurance com- More reforms also are taking effect. To ensurepanies more accountable, lower health care costs, that dollars are going to patient care, the ACAguarantee more health care choices, and enhance requires insurance companies to spend at leastthe quality of health care for all Americans. The 80 or 85 percent, depending on their market, ofACA gives Americans the stability and security premium dollars on medical care and qualitythey need by ending many discriminatory and improvements, instead of administrative costsabusive insurance industry practices; expand- and profits. If they fail to meet these standards,ing coverage to more than 30 million Americans insurance companies are required to provide awho lack insurance; cutting waste and reforming rebate to their customers. The first rebates willhealth care delivery so that patients receive high- be paid out later this year. Additionally, the ACAer quality care; and doing it all without adding a brings an unprecedented level of scrutiny anddime to the deficit. In fact, the ACA will reduce transparency to health insurance rate increases.the deficit by more than $1 trillion over the next Large premium increases proposed by health in-two decades. Considering that rising health care surance companies in the individual and smallcosts are a major contributor to the deficit and group markets will now be evaluated by expertshinder the Nation’s overall competitiveness, the to make sure they are based on reasonable costACA puts in place much-needed deficit reduction. assumptions and solid evidence, and insurance companies have to publicly justify unreasonable Americans already are enjoying many of the rate increases.protections put in place by the ACA. For instance,in the past, if a person became ill, insurance Beyond curbing the most egregious practicescompanies could rescind coverage and deny pay- of the insurance industry, Americans have real-ments for health services by retroactively finding ized other benefits. Since ACA’s passage, smallan error or other technical mistake on their pre- businesses have been claiming tax credits to helpviously accepted application; this is now illegal. them provide insurance benefits to their workers.Insurance companies are now prohibited from Through 2013, this provision provides a creditimposing lifetime dollar limits on benefits, such worth up to 35 percent of employers’ contribu-as hospital stays. Young adults under age 26 can tions to employees’ health insurance; it rises tonow stay on their parents’ policies. And because 50 percent for coverage purchased through Af-of the ACA, insurance companies can no longer fordable Insurance Exchanges starting in 2014.deny coverage to children under the age of 19 due For those individuals who have been uninsuredto a pre-existing condition. And all new private- for at least six months because of a pre-existingmarket health insurance plans now must cover condition, there is now a Pre-Existing Conditioncritical preventive care services such as mam- Insurance Plan to provide them with affordable,mograms and colonoscopies without charging a comprehensive coverage options. This programdeductible, copay, or coinsurance. serves as a bridge to 2014, when all discrimina- tion against pre-existing conditions will be pro- Also, two important additions to coverage from hibited. Similarly, the Early Retiree Reinsurancethe ACA for seniors went into effect. First, eligi- Program provides temporary assistance to em-ble Medicare beneficiaries are paying less for pre- ployers who had been struggling to maintain cov-scription drugs that are purchased in the Part D erage for older workers who retired, but are notcoverage gap starting with a 50 percent discount yet eligible for Medicare.on covered brand-name prescription drugs in2011; coverage will increase each year until the In addition, numerous ACA reforms aimed atcoverage gap is closed in 2020. Second, Medicare improving quality, efficiency, and coordinationbeneficiaries are now eligible for certain free pre- of care will take effect over the next year. Hos-ventive services, such as annual wellness visits pital Value-Based Purchasing and the Hospitaland recommended cancer screenings. Readmissions Reduction Programs will both tie Medicare payments to hospitals to achievement
  • 18. THE BUDGET FOR FISCAL YEAR 2013 15of indicators of high-quality care. The Medi- meant to give the financial system free licensecare Shared Savings Program will be launched to take irresponsible and reckless risks of suchnationwide, creating new opportunities for pa- a size that they can harm our economy and leavetient-centered, integrated care for Medicare bene- taxpayers with the bill.ficiaries. Further, the Administration is launchingseveral initiatives to improve care for individuals The recent recession was not just the result ofeligible for both Medicare and Medicaid, includ- a turn in the business cycle. Rather, it was theing developing and testing new models designed result of a perfect storm of excessive risk-taking,to incentivize States to create efficiencies through inadequate disclosure, non-existent or myopicintegration of care and improved care coordina- oversight, individuals and firms who chose to le-tion. And the ACA provided significant new tools verage themselves beyond their means, and inand resources to crack down on waste and fraud some cases outright deceptive lending practicesin health care. that led too many Americans to take on debt they could not afford. In sum, it was an abdication of Finally, the Administration is committed to responsibility from across many actors in theimplementing the ACA swiftly, efficiently, and ef- financial system.fectively, and will continue to work with the Con-gress to ensure that the resources are available to To prevent this from happening again, thedo just that. The need for resources is especially Administration set out to craft a financial reformcritical for establishing Affordable Insurance Ex- package that filled the gaps in oversight, trans-changes, which will help ensure that every Amer- parency, and restraint; put a check on predatoryican can access high-quality, affordable health and abusive lending; and restored accountabil-insurance coverage beginning in 2014. These ity to the system—especially for those who hadcompetitive marketplaces will provide millions operated outside the regulatory framework. Theof Americans and small businesses with “one- Administration’s goal was to restore our financialstop shopping” for affordable coverage in every system to its core mission: providing a safe andState. Since passage of the ACA, the Department productive venue for private saving, helping en-of Health and Human Services (HHS) has pro- trepreneurs and businesses with the best ideasvided grants to nearly all States to plan for and to create value and jobs, and enabling families toestablish these State Exchanges. buy homes, finance college for their children, and secure a dignified retirement.Wall Street Reform On July 21, 2010, after a long and difficult fight on Capitol Hill, the President signed into Curbing the abuses in the health insurance in- law the most far-reaching Wall Street reformsdustry and beginning to bring down rising health since the Great Depression—the Dodd-Frankcare costs were long overdue steps toward ad- Wall Street Reform and Consumer Protection Actdressing critical problems that affect Americans (Wall Street Reform). This law takes the neces-every day. The financial and economic crisis of sary steps to create a more stable and responsible2008 also made it clear that the rules governing financial system. The Act requires banks to holdour financial system needed revision to provide more capital so that when they make a bad beta more stable foundation for the economy and to they pay for it, not taxpayers. It also preventsprotect consumers, businesses, and families. financial companies, like AIG, from posing such a risk to our economy that we have no choice The American free market system is the most but for taxpayers to bail them out. The Act doespowerful engine of economic growth and job cre- this by creating an orderly liquidation processation the world has known, and when it works, it for large financial firms that fail, and by requir-helps ensure that the American middle class is ing the largest and most systemically importantstrong and secure. But the free market was never financial firms to write “living wills” that detail
  • 19. 16 BUILDING A STRONG ECONOMYhow, if they fail, they will be wound down in a deposits—are prohibited from making risky trad-manner that does not leave taxpayers vulnerable. ing bets for their own accounts and face restric-The Act also brings transparency to the $600 tril- tions in investing in or sponsoring hedge fundslion derivatives market and prohibits banks from or private equity funds. Regulators have also pro-making risky bets with their customers’ deposits. posed new rules for higher capital standards toFinally, the Act holds CEOs accountable by tak- buffer against risk in the financial system. Theing back bonuses and compensation from failing FDIC has finalized new rules to resolve a failingCEOs, giving shareholders a voice on CEO pay, financial firm without threatening the financialand protecting whistleblowers who speak out system or costing taxpayers.about wrong-doing on Wall Street. To ensure that agencies and departments In addition, Wall Street Reform puts in place have the resources they need to implement Wallsweeping reforms to protect American consum- Street Reform, the Administration fought for anders. The Act created the Consumer Financial secured adequate funding levels for 2012, andProtection Bureau (CFPB), an agency exclusively continues this commitment in the 2013 Budget.devoted to protecting consumers, in part by giv- And to ensure that consumers are protected, theing them the tools to make their own choices and President appointed Richard Cordray to head thefind the most suitable financial products, even CFPB. Without a Director, the CFPB could notwhen a provider may have incentives to hide fully supervise non-bank financial institutionstrue costs. The CFPB is empowered to set high such as independent payday lenders, non-bankand uniform standards across the market; focus mortgage lenders, non-bank mortgage servicers,on improving financial literacy for all Americans; debt collectors, credit reporting agencies, andand help to end profits based on misleading sales private student lenders. This meant that tens ofpitches and hidden traps, forcing banks and non- millions of Americans were left unprotected frombank financial institutions to compete vigorously falling prey to many of the harmful practices thatfor consumers on the basis of price and quality. contributed to the worst financial crisis since theIt will help crack down on abusive practices in Great Depression.the mortgage industry, make financial contractssimpler, and end many of the hidden fees so that JUMpstarting econoMicfamilies know what they are signing when they groWth and Job creationbuy a home. It also ensures that students whotake out college loans will be provided clear and By almost any measure, the economy this pastconcise information about their obligations. It re- year was stronger than it was in 2009 at theinforces the Credit Card Accountability, Respon- start of the Administration. However, too manysibility, and Disclosure Act passed in 2009 that Americans are still out of work, and our economybans unfair rate hikes, and ensures that banks is not yet operating at its full potential. Part ofcannot charge unwitting consumers overdraft this is due to the destructive nature of the reces-fees when they sign up for a checking account. sion that we went through, and part is due to aIn total, these reforms put in place the strongest confluence of external world events that shookconsumer financial protections in history. global markets as described earlier in this Chap- ter. The effect of these events on economic per- Over the course of the last year, the Admin- formance in the latter part of calendar year 2011istration and independent regulators have been and, in turn, on the lives of millions of Americansworking to implement Wall Street Reform to in search of a good job and economic security ledachieve these goals. Regulators issued proposed the Administration to propose the American Jobsregulations to implement the Volcker Rule to Act in September 2011.make sure that banks benefitting from Govern-ment protections—such as Federal Deposit Insur-ance Corporation (FDIC) insurance on customer
  • 20. THE BUDGET FOR FISCAL YEAR 2013 17American Jobs Act viding a typical worker with an additional $40 in each paycheck. The full-year extension of UI ben- The purpose of the American Jobs Act (AJA) efits for Americans pounding the pavement look-was simple: put more people back to work and put ing for work would save 5 million individuals frommore money in the pockets of working Americans. exhausting benefits this year, and would help toIndependent economists estimated that the Act create nearly 500,000 jobs as these benefits arewould have added up to nearly 2 million jobs spent quickly in the economy. Finally, prevent-in 2012. The AJA included: tax cuts to help ing a deep cut in Medicare physician payments isAmerica’s small businesses hire and grow; tax critical to seniors’ access to care.credits to spur hiring; investments in infrastruc-ture improvements; new pathways back to work We need to finish the job because there are stillfor Americans looking for jobs, including the most too many Americans who want to work, but can-significant reforms to the Nation’s unemploy- not find jobs. That is why the President is stillment system in 40 years to help those without calling for efforts to spur near-term economicjobs transition to the workplace; and tax cuts to growth and job creation. This includes many ofput more money in the pockets of every American the planks in the AJA that were not enacted, asworker and family. Moreover, the AJA would not well as measures not included in that legislation.have added to the deficit. It included specific off- Some of these job-creating proposals include:sets that would, in combination, more than fullypay for its cost. • An upfront investment of $50 billion from the surface transportation reauthorization While the AJA was comprised of the kinds of bill for roads, rails, and runways to createideas that had been embraced by Democrats and thousands of quality jobs in the short term.Republicans in the past, congressional intran-sigence prevented the AJA from becoming law. • Aid to States and localities to retain and hireNevertheless, the President kept fighting for teachers and first responders.measures to jumpstart economic growth and jobcreation. In November, the President won enact- • Extending UI benefits and undertakingment of one plank of the AJA: a new tax credit for major reforms to help the long-term unem-America’s veterans, which provides up to $5,600 ployed find work and spur the creation offor hiring a veteran who is long-term unemployed job opportunities for hundreds of thousandsand $9,600 for businesses that hire a veteran of the most-vulnerable Americans—low-in-with a service-related disability. come youth and adults. This includes reforms that require those receiving emergency Fed- And, in the waning days of the year, the eral benefits to participate in ReemploymentPresident signed into law a short-term extension and Eligibility Assessments and be providedof the decrease in the payroll tax, an increase in Reemployment Services, which have beenUI benefits, and the prevention of a 27 percent proven to help put people back to work; thatcut to Medicare payments to physicians that was build on and improve innovative State pro-set to take effect at the end of the calendar year. grams where those who have been displacedTo be clear, the President preferred a year-long take temporary, voluntary work or pursueextension of these critical growth measures, and on-the-job training; and that expand pro-expects the Congress to continue the short-term grams to allow those receiving UI to startpayroll tax and UI extension they approved in their own businesses.December for the rest of 2012, and avert the im-pending reduction in physician payments. The • The Better Buildings Initiative that seeks tofull-year extension of the payroll tax cut for 2012 make non-residential buildings 20 percentwould help 160 million American workers, pro- more energy efficient over the next decade
  • 21. 18 BUILDING A STRONG ECONOMY by catalyzing private-sector investment sible borrowers with little or no equity in through a series of incentives to upgrade their homes take advantage of today’s low offices, stores, universities, hospitals, and mortgage rates. commercial buildings. • Expanding Jobs for Veterans. On October • Funds to modernize at least 35,000 schools 25, HHS announced an initiative to chal- to create jobs now and high-quality schools lenge Community Health Centers to hire for the future. 8,000 veterans—approximately one veteran per health center site—over the next three • Reauthorization of Clean Energy Manufac- years. The Administration also announced turing Tax Credits to spur the creation of that it would work with health practitioner manufacturing jobs in the advanced energy training programs to expand opportunities technology sector. for returning service members with medical training to become physician assistants. • A new HomeStar program, which would en- courage Americans to invest in energy and • Creating New Opportunities for Improving cost-saving home improvements, reducing College Affordability. On October 26, the families’ energy bills over time and creat- President announced “Pay as you Earn” to ing jobs for those who undertake and make enable student loan borrowers to cap their these renovations. student loan repayments at 10 percent of discretionary income beginning in fall 2012. • Continuing to allow businesses to write-off the full amount of new investments next • Helping Small Businesses Create Jobs. On year. October 28, the White House issued two Presidential Memoranda to help small busi- • Project Rebuild, a series of policies to help nesses create jobs. One memorandum di- connect Americans looking for work in dis- rected agencies to take steps to speed up the tressed communities with the work needed transfer of Federal research from the labora- to repurpose residential and commercial tory to the marketplace. The other directed properties. the creation of BusinessUSA, an online plat- form where businesses can access informa- tion about Federal programs that supportWe Can’t Wait: Executive Actions to small businesses and exports.Boost the Economy • Preventing Drug Shortages. On October 31, Recognizing the need for action in the face of the President signed an Executive Order di-congressional gridlock, the President believed recting the Food and Drug Administrationthat the American people could not wait for the and the Department of Justice to take actionCongress to act to spur economic growth and job to help further reduce and prevent shortag-creation. That is why, throughout the fall of 2011, es of critical drugs, protect consumers, andthe President waged a “We Can’t Wait” campaign, prevent price gouging.a series of executive actions that he and his Cabi-net took to help families hurt by the sluggish eco- • Accelerating Transportation Projects. Onnomic growth, boost economic activity, and spur November 2, the President announced stepsjob creation: the Administration is taking to improve and expedite the process of reviewing and ap- • Housing Refinancing. On October 24, the proving transportation projects. On Decem- President announced steps to help respon- ber 15, as part of this effort, the Department
  • 22. THE BUDGET FOR FISCAL YEAR 2013 19 of Transportation awarded $511 million in • Raising Fuel Economy Standards. On No- transportation grants as part of the Depart- vember 16, the Department of Transpor- ment’s popular Transportation Investment tation and the Environmental Protection Generating Economic Recovery (TIGER) Agency formally unveiled their joint proposal program, months ahead of schedule. to set stronger fuel economy and greenhouse gas pollution standards for Model Year 2017- • Supporting Jobs for Veterans. On November 2025 passenger cars and light duty trucks. 7, the Administration announced three exec- This initiative will have net benefits of be- utive actions that will provide new resources tween $310 billion and $420 billion in fuel for veterans to translate military experience savings, slash oil consumption by 4 billion to the private job market, give veterans ad- barrels, and reduce greenhouse gas emis- ditional career development support, and sions by 2 billion metric tons over the life- better identify firms looking to hire veterans. times of the vehicles sold those years. When combined with other steps we have taken to • Reforming Head Start. On November 8, the set standards for vehicles, this proposal will President announced important steps to im- save Americans approximately $1.7 trillion prove the quality of services and accountabil- at the pump, reduce America’s dependence ity at Head Start centers across the country. on oil by an estimated 12 billion barrels, and reduce greenhouse gas emissions by 6 billion • Cutting Waste. On November 9, the President metric tons over the life of the programs. signed an Executive Order that will cut waste and promote more efficient spending across • Modernizing Government Records. On No- the Federal Government. Overall spending vember 28, the Administration issued a in the areas covered by the Executive Order Presidential Memorandum that directed will be reduced by 20 percent, saving billions. agencies to move to a digital-based records keeping system. This action will save tax- • Creating Health Care Jobs. On November 14, payer dollars, promote accountability, and HHS announced a $1 billion Health Care In- increase government transparency. This is novation Challenge, which will award grants one of the policy actions that open govern- to applicants who will implement the most ment advocates have sought for years. compelling new ideas to deliver better care and lower costs to people enrolled in Medi- • Expanding Health Information Technology care, Medicaid, and the Children’s Health (IT). On November 30, HHS announced at Insurance Program. This competition pri- an event in Ohio that the number of physi- oritizes projects that deploy the health care cians adopting electronic medical records workforce in innovative ways. has doubled since 2009, and set forth steps the agency is taking to make it easier for • Reducing Improper Payments. On November doctors and other health professionals to re- 15, OMB and the Vice President announced ceive incentive payments for adopting and that the Administration cut improper pay- meaningfully using health IT. ments by nearly $18 billion in 2011, and that we are on track to meet the President’s goal • Improving Energy Efficiency Through the of cutting improper payments by $50 billion “Better Building Initiative.” On December by the end of 2012. We also announced new 2, with President Clinton, the President an- actions to help further reduce Medicare and nounced nearly $4 billion in combined Fed- Medicaid waste, fraud, and abuse as well as eral and private sector energy-efficiency up- a directive to agencies to step up their over- grades to buildings over the next two years. sight of contractors and grant recipients.
  • 23. 20 BUILDING A STRONG ECONOMY • Expanding Advanced Biofuels. In Decem- over 12 million homeowners to refinance since ber, the Defense Logistics Agency signed a April 2009; the homebuyer tax credit, which contract to purchase 450,000 gallons of ad- helped millions of Americans to purchase homes, vanced drop-in biofuel, the single largest bolstering macroeconomic demand; the low- purchase of biofuel in Government history. income housing tax credit and housing finance agency programs to support affordable housing; • Launching Small Business Innovation Fund. and the Home Affordable Modification Program On December 8, in conjunction with the first (HAMP), which provides eligible homeowners the board meeting of the Startup America Part- opportunity to significantly reduce their monthly nership, the Small Business Administration mortgage payments, remain in their homes, and announced that it is moving forward with avoid foreclosures. launching a $1 billion Early Stage Innova- tion Fund that will provide matching capi- Although initially held back by implementa- tal to small business investment companies. tion challenges and poor performance on the The Administration also announced com- part of mortgage servicers, HAMP has provided mitments from more than 50 private-sector 910,000 borrowers with a permanent modifica- partners to deliver over $1 billion in value to tion and, equally importantly, established a tem- 100,000 startups over the next three years. plate for the private market to provide more ef- fective modifications for struggling homeowners. • Extending Minimum Wage and Overtime In total, since the Administration’s housing pro- Protections. On December 15, the President grams took effect in 2009, there have been more announced new proposed rules to provide than twice as many public and private mortgage Federal minimum wage and overtime pro- modification offers made than foreclosures com- tections for nearly two million workers who pleted. The Administration has worked to expand provide in-home care services for the elderly and enhance the program—including introducing and infirm. related programs for second lien modifications and short sales, and has increased servicer over- If the Congress continues to block efforts to sight and public reporting on servicer-specificpass legislation that can spur economic growth performance.and job creation, the President will undertakewhatever executive actions he can to make sure While there are signs that the broader hous-that our economy continues its recovery. ing market is beginning to stabilize, too many Americans are still paying mortgage interest rates far above current market rates becauseRejuvenating the Housing Market home price declines made them ineligible for re- financing. To address this issue, the President As the financial crisis and recession was deep- announced last September that his economicening in 2009, the Administration took immedi- team would work with Federal housing agen-ate steps to help thousands of responsible home- cies and the Government-Sponsored Enterprisesowners who were facing foreclosure or were at (GSEs) Fannie Mae and Freddie Mac to expandrisk of losing their homes. This began with the the Home Affordable Refinance Program (HARP),Administration’s effort to establish a broad set and in October specific changes were announcedof programs designed to stabilize the housing that will remove many of the barriers preventingmarket and keep millions of Americans in their GSE borrowers who have remained current onhomes. The initiative included Treasury’s mort- their mortgages from taking advantage of today’sgage-backed securities purchase program, which historically low mortgage rates.along with mortgage-backed securities purchasesby the Federal Reserve, has helped to keep mort- While this is an important step, the Admin-gage interest rates at historic lows and allowed istration believes that more relief is needed.
  • 24. THE BUDGET FOR FISCAL YEAR 2013 21Therefore, the Administration is calling on the • Signed Into Law Free Trade Agreements withCongress to take additional steps so virtually Colombia, Panama, and Korea. To help meetevery family that has a standard mortgage and the President’s export goal, the Administra-has been paying its bills on time will have the op- tion completed negotiations for free tradeportunity to refinance their mortgage at today’s agreements (FTAs) with Colombia, Panama,historically low rates. Specifically, this would be and Korea. The three trade agreements weredone by fully streamlining HARP to increase ac- passed in quick succession in the fall of 2011cess and lower cost for borrowers and, more sig- and signed into law by the President, mark-nificantly, to provide those responsible Americans ing the biggest step forward in Americanwho happen not to have a loan guaranteed by the trade liberalization in nearly two decades.GSEs with access to a comparable streamlined These agreements are fair and were passedrefinance program through the Federal Hous- together with a renewed and strengtheneding Administration. Helping families refinance trade adjustment assistance program forwill help homeowners get into more sustainable workers displaced by international trade.loans, save each family on average $3,000, enable In particular, the Korea-United States FTAmany people to stay in their homes, and give a is expected to boost annual U.S. goods ex-jolt to local economies. ports to Korea by as much as $11 billion and support more than 70,000 American jobs.Opening Global Markets • Promoted Business Investment in the U.S., Including Foreign Direct Investment (FDI). The emergence of a global marketplace that The Obama Administration has taken un-includes the growing economies of China, India, precedented steps to facilitate and promoteBrazil, and other developing countries creates an business investment in the United States.opportunity for America to export our goods and This includes establishing SelectUSA, aservices to new customers. With 95 percent of the “one-stop shop” based in the Department ofworld’s customers as well as the globe’s fastest- Commerce that facilitates investment in thegrowing markets beyond our borders, we must United States from both foreign and domes-compete aggressively to spur economic growth tic investors. This effort represents the firstand job creation. That is why the President systematic Federal Government initiative tolaunched his National Export Initiative to mar- promote and facilitate business investment,shal the full resources of the Federal Government a role that had historically been left to thebehind America’s businesses, especially small- States. In addition to increasing the level ofand medium-sized enterprises, to best help them FDI, SelectUSA also seeks to diversify oursell their goods, services, and ideas to the rest FDI beyond those countries that have his-of the world and to reach the President’s goal of torically been our largest trading partners.doubling U.S. exports in five years’ time (by the Within the United States, SelectUSA worksend of 2014). across the Federal Government and partners with State and local economic development The Administration is currently on pace to organizations to enable a coordinated ap-meet this target: through October 2011, exports proach to compete for business investment,of goods and services over the preceding 12 an effort which the President is proposing tomonths totaled over $2 trillion, 32 percent above significantly expand in the 2013 Budget.2009 levels. Current GDP forecasts suggest thatthe ratio of exports to GDP will hit 14 percent in This year, the Administration will continue to2011, which would also be an historical record. vigorously enforce international and domesticTo support international trade and the jobs that trade laws and look for opportunities to level theaccompany it, the Administration has: playing field for American workers, businesses,
  • 25. 22 BUILDING A STRONG ECONOMYranchers, and farmers; pursue increased access a low-cost, high-impact regulatory tool. Fromto several foreign markets through the ground- automobile safety to energy efficiency and creditbreaking Trans-Pacific Partnership; implement cards, this approach has been fruitful. In fact, inthe three FTAs passed in 2011; work with the the Administration’s first two years, the net ben-Congress to pass legislation allowing the United efits of regulation were estimated to exceed $35States to benefit from Russia’s accession to the billion—over 10 times the amount in the first twoWorld Trade Organization; and promote tourism years of the George W. Bush Administration, andand travel to the United States from the world’s over three times the amount in the correspond-fastest growing economies by expanding visa ing period in the Clinton Administration. In fact,processing in countries such as Brazil and China. fewer regulations were issued by Executive Agen- cies in the first three years of this Administration than in the first three years of the previousPursuing Sensible Regulation Administration. Administration is firmly committed to a regu- To improve the regulatory process, thelatory strategy that promotes continued economic President issued a new Executive Order callinggrowth and job creation, while protecting the for attention to the best available evidence, care-safety and health of all Americans. Smart, cost- ful consideration of costs and benefits, greatereffective regulations, crafted with input from coordination among agencies, and selection ofstakeholders inside and outside of Government, flexible and least burdensome alternatives, andcan save lives and prevent harm while promoting has called on independent Federal regulators togrowth and innovation. As the economy continues follow suit in their rulemakings. The Executiveto recover and create new jobs, it is particularly Order also called for an unprecedented Govern-critical for the Nation’s regulatory strategy to ment-wide review of existing rules. The reviewenable American businesses to grow and innovate. produced over 500 reform proposals across all Executive agencies. Already, we are on track to That is why the Administration carefully save more than $10 billion dollars in just the nearweighs the costs and benefits of rules—not by term, with much more savings to come.reducing difficult questions to problems of arith-metic, but by carefully weighing economic effects In the coming year, agencies will continue toand also by taking into account qualitative fac- pursue the regulatory reforms identified in thetors, including fairness and human dignity. The retrospective review process, producing billionsAdministration uses objective data to assess the more in savings by simplifying rules, eliminatingimpact of rules and to assess alternatives. More- redundancies, and identifying more cost-effectiveover, the Administration looks for areas where ways of doing things.it can promote transparency and disclosure as
  • 26. CUTTING WASTE, REDUCING THE DEFICIT, AND ASKING ALL TO PAY THEIR FAIR SHARE To construct an economy that is built to last of programs that are duplicative, ineffective, orand creates good jobs that pay well for genera- outdated—at a significant cost to taxpayers.tions to come, it will take making investments ineducation, innovation, and infrastructure so that Since taking office the President has workedour entrepreneurs, scientists, and workers have to restore accountability and fiscal responsibil-the tools they need to succeed. To pay for those ity. In his first Budget, the President directlyinvestments and free our economy from the bur- confronted the unsustainable fiscal situation heden of historic deficits and growing debt, we need inherited by making a commitment to restoringto change how Washington does business, and fiscal responsibility, while recognizing that in-restore responsibility for what we spend and ac- creasing the deficit in the short term was neces-countability for how we spend it. For too long, sary to arrest the economic freefall. He signedWashington has spent money without identify- into law pay-as-you-go (PAYGO) legislation thating a way to pay for it. Indeed, the cost of the returned the tough but disciplined budget rules2001 and 2003 tax cuts as well as the Medicare of the 1990s to Washington. The principle be-prescription drug benefit passed in the last ad- hind PAYGO is simple: all new, non-emergencyministration contributed significantly to turning entitlement spending and revenue losses mustthe surpluses of the 1990s into the record defi- be offset by savings or revenue increases, withcits of the following decade. The financial crisis no exception for new tax cuts. And, recognizingand recession exacerbated our fiscal situation as the role that rising health care costs play in ourrevenue decreased and automatic Government long-term fiscal future, the President advocat-outlays increased to counter the recession and ed for and signed into law fiscally responsiblecushion its impact. The result was that, upon health care reform that, according to the latesttaking office, the President faced an annual defi- analysis, will reduce our deficit by more thancit of $1.3 trillion, or 9.2 percent of GDP, and a $1 trillion over the next two decades, as well as10-year deficit of more than $8 trillion—and this fully pay for all new coverage. The President alsofigure grew even larger as the depth of the re- convened the bipartisan National Commissioncession became clear. While the need to jump- on Fiscal Responsibility and Reform (the Fiscalstart our economy through the Recovery Act and Commission) whose work reset the debate aboutother measures added to the short-term deficit, further deficit reduction, and who contributedthese critical measures were temporary and did many ideas that have been included in severalnot have significant deficit effects beyond the deficit reduction plans to date.recession. Finally, the President pursued significant, In addition, for far too long, many Govern- balanced deficit reduction throughout last year:ment programs have been allowed to continue first, in February in his 2012 Budget; then, inor to grow even when their objectives are no April in the Framework for Shared Prosperitylonger clear and they lack rigorous assessment and Shared Fiscal Responsibility that built onof whether the programs are achieving the de- the Budget to identify $4 trillion in deficit re-sired goals. The result has been the profusion duction; and next, in July, in a similarly sized 23
  • 27. 24 CUTTING WASTE, REDUCING THE DEFICITplan presented to congressional Republicans dur- There is time for the Congress to pass a bal-ing negotiations over extending the debt ceiling anced, sensible plan to meet the deficit reductionthis summer. Unfortunately, an unwillingness goals of the BCA. And they should act to do soby Republicans in Congress to ask the wealthi- since cuts of this magnitude and done in an across-est among us to pay their fair share through any the-board fashion would be devastating both torevenue increases prevented a comprehensive defense and non-defense programs. Already, wedeficit reduction agreement from being enacted. have reduced spending on these programs, andInstead, the President signed into law the Bud- further cuts would lead to an erosion of servicesget Control Act of 2011 (BCA), which established that Americans would not want and underminediscretionary spending caps that put into effect our national security in a way that we cannotnearly $1 trillion of discretionary spending cuts. allow. That is why in this Budget, the PresidentThese caps impose very tight constraints on dis- again has put forward a plan that will, togethercretionary spending, and meeting them will take with the deficit reduction enacted last year, cutdifficult decisions and trade-offs. In this Budget, the deficit by more than $4 trillion over the nextthe President has put forward a plan to meet decade. This would put our Nation on the rightthese caps by making tough decisions that target course toward a level of deficits of below 3 percentresources toward priorities that will not under- of GDP by the end of the decade. This is not anmine our ability to build a strong economy and end in and of itself; rather, bringing our deficits tothat asks all to shoulder their fair share. this level would mean that we are no longer add- ing to our deficits through additional spending; Discretionary spending is just one small part that debt is falling as a share of the economy; andof the Budget, and the BCA also established a that the country is headed in the right direction.congressional process to cut at least $1.2 tril- To do this, we need to make tough choices: cuttinglion more from the deficit. In August 2011, the waste where we can, reducing spending in areasPresident sent his Plan for Economic Growth and that are not critical to long-term economic growthDeficit Reduction to the Joint Select Committee and job creation, and asking everyone to pay theiron Deficit Reduction, laying out how he would fair share. Making these choices now is critical topay for the American Jobs Act and cut the deficit building our economy on a solid foundation thatby an additional $3 trillion over the next decade. can deliver for the middle class for years to come. In order to force the Congress to act and en-act at least $1.2 trillion in deficit reduction, the Making toUgh choices to restoreBCA included an automatic sequester that would fiscal disciplinecut that same amount beginning in calendar year2013 if the Joint Select Committee on Deficit Re- To be competitive in the 21st Century, the Unit-duction failed. By design, the sequester is not ed States cannot be weighed down by cripplinggood policy and is meant to force the Congress budget deficits, ineffective programs that wasteto take action: it would lead to significant cuts to tax dollars, and Government spending that lackscritical domestic programs such as education and accountability. As we move forward with theresearch and cuts to defense programs that could tough choices necessary to rein in our deficits andundermine our national security. Yet even this put the country on a sustainable fiscal path, westrong incentive to action was not enough for Re- must balance those efforts with the investmentspublicans in Congress to agree to ask the wealthi- and actions required to keep the economy grow-est Americans to pay their fair share in revenue ing and competing with other nations. We mustor to close special tax loopholes for large compa- look for cuts while protecting our core values.nies; thus, no action was taken, and the seques- The Budget maintains and makes critical invest-ter was triggered and will take effect in January ments in areas important to growth and competi-2013 if no action is taken. tiveness while broadly sharing sacrifices to re- duce the deficit. The Administration proposes to:
  • 28. THE BUDGET FOR FISCAL YEAR 2013 25 Reduce Discretionary Spending. In Au- whose mission the Administration cares deeplygust 2011, the President signed into law the BCA, about, but that had to be reduced to meet our fis-which put in place a down payment toward defi- cal targets. A full list of these cuts and consoli-cit reduction and a structure to accomplish even dations are detailed in the Budget volume, Cuts,more. The BCA included a cap on discretionary Consolidations, and Savings. Furthermore, thespending that would achieve approximately $1 President is pushing for the authority for eventrillion in deficit reduction over the next decade. more substantial reorganizations, streamliningIn 2012, the Congress worked in a bipartisan way and consolidations—as discussed in detail below.to meet the caps that were agreed to in the BCA.As we turn to 2013, the caps, in combination with Implement the New Defense Strategy.the drawdown in overseas contingency opera- Over the past three years, we have made historictions proposed in this Budget, would bring dis- investments in our troops and their capabilities,cretionary spending to its lowest level as a share military families, and veterans. Now, we are atof the economy since Dwight D. Eisenhower sat an inflection point after a decade of war: Amer-in the Oval Office. These are very tight caps; in- ican troops have left Iraq; we are undergoing adeed, it would not be possible to go further and transition in Afghanistan so Afghans can assumestill meet the needs of the Nation. That is why more responsibility for their security; and weachieving these cuts in discretionary spending is have debilitated al Qaeda’s leadership, puttingnot easy and will take tough choices. Many pro- that terrorist network on the path to defeat. Atgrams are cut or consolidated where possible, and the same time, we have to renew our economicin some cases, only because of the demands of the strength here at home, which is the foundationfiscal situation. The Budget makes these cuts in of our strength in the world, and that includesa way that asks all to shoulder their fair share. putting our fiscal house in order. That is why theIn areas critical to building a strong, growing President directed the Pentagon to undertakeeconomy that can create good jobs that pay well, a comprehensive strategic review to ensure ourprograms are not cut, but rather frozen or given defense budget is driven by a clear strategy thatsmall increases. In light of the caps on discretion- reflects our national interests. The key elementsary spending, these increases are significant. of the strategy are: Cut or Consolidate Programs. Allocating • Strengthening our presence in the Asia Pa-budgetary resources always involves a trade-off cific with a continued vigilance in the Middlebetween what one wants to do and what one can East.afford to do. This is exacerbated when the imper-ative is to limit spending in order to reduce the • Investing in our critical partnerships anddrag of deficits and debt on our economic growth alliances, including NATO, which has dem-and competitiveness. In each of his first two bud- onstrated time and again—most recently ingets, the President put forward more than 120 Libya—that it is a force multiplier.terminations, reductions, and savings totalingapproximately $20 billion in each year. In 2012, • Having ended our military commitment inthe Budget proposed more than 200 terminations, Iraq and commenced a drawdown in Afghan-reductions, and savings, totaling approximately istan, and as we look to future threats, we$30 billion in savings. This year, the Administra- will no longer size our force for prolonged,tion is proposing cuts and consolidations across large-scale stability operations. Instead, wethe Government in order to live within the caps will field smaller forces while focusing onestablished by the BCA. To achieve these savings, modernization to address emerging threats.we went through the Budget carefully to identifyprograms that were either ineffective, duplica- • Continuing to get rid of outdated Cold War-tive, or outdated and thus needed to be cut or era systems so that we can invest in the ca-consolidated. Other cuts were taken in programs pabilities we need for the future, including
  • 29. 26 CUTTING WASTE, REDUCING THE DEFICIT intelligence, surveillance and reconnais- on the largest financial institutions to fully com- sance; counterterrorism; countering weap- pensate taxpayers for the extraordinary support ons of mass destruction; and the ability to they provided to the financial sector, while dis- operate in environments where adversaries couraging excessive risk-taking. The assistance try to deny us access. given to the largest financial firms represented an extraordinary step that no one wanted to take, • Keeping faith with those who serve by pri- but one that was necessary in order to stem a oritizing efforts that focus on wounded war- deeper financial crisis and set the economy on riors, mental health, and the well-being of a path to recovery. The cost associated with the military families. excessive risk-taking by the largest financial in- stitutions continues to ripple through the econo- With this strategy as a guide, over the 10 my. Furthermore, although many of the largestyears beginning in 2012, the Department of De- financial firms have repaid the Treasury for thefense (DOD) will spend $487 billion less than direct Troubled Asset Relief Program (TARP) as-was planned in last year’s Budget. The Depart- sistance they received, the entire financial sys-ment will realize these savings through targeted tem benefitted enormously from the support thatreductions in force structure; reprioritization of TARP provided during a period of great economickey missions and the requirements that support upheaval. While the expected cost of the TARPthem; and continued reforms and efficiencies in program has fallen considerably from initial es-acquisition, management, and other business timates to approximately $68 billion in the 2013practices. The overall defense budget, including Budget, shared responsibility requires that theoverseas contingency operations reductions, will largest financial firms pay back the taxpayer forbe down by 5 percent from the 2012 enacted level. the extraordinary support they received as well as to discourage excessive risk taking. The fee Establish a Budget Cap on Overseas Con- will be restricted to financial firms with assetstingency Operations (OCO) Spending. The over $50 billion. The Administration’s FinancialBudget also reflects the Administration’s efforts Crisis Responsibility Fee meets the statutoryto constrain OCO spending in the years beyond requirement contained in the TARP legislation2013. The BCA established year-by-year caps on that requires the President to propose a way fordiscretionary spending for agencies’ base budgets the financial sector to pay back taxpayers so thatthrough 2021, reducing the 10-year budget deficit not one penny of the Government’s TARP-relatedby about $1 trillion. However, the BCA did not debt is passed on to the next generation. It wouldlimit OCO funding. Leaving OCO funding un- extend beyond 2022 as necessary to achieve theseconstrained could allow future Administrations ends, and to offset the cost of the President’sand Congresses to use it as a convenient vehicle new, broad-based mortgage refinancing programto evade the fiscal discipline that the BCA caps which is designed to help homeowners who arerequire elsewhere in the Budget. With the end of still suffering as a result of the financial crisis.our military presence in Iraq, and as troops con- The structure of this fee would be consistent withtinue to draw down in Afghanistan, this Budget principles agreed to by the G-20 Leaders and sim-proposes a binding cap on OCO spending as well. ilar to fees proposed by other countries. This feeFrom 2013 through 2021, the Budget limits OCO will reduce the deficit by $61 billion over the firstappropriations to $450 billion. Given the need for 10 years.ample flexibility in budgeting for overseas contin-gencies, this is a multi-year total cap, rather than Restrain Increases in Federal Civiliana series of year-by-year caps. Worker Pay. Putting the Nation back on a sus- tainable fiscal path will take some tough choices Require the Financial Services Industry and sacrifices. The men and women who serveto Pay Back Taxpayers. The Administration is their fellow Americans as civilian Federal work-calling for a Financial Crisis Responsibility Fee ers are patriots who work for the Nation often at
  • 30. THE BUDGET FOR FISCAL YEAR 2013 27great personal sacrifice; they deserve our respect Modernize Federal Personnel Policies. Toand gratitude. But just as families and business- manage the complex work agencies perform to-es across the country are tightening their belts, day in order to meet the needs of the Americanso too must the Federal Government. On his first people, Federal managers and employees needday in office, the President froze salaries for all a modernized personnel system that reflects thesenior political appointees at the White House. In reality of the 21st Century—where agencies offer2010, the President eliminated bonuses for all po- compensation that reflects market competitionlitical appointees across the Administration and for employees, facilitate career-development mo-last year cut back on performance awards to all bility across agencies and with the private sector,other employees. Starting in 2011, the President address poor performers consistently and fairly,has proposed and the Congress enacted a two- develop staff, and motivate better performanceyear pay freeze for all civilian Federal workers, using the best evidence-based public and pri-which has saved approximately $3 billion and is vate sector practices. To advance this effort, theprojected to save more than $60 billion over the Administration recommends that the Congressnext 10 years. A permanent pay freeze is neither establish a Commission on Federal Public Ser-sustainable nor desirable. However, in light of vice Reform comprised of Members of Congress,the fiscal constraints we are under, the Admin- representatives from the President’s Labor-Man-istration is proposing a 0.5 percent increase in agement Council, members of the private sector,civilian pay for 2013. Compared to the baseline, and academic experts. The Commission would de-this slight increase in civilian pay would free up velop recommendations on reforms to modernize$2 billion in 2013 and $28 billion over 10 years Federal personnel policies and practices withinto fund programs and services and is one of the fiscal constraints. Such reforms could include butmeasures the Administration proposes to help would not be limited to compensation, staff devel-meet the discretionary caps. opment and mobility, and personnel performance and motivation. Reform Federal Civilian Worker Retire-ment. In order to make reasonable changes toFederal worker retirement, while maintaining taking responsibility for long-terMthe ability to attract and retain highly qualified challenges to oUr fiscal healthindividuals, the Administration proposes to in-crease the employee contribution toward accru- In the BCA, the President signed into law aing retirement costs by 1.2 percent over three measure that will generate approximately $1years beginning in 2013. While Federal agency trillion in deficit reduction over the next decadecontributions for currently accruing costs of em- through the use of discretionary spending caps.ployee pensions would decline, these Federal em- With discretionary spending projected to reachployers would pay an additional amount toward historically low levels, we cannot go any fur-unfunded liabilities of the retirement system ther and meet the needs and expectations of thethat would leave total agency contributions un- American people. We need to look at other partschanged. Under the proposed plan, the amount of of the budget for deficit reduction. Mandatorythe employee pension would remain unchanged. programs, those that are not generally appropri-We estimate this proposal will save $27 billion ated on an annual basis, are an important area toover 10 years. In addition, the Administration is find savings. In some areas, these programs haveproposing to eliminate the FERS Annuity Supple- not been updated or reformed for years. In others,ment for new employees. Overall, these changes parochial politics has allowed waste to pile up orare not expected to have a negative impact on the programs to stray from their mission. In his sub-Administration’s ability to manage its human re- mission to the Joint Select Committee on Deficitsources, nor inhibit the Government’s ability to Reduction, the President put forward hundredsserve the American people. of billions of dollars in savings over 10 years in mandatory programs as well as guidelines to
  • 31. 28 CUTTING WASTE, REDUCING THE DEFICITgenerate $1.5 trillion in revenue from tax reform. were supported by Government programs,While the Committee was unsuccessful in its ef- regardless of whether the farmer is current-forts to construct a bipartisan, balanced deficit ly producing those crops—or producing anyreduction plan, the President is not deterred in crop, for that matter. Direct payments do nothis commitment to this goal. With a sequester vary with prices, yields, or producers’ farmpoised to take effect in January 2013 that would incomes. As a result, taxpayers continue toinflict great damage on critical domestic priori- foot the bill for these payments to farmersties as well as the country’s national security, it is who are experiencing record yields and pric-especially important that the Congress come to- es; more than 50 percent of direct paymentsgether and pass a balanced deficit reduction plan go to farmers with more than $100,000 into replace this sequester and, also, go beyond its annual income. Eliminating these paymentsrequired deficit reduction. would save the Government roughly $23 bil- lion over 10 years and build a better farm That is why the President’s Budget includes safety net.$517 billion in mandatory savings over thenext 10 years and a plan for tax reform to raise • Reduce Crop Insurance Subsidies. Crop in-more than $1.5 trillion. The President’s proposal surance is a foundation of our farm safetyincludes plans to: net. Yet, the program continues to be highly subsidized and costs the Government ap- Find Savings in the Agricultural Sector. A proximately $10 billion a year to run: $3strong agricultural sector is important to main- billion per year for the private insurancetaining a strong rural economy. The Administra- companies to administer and underwrite thetion is committed to a vital, robust farm economy. program and $7 billion per year in premiumIn recent years, we have had that: for the past subsidy to the farmers. A U.S. Department ofdecade farm income has been high and continues Agriculture commissioned study found that,to increase, with net farm income forecast to be when compared to other private companies,$100.9 billion in 2011, up $21.8 billion (28 per- crop insurance companies’ rate of return oncent) from the 2010 forecast—the second highest investment (ROI) should be around 12 per-inflation-adjusted value for net farm income re- cent, but that it is currently expected to becorded in more than 35 years. The top five earn- 14 percent. The Administration is proposingings years for the past three decades have oc- to lower the crop insurance companies’ ROIcurred since 2004, attesting to the profitability of to meet the 12 percent target, saving $1.2farming this decade. The Administration remains billion over 10 years. In addition, the currentcommitted to a strong safety net for farmers, one cap on administrative expenses is based onthat protects them from revenue losses that re- the 2010 premiums, which were among thesult from low yields or price declines, and strong highest ever. A more appropriate level forcrop insurance programs. But there are programs the cap would be based on 2006 premiums,and places where current support is unnecessary neutralizing the spike in commodity pricesor too generous. To reduce the deficit, the Admin- over the last four years, but not harming theistration proposes to eliminate or reduce those delivery system. The Administration, there-programs, while strengthening the safety net for fore, proposes setting the cap at $0.9 billionthose that need it most. The Administration is adjusted annually for inflation, which wouldproposing to: save $2.9 billion over 10 years. Finally, the Administration proposes to price more ac- • Eliminate Direct Payments to Farmers. The curately the premium for catastrophic (CAT) direct payment program provides produc- coverage policies, which will slightly lower ers fixed annual income support payments the reimbursement to crop insurance compa- for having historically planted crops that nies. The premium for CAT coverage is fully
  • 32. THE BUDGET FOR FISCAL YEAR 2013 29 subsidized for the farmer, so the farmer is continuation of the current farm bill base- not impacted by the change. This change will line). save $225 million over 10 years. Better Align Federal Worker and Military In addition, the Administration is proposing Retirement Programs. The men and women to reduce producers’ premium subsidy by 2 who serve their fellow Americans in the Armed basis points for all but catastrophic crop in- Forces and civil service are patriots who work surance, where the subsidy is greater than for the Nation often at great personal sacrifice. 50 percent. This will have little impact on Just as families and businesses must tighten producers. Most producers pay only 40 per- their belts to live within their means, so must the cent of the cost of their crop insurance premi- Federal Government. In addition to the proposed um on average, with the Government paying changes to civilian retirement noted above, one for the remainder. This cost share arrange- area to examine is the retirement and health ben- ment was implemented in 2000, when very efits offered to the Federal military workforce—a few producers participated in the program group of benefits that has grown comparatively and “ad-hoc” agricultural disaster assistance more generous than those offered in the private bills were passed regularly. The Congress sector. The Administration is proposing a set of increased the subsidy for buy-up coverage reforms to align these retirement programs bet- by over 50 percent at the time to encourage ter with the private sector, while still preserving greater participation. With current partici- the Federal Government’s ability to recruit and pation rates, the deep premium subsidies are retain the personnel that the American people no longer needed. This proposal is expected need, including an adequately skilled and ap- to save $3.3 billion over 10 years. propriately sized military force. The reductions sought in these retirement reforms are evenly • Better Target Agricultural Conservation As- split between civilian and military retirement sistance. The Administration has champi- programs. For military retirement reforms, the oned programs that create incentives for pri- Administration proposes to: vate lands conservation and has worked to leverage these resources with those of other • Increase TRICARE Prime Enrollment Fees, Federal agencies toward greater landscape- Initiate Standard/Extra Annual Enrollment scale conservation; however, the significant Fees, and Adjust Deductible and Catastroph- increases in conservation funding (roughly ic Caps. DOD has implemented a variety of 200 percent since enactment of the Farm Se- efficiencies within its medical program and curity and Rural Investment Act of 2002) has continues to seek cost savings, but with in- led to redundancies among our agricultural creases in users, increased utilization, and conservation programs. At the same time, expansion of benefits, defense health costs high crop prices have both strengthened keep growing. In 2012, DOD implemented market opportunities to expand agricultural minor TRICARE Prime fee increases for new production on the Nation’s farmlands and retiree enrollees. In 2013, DOD will phase decreased producer demand for certain ag- in additional fee increases based on an- ricultural conservation programs. To reduce nual retirement pay and initiate Standard the deficit, the Administration proposes to and Extra enrollment fees. Deductibles will reduce conservation funding by $1.8 billion be slightly increased and the current cata- over 10 years by better targeting conserva- strophic cap adjusted. The Administration’s tion funding to the most cost-effective and proposal is estimated to save $12.1 billion in environmentally-beneficial programs and discretionary funds over 10 years. practices. Even under this proposal, con- servation assistance is projected to grow by • Initiate Annual Fees for TRICARE-For- $60 billion over the next decade (assuming Life Enrollment (TFL). Upon turning 65,
  • 33. 30 CUTTING WASTE, REDUCING THE DEFICIT military retirees and their families transi- recommendations to the Congress; and Con- tion to Medicare coverage, with TFL becom- gress would vote “up or down” on the legis- ing second payer. In the private sector, this lation. The Administration believes that any type of “Medigap” policy would likely require major military retirement reforms should premiums, deductibles, and copays. In 2009 include grandfathering provisions for cur- the average annual premium for a Medigap rent retirees and those currently serving in policy was $2,100. By contrast, there are no the military. premiums under the TFL programs. The Ad- ministration is proposing to introduce mod- Reform the Aviation Passenger Security est annual fees for the TFL program, based Fee to Reflect the Costs of Aviation Secu- on retirement pay. This proposal is estimated rity More Accurately. Reflecting its commit- to save approximately $5.9 billion in manda- ment to keeping air travel and commerce safe, tory funds and $5.0 billion in discretionary the Administration has invested heavily in per- funds over 10 years. sonnel, technology, and infrastructure to mitigate the constantly-evolving risks to aviation security. • Make Targeted Increases to TRICARE Phar- As risk changes, however, so too must the way in macy Benefit Copayments. Copayments for which we fund our aviation security efforts. In military members have lagged behind oth- 2001, the Aviation and Transportation Security er Federal and private plans’ copayments Act created the Aviation Passenger Security Fee, for prescription drugs. In an effort to slow which originally intended to recover the full costs the growth in DOD’s health care costs, the of aviation security. Since its establishment, how- President’s 2012 Budget included minor ever, the fee has been statutorily limited to $2.50 pharmacy copay adjustments—which were per passenger enplanement with a maximum fee supported by Congress. The new proposal of $5.00 per one-way trip. This recovers only 43 would encourage the use of less expensive percent of the Transportation Security Adminis- mail order and military treatment facility tration’s aviation security costs, which have risen pharmacies. This option would have no im- over the years while the fee has remained the pact on active duty members, but would af- same. The Administration proposes to replace the fect active duty families and all military re- current “per-enplanement” fee structure with a tirees regardless of the age of the beneficiary. “per one-way trip” fee structure so that passen- The Administration’s proposal is estimated gers pay the fee only one time when travelling to save $10.6 billion in mandatory funds and to their destination; remove the current statu- $17.4 billion in discretionary funds over 10 tory fee limit and replace it with a statutory fee years. minimum of $5.00, with annual incremental in- creases of 50 cents from 2014 to 2018, resulting • Establish a Military Retirement Moderniza- in a fee of $7.50 in 2018 and thereafter; and allow tion Commission. To recommend improve- the Secretary of Homeland Security to adjust the ments to the military retirement system, fee (to an amount equal to or greater than the the Administration is proposing to establish new statutory fee minimum) through regulation a Military Retirement Modernization Com- when necessary. The proposed fee would collect mission. Under the proposal, the President an estimated $9 billion in additional fee revenue would appoint the Commissioners; DOD over five years, and $25.5 billion over 10 years. Of would transmit to the Commission initial this amount, $18 billion will be deposited into the recommendations to change the military re- General Fund for debt reduction. tirement system; the Commission would hold hearings, make final recommendations, and Share Payments More Equitably for Air draft legislation to implement its recommen- Traffic Services. All flights that use controlled dations; the President would review and de- air space require a similar level of air traffic servic- cide whether to transmit the Commission’s es. However, commercial and general aviation can
  • 34. THE BUDGET FOR FISCAL YEAR 2013 31pay very different aviation fees for those same air over $25 billion in cash relief over the next twotraffic services. To reduce the deficit and more eq- years and in total would produce savings of $25uitably share the cost of air traffic services across billion over 11 years.the aviation user community, the Administrationproposes to create a $100 per flight fee, payable to Strengthen the Safety Net for Workers’the Federal Aviation Administration, by aviation Retirement Benefits. All Americans deserve aoperators who fly in controlled airspace. All piston secure retirement. The Administration has pro-aircraft, military aircraft, public aircraft, air am- posed to create new opportunities to save for re-bulances, aircraft operating outside of controlled tirement by establishing a system of automaticairspace, and Canada-to-Canada flights would be workplace pensions and doubling the small em-exempted. This fee would generate an estimated ployer pension plan start-up credit. In addition,$7.4 billion over 10 years. Assuming the enact- the Administration has issued regulations thatment of the fee, total charges collected from avia- would increase 401(k) fee disclosure, so that busi-tion users would finance roughly three-fourths of nesses can better differentiate among retirementairport investments and air traffic control system products and workers can make more informedcosts. choices about how to invest their retirement sav- ings. The Pension Benefit Guaranty Corporation Provide Postal Service Financial Relief (PBGC), which protects the retirement securityand Undertake Reform. The Administration of 44 million workers in defined benefit pensionrecognizes the enormous value of the U.S. Postal plans, is also critical to the success of a robustService (USPS) to the Nation’s commerce and pension system. When underfunded plans termi-communications, as well as the urgent need for nate, PBGC assumes responsibility for paying thereform to ensure its future viability. USPS faces insured benefits. PBGC is responsible for payinglong-term, structural operating challenges that current and future retirement benefits to morehave been exacerbated by the precipitous drop than 1.5 million workers and retirees. PBGC re-in mail volume in the last few years due to the ceives no taxpayer financing and relies primarilyeconomic crisis and the continuing shift toward on premiums paid by insured plans. PBGC pre-electronic communication. Bold action is needed miums are currently much lower than what a pri-to ensure that USPS can continue to operate in vate financial institution would charge for insur-the short-run and achieve viability in the long- ing the same risk and are insufficient for PBGCrun. To that end, the President is proposing a to meet its long-term obligations. As of the end ofcomprehensive reform package that would: 1) re- September 2011, PBGC faced a $26 billion deficit.structure Retiree Health Benefit pre-funding in The Administration proposes to encourage com-order to accelerate moving these Postal payments panies to fully fund their pension benefits andto an accruing cost basis and reduce near-year ensure PBGC’s continued financial soundnessPostal payments; 2) provide USPS with a refund by giving the PBGC Board the authority to ad-over two years of the $10.9 billion positive credit just premiums to better account for the risk thebalance in Postal contributions to the FERS pro- agency is insuring. This proposal consists of twogram; 3) reduce USPS operating costs by giving parts: a gradual increase in the single-employerUSPS authority, which it has said it will exercise, flat-rate premium that will raise approximatelyto reduce mail delivery from six days to five days $4 billion by 2022; and PBGC Board discretionstarting in 2013; 4) allow USPS to increase col- to increase the single-employer variable-rate pre-laboration with State and local governments; and mium to raise $12 billion by 2022. This proposal5) give USPS the ability to better align the costs would save $16 billion over the next decade.of postage with the costs of mail delivery whilestill operating within the current price cap, and Restore the Solvency and Financial Integ-permit USPS to seek the balance of the modest rity of the Unemployment Insurance Systemone-time increase in postage rates it proposed in by Helping Employers Now and Restoring2010. These reforms would provide USPS with State Fiscal Responsibility. Unemployment
  • 35. 32 CUTTING WASTE, REDUCING THE DEFICITInsurance (UI) provides a vital safety net for tools to prevent improper payments, and reducingworkers who are laid off. Over the past several State UI error rates remains an Administrationyears, UI benefits have kept many families afloat priority.during tough financial times, and in 2010 thesebenefits prevented 3.2 million individuals—in- Reform Abandoned Mine Lands (AML)cluding nearly 1 million children—from falling Payments. The coal industry as a whole is cur-into poverty. UI has among the highest “bang- rently held responsible for cleaning up abandonedfor-the-buck” of any measure the Federal Govern- coal mines by paying a fee that finances grants toment could take to support near-term economic States and Tribes for reclamation. This linkagegrowth—generating up to $2 of economic activ- was lost, however, when the Congress in 2006 au-ity for every $1 spent. The President has strongly thorized additional unrestricted payments to cer-supported expanding this critical safety net and tain States and Tribes that had already complet-has called for an extension of unemployment ed their coal mine reclamation work. In addition,benefits for another year, along with key reforms regular reclamation funds are not well targetedthat would help connect long-term unemployed at the highest priority abandoned mine lands, be-Americans with work. cause amounts are distributed by a production- based formula so that funding goes to the States At the same time, the combination of chroni- with the most coal production, not the greatestcally underfunded reserves and the economic reclamation needs. States can use their fundingdownturn has placed a considerable financial for a variety of purposes, including the recla-strain on States’ UI operations. Currently, 28 mation of abandoned hardrock mines, for whichStates owe more than $37 billion to the Feder- there is no other source of Federal funding. Theal UI trust fund. As a result, employers in those Administration proposes to reform the coal AMLStates are now facing automatic Federal tax in- program to reduce unnecessary spending and en-creases, and many States have little prospect of sure that the Nation’s highest priority sites arepaying these loans back in the foreseeable future. reclaimed. First, the Administration proposes toState UI programs also have large improper pay- terminate unrestricted payments to the Statesment rates—12 percent in fiscal year 2011. The and Tribes that have been certified for complet-Administration proposes to put the UI system ing their coal reclamation work, since these pay-back on the path to solvency and financial integ- ments do not contribute to reclaiming abandonedrity by providing immediate relief to employers to coal mines. Second, the Administration proposesencourage job creation now, reestablishing State to reform the distribution process for the remain-fiscal responsibility going forward, and working ing funds to allocate available resources com-closely with States to eliminate improper pay- petitively to the highest priority coal AML sites.ments. Under this Budget proposal, employers in Through a competitive grant program, a newindebted States would receive tax relief for two AML Advisory Council will review and rank theyears. To encourage State solvency, the proposal abandoned mine lands sites, so that the Depart-would also raise the minimum level of wages ment of the Interior, in coordination with Statessubject to unemployment taxes in 2015 to a level and Tribes, can distribute grants to reclaim theslightly lower in real terms than it was in 1983, highest priority coal sites each year.after President Reagan signed into law the lastwage base increase. The higher wage base will be Mining for hardrock minerals (e.g., silver andoffset by lower tax rates to avoid a Federal tax gold) has also left a legacy of abandoned minesincrease. Further, the Administration has taken across the United States. The Administrationa number of steps to address program integrity proposes to create a parallel AML program forin States that have consistently failed to place abandoned hardrock sites. Like the coal program,enough emphasis on combating improper pay- hardrock reclamation would be financed by a newments in their UI programs. The Administration’s AML fee on the production of hardrock miner-aggressive actions have given States a number of als on both public and private lands. This would
  • 36. THE BUDGET FOR FISCAL YEAR 2013 33hold the hardrock mining industry responsible Health Savingsfor cleaning up the hazards left by its predeces-sors. The funds would be distributed through a Health care comprises one-quarter of non-in-competitive grant program to reclaim the highest terest Federal spending, and is the major driver ofpriority hardrock sites on Federal, State, tribal, future deficit growth. To help control these costs,and private lands. Altogether, this proposal will the President signed into law the Patient Protec-save $1.6 billion over the next 10 years. Equal- tion and Affordable Care Act (ACA) which, ac-ly important, it would focus available coal fees cording to the Congressional Budget Office’s lat-to better address the Nation’s most dangerous est analysis, will reduce the deficit by more thanabandoned coal mines and establish a new ap- $1 trillion over the next two decades. Realizingproach to cleaning up abandoned hardrock mines this deficit reduction and efficiencies in the healthacross the country. care system that will reduce cost and improve quality will require effective implementation of Provide a Better Return to Taxpayers from the ACA, and the President is resolutely commit-Mineral Development. The public received ted to implementing ACA fairly, efficiently, andabout $10 billion in 2011 from fees, royalties, and swiftly. Repealing or failing to implement healthother payments related to oil, gas, coal, and other care reform would return the Nation to a path ofmineral development on Federal lands and wa- rapidly increasing health care costs, and add tril-ters. A number of recent studies by the Govern- lions to deficits over the long run. The Presidentment Accountability Office and the Department is putting forward $364 billion in health savingsof the Interior’s Inspector General have found that build on the ACA to strengthen Medicare,that taxpayers could earn a better return through Medicaid, and other health programs by reducingmore rigorous oversight and policy changes, such wasteful spending and erroneous payments, andas charging appropriate fees and reforming how supporting reforms that boost the quality of care.royalties are set. The Budget proposes a number It accomplishes this in a way that does not shiftof actions to receive a fair return from the con- significant risks onto the individuals they serve;tinued development of these vital U.S. mineral slash benefits; or undermine the fundamentalresources: charging a royalty on select hardrock compact they represent to our Nation’s seniors,minerals (such as silver, gold, and copper); ex- people with disabilities, and low-income families.tending net receipt sharing, where States with Included are savings that would:mineral revenue payments help defray the costsof managing the mineral leases that generate the Reduce Medicare Coverage of Bad Debts.revenue; charging user fees to oil companies for Today, for most eligible provider types, Medicareprocessing oil and gas drilling permits and in- generally reimburses 70 percent of bad debtsspecting operations on Federal lands and waters, resulting from beneficiaries’ non-payment of de-which complement new and rigorous safety and ductibles and copayments after providers haveenvironmental standards to make sure that these made reasonable efforts to collect the unpaidactivities are done responsibly; establishing fees amounts. Similar to a proposal made by the Na-for new non-producing oil and gas leases (both tional Commission on Fiscal Responsibility andonshore and offshore) to encourage more timely Reform (Fiscal Commission), the Budget proposesproduction; and making administrative changes to align Medicare policy more closely with privateto Federal oil and gas royalties, such as adjusting sector standards by reducing bad debt paymentsroyalty rates and terminating the royalty-in-kind to 25 percent for all eligible providers over threeprogram. Together, these changes are expected to years starting in 2013. This proposal will savegenerate approximately $3 billion in savings over approximately $36 billion over 10 years.10 years.
  • 37. 34 CUTTING WASTE, REDUCING THE DEFICIT Better Align Graduate Medical Education improve the quality of care. These include adjust-Payments With Patient Care Costs. Medicare ing payment updates for certain post-acute carecompensates teaching hospitals for the indirect providers, equalizing payments for certain condi-costs stemming from inefficiencies created from tions commonly treated in IRFs and SNFs; en-residents “learning by doing.” The Medicare Pay- couraging appropriate use of inpatient rehabili-ment Advisory Commission (MedPAC) has de- tation hospitals; and adjusting SNF payments totermined that these Indirect Medical Education reduce unnecessary hospital readmissions.(IME) add-on payments are significantly greaterthan the additional patient care costs that teach- Align Medicare Drug Payment Policiesing hospitals experience, and the Fiscal Commis- With Medicaid Policies for Low-Income Ben-sion, among others, recommended reducing the eficiaries. Under current law, drug manufactur-IME adjustment. This proposal would reduce the ers are required to pay specified rebates for drugsIME adjustment by 10 percent beginning in 2014, dispensed to Medicaid beneficiaries. In contrast,and save approximately $10 billion over 10 years. Medicare Part D plan sponsors negotiate with manufacturers to obtain plan-specific rebates at Better Align Payments to Rural Providers unspecified levels. The Department of Health andWith the Cost of Care. Medicare makes a num- Human Services’ Inspector General has foundber of special payments to account for the unique substantial differences in rebate amounts and netchallenges of delivering medical care to benefi- prices paid for brand name drugs under the twociaries in rural areas. These payments continue programs, with Medicare receiving significantlyto be important; however, in specific cases, the lower rebates and paying higher prices than Med-adjustments may be greater than necessary to icaid. Moreover, Medicare per capita spending inensure continued access to care. The Adminis- Part D is growing significantly faster than thattration proposes to improve the consistency of in Parts A or B under current law. This proposalpayments across rural hospital types, provide in- would allow Medicare to benefit from the samecentives for efficient delivery of care, and elimi- rebates that Medicaid receives for brand namenate higher than necessary reimbursement. To and generic drugs provided to beneficiaries whoimprove payment accuracy for Critical Access receive the Part D Low-Income Subsidy begin-Hospitals (CAHs), the Administration proposes ning 2013. Manufacturers previously paid Medic-to reduce payments from 101 percent to 100 per- aid rebates for drugs provided to the dual eligiblecent of reasonable costs, effective in 2013, and to population prior to the establishment of Medicareeliminate the CAH designation for those that are Part D. The Fiscal Commission recommended afewer than 10 miles from the nearest hospital, ef- similar proposal to apply Medicaid rebates tofective in 2014. These changes will ensure that dual eligibles for outpatient drugs covered underthis unique payment system is better targeted to Part D. This proposal is estimated to save $156hospitals meeting the eligibility criteria and will billion over 10 years.save approximately $2 billion over 10 years. Increase Income-Related Premiums Encourage Efficient Post-Acute Care. Under Medicare Parts B and D. Under Medi-Medicare covers services in skilled nursing fa- care Parts B and D, certain beneficiaries paycilities (SNFs), long-term care hospitals (LTCHs), higher premiums as a result of their higher lev-inpatient rehabilitation facilities (IRFs) and els of income. Beginning in 2017, the Administra-home health. Over the years, expenditures for tion proposes to increase income-related premi-post-acute care have increased dramatically, and ums under Medicare Parts B and D by 15 percentpayments in excess of the costs of providing high and maintain the income thresholds associatedquality and efficient care place a drain on Medi- with income-related premiums until 25 percentcare. Recognizing the importance of these servic- of beneficiaries under Parts B and D are subjectes, the Administration supports policies that will to these premiums. This will help improve thesave approximately $63 billion over 10 years and financial stability of the Medicare program by
  • 38. THE BUDGET FOR FISCAL YEAR 2013 35reducing the Federal subsidy of Medicare costs particular concern are Medigap plans that coverfor those beneficiaries who can most afford them. substantially all Medicare copayments, includingThis proposal will save approximately $28 billion even the modest copayments for routine care thatover 10 years. most beneficiaries can afford to pay out of pocket. To encourage more efficient health care choices, Modify Part B Deductible for New Benefi- the Administration proposes a Part B premiumciaries. Beneficiaries who are enrolled in Medi- surcharge equivalent to about 15 percent of thecare Part B are required to pay an annual deduct- average Medigap premium (or about 30 percentible. This deductible helps to share responsibility of the Part B premium) for new beneficiaries thatfor payment of Medicare services between Medi- purchase Medigap policies with particularly lowcare and beneficiaries. To strengthen program cost-sharing requirements, starting in 2017. Cur-financing and encourage beneficiaries to seek rent beneficiaries and near-retirees would not behigh-value health care services, the Administra- subject to the surcharge. Other Medigap planstion proposes to apply a $25 increase in the Part would be exempt from this requirement whileB deductible in 2017, 2019, and 2021 for new ben- still providing beneficiaries options for protectioneficiaries. Current beneficiaries or near retirees against high out-of-pocket costs. This proposalwould not be subject to the revised deductible. will save approximately $2.5 billion over 10 years.This proposal will save approximately $2 billionover 10 years. Strengthen the Independent Payment Ad- visory Board (IPAB) to Reduce Long-Term Introduce Home Health Copayments for Drivers of Medicare Cost Growth. CreatedNew Beneficiaries. Medicare beneficiaries cur- by the ACA, IPAB has been highlighted by econ-rently do not make copayments for Medicare omists and health policy experts as a key con-home health services. This proposal would cre- tributor to Medicare’s long term solvency. Underate a home health copayment of $100 per home current law, if the projected Medicare per capi-health episode, applicable for episodes with five ta growth rate exceeds a predetermined targetor more visits not preceded by a hospital or other growth rate, IPAB recommends to the Congressinpatient post-acute care stay. This would ap- policies to reduce the rate of Medicare growth toply to new beneficiaries beginning in 2017. This meet the target. IPAB recommendations are pro-proposal is consistent with a MedPAC recom- hibited from increasing beneficiary premiums ormendation to establish a per episode copayment. cost-sharing, or restricting benefits. To furtherMedPAC noted that “beneficiaries without a prior moderate the rate of Medicare growth, this pro-hospitalization account for a rising share of epi- posal would lower the target rate from the GDPsodes” and that “adding beneficiary cost sharing per capita growth rate plus 1 percent to plus 0.5for home health care could be an additional mea- percent. Additionally, the proposal would givesure to encourage appropriate use of home health IPAB additional tools like the ability to considerservices.” This proposal will save approximately value-based benefit design.$350 million over 10 years. Cut Waste, Fraud, and Abuse in Medi- Introduce a Part B Premium Surcharge care and Medicaid. In this fiscal environment,for New Beneficiaries That Purchase Near we cannot tolerate waste, fraud, and abuse inFirst-Dollar Medigap Coverage. Medigap Medicare, Medicaid, and the Children’s Healthpolicies sold by private insurance companies pro- Insurance Program (CHIP)—or any Govern-vide beneficiaries additional support for covering ment program. That is why the Administrationhealthcare costs by covering most or all of the has introduced its Campaign to Cut Waste, to-cost sharing Medicare requires. This protection, gether with long-standing efforts to boost pro-however, gives individuals less incentive to con- gram integrity and reduce improper paymentssider the costs of health care services and thus (that is, payments made to the wrong person,raises Medicare costs and Part B premiums. Of in the wrong amount, or for the wrong reason).
  • 39. 36 CUTTING WASTE, REDUCING THE DEFICITThe Administration is aggressively implement- Apply a Single Blended Matching Rate toing the new tools for fraud prevention included Medicaid and CHIP Starting in 2017. Underin the ACA. Also, it is implementing the fraud current law, States face a patchwork of differentprevention system, a predictive analytic model Federal payment contributions for individualssimilar to those used by private sector experts. In eligible for Medicaid and CHIP. Specifically, Stateaddition, the Administration is proposing a series Medicaid expenditures are generally matched byof policies to build on these ongoing efforts that the Federal Government using the Federal medi-will save nearly $5 billion over the next 10 years. cal assistance percentage (FMAP); CHIP expen-Specifically, the Administration proposes to: cre- ditures are matched with enhanced FMAP (eF-ate new initiatives to reduce improper payments MAP); and the ACA provides increased match forin Medicare; dedicate penalties for failure to use newly-eligible individuals and certain childlesselectronic health records toward deficit reduction; adults beginning in 2014. This proposal wouldupdate Medicare payments to more appropriately replace these complicated formulas with a singleaccount for utilization of advanced imaging; re- matching rate specific to each State that auto-quire prior authorization for advanced imaging; matically increases if a recession forces enroll-direct States to track high prescribers and utiliz- ment and State costs to rise beginning in 2017.ers of prescription drugs in Medicaid to identify This proposal is projected to save $17.9 billionaberrant billing and prescribing patterns; and af- over 10 years.firm Medicaid’s position as a payer of last resortby removing exceptions to the requirement that Limit Medicaid Reimbursement of Du-State Medicaid agencies reject medical claims rable Medical Equipment (DME) Based onwhen another entity is legally liable to pay the Medicare Rates. Under current law, States haveclaim. Additionally, the Budget would alleviate experienced the same challenges in preventingState program integrity reporting requirements overpayments for DME that previously confront-by consolidating redundant error rate measure- ed Medicare. The Medicare program is in the pro-ment programs to create a streamlined audit cess of implementing innovative ways to increaseprogram with meaningful outcomes, while main- efficiency for payment of DME through the DMEtaining the Federal and State’s government abil- Competitive Bidding Program, which is expectedity to identify and address improper Medicaid to save the Medicare program more than $25 bil-payments. lion and Medicare beneficiaries approximately $17 billion over 10 years. This proposal extends Phase Down the Medicaid Provider Tax some of these efficiencies to Medicaid, startingThreshold Beginning in 2015. Many States in 2013, by limiting Federal reimbursement forimpose taxes on health care providers to help fi- a State’s Medicaid spending on certain DME ser-nance the State share of Medicaid program costs. vices to what Medicare would have paid in theHowever, some States use those tax revenues to same State for the same services. This proposal isincrease payments to those same providers and projected to save $3.0 billion over 10 years.use that additional spending to increase theirFederal Medicaid matching payments. The Ad- Re-Base Medicaid Disproportionate Shareministration proposes to limit these types of Hospital (DSH) Allotments in 2021 and Be-State financing practices that increase Federal yond. This proposal continues the ACA policyMedicaid spending by phasing down the Medic- to better align Medicaid DSH payments withaid provider tax threshold from the current law reductions in the number of uninsured in 2021level of 6 percent in 2014, to 4.5 percent in 2015, and beyond. Supplemental DSH payments are4 percent in 2016, and 3.5 percent in 2017 and intended to help support hospitals that providebeyond. By delaying the effective date until 2015, care to disproportionate numbers of low-incomethe proposal gives States more time to plan for and uninsured individuals. The ACA reducedthe change. This proposal is projected to save State DSH allotments by $18.1 billion through$21.8 billion over 10 years. 2020 to reflect the reduced need as a result of the
  • 40. THE BUDGET FOR FISCAL YEAR 2013 37increased coverage provided in the Act. The Ad- celerates access to affordable generic biologicsministration proposes to compute 2021 State DSH by modifying the length of exclusivity on brandallotments based on States’ actual 2020 DSH al- name biologics. Beginning in 2013, this proposallotments, better aligning future Medicaid supple- would award brand biologic manufacturers sevenmental payments to hospitals with reduced levels years of exclusivity rather than 12 years underof uncompensated care. This proposal is projected current law and prohibit additional periods of ex-to save $8.3 billion over 10 years. clusivity for brand biologics due to minor changes in product formulations, a practice often referred Expand State Flexibility to Tailor Benefit to as “evergreening.” Reducing the exclusivity pe-Packages to Meet the Needs of Beneficia- riod increases the availability of generic biolog-ries. This proposal would give States flexibility ics by encouraging faster development of genericto require “benchmark” benefit plan coverage for biologics while retaining appropriate incentivesnon-elderly, non-disabled adults with incomes for research and development for the innovationover 133 percent of the Federal poverty level. of breakthrough products. The Administration’sCurrently, States have the option to provide cer- proposal strikes a balance between promotingtain populations “benchmark” or “benchmark affordable access to medications and encourag-equivalent” plans, or alternative benefit packages ing innovation to develop needed therapies. Thethat may be offered in lieu of the benefits covered proposal will result in $4 billion in savings overunder a traditional Medicaid State plan. 10 years to Federal health programs including Medicare and Medicaid. Prohibit “Pay for Delay” Agreements toIncrease the Availability of Generic Drugsand Biologics. The high cost of prescription Tax Reformdrugs places a significant burden on Americanstoday, causing many to skip doses, split pills, or The President is committed to reducing theforgo needed medications altogether. The Admin- deficit through a balanced approach—one that re-istration proposes to increase the availability of strains spending across the Budget, including ingeneric drugs and biologics by authorizing the the tax code; asks the wealthiest among us to con-Federal Trade Commission to stop companies tribute to deficit reduction; and lays the founda-from entering into anti-competitive deals, known tion for future growth. That is why the Presidentalso as “pay for delay” agreements, intended to is calling on the Congress to undertake compre-block consumer access to safe and effective ge- hensive tax reform to cut rates, cut inefficientnerics. Such deals can cost consumers billions of tax breaks, cut the deficit, and increase jobs anddollars because generic drugs are typically priced growth in the United States—while observing thesignificantly less than their branded counter- “Buffett Rule” that people making over $1 millionparts. These agreements reduce competition and should not pay lower taxes than the middle class.raise the cost of care for patients both directly,through higher drug and biologic prices, and indi- Tax reform is critical to rebuilding our econ-rectly through higher health care premiums. The omy to be stronger and more stable than in theAdministration’s proposal facilitates greater ac- past. Two of our biggest economic challenges—cess to lower-cost generics and will generate $11 creating jobs and reducing long-term deficits—billion over 10 years in savings to Federal health both depend on instituting a simpler, fairer, moreprograms including Medicare and Medicaid. progressive tax system than we have today. The Administration believes, like many others, that Modify the Length of Exclusivity to Facili- well-designed tax cuts can play an important roletate Faster Development of Generic Biolog- in job creation now. But the Administration be-ics. Access to affordable lifesaving medicines is lieves that immediate, broad tax cuts for the mid-essential to improving the quality and efficiency dle class—rather than for only the wealthiest 1of health care. The Administration’s proposal ac- or 2 percent of Americans—are far more effective
  • 41. 38 CUTTING WASTE, REDUCING THE DEFICITat creating jobs and growing the economy. When partners as a share of our economy; this, in turn,millions of middle-class families across the coun- hurts our competitiveness in the world economy.try have more money in their bank accounts to In addition, a large fraction of the tax code isspend in their communities, businesses large and now temporary and expires periodically, addingsmall can grow, innovate, invest, and hire. The uncertainty for households and businesses, andsuccess of the American economy has long been complicating the fiscal outlook.built on the vibrancy of our middle class, and ourefforts to create a tax system that is fairer, sim- The result is a tax code that neither serves thepler, and more progressive reflect that reality. American people nor our economy. In September, the President announced five principles for tax Tax reform is also an important part of reduc- reform. The President stands by those principlesing our long-term deficits and placing our country as elaborated upon below. Tax reform should:on a fiscally sustainable path. We cannot addressa deficit a decade in the making through spend- • Simplify the Tax Code and Lower Tax Rates.ing cuts alone—that is, unless we, as a country, The tax system should be simplified andagree to cut every program in the entire budget work for all Americans with lower individ-by more than a quarter, including defense spend- ual and corporate tax rates and fewer taxing, Social Security payments, Medicare benefits, brackets.and veterans’ benefits, along with everythingelse. The Administration believes in a balanced • Reform Inefficient and Unfair Tax Breaks—approach that cuts spending responsibly, but also Eliminating Them for Millionaires Whileasks the most well-off in society—many of whom, Making All Tax Breaks at Least as Goodthrough loopholes and other exemptions, pay a Deal for the Middle Class as for Wealthyless in taxes than most middle-class families—to Americans. Reform should cut and simplifycontribute their fair share toward reducing the tax breaks that are now inefficient, unfair,deficit and invigorating our economy. or both, so that wealthiest Americans cannot avoid their responsibilities by gaming the Unfortunately, the tax code has become increas- system, that middle class working Americansingly complicated and unfair. Changes enacted receive their fair share, and that Americansduring the previous Administration were skewed can spend less time and money each year fil-in favor of the wealthiest taxpayers and reduced ing taxes. That means eliminating tax sub-the tax code’s overall progressivity. Under today’s sidies for millionaires that they do not need;tax laws, those who can afford expert advice can there is no reason that those making overavoid paying their fair share and interests with $1 million should get any tax subsidies forthe most connected lobbyists can get exemptions housing, health care, retirement, and childand special treatment written into our tax code. care. And it means ensuring fair incentivesWhile many of the tax incentives serve important for the middle class to buy a home or save forpurposes, taken together the tax expenditures in retirement, as opposed to allowing the mostthe law are inefficient, unfair, duplicative, and of- well-off to get two to three times as much.ten unnecessary. The corporate tax system pro-vides special incentives for some industries, like • Decrease the Deficit While Protecting Progres-oil and gas producers, yet fails to provide sufficient sivity. Reform should cut the deficit by $1.5incentives for companies to invest in America. Be- trillion over the next decade through tax re-cause our corporate tax system is so riddled with form, including the expiration of tax cuts forspecial interest loopholes, our system has one of single taxpayers making over $200,000 andthe highest statutory tax rates among developed married couples making over $250,000. Andcountries to generate about the same amount of it should do this while keeping the tax codecorporate tax revenue as our developed country at least as progressive as if the high-income
  • 42. THE BUDGET FOR FISCAL YEAR 2013 39 2001 and 2003 tax cuts were eliminated, as closer to observing the Buffett rule. Included are the President proposes. measures that would: • Increase Job Creation and Growth in the Allow the 2001 and 2003 High-Income Tax United States. The tax code should make Cuts to Expire and Return the Estate Tax America stronger at home and more com- to 2009 Parameters. The tax cuts for those petitive globally by increasing the incentive with household income above $250,000 per year to work and invest in the United States. This passed in the Bush Administration were unfair includes fundamental corporate tax reform. and unaffordable at the time they were enacted That is why, in addition to these principles, and remain so today. In December 2010, congres- the President is proposing a roadmap for sional Republicans insisted on extending them corporate tax reform that will make America through 2012 and threatened to allow taxes to in- more competitive and create jobs here at crease on middle-class families if the Administra- home. tion did not agree. Not extending the middle-class tax cuts would have hurt our nascent economic • Observe the Buffett Rule. No household mak- recovery, and would have imposed an enormous ing over $1 million annually should pay a burden on working families; as a result, the Ad- smaller share of its income in taxes than ministration agreed to extend them to 2012 as middle-class families pay. As Warren Buffett part of a deal that also included immediate sup- has pointed out, his effective tax rate is low- port for the economy in the form of a payroll tax er than his secretary’s. And, the President cut and an extension of unemployment insur- is now specifically proposing that in obser- ance. The Administration remains opposed to the vance of the Buffett rule, those making over extension of these high-income tax cuts past 2012 $1 million should pay no less than 30 per- and supports the return of the estate tax exemp- cent of their income in taxes. The Adminis- tion and rates to 2009 levels. This would reduce tration will work to ensure that this rule is the deficit by $968 billion over 10 years. implemented in a way that is equitable, in- cluding not disadvantaging individuals who Reduce the Value of Itemized Deductions make large charitable contributions. And he and Other Tax Preferences to 28 Percent for is proposing that the Buffett rule should re- Families With Incomes Over $250,000. Cur- place the Alternative Minimum Tax, which rently, a millionaire who contributes to charity now burdens middle-class Americans rather or deducts a dollar of mortgage interest, enjoys a than stopping the richest Americans from deduction that is more than twice as generous as paying too little as was originally intended. that for a middle-class family. The proposal would limit the tax rate at which high-income taxpayers This will make our tax code simpler, fairer, and can reduce their tax liability to a maximum of 28more efficient—and end a system that allows percent, affecting only married taxpayers filing ahouseholds making millions of dollars annually joint return with income over $250,000 (at 2009to pay lower tax rates than middle-class families. levels) and single taxpayers with income over $200,000. This limit would apply to: all itemized To begin the national conversation about tax deductions; foreign excluded income; tax-exemptreform, the President is offering a detailed set interest; employer sponsored health insurance;of specific tax loophole closers and measures to retirement contributions; and selected above-the-broaden the tax base that, together with the expi- line deductions. The proposed limitation wouldration of the high-income tax cuts, would be more return the deduction rate to the level it was atthan sufficient to hit his $1.5 trillion target for tax the end of the Reagan Administration. It wouldreform, pay for tax cuts for the middle class, cut reduce the deficit by $584 billion over 10 years.inefficient expenditures, and move the tax system
  • 43. 40 CUTTING WASTE, REDUCING THE DEFICIT Tax Carried (Profits) Interests as Ordi- outdated, ineffective, or duplicative is wrong.nary Income. Currently, many hedge fund man- With the tight discretionary caps implementedagers, private equity partners, and other manag- by the BCA, we have no choice but to redoubleers in partnerships are able to pay a 15 percent our efforts to scour the Budget for waste and tocapital gains rate on their labor income (on in- make tough decisions about reducing funding orcome that is known as “carried interest”). This ending programs that are laudable, but cannot betax loophole is inappropriate and allows these fi- funded in this fiscal environment. This exercisenancial managers to pay a lower tax rate on their is difficult, but builds on the efforts the Adminis-income than other workers. The President pro- tration has undertaken since the President tookposes to eliminate the loophole for managers in office. As part of its Campaign to Cut Waste, theinvestment services partnerships and to tax car- Administration has moved to cut wasteful spend-ried interest at ordinary income rates. This would ing and programs that do not work, strengthenreduce the deficit by $13 billion over 10 years. and streamline what does work, leverage tech- nology to transform Government operations to Eliminate Special Depreciation Rules for save money and improve performance, and makeCorporate Purchases of Aircraft. Under cur- Government more open and responsive to therent law, airplanes used in commercial and con- needs of the American people. As the Presidenttract carrying of passengers and freight can be said in his 2011 State of the Union address, wedepreciated over seven years. Airplanes not used cannot win the future with the government ofin commercial or contract carrying of passengers the past. In order to win the future and betteror freight, for example corporate jets, are depreci- serve a more competitive America, we need a 21stated over five years. The proposal would change Century government that is efficient, effectivedepreciation schedules for corporate planes that and accountable. To continue these efforts, thecarry passengers to seven years to be consistent Administration proposes to:with the treatment of commercial aircraft. Thiswould reduce the deficit by $2 billion over 10 Reorganize Government. We live and doyears. business in the information age, but the orga- nization of our Government has not kept pace, Eliminate Oil and Gas Tax Preferences. changing little since the days of black and whiteThe tax code currently subsidizes oil and gas pro- TV. Over the years, duplicative efforts sprangduction through loopholes and tax expenditures up that made it less effective, wasting taxpayerthat preference these industries over others. Cur- dollars, and making it harder for the Americanrent law provides a number of credits and deduc- people to navigate their Government. To createtions that are targeted toward certain oil and an economy that is built to last, will take a pri-gas activities. In accordance with the President’s vate sector that has at its disposal all it needs toagreement at the G-20 Summit in Pittsburgh in compete with firms and workers from around theDecember 2009 to phase out subsidies for fossil world. That means re-organizing government sofuels so that we can transition to a 21st Century that it does more for less, and that it is best po-energy economy, the President is proposing to sitioned to assist businesses and entrepreneursrepeal a number of tax preferences available for grow and win in the world economy. That is whyfossil fuels. Getting rid of these would reduce the the President has asked the Congress to revivedeficit by $41 billion over 10 years. an authority that Presidents had for almost the entire period from 1932 through 1984: to submit proposals to reorganize the Executive Branch via creating a governMent that is a fast-track procedure. The Administration’s pro- effective and efficient posal, the “Reforming and Consolidating Govern- ment Act of 2012,” would enable the President to Whether the Budget is in surplus or deficit, submit plans to consolidate and reorganize Ex-wasting taxpayer dollars on programs that are ecutive Branch departments and agencies for fast
  • 44. THE BUDGET FOR FISCAL YEAR 2013 41track consideration by the Congress, but only so tiveness, and job creation. The Administrationlong as the result would be to reduce the size of expects these changes to generate approximatelyGovernment or cut costs, the latter being a new $1.5 billion in savings over the next 10 years byrequirement for this type of authority. reducing overhead and consolidating offices and support functions, as well as additional, compa- If given this authority, the President would rable savings through programmatic cuts oncesubmit a proposal to consolidate a number of the synergies from consolidation are realized, foragencies and programs into a new Department a total of $3 billion over the next 10 years.with a focused mission to foster economic growthand spur job creation. The proposal would consoli- Cut Improper Payments by $50 Billion.date the six primary business and trade agencies, Each year, the Federal Government wastes bil-as well as other related programs, integrating lions of American taxpayers’ dollars on improperinto one new Department the Government’s core payments to individuals, organizations, and con-trade and competitiveness functions. Specifically, tractors. These are payments made in the wrongthe new Department will absorb the Department amount, to the wrong person, or for the wrongof Commerce’s core business and trade functions, reason. In the summer of 2010, the Presidentthe Small Business Administration, the Office of set a goal of cutting improper payments by $50the U.S. Trade Representative, the Export-Import billion between 2010 and 2012. The Administra-Bank, the Overseas Private Investment Corpora- tion is on track to meet or exceed this goal, hav-tion, and the U.S. Trade and Development Agen- ing avoided more than $20 billion in impropercy. It will also incorporate related programs from payments in 2010 and 2011 combined. In 2011,a number of other departments, including the the Government-wide improper payment rateDepartment of Agriculture’s business develop- declined to 4.69 percent, a sharp decrease fromment programs, the Department of the Treasury’s the 5.29 percent reported in 2010. Agencies alsoCommunity Development Financial Institutions reported that they recaptured more than $1.2 bil-Fund program, the National Science Foundation’s lion in overpayments to contractors and vendorsstatistical agency and industry partnership pro- in 2011. This was the highest recapture amountgrams, and the Bureau of Labor Statistics from reported in the eight years that agencies have re-the Department of Labor. Creating a department ported results. In total, the Federal Governmentwith a laser-focus on economic growth requires has recaptured $1.9 billion in 2010 and 2011 com-moving the National Oceanic and Atmospheric bined, and the Administration is less than $100Administration to the Department of the Interior. million away from meeting the President’s goal to recapture $2 billion by the end of 2012. By bringing together the core tools to expandtrade and investment, grow small businesses, and Dispose of Excess or Under-Utilized Fed-support innovation, the new Department could eral Property. With over 1.1 million buildings,coordinate these resources to maximize the ben- structures, and land parcels, the Federal Govern-efits for businesses and the economy. With more ment is the largest property owner and managereffectively aligned and deployed trade promo- in the country. In 2010, agencies identified tens oftion resources, strengthened trade enforcement thousands of excess and underutilized real prop-capacity, streamlined export finance programs, erty assets (both civilian and military assets)and enhanced focus on investment in the United that represent hundreds of millions of taxpayerStates, the Government could better implement dollars spent annually on unnecessary operationa strong, pro-growth trade policy. This reorgani- and maintenance costs, as well as other opportu-zation would help American businesses compete nities for reforming the inventory that could cre-more effectively in the global economy, expand ex- ate billions of dollars in savings through stream-ports, and create more jobs at home. Businesses lined efficiencies and reduced operating costs.will more easily and seamlessly be able to access In June 2010, the President directed agencies toservices in support of exports, domestic competi- accelerate efforts to shed unneeded property and
  • 45. 42 CUTTING WASTE, REDUCING THE DEFICITreduce operating costs in order to achieve $3 bil- Budget. They responded by identifying 77 cost-lion in non-defense savings by the end of 2012. To saving measures, amounting to $243 million indate, Federal agencies have achieved $1.5 billion savings through 2010. Continuing that effort, thein savings and identified enough savings oppor- 2012 Budget included agency-specific, targetedtunities to exceed the $3 billion goal for non-de- cuts to administrative expenses such as travel,fense savings opportunities. In addition, the DOD printing, supplies, and advisory contract services.has achieved roughly half of its $5 billion goal for The total administrative savings is estimated toBase Realignment and Closure (BRAC) related be over $2 billion. Building upon that effort, thesavings. President issued an Executive Order to promote efficient spending in November 2011. The Execu- Despite these successes, there is bipartisan tive Order called for agencies to make a 20 per-agreement that competing stakeholder interests cent reduction in their spending on the admin-and red tape continue to significantly hinder the istrative areas targeted in the 2012 Budget, asdisposal of Government property. There remain well as three additional areas: employee informa-numerous high-value assets within the civilian tion technology devices, extraneous promotionalreal estate inventory that are no longer needed to items, and executive transportation. Overall, thissupport Federal agency missions and represent will yield nearly $8 billion in savings in 2013unnecessary costs to the taxpayer. Faced with compared to 2010 spending on these administra-similar challenges, DOD utilized BRAC, a stream- tive activities, which agencies are redirecting tolined process, to dispose of military properties and higher priority programs.achieve billions of dollars of savings over the last20 years. Building off the best practices of BRAC, Save Billions of Dollars in Contracting.the Administration proposed the Civilian Proper- The President’s mandate to improve Federalty Realignment Act (CPRA) in the 2012 Budget. procurement practices has stopped uncontrolledThe proposal would create an independent Board contract spending and put agencies on a path forof experts to identify opportunities to consoli- achieving real and sustained improvement. Afterdate, reduce, and realign the Federal footprint as over a decade of dramatic increases in contractwell as expedite the disposal of properties. This spending, contracting decreased in 2010 for theproposal utilizes bundled recommendations, a first time in 13 years—with agencies spendingfast-track congressional procedure, streamlined $80 billion less than what they would have, if con-disposal and consolidation authorities, and a re- tract costs had continued to grow at the same ratevolving fund replenished by proceeds to provide as they did from 2000 to 2008. In 2011, agencieslogistical and financial support to agencies, as a maintained this lower level of spending by buyingcomprehensive solution to the key obstacles that less, ending contracts that were unaffordable orprevent the Federal Government from effectively no longer needed, improving the workforce’s abil-managing its real estate, and could make a sig- ity to negotiate better deals and hold contractorsnificant contribution to deficit reduction. The Ad- to their promise of delivering on time and on bud-ministration will continue to aggressively pursue get, and reducing the use of high-risk contracts,the CPRA in 2013 so the Federal Government can including time-and-materials contracts, wherecut through red tape and competing stakeholder agencies reimburse contractors for the hours theyinterests to more quickly dispose and consolidate work instead of the results they achieve. Agenciescivilian properties and realize billions of dollars also increased their use of Government-wide con-in savings for taxpayers. tracts to leverage the Federal Government’s buy- ing power as the world’s largest customer, saving Reduce Administrative Overhead. In his taxpayers tens of millions of dollars for everydayvery first Cabinet meeting, the President asked needs, like office supplies and overnight deliveryhis Cabinet to find at least $100 million in col- services.lective cuts to their administrative budgets,separate and apart from those identified in the
  • 46. THE BUDGET FOR FISCAL YEAR 2013 43 In 2012, the Administration will continue its Reduce Energy Costs for the Federalefforts to deliver better value to taxpayers. Agen- Government’s Biggest Consumer. DOD con-cies will reduce by 15 percent spending on man- sumes almost three-fourths of all Federal energyagement support service contracts, where con- resources. To reduce consumption, the Budgettract spending has far outpaced the already fast includes approximately $1 billion for energygrowth in contracting generally and one that has conservation investments at DOD—up from $400been prone to risk, including the risk of overreli- million in 2010. These investments include mak-ance on contractors. Agencies will also strengthen ing energy retrofits of existing buildings, meet-their suspension and debarment programs to ing energy efficiency standards in new buildings,better ensure that bad actors who put taxpayer and developing renewable energy projects. DODdollars at risk of waste, fraud, and abuse are is steadily improving its installation energy per-prohibited from doing work with Federal agen- formance by reducing the demand for traditionalcies. In addition, they will continue to build the energy and by increasing the supply of renew-capabilities of the acquisition workforce, by im- able energy, currently 8.5 percent of DOD energyproving training and developing specialized production and procurement. The request in-cadres to better manage information technology cludes $150 million for the Energy Conservationprocurements as well as centers of excellence to Investment Program, which improves the energyfacilitate the rapid adoption of best practices for efficiency of DOD facilities worldwide. In addi-achieving stronger program outcomes. tion, the Budget provides $32 million, a 7 percent increase compared to 2012, for the Installation Reform Military Acquisition. DOD con- Energy Test Bed Program to demonstrate newtracts account for approximately 70 percent of all energy technologies to reduce risk, overcomeFederal procurement. Through its “Better Buy- barriers to deployment, and facilitate wide-scaleing Power” acquisition reform initiative, DOD is commercialization.charting a new path that will result in greaterefficiency and productivity throughout the de- Harness Information Technology to Dofense acquisition system. In particular, DOD is: More with Less. The American people expect1) decreasing the use of high-risk contracts based the Government to use information technologyon time-and-materials and labor-hours; 2) con- (IT) to provide the same level of service they ex-tinuing to develop the acquisition workforce to perience in their everyday lives. As part of theprovide needed oversight; 3) eliminating or re- Accountable Government Initiative, the Admin-structuring lower-priority acquisitions; 4) reduc- istration is transforming how the Governmenting contract spending on management support uses IT to improve productivity, lower the cost ofservices; 5) taking full advantage of contract ve- operations, and streamline service delivery, allhicles that reflect the Government’s buying lever- while bolstering cyber security. By taking a hardage; 6) increasing the use of strategic sourcing; look at Government IT projects through Tech-7) increasing small business participation; and Stats, over the last three years we have avoided8) improving financial management systems. In project costs of nearly $4 billion—while also ac-addition, DOD has instituted a number of acqui- celerating the time it takes to get usable productssition management best practices: applying les- up and running. To reduce duplicative spending,sons learned from past acquisitions; establishing the Administration has already shut down overprocess teams to review qualifications of acquisi- 140 Government data centers and is on track totion professionals; and instituting peer reviews to close nearly 1,100 by the end of 2015. Overall, theensure affordability and effective competition. In data center optimization efforts are expected toa world of tight discretionary budget caps, these yield $3 to $5 billion in savings. And through thereforms will help free up resources that can be “Cloud First” policy, agencies are shifting from adevoted to higher-priority programs. capital-intensive model toward a more flexible operational model where they pay only for the services they use. The ultimate goal is to improve
  • 47. 44 CUTTING WASTE, REDUCING THE DEFICITservice to the American people. To do this, we must Adopt Performance-Based Reforms. Wide-lower the barriers to interaction with the Govern- ly viewed as leveraging more change than anyment. That is why the Administration launched other competitive grant program in history, thea one-stop, online portal for small businesses to Department of Education’s Race to the Top (RTT)find and access available programs, information, initiative spurred States across the Nation toand other services from across the Government bring together teachers, school leaders, and poli-rather than having to waste time navigating the cymakers to achieve difficult yet fundamentalFederal bureaucracy. Going forward, the Admin- improvements to our education system. By set-istration will continue to harness the transfor- ting out clear standards that needed to be met tomational power of IT to build the Government receive funds, RTT instigated change in States allof the 21st Century and to help agencies deliver across the Nation, including even those that ulti-more effectively on their missions. By doing more mately did not receive RTT funds. By doing so,with less, the Administration is driving savings RTT has driven taxpayer dollars to be used moreacross Government and using those savings to effectively. The RTT approach is being expandedreinvest in information technology and services to transform and improve lifelong learning fromthat benefit the American people. early childhood education through college and beyond; to allocate grants for transportation; to The Federal Government is also improving how bring innovation to workforce training; and toit acquires IT products and services through the accelerate advanced vehicle deployment.use of early vendor engagement in complex andhigh-risk IT procurements and the development Improve Outcomes with Better Evidence.of specialized IT acquisition cadres that increase In order to understand what works and whatthe chance of successful program outcomes. does not in the Federal Government, and thus better use taxpayer dollars, rigorous evaluations Reduce Outdated and Duplicative Re- of results are critical. Agencies must establish aporting. While the plans and reports that Con- culture where they constantly ask, and try to an-gress requires of the Executive Branch often swer, questions that help them find, implement,serve legislative decision-making, oversight and spread, and sustain effective programs and prac-public transparency, they can become outdated, tices; find and fix or eliminate ineffective ones;duplicative, or less useful than when originally test promising programs and practices to see ifmandated. Under the GPRA Modernization Act, they are effective and can be replicated; and findthe Congress instructed the Executive Branch to lower-cost ways to achieve a positive impact. Theidentify outdated or redundant reports to consoli- Federal fiscal situation necessitates doing moredate, streamline, or eliminate. Agencies identified with less, not only to reduce budget deficits, butmore than 9,000 plans or reports currently pro- to build confidence that Americans are receivingduced for the Congress, with DOD responsible for maximum value for their hard-earned tax dol-approximately 70 percent of them. Of these, agen- lars. It is therefore critical to apply an evidence-cies proposed more than 450 low-priority plans based approach to government managementand reports for the Congress to consider elimi- that utilizes rigorous methods appropriate to thenating or consolidating. These reports currently situation, learns from experience, and is open totake Federal employees approximately 200,000 experimentation. Agencies are conducting evalu-hours to prepare and result in almost 30,000 pag- ations across the Federal Government, and thees. Concurrent with the Budget, the list of plans Recovery Act launched a number of evaluationsand reports identified for possible elimination or that are currently underway on such topics asconsolidation have been posted for public com- the effects of different rent formulas on hous-ment on Performance.gov. After collecting public ing assistance recipients, the effects of electricitycomments, OMB will work with the Congress to pricing treatments in combination with advancedeliminate or consolidate plans and reports that metering infrastructure (including smart meters)have become outdated or duplicative. on residential electricity usage, and the effects
  • 48. THE BUDGET FOR FISCAL YEAR 2013 45of extended unemployment insurance benefit costs of delivery, while sustaining high qualityprograms on employment outcomes. In addition, customer service.the Administration is placing additional focus onagency evaluation budgets to ensure that those Pay for Success in Domestic Programs.dollars are producing high quality evidence that Many traditional Government social programsinforms key decisions. fit one of two molds: prescriptive programs that stifle innovation by specifying eligible providers Use Goals and Frequent Data-Driven and activities, or flexible block grants that fail toReviews to Achieve More Results for the focus on results. To ensure taxpayers get the bestMoney. In these fiscal times, it is it more impor- possible return on their investment, the Adminis-tant than ever for Government agencies to use tration is testing a new program model—Pay fortaxpayer money wisely to achieve greater pro- Success—in which the Government provides flex-gram impact for the taxpayer’s dollar. A careful ibility for how services are delivered and pays forreview of past experience shows that govern- results after they are achieved. The working capi-ment works better when leaders identify a lim- tal for a Pay for Success project generally comesited number of clear, measurable, and ambitious from private investors that bear the risk of fail-goals and regularly review progress toward them. ure, but receive a financial return if the projectBuilding on these lessons from two prior years, succeeds. Projects use and build evidence-basedsenior agency leaders identified with their 2013 practices to improve the lives of vulnerable tar-budget submissions a limited number of near- get populations, reducing their need for futureterm Agency Priority Goals (formerly called Government services and cash assistance. OverHigh Priority Performance Goals) that require the course of 2012, the Administration is launch-neither additional resources nor legislative ac- ing a small number of Pay for Success pilots intion, but rather hinge on strong execution to be criminal justice and workforce development.accomplished. They have also designated a se- The President’s 2013 Budget reserves a totalnior accountable official, a “Goal Leader,” respon- of up to $109 million to test this new financingsible for driving progress on each goal. For the mechanism in a broader range of areas includingfirst time, as part of the 2013 Budget process, the education and homelessness. If successful, PayAdministration has also set a limited number of for Success projects offer a cost-effective way toagency Federal Cross-Agency Priority Goals in replicate effective practices and support continu-areas where increased cross-agency coordination ing innovation as Federal resources become moreor learning, regular review, and designation of a constrained.goal leader are expected to accelerate progress.Agency and Cross-Agency 2013 Priority Goals Empower Local Communities to Achievehave been set in a wide variety of areas. Some Better Results. Inconsistent and overlappingfocus on increasing U.S. exports, broadband cov- Federal program requirements sometimes preventerage, entrepreneurship opportunities, and the States and localities from effectively coordinatingscience and technology workforce. Others focus services or using funding to support strategieson reducing the cost of clean energy technologies, that are likely to achieve the best outcomes.such as advanced vehicles and improving the en- This is especially true for cross-cutting policyergy efficiency of the Nation’s homes and indus- areas, such as disconnected youth and distressedtries while reducing costs for families. Some seek neighborhoods, where multiple programs, eachto improve the well-being of the Nation’s children with its own requirements, all contribute to theand adults, especially veterans who served the same broad goals. Performance PartnershipNation so well, while others seek to prevent bad pilots provide a model for enabling leading edgethings, such as fatalities and health-care associ- States and localities to demonstrate better waysated infections, from happening and reduce their to use resources, by giving them flexibility tocosts when they do. Several goals seek to cut the pool discretionary funds across multiple Federal programs in exchange for greater accountability
  • 49. 46 CUTTING WASTE, REDUCING THE DEFICITfor results. In 2013, the Administration proposes Office of Management and Budget would haveto establish a limited number of Performance to approve of the agreement and confirm thatPartnership pilots designed to improve outcomes vulnerable populations would not be adverselyfor disconnected youth or to support the affected, before a Performance Partnership pilotrevitalization of distressed neighborhoods. All could be established.affected Federal agencies and the Director of the
  • 50. INVESTING IN OUR FUTURE Our economy is undergoing a transformation tion is to cut regulations and reduce taxes fornot seen since the move from an agrarian to an the wealthy. Prosperity and jobs will then trickleindustrial economy at the turn of the 20th Cen- down to the vast majority of Americans. This ap-tury. Huge advances in technology—from com- proach has not worked. It contributed to yearsputing power to communications—have allowed of income stagnation for middle-class families,companies to boost productivity and realign helped produce a level of inequality that is atheir workforces. These technological advances, drag on overall economic growth, and helped cre-like earlier ones, raise our standard of living and ate the deep rescission whose after-effects we arecreate entire new industries. During the 20th still grappling with. As a result, the rungs on theCentury, our economy was the envy of the rest ladder of opportunity have grown farther apart,of the world, in no small part because it was bet- making it more difficult for people who workter at creating and harnessing new technologies, hard and play by the rules to provide a secureand more flexible in adapting to them. middle-class life for their family. Advances in technology also can require pain- This is not a future that we can or should ac-ful adjustments. Recent advances have allowed cept. Instead, we need to make sure that everyonefirms to search the world for the best place to gets a fair shot at success, does their fair share,make their products and deliver their services, and engages in fair play so that we, as a Nation,and hire workers wherever they may find them. can grow and prosper. To do that, we must notAt first, this transition was felt most acutely by race to the lowest global common denominator;industrial workers; factories, plants, and mills instead, we must race to the top—to good jobshave closed because fewer people were needed to that pay well and offer middle-class security. Inrun them or the operations were sent overseas. today’s high-tech, interdependent economy, thatIn recent years, white-collar workers have felt means we must transform our economy from onethe effects of this transformation too. In some that is too focused on speculation, spending, andfields, technological advances have meant fewer borrowing to one that is educating, innovating,workers were needed to perform a task. In oth- and building. We need to continue to construct aers, advances in telecommunications have en- new foundation for long-term economic growthabled the outsourcing of jobs to countries such as that has as its pillars what is needed to winChina or India. in the world economy: an educated and skilled workforce; cutting-edge research leading to the The dislocations caused by these changes have innovations that will power the industries ofbeen jarring and painful to many Americans and tomorrow; and a modern, robust infrastructurecommunities across our country. Moreover, their that can support a growing, high-tech economyeffects have been compounded by a belief among with the jobs that promote a growing middlesome policymakers that all that is needed to help class. With that as a base, we can out-competeour fellow Americans through this transforma- any country and sustain a strong economy. 47
  • 51. 48 INVESTING IN OUR FUTURE Putting the Nation on a sustainable fiscal path a workforce that is second to none, and a steadyis critical to keeping the United States competi- stream of inventors and entrepreneurs to createtive in the global economy, and the Budget lays the businesses and jobs of the future.out a strategy to do that. At the same time, italso recognizes that we must go forward with in- Our approach to investing in education is tovestments that will fuel future economic growth, direct significant resources to where they areparticularly since sustained and robust economic needed and to ensure that those funds are beinggrowth plays a very significant, long-term role invested in programs that are effective in educat-in reducing deficits. To be sure, making these in- ing our children. Over the past three years, thevestments and re-tooling our Nation for this chal- Administration has funded evaluations and re-lenge is not an easy task. The discretionary bud- quired greater use of evidence in grant competi-get caps put in place by the Budget Control Act of tions, so we can determine and fund what works.2011 create tight limits, forcing us to make tough Central to this effort has been the Race to thedecisions about where to invest. In many areas, Top (RTT) initiative for elementary and second-that means keeping funding level or cutting it; in ary education, which created a competition forsome, it entails reforming programs to be more funds that spurred States across the Nation toeffective; in a small number, it means targeted bring together teachers, school leaders, and policyincreases. Overall, the Administration is pursu- makers to achieve difficult, yet fundamental im-ing a strategy in which the Budget identifies cuts provements to our education system. By offeringand savings, asks for shared sacrifices across the competitive funding, demanding significant re-board, and invests in areas critical to helping forms with deep support, requiring outcomes, andAmerica win the race for the jobs and industries measuring success, the RTT competition fosteredof the future. meaningful change even in States that ultimately did not win an award. This past year, a new RTT competition, called Race to the Top: Early Learn-Educating a Competitive Workforce ing Challenge, also drove States to take major steps to focus systematically on improved qual- For decades, the strength of our schools and ity and results in their early education programs.universities as well as our ability to provide a The 2013 Budget will extend the Race to the Topquality education to a large number of our peo- model to the realm of higher education, with aple has been an engine for our economic growth. new competition that rewards States that keepFrom the land-grant universities of the 19th Cen- public colleges affordable and adopt reforms thattury to the GI Bill in the 20th, we have worked lead more students to complete their degrees onto open the doors of education to more and more time.of our people. Looking ahead, a highly-educatedand skilled workforce will be critical to compet- To meet the President’s goal on college accessing in the global economy and to creating jobs and completion, the Administration is proposingthat pay well and offer middle-class security. The investments and reforms that touch every phaseunemployment rate for Americans with a college of a lifetime of learning. The Administration will:degree or more is about half the national aver-age, and their incomes are twice as high as those Reform Elementary and Secondarywithout a high-school diploma. Education needs School Funding by Setting High Standards,to be a national mission in which we all—educa- Encouraging Innovation, and Rewardingtors, government, businesses, parents, students, Success. The Administration has jump-startedand communities—work together to give our landmark reforms in our education system bychildren a world-class education. That is why the rewarding excellence and promoting innovation.President has set an ambitious goal: by 2020, we Early indications show impressive progress inwill have the highest proportion of college gradu- helping children start school ready to succeed,ates in the world. Meeting this goal will give us raising academic standards, placing an effective
  • 52. THE BUDGET FOR FISCAL YEAR 2013 49teacher in every classroom, and turning around services for families combined with compre-struggling schools. The Administration will work hensive reforms centered on high-qualitywith the Congress on reauthorization legisla- schools, in an effort to improve educationaltion to restructure K-12 funding to continue to and life outcomes for children and youth.focus on these critical educational goals. In thisreauthorization, we would encourage innovation • Investing in Innovation (i3). The Budget con-by consolidating narrow authorities into broader tinues robust investment in the i3 fund, toprograms. Key components of education reform support evidence-based approaches that im-reflected in the Budget include: prove K-12 achievement and close achieve- ment gaps, decrease dropout rates, increase • Race to the Top (RTT). The Budget provides high school graduation rates, and improve $850 million for RTT, a program that has en- teacher and school leader effectiveness. A abled States to implement systemic reforms portion of i3 funds will also be used to sup- in five fundamental areas: implementing port the development of breakthrough learn- rigorous standards and assessments; using ing technologies through the Advanced data to improve instruction and decision- Research Projects Agency for Education. making; recruiting and retaining effective teachers and principals; turning around • Flexibility in Exchange for Smart Reforms. the lowest-performing schools, and improv- To build on the successful reforms leveraged ing State systems of early learning and by the first RTT competition, the Depart- care. In 2011, the Department of Education ment of Education recently invited States to launched the RTT Early Learning Challenge apply for Elementary and Secondary Educa- grant competition, a joint effort with the De- tion Act (ESEA) waivers in exchange for a partment of Health and Human Services, commitment to continue to focus on closing designed to spur progress in States with the achievement gaps and comprehensive re- most ambitious plans to ensure that high- forms. The Budget maintains investments in needs children from birth to age five enter key programs that States can use to advance kindergarten ready to succeed. In 2012, the these reforms. For example, States and dis- Administration is building on the State-level tricts will have new flexibility to use Title progress of RTT by launching a district-level I funds that were previously required to be competition to support reforms best executed reserved for supplemental educational ser- at the local level. In 2013, RTT will be poised vices, public school choice, and professional to deepen our investments in these vari- development to support locally-determined, ous areas, to address the unmet demand of rigorous interventions in schools. States and districts that have demonstrated a commitment to implementing comprehen- • Streamline and Consolidate Programs. The sive and ambitious reforms. Additional re- Budget overhauls the Department of Edu- sources also will be provided for Race to the cation’s ESEA programs by consolidating Top: Early Learning Challenge, to be paired 38 program authorities into 11 competitive with new investments by the Department of grant programs designed to allow States and Health and Human Services in improving districts more flexibility to use resources child care quality and preparing children for where they will have the greatest impact. success in school. Open the Doors of College to More • Promise Neighborhoods. The Budget pro- Americans. To boost the number of college grad- vides a considerable increase to Promise uates, we need to make it easier for students to af- Neighborhoods, funding the program at $100 ford a postsecondary education and increase the million. This initiative supports high-need number of students who complete their degree. communities who plan to integrate effective The Administration has already taken significant
  • 53. 50 INVESTING IN OUR FUTUREstrides to improve access to college. Today, nearly well. Finally, the Budget proposes a new $5510 million students receive Pell Grants, and more million First in the World Fund that intro-than 12 million borrowers receive low-cost loans, duces an evidence-based framework—mod-with new affordable repayment options based on eled after the i3 initiative—to test, validate,their income after leaving school. Just as invest- and scale up effective strategies to improvements over the past three years have transformed higher education.K-12 education, this Budget invests significantresources to reform higher education. Our goal is Prepare 100,000 STEM Teachers Over theto reduce college costs, improve access, increase Next Decade and Improve STEM Education.levels of completion, and better post-graduation Students need to master science, technology, en-outcomes. Key initiatives include: gineering, and mathematics (STEM) in order to thrive in the 21st Century economy. Steadily, we • Helping Students and Their Families Pay have seen other nations eclipse ours in preparing for College. An educated and highly-skilled their children in these critical fields. That is why American workforce is essential to winning the President has set the ambitious goal of pre- the future in today’s global economy. Since paring 100,000 STEM teachers over the next de- 2008, the Administration has increased the cade, and recruiting 10,000 STEM teachers over maximum Pell Grant by $900, ensuring ac- the next two years. The Budget allocates $80 mil- cess to postsecondary education for nearly lion within the Effective Teachers and Leaders 10 million needy students. The Budget con- State Grant program toward that goal, to expand tinues that commitment to Pell and pro- promising and effective models of teacher prepa- vides the necessary resources to sustain the ration in STEM. The Budget also funds a jointly maximum award of $5,635 and, by generat- administered mathematics education initiative, ing savings elsewhere in higher education, with $30 million from the Department of Educa- to fund the maximum Pell award through tion and $30 million from the National Science the 2014-2015 award year. In addition, the Foundation to develop, validate, and scale up Tax Relief, Unemployment Insurance Re- evidence-based approaches to improve student authorization, and Job Creation Act of 2010 learning at the K-12 and undergraduate levels. extended for two years the new American These programs will be developed in conjunction Opportunity Tax Credit (AOTC)—a partially with a Government-wide effort to improve the im- refundable tax credit worth up to $10,000 pact of Federal investments in math and science per student over four years of college. AOTC, education by ensuring that all programs support- which would be made permanent in the Bud- ing K-12 and undergraduate education adhere to get, helps more than 9 million students and consistent standards of effectiveness. their families afford the cost of college. Invest in Building the Skills of American • Rewarding Colleges That Stay Affordable Workers. As our economy continues to recover, and Provide Good Value. The Budget pro- millions of Americans are looking for ways to up- poses Race to the Top: College Affordabil- grade and hone their skills to prepare for emerging ity and Completion to help make America’s job opportunities. The Budget provides resources public colleges and universities more afford- to connect these workers with job openings and able and a better value, and to drive reforms skill-building opportunities. This includes a $12.5 that will help boost quality, productivity, and billion Pathways Back to Work Fund, which will degree completion. In addition, the Budget support summer and year-round jobs for low-in- proposes to reform the formula for distrib- come youth, and will help connect the long-term uting approximately $10 billion annually of unemployed and low-income adults to subsidized Campus-Based Aid to reward colleges that employment and work-based training opportuni- act responsibly in setting tuition, providing ties. To complement this short-run investment, the best value, and serving needy students the Budget continues to support a Workforce
  • 54. THE BUDGET FOR FISCAL YEAR 2013 51Innovation Fund that, paired with broader waiv- students enrolled in Career Academies, a par-er authority, will encourage States, regions, and ticularly successful educational model for younglocalities to break down barriers among programs, people.test new ideas, and replicate proven strategiesfor delivering better employment and education Reform Job Corps. The Administrationresults in a more cost-effective way. The Budget strongly supports Job Corps, but believes thealso funds a new initiative designed to improve program could be more effective and efficient.access to job training across the Nation and pro- The 2013 Budget launches a bold reform effortvides $8 billion in the Departments of Education for Job Corps to improve program outcomes andand Labor to support State and community col- strengthen accountability. Specifically, the Ad-lege partnerships with businesses to build the ministration intends to fund Job Corps centersskills of American workers. in every State, but close by program year 2013 the small number of Job Corps centers that are Give Dislocated Workers the Help They chronically low-performing, to be identified us-Need to Find New Jobs. Nearly 7 million of ing criteria that will be published in advance.the Americans who lost jobs in 2009 were dis- The Administration will also shift the program’splaced from jobs that are unlikely to come back, focus toward the strategies that were provenand those who do find reemployment, on average, most cost-effective in evaluations of Job Corps,suffer significant earnings losses. But our current strengthen the performance measurement sys-system does not treat all workers who were dislo- tem, and provide information to the public aboutcated because of economic shifts equally. Workers each Job Corps center’s performance in a morein trade-impacted industries are eligible for ex- transparent way.tensive income support, training, and reemploy-ment services under the Trade Adjustment Assis-tance program, while those who lose their jobs for Investing in American Innovationother reasons receive less generous assistance.In this increasingly global economy, it is increas- The world is shifting to an innovation econo-ingly difficult to distinguish between trade, tech- my, and no other country fosters innovation bet-nology, outsourcing, consumer trends, and other ter than America. From Franklin to Edison, fromeconomic shifts that cause displacement. As part Ford to Gates and Jobs, American inventors andof the Administration’s effort to reform and mod- entrepreneurs have transformed the world. Be-ernize the Nation’s job training system so that ing daring and harnessing the talents of a diverseindividuals can quickly gain the training they population are our Nation’s strengths, and theyneed for the jobs created as our economy evolves, match up with the demands of the economy todaythe Budget proposes a universal core set of ser- and in the decades to come.vices where the focus is on helping all dislocatedworkers find new jobs. To create jobs in the 21st Century economy, we need to create an environment where invention, Prepare Young People for Jobs Through a innovation, and industry can flourish. We need toReformed Career and Technical Education build a future in which our factories and workersProgram. The President’s Budget recommends are busy manufacturing the high-tech productsreauthorization and reform of the Career and that will define the century. We need an economyTechnical Education (CTE) program, currently not built on bubbles and financial speculation,set to expire in 2013. The Administration’s $1.1 but one built on creating and selling through-billion reauthorization proposal would restruc- out the world products that are stamped, “Madeture CTE to align what students learn in school in America.” Doing that starts with continuingwith the demands of 21st Century jobs. The Bud- investment in the basic science and engineer-get also invests in immediate job-creation mea- ing research and technology development fromsures to increase substantially the number of which new products, new businesses, and even
  • 55. 52 INVESTING IN OUR FUTUREnew industries are formed. It means writing our to double the budgets of three key basicrules, regulations, and laws in a way that promote research agencies: the National Sciencegrowth and innovation and make it easier for sci- Foundation (NSF), the Department ofentists and inventors to bring their ideas to mar- Energy’s (DOE’s)Office of Science, and theket and see those ideas become thriving business- National Institute of Standards and Tech-es. And, we must focus our efforts in areas that nology (NIST) labs. Basic research has beenshow the most promise for job creation to com- America’s great strength, creating whole newpete with developing countries that are devoting industries and jobs. Especially as the privatemore of their resources to these industries. sector has reduced the amounts it dedicates to this type of research, it is critical that the That is why the Budget continues to make a Federal Government dedicates funds to it.significant investment in clean energy technol- Consequently, the Budget builds upon pre-ogy. Whichever country leads in the global, clean vious investments, including $13.1 billionenergy economy will also take the lead in creat- in research programs and projects at theseing high-paying, highly-skilled jobs for its people. three agencies. Within these agencies, fundsMore than that, moving toward a clean energy will be focused on basic research directed ateconomy will reduce our reliance on oil and on priority areas, such as clean energy technol-other energy sources that contribute to global ogies, the bio-economy, advanced manufac-warming. We are at the cusp of a future in which turing technologies, “smart” infrastructure,hundreds of thousands of vehicles that do not rely wireless communications, and cybersecurity.on a gasoline-powered engine will be on our roads,and where millions of homes will be powered by • Supporting biomedical research at the Na-electricity from clean sources. tional Institutes of Health (NIH). Biomedi- cal research contributes to improving the To continue to bring about this vision and to health of the American people as well asnurture the incalculable number of good ideas the economy. Tomorrow’s advances in healththat one day will be ready to go from lab to mar- care depend on today’s investments in ba-ket, we need to make the United States the world sic research on the fundamental causes andleader in innovation. The Budget proposes to: mechanisms of disease, new technologies to accelerate discoveries, innovations in clini- Increase Investment in Research and De- cal research, and a robust pipeline of cre-velopment (R&D). For many years, the United ative and skillful biomedical researchers.States has been a world leader in R&D. In order Although there are very tight discretionaryfor the United States to thrive in today’s innova- caps, the Budget provides $30.7 billion fortion economy, we need to maintain a world-class NIH, the same amount as 2012.commitment to science and research. The 2013Budget does that by providing $140.8 billion for • Providing $51 million at NSF for an inter-R&D overall, while targeting resources to those disciplinary program to develop innovativeareas most likely to directly contribute to the approaches and technologies to enable morecreation of transformational technologies that flexible and efficient access to the radio spec-can create the businesses and jobs of the future. trum—an investment that reflects the largeAmong the steps taken are: and growing importance of the wireless communications sector. • Increasing the level of investment in non- defense R&D by 5 percent from the 2011 and • Providing the National Aeronautics and 2012 levels, even as overall budgets decline. Space Administration $1.3 billion to de- velop innovative aeronautics and space • Maintaining the President’s commitment technologies that will keep the aerospace
  • 56. THE BUDGET FOR FISCAL YEAR 2013 53 industry—one of the largest net export in- proposes $19 million for the new public-private dustries in the United States—at the cutting “Innovation Corps” program at NSF aimed at edge in the years to come. bringing together the technological, entrepre- neurial, and business know-how necessary to Support the Long-Term Competitiveness bring discoveries ripe for innovation out of theof American Manufacturing. The Administra- university lab.tion proposes $149 million, an increase of $39million above the 2012 enacted level, for research Bring About a Clean Energy Economy andat NSF targeted at developing revolutionary new Create the Jobs of the Future. Moving towardmanufacturing technologies in partnership with a clean energy economy will reduce air and wa-the private sector. This advanced manufacturing ter pollution and enhance our national securityresearch is part of a larger $225 million research by reducing dependence on oil. Cleaner energyinitiative aimed at transforming static systems, will play a crucial role in slowing global climateprocesses, and infrastructure into adaptive, per- change, meeting the President’s goals of cuttingvasive “smart” systems with embedded compu- greenhouse gas emissions in the range of 17 per-tational intelligence that can sense, adapt, and cent below 2005 levels by 2020, and 83 percent byreact. The Administration also proposes $708 2050. Just as important, ensuring that the Nationmillion, $86 million above the 2012 enacted level, leads the world in the clean energy economy isfor NIST labs to expand research in areas such an economic imperative. The clean energy indus-as bio-manufacturing and nano-manufacturing, try, which was in its infancy just a few years ago,and $21 million for a new Advanced Manufac- is now growing by leaps and bounds. Across theturing Technology Consortia program, a public- globe—from Europe to Asia to South America—private partnership that will support road maps countries are making significant investments inand research to address common manufacturing clean energy technologies. The Administrationchallenges faced by private sector businesses. supports a range of investments and initiativesIn addition, the Administration proposes $290 to help make the United States the leader in thismillion—more than double the amount in 2012 industry and bring about a clean energy economy—for the Advanced Manufacturing Office at the with its new companies and jobs:DOE Office of Energy Efficiency and RenewableEnergy. This Office will fund activities on inno- • Double the Share of Electricity from Cleanvative manufacturing processes and advanced Energy Sources by 2035. The President’sindustrial materials that will enable U.S. compa- proposed Clean Energy Standard is the cen-nies to cut the costs of manufacturing by using terpiece of the Administration’s strategy toless energy, while improving product quality and ensure strong American leadership in theaccelerating product development. In total, the clean energy economy. To support this goal,Budget provides $2.2 billion for Federal advanced the Budget increases funding for renewablemanufacturing R&D, a 19 percent increase over energy research and development; supports2012. advances in fossil energy technologies that reduce carbon emissions from coal-fired pow- Accelerate Innovations from the Labora- er plants; supports nuclear energy; and pro-tory to the Market. One of the most difficult motes the expansion and use of clean energychallenges facing an inventor or entrepreneur is across the country including rural areas.taking a new idea from the laboratory or draw- The Budget also extends key tax incentivesing board to market. While the knowledge gained to encourage investment in wind energy andfrom Government-supported basic and applied clean energy technology.research frequently advances a particular fieldof science or engineering, some results also show • Put One Million Advanced Technology Ve-immediate potential for broader applicability and hicles on the Road by 2015. In 2008, theimpact in the business world. The Administration President set an ambitious goal of having
  • 57. 54 INVESTING IN OUR FUTURE one million advanced technology vehicles on port energy efficiency retrofit investments in the road by 2015. To reach this goal and be- commercial buildings. The Administration come the first in the world to do so, the Bud- continues to call on Congress to pass the get builds on Recovery Act investments and HomeStar bill, which would create jobs by continues to support electric vehicle manu- encouraging Americans to invest in energy facturing and adoption in the United States saving home improvements. The Budget also through new consumer rebates, investments supports increased R&D in innovative build- in R&D, and competitive programs to en- ing efficiency technologies and the continued courage investment in advanced vehicle introduction of appliance efficiency stan- infrastructure. dards that save consumers and companies money while improving performance. • Save Manufacturers Money by Improving Energy Efficiency. The President’s Advanced • Pursue Responsible Oil and Gas Production. Manufacturing Partnership invests in a na- Even as we develop next generation energy tional effort to develop and commercialize technologies, we will continue to rely on oil the emerging technologies that will create and gas. As was underscored by the tragic high quality manufacturing jobs and en- 2010 explosion of the Deepwater Horizon and hance our global competitiveness. By coordi- the oil spill that followed, we must take im- nating across Federal agencies and collabo- mediate steps to make production safer and rating with the private sector, it will provide more environmentally responsible. In the the platform for inventing new manufactur- wake of the spill, the Administration focused ing technologies, speeding ideas from the on implementing more rigorous safety and drawing board to the manufacturing floor, environmental standards than ever before, scaling-up first-of-a-kind technologies, and and making structural reforms within the developing the infrastructure and shared fa- Department of the Interior to increase over- cilities to allow small and mid-sized manu- sight of offshore drilling, including greater facturers to innovate and compete. independence for the new environmental enforcement agency that has now been cre- • Reduce Buildings’ Energy Use by 20 Percent ated through the restructuring. The Budget by 2020. The 80 billion square feet of non-res- proposes $368 million to fund the two new idential building space in the United States bureaus that oversee offshore oil and gas present an opportunity to realize large gains development, the Bureau of Ocean Energy in energy efficiency. In 2010, commercial Management and the Bureau of Safety and buildings consumed roughly 20 percent of all Environmental Enforcement. These funds energy in the U.S. economy. The President’s will be used to: hire new oil and gas inspec- Better Buildings Initiative will, over the tors, engineers, scientists, and other key staff next 10 years, seek to make non-residential to oversee industry operations; establish buildings 20 percent more energy efficient real-time monitoring of key drilling activi- by catalyzing private sector investment ties; conduct detailed engineering reviews through a series of incentives to upgrade of offshore drilling and production safety offices, stores, universities, hospitals and systems; and implement more aggressive commercial buildings. These programs build reviews of company oil spill response plans. on the Administration’s commitment to im- The Budget also includes $45 million for the proving efficiency in residential and Govern- Department of Energy, the Environmental ment buildings, particularly through Recov- Protection Agency, and the U.S. Geological ery Act investments. The Budget proposes Survey for a coordinated effort among these to encourage the use of the Small Business agencies to conduct an R&D program aimed Administration’s 504 Certified Development at reducing the potential health, safety, and Company loan guarantee program to sup- environmental risks of hydraulic fracturing
  • 58. THE BUDGET FOR FISCAL YEAR 2013 55 for natural gas and oil production from shale Building a 21st Century Infrastructure formations. From the Erie Canal to the transcontinental Reform Our Tax Code to Create Jobs Here railroad, from the interstate highway system toat Home and Foster Innovation and Com- the Internet, infrastructure has been critical topetitiveness. Over the nearly three decades the economic growth and competitiveness of thesince the last comprehensive reform effort, the American economy. For too long, we have neglect-tax system has been loaded up with revenue-side ed our Nation’s infrastructure, its roads, bridges,spending such as special deductions, credits, and levees, ports and waterways, communicationsother tax expenditures that help well-connected networks, and transit systems. To compete inspecial interests, but do little for middle-class the 21st Century, we need an infrastructure thatfamilies or our Nation’s economic growth. Now keeps pace with the times and outpaces our ri-more than ever, when we want to compete and vals. Manufacturers and other companies arewin in the world economy, we cannot afford a tax looking to expand in the places with the bestcode burdened with special interest tax breaks. infrastructure to ship their products, move theirSuccessful comprehensive tax reform is a long workers, and communicate with the rest of theprocess, often taking several years, but even world. To attract those businesses to the Unitedthough it is a daunting task, we cannot afford to States and grow them here at home, we need toshirk from the work. In an increasingly competi- invest today. That is why, in the Recovery Act,tive global economy, we need to ensure that our the Administration made the largest one-timecountry remains the most attractive place for en- investment in our Nation’s infrastructure sincetrepreneurship and business growth. That is why President Eisenhower called for the creation of anthis Budget proposes a number of measures to interstate highway system. Now, we must buildkeep America competitive and to make sure that on those efforts, and we must do so responsibly byour tax system encourages jobs to be created here paying for what we build. We cannot strengthenrather than abroad. In addition to these changes our economy with a modern infrastructure if atto the current tax code, the President is calling on the same time it weakens our fiscal standing. Tothe Congress to immediately begin work on cor- build the infrastructure we need to compete inporate tax reform that will close loopholes, lower the 21st Century, the Budget proposes to:the overall rate, encourage investment here athome, and not add a dime to the deficit. Enact an Historic $476 Billion, Six-Year Surface Transportation Reauthorization Improve the Patent System and Protect and Better Allocate Those Dollars to GetIntellectual Property. The Budget proposes to Results. Recognizing the importance of a moderngive the U.S. Patent and Trademark Office (USP- transportation infrastructure to the growth andTO) full access to its fee collections and strength- competitiveness of the economy, the Presidenten USPTO’s efforts to improve the speed and proposes a $476 billion, six-year surface trans-quality of patent examinations through reforms portation reauthorization package—expanded toauthorized by the America Invents Act. This include inter-city passenger rail transportation.will provide USPTO with more than $2.9 billion Together with an additional $50 billion invest-in resources in 2013. The Budget also supports ment in 2012 to jumpstart critical transporta-strengthened intellectual property enforcement tion infrastructure projects, the proposal is andomestically and overseas as set out in the Intel- increase of more than 80 percent above the infla-lectual Property Enforcement Coordinator’s Joint tion-adjusted levels in the previous six-year billStrategic Plan required by Prioritizing Resources plus annual appropriated funding for passengerand Organization for Intellectual Property Act of rail during those years. The proposal is not just a2008 (Pro-IP). historic commitment of funds, but also seeks to re- form how transportation dollars are spent so that they are directed to the most effective programs
  • 59. 56 INVESTING IN OUR FUTUREand projects. It will hold States and localities transit formula grants and through the con-accountable for real results and make Federal solidation of 55 duplicative, often-earmarkedfunding decisions based on sounder and more in- highway programs into five streamlinedclusive transportation plans. It will complement programs.steps the Administration is already taking to im-prove and expedite the process of reviewing and Build a 21st Century Aviation System Thatapproving transportation projects. While we are Reduces Delays and Improves Safety. Thecommitted to the user-financed principle that has Budget provides more than $1 billion for the Fed-guided surface transportation, we recognize that eral Aviation Administration for implementationmore funds will be needed to make these overdue of the Next Generation Air Transportation Sys-investments. That is why the Administration is tem, a multi-year, interagency effort to improveproposing to use savings from ending the war in the efficiency, safety, and capacity of the aviationIraq and winding down operations in Afghanistan system. This will help the country move from ato pay for the difference. Specifically, the proposal national, ground-based radar surveillance sys-seeks to: tem to a more accurate satellite-based one, which will result in the development of more efficient • Build upon an immediate investment of $50 routes through airspace. This, in turn, would al- billion for roads, rails, and runways to create low more planes to fly, reduce delays, save fuel, thousands of jobs in the short term with a and improve overall safety. robust, multi-year reauthorization proposal that will renew our decaying transportation Establish a National Infrastructure Bank. infrastructure while deepening the economic To direct Federal resources for infrastructure to recovery and spurring job creation. projects that demonstrate the most merit and may be difficult to fund under the current patchwork • Provide 80 percent of Americans with conve- of Federal programs, the President has called for nient access to a passenger rail system, fea- the creation of an independent, non-partisan Na- turing high-speed service, within 25 years. tional Infrastructure Bank (NIB), led by infra- The Budget provides $47 billion over six structure and financial experts. The NIB would years, plus $6 billion in 2012, to fund the de- offer broad eligibility and merit-based selection velopment of high-speed rail and other pas- for large-scale ($100 million minimum) transpor- senger rail programs as part of an integrat- tation, water, and energy infrastructure projects. ed national strategy. This includes merging Projects would have a clear public benefit, meet Amtrak’s stand-alone subsidies into the rigorous economic, technical and environmental high-speed rail program as part of a larger, standards, and be backed by a dedicated revenue competitive System Preservation Initiative. stream. Geographic, sector, and size consider- ations would also be taken into account. The NIB • Bring more accountability, goal-driven per- would issue loans and loan guarantees to eligible formance, competition, and innovation to projects. Loans issued by the NIB could be ex- transportation funds through a competitive, tended up to 35 years, giving the NIB the ability Race to the Top-style grant program that to be a “patient” partner side-by-side with State, also will create incentives for States and local, and private co-investors. To maximize le- localities to adopt critical reforms in a vari- verage from Federal investments, the NIB would ety of areas, including safety, livability, and finance no more than 50 percent of the total costs demand management. Proposed funding for of any project. this program is nearly $20 billion over six years. Bring Next-Generation, Wireless Broad- band to All Parts of the Country. The ad- • Get the most out of taxpayer dollars with a vances in wireless technology and the adop- new “fix-it-first” emphasis for highway and tion of and reliance on wireless devices in daily
  • 60. THE BUDGET FOR FISCAL YEAR 2013 57commercial and personal life have been dramatic. istration gives priority for funding the operationHigh-speed, wireless broadband is fast becoming and maintenance of the key infrastructure that isa critical component of business operations and most important to the Nation, including naviga-economic growth. The United States needs to lead tion channels that serve our most heavily usedthe world in providing broad access to the fastest coastal ports and inland waterways, such as thenetworks possible. To do that, however, requires Mississippi and Ohio Rivers, and the Illinois Wa-freeing up of transmission rights to underutilized terway. The Budget also emphasizes investing inportions of the spectrum currently dedicated to projects that address a significant risk to life andother private and Federal uses. To that end, the public safety, and projects that will restore sig-Budget again proposes legislation to provide au- nificant aquatic ecosystems. The Administrationthority for “voluntary incentive auctions” that will will also focus on ways to modernize Federal wa-enable spectrum licensees to auction the rights ter resources development policies and programsto transmit over their portion of the spectrum in to ensure their responsiveness, accountability,return for a share of the proceeds. This step is and operational oversight, and to improve per-critical for re-purposing use of the communica- formance of these programs to best meet currenttions spectrum over the coming decade to greatly and future water resources challenges.facilitate access for smart phones, portable com-puters, and innovative technologies that are onthe horizon. Voluntary incentive auctions, along Opening Global Markets and Keepingwith other measures to enable more efficient America Safespectrum management, will provide $10 billionin funds and reserved spectrum to help us build To thrive in the interdependent, global econo-an interoperable wireless broadband network for my, U.S. businesses, farmers, and ranchers mustpublic safety and allow for seamless use by first have the ability to export the goods and servicesresponders across the country; invest in spectrum the world needs to consumers around the globe.innovation, including setting aside spectrum for Doing that will take a concerted effort to promoteunlicensed use; and reduce the deficit by $21 American exports and remove barriers that pre-billion over the next 10 years. vent American businesses, farmers, and ranchers from selling their goods and services in growing Invest in Smart, Energy-Efficient, and Re- markets abroad. It will require working with ourliable Electricity Delivery Infrastructure. trading partners to ensure the aggressive en-The Budget continues to support the moderniza- forcement of international trade rules and col-tion of the Nation’s electrical grid, by investing laborating with other leading economies to keepin research, development, and demonstration of the global economy growing.smart-grid technologies that will spur the tran-sition to a smarter, more efficient, secure and It also will take security and stability in regionsreliable electrical system. The end result will throughout the world. Just as modern technologypromote energy- and cost-saving choices for con- makes it possible for commerce to happen acrosssumers, reduce emissions, and foster the growth the planet, it also makes it possible for remoteof renewable energy sources like wind and solar. threats—such as terrorism, pandemics, andIn addition, the Budget supports the Power Mar- failed states—to affect us at home. That is why itketing Administration to reliably operate, main- is imperative that we continue to strengthen ourtain, and rehabilitate the Federal hydropower alliances and America’s standing in the world.and transmission systems. American leadership is indispensable in marshal- ing the world against many of our shared threats, Invest in High-Priority Water Resources such as stopping the spread of nuclear weapons;Infrastructure. While there are a number of disrupting, dismantling, and defeating al Qaeda;worthy water infrastructure projects, we cannot and improving the health of and enhancing foodfund them all. In the 2013 Budget, the Admin- security for the world’s poorest populations and
  • 61. 58 INVESTING IN OUR FUTUREthe health systems of the nations where they live. international trade rules; fight to eliminate bar-To this end, the President charged the Department riers on sales of U.S. goods and services; and im-of Defense (DOD) to develop a new defense strat- prove the competitiveness of U.S. firms. Amongegy to guide how the United States can respond the efforts that ITA will champion through itsto these and other challenges in a way that helps expanded funding is SelectUSA, the first Federalto put our country’s fiscal house in order. Across program to promote and facilitate business in-the foreign affairs budget, the Administration vestment in the United States. Finally, the Statehas made many difficult decisions so investment Department’s Bureau of Consular Affairs willin key areas that commit to keeping America en- promote tourism and travel by expanding visagaged in the world to keep our people safe and our processing to the United States from the world’seconomy strong. The Administration proposes to: fastest growing economies such as Brazil and China. Encourage Economic Growth ThroughSupport for the National Export Initiative Facilitate Trade and Travel and Supportas well as Investment and Tourism Promo- Border Security. The safe, secure, and speedytion. A critical component of building stronger flow of people and products across our bordersand more durable domestic economic growth is critical to international trade and the growthis ensuring that U.S. businesses, farmers, and of our economy. The President’s Budget includesranchers can actively participate in international funding to maintain 21,186 Customs and Bor-markets by increasing their exports of goods and der Protection officers and 21,370 Border Patrolservices. In addition to securing passage of three agents, and continue the deployment of bordernew free trade agreements, the Administration surveillance technology along the Southwest bor-launched the National Export Initiative (NEI) in der. These resources will reduce wait times at ourJanuary 2010 with the goal of doubling U.S. ex- Nation’s ports of entry, enhance targeting andports over five years while supporting millions of screening of cargo coming to the United States,new jobs. The Administration is currently on pace increase seizures of unlawful items, and continueto meet this target—through October 2011, ex- to strengthen the security of our borders.ports of goods and services over the preceding 12months totaled over $2 trillion, 32 percent above Strengthen Immigration Verification. The2009 levels. The NEI helps achieve this goal by Budget proposes $132 million to enhance im-enforcing trade rules and removing trade barri- migration-related verification programs at U.S.ers abroad, by helping firms—especially small Citizenship and Immigration Services and sup-businesses—overcome the hurdles to entering port the nationwide deployment of E-Verify Selfnew export markets, by assisting with trade fi- Check. E-Verify Self-Check is a free service thatnancing, and by pursuing a Government-wide ap- empowers individuals to check their own em-proach to trade promotion and advocacy abroad. ployment eligibility status and allows workersTo that end, the Administration provides $430 to protect themselves from potential workplacemillion, an increase of $19 million over 2012 lev- discrimination. Additionally, the Budget supportsels, for the Export-Import Bank, the U.S. Trade continued enhancements to the Systematic Alienand Development Agency, the Office of the U.S. Verification for Entitlements (SAVE) programTrade Representative, the U.S. International which assists Federal, State, and local benefit-Trade Commission, and the Overseas Private granting agencies in determining eligibility forInvestment Corporation (OPIC). The Budget benefits by verifying applicants’ immigration sta-also provides $517 million for the Department of tus. Both SAVE and E-Verify promote complianceCommerce’s International Trade Administration with immigration laws and prevent individuals(ITA), an increase of $61 million over 2012 lev- from obtaining benefits they are not eligible toels, to strengthen its efforts to promote exports receive.from small businesses; help enforce domestic and
  • 62. THE BUDGET FOR FISCAL YEAR 2013 59 Transform the Legal Immigration System defeat. At the same time, we have to renew ourto Work for Employers, Immigrants, and economic strength here at home, which is theTheir Families. The United States reaps numer- foundation of our strength in the world, and thatous and significant economic rewards because we includes putting our fiscal house in order. Thatremain a magnet for the best, brightest, and most is why the President directed DOD to undertakehardworking from across the globe. Many travel a comprehensive strategic review—to ensure ourhere in the hopes of being a part of an American defense budget is driven by a clear strategy thatculture of entrepreneurship and ingenuity, and reflects our national interests.in turn enhance that culture, resulting in jobsfor American workers. From Goya to Google, There are several key elements to this strat-immigrant entrepreneurs and their families have egy. We will strengthen our presence in the Asialong helped America lead the world. The Admin- Pacific region and continue vigilance in the Mid-istration is working to reform and streamline our dle East. The Administration will invest in criti-legal immigration system so that employers, im- cal partnerships and alliances, including NATO,migrants, and families can navigate the immigra- which has demonstrated time and again—mosttion system effectively. For example, the Budget recently in Libya—that it is a force multiplier.continues the multi-year effort to transition U.S. Looking past Iraq and Afghanistan to futureCitizenship and Immigration Services from a threats, the force will no longer be sized for large-paper-based filing service to a customer-focused, scale, prolonged stability operations. Instead,electronic filing service. The Budget also contin- DOD will focus modernization on emergingues support for integration of new immigrants, threats, sustaining efforts to get rid of outdatedproposing $11 million to promote citizenship Cold War-era systems so that we can invest in thethrough education and naturalization prepara- capabilities we need for the future, including in-tion programs, replication of promising practic- telligence, surveillance and reconnaissance. Thees in integration for use by communities across Administration will continue to enhance capabili-the Nation, and expansion of innovative English ties related to counterterrorism and counteringlearning tools. Additionally, the President will weapons of mass destruction. We will also main-continue to insist that Congress work with the tain the ability to operate in environments whereAdministration to fix the broken immigration adversaries try to deny us access. And, we willsystem through legislation, which is the only way keep faith with those who serve by giving priorityto change the law so that it meets America’s 21st to our wounded warriors, servicemembers’ men-Century economic and security needs. tal health, and the well-being of military families. With this strategy as a guide, over the 10 years Implement the New Defense Strategy. The beginning in 2012, DOD will spend $486.9 billionUnited States of America is the greatest force less than was planned in last year’s Budget. Thefor freedom and security that the world has ever Department will realize these savings throughknown. In no small measure, that is because targeted reductions in force structure and mod-we have built the best-trained, best-led, best- ernization; reprioritization of key missions andequipped military in history. The President, as the requirements that support them; and contin-Commander-in-Chief, is committed to keeping it ued reforms and efficiencies in acquisition, man-that way. Over the past three years, the Admin- agement, and other business practices.istration has made historic investments in ourtroops and their capabilities, military families, Re-prioritize Investments in Weaponsand veterans. Now, we are at an inflection point Systems. The Administration is committed toafter a decade of war: American troops have left providing our servicemembers with the neces-Iraq; we are undergoing a transition in Afghani- sary equipment and support to meet future mod-stan so Afghans can assume more responsibility; ernization goals. The Budget reflects continuedand we have debilitated al Qaeda’s leadership, reevaluation of the magnitude and timing ofputting that terrorist network on the path to planned modernization efforts to maintain the
  • 63. 60 INVESTING IN OUR FUTUREfinest military in the world—a force capable of States and Russia implement the New Strategicdeterring conflict, projecting power, and winning Arms Reduction Treaty. DOD and the Nationalwars. For example, expensive programs such as Nuclear Security Administration are working to-the Joint Strike Fighter, which are designed to gether to refine weapons system requirements socounter the potential threat from a sophisticated that these systems focus on the highest-priorityadversary, will continue, but at a reduced level. In capabilities. The Administration also continuessupport of the new defense strategy, where possi- its commitment to sustaining and modernizingble, DOD will continue to rely on proven existing U.S. strategic delivery systems, thus ensuring ansystems rather than developing new ones, and effective deterrent in the face of evolving chal-lower-priority programs will be terminated or lenges and technological developments. More-reduced, including the C-27 airlift aircraft, High over, the Budget provides $9.7 billion for ballisticMobility Multi-Purpose Wheeled Vehicle Recapi- missile defense. The Administration is commit-talization, and a new weather satellite. In addi- ted to developing and fielding proven capabili-tion, the Navy will truncate the Joint High Speed ties to defend the United States from the threatVessel program after buying 10 ships, sufficient of limited ballistic missile attack, and to defendto meet its core requirement. The Administration against regional ballistic missile threats to U.S.is committed to maintaining a healthy industrial forces, allies, and partners. The United Statesbase and will work to mitigate adverse effects on will continue to work with our allies and part-workers and industry. As these reductions are ners to this end as we continue to implement theimplemented, the Administration will monitor European Phased Adaptive Approach.and manage the industrial base to ensure thatthe Nation has the ability to develop and produce Prepare for Emerging Threats, Includingthe future weapons systems it needs. Cyber Attacks. There are a range of emerging threats for which the United States must be pre- Work to Defeat al Qaeda and Prevent Ter- pared, from chemical and biological weapons tororist Attacks. Building on recent successes cyber-attacks on the Nation’s critical infrastruc-against al Qaeda and its leadership, defeating ture and information technology networks thatal Qaeda and protecting the United States from are integral to our economy and our society. Theterrorist attacks remains one of the Administra- Budget invests in a host of initiatives to improvetion’s highest national security priorities. As part our ability to protect the United States fromof the National Strategy for Counterterrorism, the these emerging threats. These initiatives includeAdministration continues to strengthen counter- a wide spectrum of chemical, biological, radiologi-terrorism programs and develop partner capa- cal, and high-yield explosive (CBRNE) responsebilities to prevent terrorist attacks on the United programs, supporting surveillance, training,States and other countries. The Budget protects research, and response to CBRNE threats. Forresources in this high-priority area and makes example, the Budget provides $96 million fornecessary investments to protect the homeland, Medical Countermeasures Initiative activities,defeat al Qaeda and its affiliates, build partner which span regulatory science, strategic invest-capacity, and prevent the development, acquisi- ment in novel technologies, and the implementa-tion, and use of weapons of mass destruction by tion of a concept acceleration program to improveterrorists. the pipeline and approval of new countermea- sures against CBRNE threats; $1.2 billion for Modernize the Nation’s Nuclear Deter- biological, chemical, radiological and nuclearrent. Even as we work to reduce the number and defense programs, including medical counter-role of nuclear weapons in our national security measures; and $180 million for global diseasestrategy, the Administration remains committed surveillance. In the cyber domain, the Budgetto enhancing the reliability of the Nation’s nucle- sustains and enhances all aspects of DOD’s cy-ar weapons complex and supporting the goals of bersecurity capabilities, including defensive andthe Nuclear Posture Review (NPR) as the United offensive operations in cyberspace as directed by
  • 64. THE BUDGET FOR FISCAL YEAR 2013 61the President, defense of national security-criti- strategically targeting our foreign assistance.cal infrastructure, and leading-edge cybersecu- Specifically, the Budget supports our mission inrity science and technology efforts. Moreover, the Afghanistan with funding for: military opera-Administration proposes $769 million to support tions; incremental personnel costs; force protec-the operations of the National Cyber Security tion; repair or replacement of damaged equip- ment; intelligence activities; support for coalition Division of the Department of Homeland Se- partners; training, equipping, and sustaining thecurity, which will further strengthen the defense Afghan National Army and Afghan National Po-of The Budget for Fiscal Year 2013 Federal civil- lice; expanded diplomatic presence; and targetedian networks through the EINSTEIN program, assistance to support the economic strategy forimprove continuous monitoring on Federal net- Afghanistan. Funding to build Afghan capacityworks to more quickly respond to cyber threats, is a key component of the joint U.S.-Afghan planand support the cyber response capabilities of for transitioning full responsibility for security toState and local governments and critical infra- the Afghan government by the end of 2014.structure owners and operators. Assist Countries in Transition and Pro- Support the Military-to-Civilian Transi- mote Reforms in the Middle East and Northtions in Iraq and Afghanistan, Including Africa. Building on the Administration’s signifi-Continued Support to Critical Coalition cant and continuing response to the transforma-Partners. After a decade of war and consistent tive events in the Middle East and North Africawith the U.S.-Iraq Security Agreement, the with- (MENA) region, the Budget provides over $800drawal of U.S. military forces was completed by million to support political and economic reformthe end of December 2011. Success in Iraq and Af- in the region. The Budget expands our bilateralghanistan requires the seamless integration and economic support in countries such as Egypt, Tu-optimal balance of military and civilian power. nisia, and Yemen where transitions are alreadyThe Budget expands civilian operational capac- underway. Consistent with the President’s Mayity to secure our military’s hard fought gains, and 2011 speech, the Budget establishes a new $770supports programs to build the Iraqi institutions million MENA Incentive Fund, which will pro-necessary for long-term stability. This includes vide incentives for long-term economic, political,securing Embassy Baghdad and three regional and trade reforms to countries in transition—andconsulates in Iraq, helping Iraq develop its ener- to countries prepared to make reforms proac-gy sector in a self-supporting model, and support- tively. This new Fund builds upon other recentlying efforts to help Iraq build its civilian and mili- announced programs in the region, including uptary capabilities. Specifically, the Budget includes to $2 billion in regional OPIC financing commit-funding for: a diplomatic presence to strengthen ments, up to $1 billion in debt swaps for Egypt,our bilateral ties with the Iraqis; a police devel- and approximately $500 million in existing fundsopment and rule of law program to enhance the re-allocated to respond to regional developmentsIraqi police force and civilian ministries; and the in 2011.Office of Security Cooperation-Iraq to manage se-curity assistance and security cooperation activi- Make Foreign Affairs Operations Moreties, including cooperation on counterterrorism, Efficient and Effective. As with all Govern-counter-proliferation, maritime security, and air ment resources, it is critical that foreign affairsdefense. In Afghanistan, the State Department investments maximize the impact of every dol-and DOD have been integrating our civilian and lar and that we ensure that money is not wastedmilitary missions in readiness for the drawdown on the unnecessary. The State Department bud-of military forces. In the critical year following get reflects a program-by-program review thatthe gradual drawdown, the Budget supports op- identified reductions and focused resources onerations necessary to fulfill our security goals high-priority areas. For instance, funding in thewhile strengthening our diplomatic presence and Assistance for Europe, Eurasia and Central Asia
  • 65. 62 INVESTING IN OUR FUTUREaccount has been shifted into other functional more integrated and efficient programming.assistance accounts, reflecting the successful While fiscal constraints have meant thattransition of many of these countries to market the Administration will not meet some ofdemocracies. This has permitted the realloca- its most ambitious global health goals on itstion of funds to focus on regions with the greatest original timeline, dollars are focused on ar-assistance needs. In concert with other domes- eas of critical importance. The Budget sup-tic agencies, the State Department and the U.S. ports an aggressive effort to prevent HIVAgency for International Development (USAID) infections, including the President’s goal ofwill reduce spending on administrative costs, supporting 6 million HIV patients on anti-such as travel and supplies, generating signifi- retroviral treatment in 2013, which researchcant savings when compared to 2010. USAID has has shown also has a powerful preventive ef-also launched a far-reaching initiative to improve fect. The Budget continues efforts to reduceoverseas acquisitions and contracting processes maternal and child deaths through proventhrough its Implementation of Procurement Re- malaria interventions and support for a ba-form Initiative and has instituted a new evalua- sic set of effective interventions to addresstion policy that will enable the agency to expand maternal and child health. In addition, theprograms that demonstrate results and curtail Budget fully funds the balance of the Ad-those that are not performing. Within one of the ministration’s historic three-year, $4 billionlargest international development programs, the pledge to the Global Fund to Fight AIDS,Global Health Initiative, the costs of commodi- Tuberculosis, and Malaria, in recognition ofties and service delivery continue to fall dramati- this multilateral partner’s key role in globalcally; notably, the per patient cost to the United health and its progress in instituting reform,States of providing anti-retroviral treatment and fully funds the Administration’s pledgefor AIDS patients has fallen by over 50 percent to the Global Alliance for Vaccines and Im-since 2008, enabling the President to increase munizations in order to expand access tothe global treatment target by 50 percent without child immunization globally.increasing funding levels. • Fights Hunger and Invests in Economic Address Root Causes of Conflict and Stability and Growth by Improving FoodSecurity Threats. In our increasingly interde- Security. The Administration continuespendent world, failed states or regional conflicts funding for agriculture development andcan quickly have effects all over the world. In- nutrition programs as part of a multi-yeartense poverty, pandemics, and food insecurity all plan of strategic investments to address thecan contribute to political instability and even- root causes of hunger and poverty. Thesetually conflict. Alleviating these conditions is the programs are intended to reduce extremeright thing to do, and it is also the smart thing to poverty, increase food security, and reducedo as attacking these root causes of suffering can malnutrition for millions of families by 2015.prevent future security threats. To that end, the The 2011 famine in the Horn of Africa un-Budget: derscored the importance of targeted pro- grams that help prevent future famines and • Supports Continued Progress in Global instability in the Horn and elsewhere. The Health by Focusing on High-Impact Inter- Administration also maintains strong sup- ventions. The Administration is building on port for food aid and other humanitarian recent progress in the Global Health Initia- assistance, including over $4 billion to help tive’s fight against infectious diseases and internally-displaced persons, refugees, and child and maternal mortality, by focusing victims of armed conflict and natural disas- resources on interventions that have been ters. The Budget provides funding through proven effective and continuing to push for bilateral assistance and a multi-donor
  • 66. THE BUDGET FOR FISCAL YEAR 2013 63 trust fund, the Global Agriculture and Food again proposes to reallocate “D Block” spectrum Security Program, directing funding to poor valued at over $3.1 billion, which will be reserved countries that commit to policy reforms and for public safety and not auctioned as called for robust country-led strategies to address in- under existing law, and provides $7 billion to ternal food security needs. Assistance helps support the deployment of this network, includ- countries increase agricultural productiv- ing up to $300 million to fund R&D and support ity, improve agricultural research and de- for standards and technologies to ensure the net- velopment, and expand markets and trade, work capabilities meet the mission requirements while monitoring and evaluating program of public safety. performance. Care for Wounded, Ill, and Injured • Build Resilience to Climate-Related Events Servicemembers. Caring for wounded, ill, by Promoting Low-Emissions Economic De- and injured servicemembers is a critical prior- velopment. The Administration will continue ity of the Administration. The Budget includes to fund support programs that build climate $49.1 billion in base and Overseas Contingency resilience in communities and countries Operations (OCO) funding for the DOD Unified most vulnerable to extreme weather and Medical Budget to support the Military Health climate events. These efforts will enhance System, which provides medical care for over America’s security by reducing the risk of in- 9.6 million eligible beneficiaries, including active stability caused by climate stresses, includ- duty members, military retirees, family mem- ing drought, famine, and rising sea levels. In bers, dependent survivors and eligible Reserve addition to building climate resilience, the members and their families. The Budget funds a Budget also addresses the drivers of climate variety of strong programs to support wounded, change by promoting low-emissions econom- ill and injured servicemembers and to help ser- ic development (helping to open up markets vicemembers transition into civilian life and the for American clean energy goods and servic- workforce. These programs include support for es in the process) and sustainable land use, wounded warrior transition units and centers of as well as helping countries develop the sci- excellence in vision, hearing, traumatic brain in- entific and analytic capacity and sound gov- jury, as well as other areas to continuously im- ernance necessary to reduce climate risk. prove the care provided to wounded, ill, and in- jured servicemembers. For example, the Budget Foster the Creation of an Advanced, In- provides $33.7 billion overall for medical care;teroperable Communications System for $662 million to provide care for traumatic brainFirst Responders. Today’s public safety agen- injury (TBI) and psychological health; and $771.3cies largely lack access to the level of wireless ca- million for continued support of wounded, ill, andpabilities used by the military and large commer- injured medical research, including psychologicalcial enterprises. Federal, State, and local public health and TBI/Post Traumatic Stress Disorder.safety agencies largely rely on their legacy landmobile radio systems, which only provide voice Support Military Families. The Presidentcommunications and are often not interoper- has made supporting military families a top pri-able with other local and regional systems. This ority. The Budget provides $8.5 billion to supportfragmented system of voice only communications military families, sustaining funding in this im-has left public safety organizations with 1990’s portant area despite the challenges of the currenttechnology to face the problems of a 21st Century budget environment. The Administration is com-world. To support the creation of an interopera- mitted to improving access to military family pro-ble, 4G wireless network for public safety, the Ad- grams, integrating services to ensure the highestministration is calling for a total of over $10 bil- impact, and pursuing efficient innovations to in-lion toward this effort derived from the sale and crease capacity and capabilities to best meet thereallocation of spectrum. Specifically, the Budget needs of military families. Key Administration
  • 67. 64 INVESTING IN OUR FUTUREpriorities include enhancing the well-being and and VetSuccess on Campus initiatives. IDES andpsychological health of the military family, en- VetSuccess counselors ensure that veterans, es-suring excellence in military children’s education pecially wounded warriors and students, receiveand their development, developing career and ed- timely information about education opportuni-ucational opportunities for military spouses, and ties, job counseling, and placement assistance toincreasing child care availability and quality for successfully transition from military to civilianthe Armed Forces. life. The Budget also boosts funding for the Tran- sition Assistance Program and grants for employ- Help Veterans Transition to the Work- ment services to veterans by $8 million, 5 percentforce. America faces a significant challenge of over 2012 levels.veteran unemployment. As of December 2011,there were more than 850,000 unemployed Reduce Veteran Homelessness. Theveterans, including nearly 250,000 unem- President’s Budget invests $1.35 billion to pro-ployed post-9/11 veterans. At the same time, the vide Veterans Affairs services for homeless andAdministration is planning to reduce the size of at-risk veterans. These funds will continue to re-the military by more than 100,000 servicemem- duce veteran homelessness through collaborativebers, beyond the normal departures, over the partnerships with local governments, non-profitnext five years—including tens of thousands of organizations, and the Departments of Housingyoung veterans under the age of 25. Already, the and Urban Development, Justice, and Labor.President has signed into law new tax credits toencourage businesses to hire post-9/11 veterans Continue Implementation of the Paperlessand disabled veterans; created resources to help Veteran Benefit Claims System to Boostveterans translate their military skills for the Efficiency and Responsiveness. The President’scivilian workforce; built new online tools to help Budget includes funding to support transforma-veterans and their spouses connect with jobs; and tion initiatives, including the continued develop-partnered with the private sector to make it eas- ment of a digital, near-paperless environmentier to connect our veterans with companies that that allows for great exchange of information andwant to hire them. Yet more needs to be done. The increased transparency for veterans. The goal ofAdministration will take steps to help veterans the Veterans Benefit Management System is tomake the transition back to work. These include reduce the processing time and the claim back-the hiring of 279 additional vocational rehabilita- log, facilitate quality improvements throughtion and employment counselors to support the rules-based tools, and automate claims tracking.Integrated Disability Evaluation System (IDES)
  • 68. DEPARTMENT OF AGRICULTUREFunding Highlights:• Provides $23 billion in discretionary funding, a decrease of nearly 3 percent or almost $700 million, below the 2012 enacted level. Consistent with Administration priorities, targeted investments are made in renewable energy, housing, utilities, infrastructure, rural development, and key innovation research areas. Discretionary savings are achieved through ongoing efforts to streamline operations, reduce costs, and close offices, and these savings are redirected into critical activities in recognition of tighter budget constraints.• Modernizes service by redirecting staff to areas of greatest need without reducing or disrupting service to customers.• Reduces the deficit by $32 billion over 10 years by eliminating direct farm payments, decreasing subsidies to crop insurance companies, and better targeting conservation funding for high priority areas.• Invests $6.1 billion in renewable and clean energy and environmental improvements to spur the creation of high-value jobs, make America more energy independent, and drive global competitiveness in the sector.• Increases the 2012 funding level for the Agriculture and Food Research Initiative to $325 million and targets areas that are key to American scientific leadership: human nutrition and obesity reduction; food safety; sustainable bioenergy; global food security; and climate change.• Contributes to the job creation and economic growth goals of the White House Rural Council by continuing to fund programs that effectively promote renewable energy, job training, infrastructure investment, access to capital, worker training, and green jobs throughout rural America.• Leverages resources and works with Federal, State, and Tribal partners to accelerate voluntary adoption of agricultural conservation practices to improve water quality. 65
  • 69. 66 DEPARTMENT OF AGRICULTURE • Provides $7 billion for the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) for low-income and nutritionally at-risk pregnant and post-partum women, infants, and children up to age 5. • Supports State, local, and Tribal efforts to serve healthy meals and snacks to schoolchildren. • Preserves a strong Supplemental Nutrition Assistance Program to prevent hunger for millions of Americans. • Conserves landscapes and promotes outdoor recreation in national forests and on working lands through the America’s Great Outdoors initiative. • Continues efforts to restore significant ecosystems such as the California Bay-Delta, Everglades, the Great Lakes, Chesapeake Bay, and the Gulf Coast, helping to promote their ecological sustainability and resilience. The U.S. Department of Agriculture (USDA) ergy, rural development, and key innovative re-provides leadership on issues related to food, ag- search areas, the Budget makes tough choices toriculture, and natural resources, including ener- meet tight discretionary caps. Deficit reductiongy, based on sound public policy, the best avail- savings are achieved by eliminating direct farmable science, and efficient management. USDA payments, decreasing subsidies to crop insuranceworks to expand economic opportunity through companies, and better targeting conservationinnovation in research and provides financing funding.needed to help expand job prospects and improvehousing, utilities, and infrastructure in ruralAmerica. The Department also works to promote Fosters Innovation, Job Creation, andsustainable agricultural production to protect Growththe long-term availability of food. USDA pro-grams safeguard and protect America’s food sup- Promotes Development of Rural Renew-ply by reducing the incidence of food-borne haz- able Energy and Homegrown Biofuels. Theards from farm to table and to improve nutrition Administration proposes $6.1 billion in loans toand health through food assistance and nutrition rural electric cooperatives and utilities that willeducation. Internationally, USDA supports agri- support the transition to a clean-energy genera-cultural and economic development through re- tion and the creation of high-value jobs in ruralsearch and technical assistance to combat chronic America. Specifically, this funding will be targetedhunger and achieve global food security. Finally, to decrease America’s reliance on fossil fuels andUSDA manages and protects America’s public promote renewable and clean energy at electricand private lands by working cooperatively with generation, transmission, and distribution sitesother levels of government and the private sec- in rural communities. In addition, through thetor to preserve and conserve our Nation’s natu- Rural Energy for America Program, this Budgetral resources through restored forests, improved provides $19 million in assistance to agriculturalwatersheds, and healthy private working lands. producers and rural small businesses to com-The President’s 2013 Budget provides $23 billion plete a variety of projects, including renewableto support this important mission, a decrease of energy systems, energy efficiency improvements,almost $700 million from the 2012 enacted level. and renewable energy development. Finally, theWhile investments are made in renewable en- Administration proposes over $200 million to
  • 70. THE BUDGET FOR FISCAL YEAR 2013 67continue support for the development of home- Prevents Hunger and Supports Healthygrown, advanced biofuels that have the potential Eatingto reduce America’s dependence on foreign oil andto bolster our rural economies. Prevents Hunger. At a time of continued need, the President’s Budget provides $7.5 bil- Spurs American Innovation by Advancing lion for discretionary nutrition program support.Priority Research. USDA research has played Funding supports the 9.1 million individuals ex-a key role in spurring innovation and advancing pected to participate in the Special Supplemen-technology that has allowed American agricul- tal Nutrition Program for Women, Infants, andture to increase in both efficiency and profitabil- Children (WIC), which is critical to the health ofity. At the same time, the Administration recog- pregnant women, new mothers, and their infants.nizes that continued fiscal constraint requires The Administration also reproposes to continuetrade-offs to focus resources on only the most im- certain temporary Supplemental Nutrition As-portant priorities. Therefore, the President’s Bud- sistance Program (SNAP) benefits. SNAP is theget proposes $325 million—a $60 million increase cornerstone of our Nation’s food assistance safetyabove the 2012 enacted level—for competitive net and touches the lives of more than 46 millionresearch grants made through the Agriculture people. The Administration is committed to pre-and Food Research Initiative. The Budget also in- venting hunger by preserving access to SNAP forcreases in-house research in select areas such as all eligible participants.crop protection, sustainable agriculture, and foodsafety by $75 million, and fully funds the Cen- Supports Healthy Eating. The Administra-sus of Agriculture. Consistent with Administra- tion supports continued implementation of thetion-wide efforts to create additional savings, the Healthy, Hunger-Free Kids Act of 2010, strength-Agricultural Research Service is reallocating $70 ening the child nutrition programs and increas-million from lower priority projects. ing children’s access to healthy meals and snacks. Promotes Infrastructure and Commu-nity Development. The Budget supports eco- Makes Tough Choices with Targetednomic growth in rural areas by funding loan Reductionsprograms that effectively promote infrastructureinvestment and access to capital throughout ru- Responsibly Reduces Farm Spending.ral America. For instance, in order to provide Government payments to farmers are expectedsupport for projects in low income rural areas, to total $10.6 billion in 2011. Roughly $4.7 bil-the President’s Budget includes a $700 million lion—or 44 percent—of these payments are inincrease in the community facility program’s di- the form of a “direct payment”—payments thatrect loan level, a program that funds a wide ar- do not vary with current prices or crop yields andray of rural projects, including schools, hospitals, for which a crop is not necessarily produced. Asday care facilities, and fire and police stations. part of the strategy to confront our fiscal chal-In addition, the Budget also provides $24 bil- lenges in a thoughtful and responsible mannerlion in guaranteed single-family housing loans, the Budget includes $32 billion in savings overwhich will support mortgage lending institutions 10 years by eliminating direct farm payments,in rural areas and boost home ownership among providing disaster assistance, reducing subsi-moderate-to low-income rural residents. dies to crop insurance companies, and better targeting conservation funding, consistent with the Administration’s deficit reduction proposal. These proposals are sound policy and prudent steps that the Administration believes are neces- sary to put the country on a fiscally sustainable path.
  • 71. 68 DEPARTMENT OF AGRICULTURE Targets the Direct Single Family Hous- approach to restoration and maintenance of sus-ing Loan Program. The Budget proposes $653 tainable landscapes; streamlining programs tomillion for the direct single family housing loan improve forest management efficiency; reducingprogram, a significant reduction from an enact- wildfire risk; and expanding efforts to maximizeed amount of $900 million, and proposes to pro- collaborative efforts including public-privatevide single family housing assistance primarily partnerships. Together, these changes will makethrough loan guarantees. The reduced level rep- better use of available resources and increase theresents a minimum level to allow targeted sup- resilience and health of our Nation’s forests.port for teachers in rural areas and beneficiariesof the mutual self-help housing program, along Protects Communities and Ecosystemswith other very-low and low income individuals from Wildfire Damage. The Budget continuesin rural areas still needing mortgage credit assis- the long-standing practice of fully funding thetance despite historically low interest rates. 10-year average cost of wildland fire suppres- sion operations. The Budget also continues the practice of targeting hazardous fuels reductionImproves the Way Federal Dollars are funding for activities near communities (knownSpent as the “wildland-urban interface”) where they are most effective. Priority is given to projects in Modernizes Service. Consistent with Ad- communities that have met “Firewise” standardsministration-wide efforts, USDA agencies are re- (or the equivalent), identified acres to be treated,shaping the way that they do business, without and invested in local solutions to protect againstsacrificing services to the public. In 2012, the De- wildland fire.partment began an effort to streamline operationsand reduce cost, including closing about 260 offic- Enhances Interagency Efforts to Improvees. In some cases, staff will be redirected to areas Water Quality. The United States has madeof greatest need; in others, advances in technol- great strides in improving water quality; however,ogy have reduced the need for brick and mortar “nonpoint” source pollution remains a significantfacilities. Building upon this effort, in 2013 the economic, environmental and public health chal-Forest Service proposes to create efficiencies and lenge that requires policy attention and thought-redirect savings toward more on-the-ground proj- ful new approaches. Key Federal partners, alongects. Finally, the Department is further stream- with agricultural producer organizations, conser-lining its staff through both Department-wide vation districts, States, Tribes, non-governmentalearly retirement and targeted buyouts offered by organizations and other local leaders will workmore than 15 agencies and offices. As a result of together to identify areas where a focused andthese and other efficiencies the Budget proposes coordinated approach can achieve substantialabout 900 fewer staff positions for USDA than in improvements in water quality. The President’s2012. Budget builds upon the collaborative process already underway among Federal partners to Improves Forest Conservation Outcomes demonstrate substantial improvements in waterby Using Landscape Scale Strategies. The quality from conservation programs by ensur-President’s Budget continues to emphasize the ing that USDA’s key investments through FarmForest Service’s ability to restore our Nation’s Bill conservation programs and related effortsforests through landscape scale efforts. These ef- are appropriately leveraged by other Federalforts include: targeting scarce resources to on-the- programs.ground activities; implementing a comprehensive
  • 72. THE BUDGET FOR FISCAL YEAR 2013 69 Department of Agriculture (In millions of dollars) Actual Estimate 2011 2012 2013 Spending Discretionary Budget Authority: Commodities and International ................................................................ 3,662 3,521 3,472 Rural Development .................................................................................. 2,572 2,404 2,402 Forest Service .......................................................................................... 4,694 4,608 4,861 Conservation ............................................................................................ 898 851 827 Food and Nutrition Service ...................................................................... 6,585 7,420 7,495 Research.................................................................................................. 2,361 2,536 2,604 Marketing and Regulatory Programs ....................................................... 2,001 1,945 1,879 Central Administration.............................................................................. 494 509 589 Subtotal, Discretionary budget authority ......................................................... 23,267 23,794 24,129 Discretionary Changes in Mandatory Programs (non-add in 2012)1 .............. –2,372 –906 Receipts and Collections: User Fees/Receipts ................................................................................. –103 –139 –266 Total, Discretionary budget authority2 ............................................................ 23,164 23,655 22,957 Discretionary Cap Adjustment:3 Disaster Relief............................................................................................. — 367 — Total, Discretionary outlays ............................................................................. 27,021 28,752 26,805 Mandatory Outlays: Food and Nutrition Service ...................................................................... 94,689 104,660 102,731 Commodity Credit Corporation ................................................................ 10,276 10,009 12,055 Crop Insurance ........................................................................................ 6,387 3,753 9,162 Natural Resources Conservation Service ................................................ 2,628 3,076 3,362 Agricultural Marketing Service ................................................................. 1,167 1,203 1,321 Forest Service .......................................................................................... 688 720 655 Rural Development liquidating accounts .................................................. –2,706 –1,236 –1,167 Receipts, reestimates and all other programs.......................................... –748 –251 –416 Total, Mandatory outlays ................................................................................. 112,381 121,934 127,703 Total, Outlays .................................................................................................. 139,402 150,686 154,508
  • 73. 70 DEPARTMENT OF AGRICULTURE Department of Agriculture—Continued (In millions of dollars) Actual Estimate 2011 2012 2013 Credit activity Direct Loan Disbursements: Farm Loans .............................................................................................. 1,934 2,023 1,936 Commodity Credit Corporation ................................................................ 7,103 7,332 7,873 Rural Utilities Service ............................................................................... 7,020 9,591 10,051 Rural Housing Service ............................................................................. 2,144 2,250 2,111 All other programs.................................................................................... 45 97 88 Total, Direct loan disbursements ..................................................................... 18,246 21,293 22,059 Guaranteed Loan Disbursements by Private Lenders: Farm Loans .............................................................................................. 3,060 3,097 3,097 Commodity Credit Corporation ................................................................ 4,767 5,500 5,500 Rural Housing Service ............................................................................. 15,295 24,433 24,149 Rural Business Service ............................................................................ 1,820 1,385 1,292 All other programs.................................................................................... 3 12 18 Total, Guaranteed loan disbursements by private lenders.................................. 24,945 34,427 34,056 1 The 2012 amounts reflect OMB’s scoring of the 2012 Appropriations acts (P.L. 112-55 and 112-74) as transmitted to the Congress. These amounts are displayed as non-add entries because they have been rebased as mandatory and are not included in any 2012 discretionary levels in the 2013 Budget. 2 Includes funding for International Food Aid programs in the Department of Agriculture (Food for Peace Title II food aid and the McGovern-Dole International Food for Education and Child Nutrition). Funding for these programs are included in International Function 150, and are classified as Security pursuant to Title I of the Budget Control Act of 2011. 3 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget authority available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations.
  • 74. DEPARTMENT OF COMMERCEFunding Highlights:• Provides $8 billion for Commerce programs through regular appropriations, an increase of 5 percent, or approximately $380 million above the 2012 level. This reflects continued strong support for key drivers of job creation, innovation, and the promotion of U.S. exports, as well as investments in critical satellite programs. Reductions are made to administrative costs and grant programs that overlap with activities funded elsewhere.• Reduces administrative costs across bureaus to focus funding on core missions, and makes tough fiscal choices by reducing funding for public works and coastal habitat grants that overlap with other Federal programs.• Enhances the competitiveness of U.S. manufacturers by providing $708 million for the National Institute of Standards and Technology laboratories, $128 million in the Hollings Manufacturing Extension Partnership, and $21 million for Advanced Manufacturing Technology Consortia, to develop measurements, standards, and technologies to support advanced manufacturing, robotics, nanotechnology, and cybersecurity.• Increases resources for the U.S. Patent and Trademark Office, which will continue on its path to accelerate patent processing and improve patent quality.• Promotes U.S. exports and export-related jobs by providing $517 million for the International Trade Administration, to better promote American exports in key markets abroad and improve trade enforcement; and for SelectUSA, to strengthen efforts to attract investment capital to the United States.• Provides over $5 billion for the National Oceanic and Atmospheric Administration, an increase of approximately $160 million, to support critical weather and climate satellite programs and the agency’s core responsibilities for environmental science and stewardship, including implementation of the National Ocean Policy.• Provides over $10 billion of mandatory budget resources to help build an interoperable public safety broadband network that will strengthen economic growth and public safety, while benefitting from commercial innovation. These costs are fully offset by proceeds from auctioning spectrum that will be used to expand wireless broadband access and services. 71
  • 75. 72 DEPARTMENT OF COMMERCE • Invests in regional economic competitiveness by providing $220 million to the Economic Development Administration to support innovative planning, capacity building, and capital projects. • Sustains critical economic and household data collection activities, such as the 2012 Economic Census and the American Community Survey, to inform private and public sector decision- making. The Department of Commerce has a wide cybersecurity. The Budget includes $21 millionrange of missions in the areas of international for a new Advanced Manufacturing Technologytrade and domestic economic development; Consortia program, a public-private partnershiptechnology and innovation; demographic and that will support road maps and research toeconomic statistics; and environmental science, address common manufacturing challengesstewardship and weather forecasting. As a group, faced by private sector businesses. The Budgetthese missions focus on expanding the American also proposes to provide the U.S. Patent andeconomy and job creation as well as providing Trademark Office (USPTO) full access to its feecritical environmental information. While there collections, which will support a program levelare tight constraints on discretionary spending, of $2.95 billion or nearly $250 million more thanthe President’s 2013 Budget supports core in 2012, while strengthening USPTO’s effortsfunctions in these areas by providing $8 billion to improve the speed and quality of patentfor Commerce programs. This represents an examinations.increase of approximately $380 million from the2012 level. Specifically, strong support is provided Promotes American Exports. The Presidentfor critical satellite programs and public safety has set the goal of doubling American exports bycommunications as well as trade promotion the end of 2014. To that end, the Administrationand enforcement. At the same time, to free up proposes $517 million for the International Traderesources, reductions are made to administrative Administration (ITA) to continue to implementcosts and grant programs that overlap with the National Export Initiative, a broad Federalfunding available elsewhere. strategy to increase U.S. exports and export relat- ed jobs. This funding will allow ITA ’s to increase its export promotion efforts in key, growing mar-Invests in America’s Long-Term Growth kets abroad, strengthen trade enforcement, andand Competitiveness support the activities of SelectUSA, which helps attract investment capital to the United States Enhances U.S. Competitiveness and that creates jobs.Fosters Innovation. The Administrationproposes $708 million for National Institute of Sustains Satellites Used for Weather Fore-Standards and Technology (NIST) laboratories casting and Climate Monitoring. The Budgetas part of the President’s Plan for Science and provides $1.8 billion to continue the developmentInnovation, $86 million above the 2012 enacted and acquisition of the National Oceanic and At-level. NIST’s work in developing measurements mospheric Administration’s (NOAA’s) polar-or-and technologies supports U.S. industry’s ability to biting and geostationary weather satellite sys-innovate and develop new products. This funding tems, as well as satellite-borne measurements ofwill accelerate advances in a variety of important sea level and potentially damaging solar storms.areas, ranging from next-generation robotics and These satellites are critical to NOAA’s ability tosmart manufacturing to nanotechnology and
  • 76. THE BUDGET FOR FISCAL YEAR 2013 73provide accurate weather forecasts and warnings not allocated via auctions to promote efficientthat help to protect lives and property. utilization of spectrum. Together, these proposals are expected to reduce the deficit by $21 billion Prioritizes Science and Stewardship over the next 10 years.Missions. The Budget provides an increasefor NOAA’s National Marine Fisheries Service Enhances Regional Economic Competi-and targets spending on data collection and tiveness. The Budget provides $220 million, astock assessments. Overfishing and resulting reduction of $38 million from the 2012 enactedrestrictions can be avoided with adequate stock level, to the Economic Development Adminis-assessments, and these funds will lead to more tration (EDA). The Budget supports economicaccurate data for our Nation’s fisheries. The development planning and projects that catalyzeBudget will also improve the accuracy of regional entrepreneurship and innovation at the regionalprojections of sea level rise and climate change scale, but conserves resources by trimming theand accelerate the implementation of the National amount requested for traditional public worksOcean Policy through multi-purpose integrated projects, which are often funded using tax-freeecosystem assessments. bonds or other Federal programs. Invests Spectrum Proceeds to Build a Sustains Statistical Programs and CorePublic Safety Broadband Network and Data Products. Commerce provides policymak-Increase Wireless Access. As proposed in ers, businesses, and the public critical economicthe American Jobs Act, the Budget supports a and household data to inform decision-making.National Wireless Initiative that would provide The Budget proposes $970 million for the Cen-$10 billion in total resources from spectrum sus Bureau to implement activities including theauction proceeds to help build an interoperable 2012 Economic Census data collection; conductpublic safety broadband network. The initiative the American Community Survey; and analyzeincludes $7 billion in funding for development the integrity of the 2010 Decennial Census andand construction of the network, and additional research improvements for the 2020 Census.spectrum valued at over $3 billion (the “D Funding for the Bureau of Economic Analysisblock” of spectrum in the 700 megahertz band) supports reliable and timely economic data,for public safety use. Within the $7 billion, up including Gross Domestic Product estimatesto $300 million will be provided for a Wireless that are among America’s most closely-watchedInnovation Fund to develop technologies and economic indicators.a standards framework for interoperable firstresponder communications. Building upon the Reforms the U.S. Export Control System.recommendations of the National Commission The Budget provides the Bureau of Industry andon Terrorist Attacks Upon the United States, this Security with $102 million to sustain export li-effort will enhance public safety by providing censing and enforcement activities, includingAmerica’s first responders modern and efficient $6 million to meet its increased responsibilitiescommunications capabilities while allowing the under the Administration’s Export Control Re-network to benefit from commercial innovation. form Initiative. Continued progress of the ReformThe National Wireless Initiative also proposes Initiative will advance our national security andto reallocate Federal agency and commercial economic competitiveness by better focusing U.S.spectrum bands to greatly increase wireless controls on transactions to destinations or endbroadband access and innovation opportunities users of concern while facilitating secure tradenationwide using auctions, and to authorize for controlled items with U.S. allies and closeuse of a spectrum license user fee for licenses partners.
  • 77. 74 DEPARTMENT OF COMMERCEMakes Tough Cuts Cuts Administrative Costs. The Depart- ment will trim its administrative costs by at least Terminates Non-Essential Programs. The $34 million through efficiencies in acquisitions,Department supports a wide variety of programs human capital, logistics, general administration,aimed at spurring growth and competitiveness, and information technology. This builds on sav-and as our economy evolves, so must these ings of $142 million that the Department is im-programs. The Budget proposes to reduce funding plementing in 2012, for a total annual reductionfor EDA grant programs, such as the Public of $176 million annually beginning in 2013.Works program and the Global Climate ChangeMitigation Incentive Fund, that overlap withprograms in other agencies. The Budget reducesfunding for conservation grants that are similarto programs in other agencies. Department of Commerce (In millions of dollars) Estimate Actual 2011 2012 2013 Spending Discretionary Budget Authority: Departmental Management Salaries and Expenses ......................................................................... 58 57 56 Steel Loan Program .............................................................................. –48 –1 — HCHB Renovation ................................................................................. 15 5 2 Office of the Inspector General ............................................................. 27 30 31 Subtotal, Departmental Management ........................................................ 52 91 89 Economic Development Administration (EDA) Salaries and Expenses ......................................................................... 38 38 38 Economic Development Assistance Programs ..................................... 246 220 182 Subtotal, EDA............................................................................................. 284 258 220 Bureau of the Census Salaries and Expenses ......................................................................... 258 253 259 Periodic Censuses and Programs ......................................................... –894 689 711 Subtotal, Bureau of the Census ................................................................. –686 887 970 Economics and Statistics Administration ................................................... 97 96 100 International Trade Administration.............................................................. 444 455 517 Bureau of Industry and Security ................................................................ 103 101 102 Minority Business Development Agency .................................................... 30 30 29
  • 78. THE BUDGET FOR FISCAL YEAR 2013 75 Department of Commerce—Continued (In millions of dollars) Estimate Actual 2011 2012 2013 National Oceanic and Atmospheric Administration Operations, Research and Facilities ..................................................... 3,245 3,131 3,161 Procurement, Acquisition and Construction .......................................... 1,400 1,816 1,966 Other Accounts ..................................................................................... 82 67 52 Subtotal, National Oceanic and Atmospheric Administration..................... 4,727 5,014 5,179 Patent and Trademark Office Program Level ....................................................................................... 2,016 2,705 2,951 Fees ...................................................................................................... –2,225 –2,706 –2,953 Subtotal, Patent and Trademark Office ...................................................... –209 –1 –2 National Institute of Standards and Technology (NIST) Scientific and Technical Research Services .......................................... 502 577 651 Industrial Technology Services.............................................................. 182 128 149 Advanced Manufacturing Technology Consortia (non-add)������������������� — — 21 Manufacturing Extension Partnership (non-add) ����������������������������������� 128 128 128 Construction of Research Facilities ....................................................... 70 56 60 Subtotal, NIST............................................................................................ 754 761 860 National Telecommunications and Information Administration (NTIA) Salaries and Expenses ......................................................................... 43 46 47 Rescissions ........................................................................................... –5 –5 — Subtotal, NTIA............................................................................................ 38 41 47 Subtotal, Discretionary budget authority ........................................................... 5,629 7,726 8,109 Discretionary Changes in Mandatory Programs (non-add in 2012):1 Promotion and Development of Fisheries .................................................. –103 –119 Digital Television and Public Safety Fund .................................................. –4 — All other ...................................................................................................... –6 — Subtotal, Discretionary changes in mandatory programs ................................. –113 –119 Total, Discretionary budget authority ................................................................... 5,629 7,726 7,990 Discretionary Cap Adjustment:2 Disaster Relief................................................................................................... — 200 — Total, Discretionary outlays................................................................................... 9,579 10,856 9,533 Mandatory Outlays: Digital Television Transition and Public Safety Fund ......................................... 334 309 5 National Wireless Initiative Legislative Proposal3 .............................................. –923
  • 79. 76 DEPARTMENT OF COMMERCE Department of Commerce—Continued (In millions of dollars) Estimate Actual 2011 2012 2013 All other Existing law ................................................................................................ 28 162 172 Legislative proposal ................................................................................... 208 Total, Mandatory outlays....................................................................................... 362 471 –538 Total, Outlays ........................................................................................................ 9,941 11,327 8,995 Credit activity Direct Loan Disbursements: Fisheries Finance Direct Loan Financing account ..................................... 56 90 58 Total, Direct loan disbursements ....................................................................... 56 90 58 Guaranteed Loan Disbursements by Private Lenders: Economic Development Assistance Programs account............................. — 65 39 Total, Guaranteed loan disbursements by private lenders ................................ — 65 39 1 The 2012 amounts reflect OMB’s scoring of the 2012 Appropriations acts (P.L. 112-55 and 112-74) as transmitted to the Congress. These amounts are displayed as non-add entries because they have been rebased as mandatory and are not included in any 2012 discretionary levels in the 2013 Budget. 2 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget authority available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations. 3 Outlays are negative for this initiative because incoming receipts are expected to be greater than outlays in 2013.
  • 80. DEPARTMENT OF DEFENSEFunding Highlights:• Provides $525.4 billion in discretionary funding for the base Department of Defense budget, a decrease of 1 percent, or $5.1 billion, below the 2012 enacted level. This will provide the necessary resources to implement the President’s new defense strategy, keep our military the finest in the world by investing in priorities, and help achieve $486.9 billion in savings by 2021.• Reprioritizes investments in weapons programs to reflect the new strategy, provide service members with state of the art equipment, and maintain the industrial base. This includes making investments in high-priority programs, such as unmanned surveillance aircraft and upgraded tactical vehicles, while terminating unnecessary and lower-priority programs such as the C-27 airlift aircraft and a new weather satellite and maintaining programs such as the Joint Strike Fighter at a reduced level.• Maintains ready forces for the full range of contingencies, including sustaining a robust counterterrorism capability, and continues to invest in our critical alliances, including NATO.• Keeps faith with servicemembers by protecting well-deserved benefits for active duty personnel and their families, provides support for servicemembers returning from war, and at a time of tight discretionary caps, finds the resources to give the military the full pay increase as authorized by law.• Continues strong support for servicemembers and military families—including access to medical care for over 9.6 million servicemembers, retirees, and their families—and takes steps to modernize military health and retirement systems.• Enhances the Administration’s commitment to maintain a reliable nuclear deterrent by increasing investments in the nuclear weapons complex and in weapon delivery technologies, and to nonproliferation by investing in securing, detecting, and neutralizing nuclear threats around the world.• Reshapes and resizes military forces to ensure the size, balance, and flexibility to preserve core capabilities and meet future challenges. 77
  • 81. 78 DEPARTMENT OF DEFENSE • Continues to focus on acquisition reforms and management efficiencies, such as the consolidation of numerous data centers, to achieve savings. • Invests in long-term scientific and technological innovation to ensure that the Nation has access to the best defense systems available in the world. High-priority research and development areas include: advanced manufacturing, cybersecurity, and autonomous systems. The United States of America is the greatest the capabilities we need for the future, includingforce for freedom and security that the world has intelligence, surveillance and reconnaissance.ever known. In no small measure, that is because The Administration will continue to enhancewe have built the best-trained, best-led, best- capabilities related to counterterrorism andequipped military in history. The President, as countering weapons of mass destruction. WeCommander-in-Chief, is committed to keeping will also maintain the ability to operate init that way. Over the past three years, we have environments where adversaries try to deny usmade historic investments in our troops and their access. And, we will keep faith with those whocapabilities, military families, and veterans. Now, serve by giving priority to our wounded warriors,we are at an inflection point after a decade of war: servicemembers’ mental health, and the well-American troops have left Iraq; we are undergo- being of military families.ing a transition in Afghanistan so Afghans canassume more responsibility; and we have deci- With this strategy as a guide, over the 10 yearsmated al Qaeda’s leadership, putting that terror- beginning in 2012, DOD will spend $486.9 billionist network on the path to defeat. less than was planned in last year’s Budget. The Department will realize these savings through At the same time, we have to renew our econom- targeted reductions in force structure and mod-ic strength here at home, which is the foundation ernization; reprioritization of key missions andof our strength in the world, and that includes the requirements that support them; and contin-putting our fiscal house in order. That is why the ued reforms and efficiencies in acquisition, man-President directed the Department of Defense agement, and other business practices. From the(DOD) to undertake a comprehensive strategic 2012 enacted level, base defense spending willreview so that our defense budget is driven by a fall by 1 percent to $525.4 billion in 2013, whileclear strategy that reflects our national interests. DOD Overseas Contingency Operations funding will fall by 23 percent (these costs are addressed There are several key elements to this in a separate chapter). However, over the next 10strategy. To sustain a global presence, DOD years, the base budget will grow modestly.will strengthen its presence in the Asia Pacificregion and continue vigilance in the Middle East.The Administration will also invest in critical Invests in Critical Areas to Implementpartnerships and alliances, including NATO, New Defense Strategywhich has demonstrated time and again—mostrecently in Libya—that it is a force multiplier. Funds Military Readiness and Training.Looking past Iraq and Afghanistan to future The Administration is committed to providingthreats, the force will no longer be sized for large- servicemembers with the equipment andscale, prolonged stability operations. Instead, resources they need to respond to the complexDOD will focus modernization on emerging and often unconventional threats posed by today’sthreats, sustaining efforts to get rid of outdated security environment. The Budget providesCold War-era systems so that we can invest in $176.2 billion to support the operations, training,
  • 82. THE BUDGET FOR FISCAL YEAR 2013 79and maintenance needed for our troops to meet Works to Defeat al Qaeda and Preventcurrent and future threats. Terrorist Attacks. Building on recent successes against al Qaeda and its leadership, protecting Provides Needed Weapons Systems for the United States from terrorist attacks andChallenges of Today and Tomorrow. The Bud- defeating al Qaeda remain the Administration’sget continues to invest in the weapons systems highest national security priorities. As partneeded by our Armed Forces to meet the chal- of the National Strategy for Counterterrorism,lenges laid out by the new defense strategy. For the Administration continues to strengthenexample, the Budget provides $3.7 billion to fund counterterrorism programs and develop partnerunmanned air surveillance systems, such as the capabilities to prevent terrorist attacks on thePredator and Reaper, which provide critical and United States and other countries. The Budgettimely intelligence to our troops on the ground in protects resources in this high-priority area andAfghanistan and other operational areas. In addi- makes necessary investments to protect thetion, the Budget provides $2 billion for upgrading homeland; defeat al Qaeda and its affiliates; buildtactical vehicles including the newest and most partner capacity; and prevent the development,effective version of armor protection, and $4.1 acquisition, and use of weapons of massbillion for the Virginia class submarine program destruction by terrorists.that will improve the Navy’s ability to operatein coastal waters and support special operations Deters and Counters the Spread of Weap-forces. ons of Mass Destruction. DOD continues to pursue a comprehensive strategy to reduce the Secures Defense Information Networks risk of intentional nuclear, biological, chemical,from Intrusion. Preparing for emerging threats and radiation related attacks. The Budget helpsincludes being able to operate across the full to counter the challenge of weapons of mass de-spectrum in cyberspace. The Budget sustains struction by funding improved infrastructureand enhances all aspects of DOD’s cybersecurity and modernization of detection, neutralization,capabilities. It also funds DOD’s support for the and treatment capabilities. Additionally, the Ad-Department of Homeland Security’s (DHS’s) ministration will enhance international stabilitycybersecurity efforts to protect the Federal by reducing the risks of global nuclear prolifera-Government’s unclassified civilian information tion. The Budget continues the President’s globaltechnology networks and improve the security of lockdown initiative to secure nuclear materi-U.S. critical infrastructure. Funding allows DOD als worldwide within four years, detect and de-to invest in improving capabilities to implement ter nuclear testing and smuggling, and supportthe DOD Strategy for Operating in Cyberspace; verification and implementation of internationalconducting the full spectrum of operations, nonproliferation treaties.including defending the Nation’s networksas directed by the President; and supporting Modernizes the Nation’s Nuclear Deter-the defense of infrastructure that is critical to rent. Even as we work to reduce the number andnational security. role of nuclear weapons in our national security strategy, the Administration remains committed The Budget sustains funding for U.S. Cyber to modernizing the Nation’s nuclear weapons com-Command to conduct its cyber mission and lead plex and supporting the goals of the Nuclear Pos-efforts to secure the Department’s networks. The ture Review (NPR) as the United States and Rus-Budget also funds leading edge cybersecurity sci- sia implement the New Strategic Arms Reductionence and technology efforts, and cybersecurity Treaty. DOD and the National Nuclear Securitypilot efforts (in partnership with DHS) to deter- Administration (NNSA) are working togethermine how best to protect critical information in- to refine weapons system requirements so thatfrastructures owned and operated by the private these systems focus on the highest-priority capa-sector. bilities. While still meeting the NPR goals, DOD
  • 83. 80 DEPARTMENT OF DEFENSEand NNSA are reducing the scope and stretching important military advantage, so it is criticalout the schedule of several warhead weapons life that military members and their families receiveextension programs, and are restructuring plans the compensation and benefits that they deserve.for maintaining plutonium capabilities to stay The Budget provides a 1.7 percent increase towithin the discretionary spending caps set in the basic pay in calendar year 2013, the full increaseBalanced Budget and Emergency Deficit Control authorized by current law.Act of 1985, as amended by the Budget ControlAct of 2011. Reflecting their close partnership The Administration prioritizes the care ofand shared commitment, DOD has included in servicemembers and their families by providingits outyear budget a portion of future funding $48.7 billion for the DOD Unified Medical Budgetfor NNSA, with allocations to be made to NNSA to support the Military Health System, whichwithin each budget year. provides medical care for over 9.6 million eligible beneficiaries. The Budget continues strong The Administration also continues its commit- programs to support wounded, ill and injuredment to sustaining and modernizing U.S. strate- servicemembers and to help servicemembersgic delivery systems, thus ensuring an effective transition into civilian life and the workforce.deterrent in the face of evolving challenges andtechnological developments. This includes spe- The Administration is committed to improvingcific commitments to maintain continuous at-sea access to military family programs, integratingdeployments of ballistic missile submarines in services to ensure the highest impact, and pursuingthe Atlantic and Pacific Oceans, as well as the innovations to better reach and serve militaryability to surge additional submarines during cri- families. Key Administration priorities includeses; procure the lead ship for the OHIO Replace- enhancing the well-being and psychologicalment program in 2021; sustain the Air Force’s health of military families, ensuring excellenceMinuteman III missile through 2030; and mod- in military children’s education, developingernize the heavy bomber force so it can serve for career and educational opportunities for militarythe indefinite future. spouses, and ensuring child care availability and quality for the Armed Forces. Finally, the Budget includes $9.7 billion forballistic missile defense. The Administration The Budget emphasizes our commitment tois committed to developing and fielding proven honor those who have served the Nation and tocapabilities to defend the United States from the maintain the hallowed grounds where they arethreat of limited ballistic missile attack, and to laid to rest. In 2013, the Army will provide $128defend against regional ballistic missile threats million for Arlington National Cemetery improve-to U.S. forces and U.S. allies and partners. These ments. These funds will be combined with the $46capabilities must be flexible enough to adapt as million requested directly for Arlington Nationalthe ballistic missile threats change. In Europe, Cemetery to almost quadruple support for plan-the United States is focused on addressing near- ning and construction to extend burial availabil-term threats from short- and medium-range ity, strengthen accounting and gravesite account-ballistic missiles, and is working with our NATO ability systems, and improve service to families.allies to this end as we continue to implement theEuropean Phased Adaptive Approach. Funds Research and Development for the Military of the Future. The Administration Cares for Servicemembers and Their will continue its strong commitment to fundingFamilies. Keeping faith with servicemembers— the Nation’s long-term scientific and technicalwhich the President has called a “moral needs, including those for national security. Ac-obligation”—is a key component of the new cordingly, the Budget proposes $69.4 billion fordefense strategy. The high quality and readiness research, development, test, and evaluation, in-of our All-Volunteer Force is the Nation’s most cluding $11.9 billion for early-stage science and
  • 84. THE BUDGET FOR FISCAL YEAR 2013 81technology programs, focusing our efforts on flecting this reduced end strength and the newthose projects most likely to enhance our capabil- defense strategy, DOD will eliminate several Bri-ity to respond to new threats. The Budget invests gade Combat Teams, as well as 130 transport air-in the Defense Advanced Research Projects Agen- craft and seven cruisers, over the next five years.cy and department-wide basic research slightly At the same time, DOD will manage the force inabove the 2012 enacted levels. Such investments ways that protect its ability to regenerate capa-will allow the Nation to explore diverse scientific bilities that may be needed to address emergentprinciples and technological applications, includ- demands, sustaining the intellectual capital anding bio-defense, cybersecurity, information ac- rank structure to facilitate the expansion of keycess, and cleaner and more efficient energy use, elements of the force if required.robotics, and advanced computing. Funding inthis area will also capitalize on the role that DOD Reassesses Base Structure. The force struc-plays in advanced manufacturing by establishing ture that emerges from the new defense strategya number of public-private partnerships in tar- will require a properly aligned infrastructuregeted technologies to expedite their development from which to operate, deploy, and train. The Bud-and production. DOD-funded research provides get requests the authority for DOD to commencefuture options for new defense systems, helps the two additional rounds of base realignment andNation avoid a technological surprise by poten- closure (BRAC) and to establish an independenttial adversaries, results in cost savings by solving Commission that will provide an objective, thor-technical problems early in the life cycle of acqui- ough, and non-partisan review and analysis ofsition programs, and takes advantage of emerg- DOD’s recommendations. While this is a difficulting technical opportunities. The funding proposed process, additional rounds of BRAC will enablein the Budget will be awarded through competi- DOD to align infrastructure to meet the needs oftive processes, with experts guiding the choices of a leaner, more agile, and flexible force.research topics to be undertaken, and reviewingand selecting projects for funding based on pro- Adjusts Health Care Benefits and Initiatesposals submitted by universities, non-profit orga- Retirement Review. DOD has implemented anizations, for-profit companies, and Government variety of internal efficiencies within its medicallaboratories. program and continues to seek cost savings, but it is imperative to better manage the health benefit. The Budget introduces new TRICARE copays andCuts and Reforms Spending to Reflect fees to help constrain the cost of healthcare whilethe New Defense Strategy continuing to provide high quality care. The Bud- get includes additional increases to TRICARE Resizes and Reshapes Military Forces. In Prime enrollment fees, initiation of Standard/response to the President’s direction to conduct a Extra annual enrollment fees, and adjustmentsfresh review of its roles, missions, and capabili- to deductibles and catastrophic caps. The Bud-ties, DOD is resizing and reshaping U.S. military get also modifies pharmacy copays to encourageforces to meet future challenges and preserve the use of less expensive mail-order and militarycore assets while retaining the ability to regen- treatment facility pharmacies. Finally, the Bud-erate lower priority capabilities as necessary. get includes modest annual fees for TRICAREThe Administration is committed to supporting beneficiaries over age 65 when they transitionproperly sized, balanced, and flexible forces that to Medicare coverage. These reforms will reducewill continue to be the core of our dominant and DOD costs over five years by an estimated $12.9capable military power. The Budget preserves billion in discretionary funding and $4.7 billioncore military capabilities and better integrates in mandatory savings in the Medicare-Eligibleactive and reserve forces to provide a smaller Retiree Health Care Fund.but more agile military force that will remaina strong deterrent against our adversaries. Re-
  • 85. 82 DEPARTMENT OF DEFENSE The Budget also includes the Administration’s Reforms Acquisition. DOD contracts accountproposal for a Military Retirement Moderniza- for approximately 70 percent of all Federal pro-tion Commission, which, if enacted, will recom- curement. The Budget requests $280 billion formend improvements to the military retirement DOD contracts in 2013. Through its “Better Buy-system. Under the proposal, the President would ing Power” acquisition reform initiative, DOD isappoint the Commissioners; DOD would transmit charting a new path that will result in greaterto the Commission initial recommendations to efficiency and productivity throughout the de-change the military retirement system; the Com- fense acquisition system. In particular, DOD is:mission would hold hearings, make final recom- 1) decreasing the use of high-risk contracts basedmendations, and draft legislation to implement on time-and-materials and labor-hours; 2) con-its recommendations; the President would review tinuing to develop the acquisition workforce toand decide whether to transmit the Commission’s provide needed oversight; 3) eliminating or re-recommendations to the Congress; and Congress structuring lower-priority acquisitions; 4) reduc-would vote “up or down” on the legislation. The ing contract spending on management supportAdministration believes that any major mili- services; 5) taking full advantage of contract ve-tary retirement reforms should include grandfa- hicles that reflect the Government’s buying lever-thering for current retirees and those currently age; 6) increasing the use of strategic sourcing;serving in the military. 7) increasing small business participation; and 8) improving financial management systems. In Reprioritizes Investments in Weapons addition, DOD has instituted a number of acqui-Systems. The Administration is committed to sition management best practices: applying les-providing our servicemembers with the neces- sons learned from past acquisitions; establishingsary equipment and support to meet future mod- process teams to review qualifications of acquisi-ernization goals. The Budget reflects continued tion professionals; and instituting peer reviews toreevaluation of the magnitude and timing of ensure affordability and effective competition.planned modernization efforts to maintain thefinest military in the world—a force capable of Improves Business Processes. The Budgetdeterring conflict, projecting power, and winning supports DOD’s ongoing efforts to upgrade itswars. For example, expensive programs such as financial management business processes inthe Joint Strike Fighter, which are designed to several ways. First, to verify its ability to trackcounter the potential threat from a sophisticated spending and improve fiscal discipline, DODadversary, will continue but at a reduced level. In will have Statements of Budgetary Resourcessupport of the new defense strategy, where possi- for general funds “audit ready” by 2014, threeble, DOD will continue to rely on proven existing years earlier than previously planned. This auditsystems rather than developing new ones, and of the Department’s Statement of Budgetarylower-priority programs will be terminated or Resources will encompass a complete reviewreduced, including the C-27 airlift aircraft, High of how the Department receives and spendsMobility Multi-Purpose Wheeled Vehicle Recapi- its funds. Second, DOD continues to upgradetalization, and a new weather satellite. In addi- its logistics management business processestion, the Navy will truncate the Joint High Speed by pursuing initiatives designed to acquire,Vessel program after buying 10 ships, sufficient manage, and deliver cargo and personnel moreto meet its core requirement. The Administration efficiently and effectively. These Department-is committed to maintaining a healthy industrial wide logistics initiatives build on previouslybase and will work to mitigate adverse effects on successful business process re-engineeringworkers and industry. As these reductions are initiatives over many years. Overall, the Budgetimplemented, the Administration will monitor helps improve Departmental business processesand manage the industrial base to ensure that and thus enables DOD to streamline the jointthe Nation has the ability to develop and produce global distribution system, manage inventory inthe future weapons systems it needs. more efficient and cost effective ways, improve
  • 86. THE BUDGET FOR FISCAL YEAR 2013 83demand forecasting, speed movement of wounded Conserves Energy. DOD consumes almostwarriors from the battlefield, and manage the three-fourths of all Federal energy resources.return of equipment from Iraq and Afghanistan To reduce consumption, the Budget includesmore responsibly. approximately $1 billion for energy conservation investments—up from $400 million in 2010— Focuses on Management Efficiencies. The increasing by two and one-half times the sup-Budget creates a balanced approach to funding port of DOD’s Priority Goal to Improve Energypriorities within spending caps by freeing up Performance. These investments include energyresources from lower priorities, eliminating du- retrofits of existing buildings, meeting energy ef-plication, trimming overhead, and improving ficiency standards for new buildings, and devel-competition and management in operating and oping renewable energy projects. DOD is steadilyinvestment programs. For example, to reduce its improving its installation energy performanceinformation technology footprint—and in turn by reducing the demand for traditional energylower staffing and energy needs—the Depart- and increasing the supply of renewable energyment plans to continue consolidating its numer- sources, currently at nearly 8.5 percent of DODous data centers. In addition, across its global energy production and procurement. The requestdistribution system, DOD continues to pursue includes $150 million for the Energy Conserva-initiatives designed to acquire, manage, and de- tion Investment Program, which improves theliver cargo and personnel more efficiently and ef- energy efficiency of DOD facilities worldwide. Infectively. Finally, as stated above, in lieu of costly addition, the Budget provides $32 million, a 7new acquisition programs, DOD strives to up- percent increase compared to 2012, for the Instal-grade existing equipment to provide equivalent lation Energy Test Bed Program to demonstratecapabilities wherever possible. new energy technologies to reduce risk, overcome barriers to deployment, and facilitate wide-scale commercialization. Department of Defense (In millions of dollars) Estimate Actual 2011 2012 2013 Spending Discretionary Base Budget Authority: Military Personnel ..................................................................................... 137,046 141,819 135,113 Operation and Maintenance...................................................................... 192,649 197,198 208,744 Procurement ............................................................................................ 103,909 104,464 98,823 Research, Development, Test and Evaluation ......................................... 75,733 71,375 69,408 Military Construction ................................................................................ 14,768 11,367 9,572 Family Housing ........................................................................................ 1,819 1,683 1,651 Revolving and Management Funds ......................................................... 2,348 2,641 2,123 Subtotal, Discretionary base budget authority ................................................. 528,272 530,547 525,434 Discretionary Cap Adjustment:1 Overseas Contingency Operations (OCO) ............................................... 158,753 115,083 88,482
  • 87. 84 DEPARTMENT OF DEFENSE Department of Defense—Continued (In millions of dollars) Estimate Actual 2011 2012 2013 Total, Discretionary budget authority (Base and OCO) .................................... 687,025 645,630 613,916 Total, Discretionary outlays (Base and OCO) .................................................. 673,848 682,995 666,159 Total, Mandatory outlays ................................................................................. 4,226 5,260 6,721 Total, Outlays ................................................................................................... 678,074 688,255 672,880 Credit activity Direct Loan Disbursements: Family Housing Improvement Direct Loan Financing Account ................. 309 202 195 Total, Direct loan disbursements ..................................................................... 309 202 195 1 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget authority available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations. Amounts in 2011 are not so designated but are shown for comparability purposes.
  • 88. NATIONAL INTELLIGENCE PROGRAM Funding Highlights: • Provides $52.6 billion in discretionary funding. This funding supports our national security goals and reflects a deliberative process to focus funding on the most critical capabilities, curtail personnel growth, and invest in more efficient information technology solutions. • Continues to better integrate intelligence to help policy officials make decisions informed by the latest and most accurate intelligence available. • Strengthens global intelligence capabilities to disrupt terrorism and better understand extremist threats. • Counters the proliferation of weapons of mass destruction by strengthening collection and analysis capabilities. • Supports military operations in Afghanistan. • Enhances cybersecurity capabilities to help protect Federal networks, critical infrastructure, and America’s economy while improving the security of intelligence networks against intrusion and counterintelligence threats. • Modernizes the Intelligence Community’s information technology infrastructure to remove barriers to collaboration, information sharing, and efficiency. • Reduces contractors and freezes Government personnel levels. • Terminates or reduces lower priority operational and investment programs. The National Intelligence Program (NIP) those who need it—including the President, thefunds Intelligence Community (IC) activities in heads of Executive Departments, military forces,six Federal departments, the Central Intelligence and law enforcement agencies. The President’sAgency, and the Office of the Director of Na- Budget advances the Administration’s nationaltional Intelligence. The IC provides intelligence security objectives and the National Intelligencecollection, the analysis of that intelligence, and Strategy and plays a critical role in protectingthe responsive dissemination of intelligence to American citizens, safeguarding our economy 85
  • 89. 86 NATIONAL INTELLIGENCE PROGRAMand fostering continued economic growth. In ad- operations to defeat al-Qaeda and other violentdition, it represents a focused effort to address extremists and disrupt their capabilities; preventthe most critical requirements while accepting the proliferation of weapons of mass destruction;and managing risk within a constrained fiscal en- penetrate and analyze the most difficult targetsvironment. The Budget strikes a careful balance of interest to U.S. foreign policymakers; identifybetween addressing critical national security re- and disrupt counterintelligence threats; and pro-quirements and providing responsible manage- vide strategic warning to policymakers on issuesment of taxpayer resources. Savings are achieved of geopolitical and economic concern. To protectby curtailing personnel growth, eliminating leg- our national security, the IC will strengthen itsacy capabilities, scaling back operations against collection and analysis capabilities and promotelower priority missions, reducing facilities, and responsible intelligence collaboration and infor-implementing “cloud computing.” mation sharing. The Administration also remains committed to measuring performance to evaluate Reflecting the Administration’s commitment to progress, ensure key intelligence gaps are closed,transparency and open government, the Budget and create accountability for results across thecontinues the practice begun in the 2012 Budget entire NIP.and discloses the President’s aggregate fundingrequest for NIP. However, the details regarding Supports Military Operations. The Budgetthe NIP budget remain classified; therefore, the supports the ability of the IC to play a key rolePresident’s Budget does not publicly disclose de- in informing decision-makers at the strategictailed funding requests for intelligence activities. level and supporting the war fighter. Field com-This chapter highlights key NIP-funded activi- manders look to the IC for situational awareness,ties without specific funding information. targeting support, and timely and actionable in- telligence. Planners look to the IC for adversary plans, intentions, and capabilities. The BudgetAdvances National Security Goals balances its focus between current, immediate needs for U.S. military forces engaged in opera- Integrates Intelligence. The IC will contin- tions with enduring intelligence requirements forue to improve intelligence integration to harness potential future military and security needs.more efficiently and effectively the strengths andcapabilities that are spread across 17 organiza- Enhances Cybersecurity Capabilities andtions. Through National Intelligence Managers Safeguards Intelligence Networks. A secureand their associated Unifying Intelligence Strat- U.S. information infrastructure—including ICegies, the Director of National Intelligence has telecommunications, computer networks anddrawn together the expertise required to accom- systems, and the data that reside on them—isplish the goals of the National Security Strategy critical to national security. Threats to informa-and the National Intelligence Strategy, as guided tion technology infrastructure endanger nationalby the National Intelligence Priorities Frame- and economic security and citizen privacy andwork. The IC is working to ensure that integrated are, therefore, an important policy focus of theintelligence information flows anywhere and any- Government. The NIP budget request supportstime it is required by any authorized user, from Presidential cybersecurity priorities, includ-the President to our troops on the ground. ing cybersecurity research and development. In addition, it supports the Senior Information Strengthens Global Intelligence Capabili- Sharing and Safeguarding Steering Committee,ties to Disrupt Terrorism and Counter Weap- which the President established by Executiveons of Mass Destruction. The IC continues to Order 13587 to guide and prioritize Government-make robust investments to combat terrorism and wide investments in classified networks. Thesupport the Administration’s National Strategy Budget invests in the protection of these criticalfor Counterterrorism. The IC will continue to lead
  • 90. THE BUDGET FOR FISCAL YEAR 2013 87networks that facilitate the IC’s information efforts to find savings in a tight fiscal environment,sharing and operational requirements. the Budget freezes IC Government personnel at 2012 levels and continues to reduce the IC Modernizes the Information Technology contractor workforce. The Budget focuses on sus-Infrastructure. The IC depends on robust infor- taining the skills in the current IC workforce thatmation technology capabilities to support opera- have been developed over the past decade.tions and allow for robust information sharing andcollaboration with all customers. Management of Achieves Savings Through Reducing orthis information and data is paramount to its us- Terminating Lower Priority Programs. Rec-ability; modernization of this infrastructure will ognizing the challenges of this fiscal environment,develop efficient, interoperable solutions to the the IC has undertaken a comprehensive reviewIC’s storage and data handling challenges. The of its operational, investment, and infrastructureNIP budget request achieves significant savings programs. The NIP budget reflects a deliberativeby implementing the Administration’s Cloud process to ensure that the IC focuses on thoseFirst policy and the Campaign to Cut Waste. programs that have the most significant return and terminates or reduces those considered lower priority or that are not performing.Makes Difficult Cuts and Reforms Reduces Contractor Workforce and FreezesIC Hiring. Consistent with Administration-wide
  • 91. OVERSEAS CONTINGENCY OPERATIONSFunding Highlights:• Provides $96.7 billion in unified Defense, State, and USAID funding for Overseas Contingency Operations (OCO), a reduction of 24 percent below the 2012 enacted level. This primarily reflects the savings from the end of military operations in Iraq and the drawdown of forces in Afghanistan.• Maintains a unified approach to budgeting in conflict areas by continuing to integrate International Affairs resource requirements related to extraordinary and temporary national security needs with Department of Defense budget plans.• Caps OCO spending through 2021 at $450 billion, which allows year-by-year flexibility for the Administration to respond effectively to changing circumstances on the ground, and which prevents the use of OCO funding as a way around discretionary caps.• Addresses the military and civilian costs necessary to achieve U.S. national security goals in Afghanistan, Pakistan, and Iraq, including support for an entirely civilian-led mission in Iraq.• Supports the security, diplomatic, and development requirements for successful military-to- civilian transitions in Iraq and Afghanistan, including continued support to critical coalition partners.• Provides $88.5 billion for the Department of Defense, of which $85.6 billion is for Operation Enduring Freedom and $2.9 billion is for activities related to Iraq, primarily the repair and replacement of damaged equipment and the operation of the Office of Security Cooperation- Iraq.• Reduces military spending at a rate consistent with the complete withdrawal of U.S. troops from Iraq and a 30 percent decline in the number of troops deployed to Afghanistan.• Provides $8.2 billion for Department of State and USAID OCO activities, of which $3.3 billion is for Afghanistan, $1.0 billion is for Pakistan, and $4.0 billion is for Iraq.• Promotes transparency and efficiency in the Budget by separating the costs of supporting OCO from those that are included in Department of Defense and Department of State and USAID base budgets. 89
  • 92. 90 OVERSEAS CONTINGENCY OPERATIONS For the second year, the President’s Budget at the beginning of 2012 to about 68,000reflects a unified approach to budgeting for at the beginning of 2013.Department of Defense (DOD), Departmentof State, and U.S. Agency for International • Supporting the continued developmentDevelopment (USAID) operations in conflict and professionalization of the Afghanareas. By aligning priority missions across National Security Forces (ANSF), enablingthese agencies, the Budget takes advantage of the ANSF to take increasing responsibilityefficiencies, improves coordination, and reduces for the security of Afghanistan.overall costs. Further, isolating the militaryand civilian costs related to temporary and • Laying the groundwork to expand theextraordinary requirements in the OCO request civilian footprint in Afghanistan as U.S.promotes transparency and efficiency across the forces draw down, while focusing civiliansecurity agencies of the Federal Government. The assistance on foundational investments inPresident’s 2013 Budget provides $96.7 billion for economic growth, reconciliation and rein-these operations, a reduction of 24 percent below tegration, and capacity building.the 2012 enacted level. • Reducing Iraq-related costs dramatically, The Budget also reflects the Administration’s reflecting the withdrawal of U.S. troopsefforts to constrain OCO spending in the years completed in December 2011.beyond 2013. The Budget Control Act of 2011(BCA) established year-by-year caps on dis- • Strengthening the State Department’scretionary spending for agencies’ base budgets capacity to manage over 400 essential ac-through 2021, reducing the 10-year budget deficit tivities that it has taken over from DODby about $1 trillion. However, the BCA did not at Embassy Baghdad and three regionallimit OCO funding. Leaving OCO funding un- consulates in Iraq.constrained could allow future Administrationsand Congresses to use it as a convenient vehicle • Operating police and criminal justice hubto evade the fiscal discipline that the BCA caps facilities and security cooperation sites torequire elsewhere in the Budget. With the end of continue enhancing Iraqi security forcesour military presence in Iraq, and as troops con- and civilian ministries.tinue to draw down in Afghanistan, the Budgetproposes a binding cap on OCO spending, as well. Reduces Defense Spending in Line withFrom 2013 through 2021, the Budget limits OCO Troop Withdrawals. The Budget reflects aappropriations to $450 billion. Given the need for significant decrease in the OCO request for DOD,ample flexibility in budgeting for overseas contin- from $115.3 billion enacted in 2012 to $88.5 billiongencies, this is a multi-year total cap, rather than requested in 2013. This reflects the withdrawala series of year-by-year caps, and future Con- of U.S. troops from Iraq and a 30 percent declinegresses may adjust it in the event of a national in the number of troops deployed to Afghanistan.emergency requiring additional OCO spending. Nearly all of these DOD funds support Operation Enduring Freedom (OEF), which is primarily conducted in Afghanistan. For OEF, the BudgetTransitions from Military to Civilian- funds military operations, incremental personnelled Missions costs, force protection, repair and replacement of damaged equipment, activities to counter and The Budget funds several key efforts in the defeat improvised explosive devices, intelligencetransition from military to civilian-led missions, activities, support for coalition partners, andincluding: the training, equipping, and sustaining of the ANSF. To support implementation of the • Supporting a smaller number of U.S. forces Nation’s new defense strategy, the Budget funds, in Afghanistan, down from about 100,000 within the OCO request, the portion of the Army
  • 93. THE BUDGET FOR FISCAL YEAR 2013 91and Marine Corps end strength that DOD will $2.9 billion from the 2012 enacted level, and re-remove from the force within the next five years. flects a more conservative OCO definition thatThis end strength supports current operations avoids the risk of inadequate base funding forin Afghanistan and elsewhere, but will not be enduring activities once OCO funding underrequired as troops withdraw. the proposed cap is exhausted. These 2013 OCO costs are limited to certain near-term operation- The Budget provides $2.9 billion to support al, security and development components of as-DOD’s Iraq-related costs, including repair and sistance programs related to stabilization andreplacement of equipment leaving the country, counterinsurgency operations, protection of ci-replenishment of munitions previously expended vilian personnel, and oversight activities of thein combat, and the operation of the Office of Special Inspector General for Afghanistan. InSecurity Cooperation-Iraq (OSC-I). This is a Iraq, these temporary operations and assistancereduction of about $7 billion from the 2012 programs are necessary to sustain a civilian-ledenacted level for Iraq. Under the aegis of the mission; strengthen the capacity of the Iraqi gov-U.S. diplomatic mission to Iraq, OSC-I is the ernment through police training, criminal justicecornerstone of the U.S.-Iraqi strategic security programs, and military assistance; and ensurepartnership and serves as the hub of both security the Department and USAID have the necessaryassistance and security cooperation activities, resources to support and secure the diplomaticincluding cooperation on counterterrorism, mission. For Afghanistan and Pakistan, uniquecounterproliferation, maritime security, and air challenges require near-term stabilization anddefense. development assistance to support a responsi- ble security transition in Afghanistan and sup- Provides Department of State and USAID port Pakistan’s counterinsurgency programs. InFunding for Civilian-Led Missions. The Afghanistan, OCO funding will provide the initialBudget reflects the OCO costs associated with infrastructure to maintain the diplomatic plat-Department of State and USAID activities in form and security posture as Afghan forces takeIraq, Afghanistan, and Pakistan. Overall, the greater responsibility for security operations.2013 request for OCO represents a decrease of
  • 94. 92 OVERSEAS CONTINGENCY OPERATIONS Overseas Contingency Operations (OCO) (In millions of dollars) Estimate Actual 2011 2012 2013Spending Memorandum:1 Discretionary Cap Adjustment:2 Department of Defense Operation Enduring Freedom ............................................................... 113,963 105,737 85,627 Operation New Dawn / Iraq .................................................................. 45,044 9,604 2,855 Subtotal, Department of Defense 3 ........................................................... 159,007 115,341 88,482 Department of State and U.S. Agency for International Development (USAID) 4 Iraq ....................................................................................................... — 4,802 4,019 Afghanistan .......................................................................................... — 3,636 3,267 Pakistan and Other............................................................................... 297 2,750 959 Subtotal, Department of State and USAID ............................................... 297 11,188 8,245 Other International Agencies .................................................................... — 14 — Subtotal, Department of State, USAID, and Other International Agencies................................................................................................ 297 11,203 8,245 Department of Justice ............................................................................... 101 — — Total, Discretionary budget authority................................................................ 159,405 126,544 96,727 1 OCO funding is included in the related agency chapter tables and is presented here as a non-add detail table. 2 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget authority available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations. Amounts in 2011 are not so designated but are shown for comparability purposes. 3 For comparability purposes, the DOD totals include $254 million in 2011 and $258 million in 2012 that were requested in Defense but that Congress appropriated directly to the Department of Homeland Security (DHS), for Coast Guard operating expenses. The Budget requests $254 million in Defense that may be transferred to DHS for the same purpose in 2013. 4 OCO funds were first appropriated to the Department of State, USAID, and Other International Programs in 2012. The 2011 OCO amount reflects a transfer from the Department of Defense to the Department of State.
  • 95. DEPARTMENT OF EDUCATIONFunding Highlights:• Provides $69.8 billion in discretionary spending, which is 2.5 percent, or $1.7 billion, above the 2012 enacted level. This request builds on the significant gains already made through Race to the Top and other Administration initiatives. It safeguards increases in major K-12 reform programs and funds new efforts to improve college access, affordability, and quality to help reach the President’s college completion goal. To accommodate increases in these priority areas, the Budget makes targeted reductions and consolidations that help preserve resources for the highest priority investments.• Spurs comprehensive reform at the State and local level by providing $850 million for Race to the Top and $100 million for Promise Neighborhoods, two signature reform initiatives.• Overhauls the Department’s Elementary and Secondary Act (ESEA) programs by consolidating 38 program authorities into 11 competitive grant programs designed to allow States and districts more flexibility to use resources where they will have the greatest impact.• Sustains investments in programs that support States’ efforts to implement rigorous and comprehensive reforms like the ones being developed in their ESEA flexibility plans.• Invests $1.1 billion in a reauthorized Career and Technical Education program, that will prepare students for the future by aligning what they learn in school with the demands of 21st Century jobs. The Budget also provides support for establishing new highly-effective career academies.• Prepares America’s students for the 21st Century workplace by providing $260 million in funding for science, technology, engineering, and mathematics (STEM) programs, including a new $30 million evidence-based math education initiative to be jointly administered with a comparable program at the National Science Foundation, and $80 million to help reach the President’s goal of recruiting and preparing 100,000 high-quality STEM teachers over the next 10 years.• Continues the Administration’s commitment to keep college affordable for students and their families by making the American Opportunity Tax Credit permanent, suspending an increase in student loan interest rates, and helping to secure the future of the Pell Grant program. The 93
  • 96. 94 DEPARTMENT OF EDUCATION Budget provides sufficient funding for a $5,635 maximum Pell Grant award, $900 above the 2008 level which ensures access to postsecondary education for nearly 10 million needy students. The Budget also provides over 12 million borrowers with low-cost loans to attend college. • Invests significant new resources to reform higher education through Race to the Top: College Affordability and Completion, reforms to the Campus-Based Aid program, and a new First in the World competition. • Builds the knowledge base of effective educational interventions and helps translate research into practice through an additional $12 million for Institute of Education Sciences’ research and development and sustained funding for Investing in Innovation. • Supports new interagency efforts to break down administrative barriers to coordinating services for disadvantaged children and disconnected youth. • Makes targeted reductions to a handful of programs to ensure that funds are spent only on the most effective and essential activities. In its first three years, the Administration above 2012 levels. In addition to sustaininghas combined unprecedented financial support and building on investments in improvingfor education with extraordinary success in early learning and elementary and secondarypursuing and achieving fundamental reforms education, the Budget places a heightenedthat will benefit students of all ages and help emphasis on postsecondary education reformbuild a globally competitive workforce. Central with efforts to tackle college costs while improvingto this effort has been the Race to the Top outcomes for students. The Budget also continues(RTT) initiative for elementary and secondary strong support for increasing access to college byeducation, a competition that spurred States maintaining historic increases for Pell Grants,across the Nation to bring together teachers, which are critical to creating future generationsschool leaders, and policy makers to achieve that are well-educated and globally-competitive.difficult, yet fundamental improvements toour education system. By offering competitivefunding, supporting systemic reforms, requiring Invests in an Educated, Competitiveoutcomes, and measuring success, the RTT Americacompetition fostered meaningful change even inStates that ultimately did not win an award. This Sustains Successful K-12 Reform. Thepast year, a new RTT competition, called the Race Department of Education has jump-startedto the Top: Early Learning Challenge, also drove landmark reforms in our education system byStates to take major steps to improve the quality rewarding excellence and promoting innovation.of their early childhood programs. Early indications show impressive progress in helping children start school ready to succeed, The President’s 2013 Budget builds on this raising academic standards, placing an effectivesuccess with a request of $69.8 billion for the teacher in every classroom, and turning aroundDepartment of Education, a $1.7 billion increase struggling schools. The Budget continues to
  • 97. THE BUDGET FOR FISCAL YEAR 2013 95build on these reforms with new and sustained • Investing in Innovation (i3). The Budget con-investments: tinues robust investment in the i3 fund, providing $150 million, to support evi- • Race to the Top (RTT). The Budget provides dence-based approaches that improve K-12 $850 million for RTT, a program that has en- achievement and close achievement gaps, abled States to implement systemic reforms decrease dropout rates, increase high school in five fundamental areas: implementing rig- graduation rates, and improve teacher and orous standards and assessments; using data school leader effectiveness. A portion of i3 to improve instruction and decision-making; funds will also be used to support the devel- recruiting and retaining effective teachers opment of breakthrough learning technolo- and principals; turning around the lowest- gies through the Advanced Research Projects performing schools; and improving State Agency for Education. systems of early learning and care. In 2011, the Department of Education launched the • School Turnaround Grants. The Budget RTT Early Learning Challenge grant com- provides $534 million for School Turnaround petition, a joint effort with the Department Grants to support the Administration’s of Health and Human Services, designed to commitment to helping States and districts support the States with the most ambitious turn around America’s lowest-performing plans to ensure that high-need children from schools. birth to age five enter kindergarten ready to succeed. In 2012, the Administration is build- • Flexibility in Exchange for Smart Reforms. ing on the State-level progress of RTT by To build on the successful reforms leveraged launching a district-level competition to sup- by the first RTT competition, the Depart- port reforms best executed at the local level. ment recently invited States to apply for In 2013, RTT will be poised to deepen the Elementary and Secondary Education Act Administration’s investments in these vari- (ESEA) waivers in exchange for a commit- ous areas, and address the unmet demand of ment to implement comprehensive reforms. States and districts that have demonstrated The Budget maintains investments in key a commitment to implementing comprehen- programs that States can use to advance sive and ambitious reforms. Additional re- these reforms. For example, States and dis- sources will be provided for the Race to the tricts will have new flexibility to use Title Top: Early Learning Challenge, to be paired I funds that were previously required to be with new investments by the Department of reserved for supplemental educational ser- Health and Human Services in improving vices, public school choice, and professional child care quality and preparing children for development to support locally determined, success in school. rigorous interventions in schools. • Promise Neighborhoods. The Budget pro- • Support for Teachers and Schools. Districts vides a considerable increase to Promise will continue to receive the vital resources Neighborhoods, funding the program at $100 needed to pay teacher salaries and fund million. This initiative supports high-need other educational interventions needed to communities who plan to combine effective help disadvantaged students and students services for families with comprehensive re- with disabilities succeed through sustained forms centered on high-quality schools, in an investments in Title I and Individuals with effort to improve educational and life out- Disabilities Education Act (IDEA) Grants comes for children and youth. to States of $14.5 billion and $11.6 billion, respectively.
  • 98. 96 DEPARTMENT OF EDUCATION • Strengthens the Teaching Profession. The higher education have to do their part to rein Budget makes a number of investments in costs and deliver a high-value education, to help ensure that an effective teacher is and States must halt their disinvestment in in every classroom, including a 25 percent higher education and pursue reforms that set-aside within the new Effective Teachers will stabilize their systems in the long run. and Leaders State Grants program to build Our goal is reduced college costs, improved evidence on ways to best recruit, prepare access, increased levels of completion, and and support effective teachers and princi- better post-graduation outcomes. To this pals. The Budget also invests $400 million in end, the Budget proposes a new Race to the the Teacher and Leader Innovation Fund to Top: College Affordability and Completion, transform teacher and leader evaluation and reforms to the Campus-Based Aid program, compensation to reward strong teaching and and a new First in the World competition. support improvement. • Support for Community Colleges. The Delivers a Quality, Affordable College Budget also funds a new initiative designedEducation to Millions of Americans. To to improve access to job training acrossstrengthen our Nation’s competitiveness and to the nation and provides $8 billion in thebe first in the world in the proportion of college Departments of Education and Laborgraduates, the Nation must open the doors of to support State and community collegecollege to more Americans and make sure that partnerships with businesses to build thestudents can complete their degrees. The Admin- skills of American workers.istration has already taken significant strides tomake college more affordable. Today, nearly 10 • Maintaining a Strong Pell Grant Pro-million students receive Pell Grants, and more gram. Since 2008, the Administration hasthan 12 million borrowers receive low-cost loans, increased the maximum Pell Grant by morewith new affordable repayment options based on than $900, to $5,635. The Budget continuestheir income after leaving school. This Budget the Administration’s strong commitment tobuilds on that progress by continuing to invest the Pell Grant program and to preservingin student aid. Just as the Administration’s in- the maximum award, and includes measuresvestments over the past three years have trans- that ensure full program funding throughformed K-12 education, this Budget contains new the 2014–2015 academic year. The Admin-initiatives to reform higher education by address- istration believes that action must be takening rising tuition and improving outcomes. Our this year to keep the Pell Grant programgoal is reduced college costs, improved access, on a sound footing, and that reforms suchincreased levels of completion, and better post- as those included in the Budget are neces-graduation outcomes—all at an affordable cost to sary to maintain this critical investmentstudents. Key initiatives include: in opening the doors of opportunity to all Americans and strengthening our Nation’s • Tackling College Costs and Raising competiveness. Completion Levels. Rising college tuition has stymied recent efforts to make college • Making the American Opportunity Tax Cred- more affordable through investments in it Permanent. The Tax Relief, Unemployment Pell Grants, student financial aid, and Insurance Reauthorization and Job Creation higher education tax credits. Students are Act of 2010 extended for two years the new still struggling to pay their tuition bills American Opportunity Tax Credit (AOTC)— and are leaving school with significant debt a partially refundable tax credit worth up to that they are having difficulty repaying. $2,500 per student per year. AOTC, which This path is not sustainable. Institutions of would be made permanent in the Budget,
  • 99. THE BUDGET FOR FISCAL YEAR 2013 97 helps more than 9 million taxpayers afford and school district connections and program scale- the cost of college. up expertise. These programs will be developed in conjunction with a Government-wide effort • Suspending an Increase in Student Loan to improve the impact of Federal investments Interest Rates. Under current law, interest in math and science education by ensuring that rates on subsidized Stafford loans are slat- all programs supporting K-12 and undergradu- ed to rise this summer from 3.4 percent to ate education adhere to consistent standards of 6.8 percent. At a time when the economy is effectiveness. still recovering and market interest rates re- main low, it makes no sense to double rates Prepares Young People for Jobs Through on student loans. The Budget suspends the a Reformed Career and Technical Educa- scheduled increase for the coming year, so tion Program. The President’s Budget recom- that rates will remain at 3.4 percent. mends reauthorization and reform of the Career • Improving the Quality of Postsecondary Out- and Technical Education (CTE) program, cur- come Data. Informed decision-making by rently set to expire in 2013. The Administration’s students and families is critical to improving $1.1 billion reauthorization proposal would re- value and quality in higher education. Bet- structure CTE to align what students learn in ter data can also help institutions make school with the demands of 21st Century jobs and more informed decisions that will improve create better quality programs for students. The both programs and outcomes. The Budget Budget also provides new funding to scale up ca- provides resources to invest in improving the reer academies. quality of postsecondary data and making information on education and employment outcomes available to the public. This will Uses Resources More Effectively for drive smarter decision-making, by showing Better Results which higher education programs lead to good results. Helps States and Districts Make Better Choices by Identifying Proven Strategies. Prepares 100,000 STEM Teachers and In a time of fiscal constraint, it is crucial that weImproves STEM Education. Students need understand which interventions and strategiesto master science, technology, engineering, and are effective at improving student outcomes. Themathematics (STEM) in order to thrive in the 21st President’s Budget maintains a commitment toCentury economy. Steadily, we have seen other building a rich evidence base of what works sonations eclipse ours in preparing their children that districts and schools can make informed de-in these critical fields. That is why the President cisions about how to best educate their students.has set the ambitious goal of preparing 100,000 The Budget sustains support for the i3 programSTEM teachers over the next decade. The Budget and provides new funds for a CTE innovation andinvests $80 million within the Effective Teachers transformation fund and First in the World, whichand Leaders State Grants program toward that will contribute to our evidence base by requiringgoal, to expand promising and effective models of rigorous evaluations of promising and proven ed-teacher preparation in STEM. The Budget also ucation interventions and solutions. The Budgetfunds a jointly administered mathematics edu- also provides an increase of $12 million for thecation initiative, with $30 million from the De- Institute of Education Sciences Research and De-partment of Education and $30 million from the velopment program to support rigorous researchNational Science Foundation (NSF). This new and evaluation and new strategies to make thisevidence-based math initiative will combine the evidence accessible to education practitioners.strength in mathematics education research atNSF with the Department of Education’s State
  • 100. 98 DEPARTMENT OF EDUCATION Creates Efficiencies and Encourages disadvantaged children and disconnected youth.Interagency Coordination. When the It continues to support the Promoting ReadinessAdministration outlined its reauthorization of of Minors in the Supplemental Security IncomeESEA in the 2011 Budget, it proposed to overhaul Program (PROMISE) pilot—a joint effortthe Department’s K-12 program structure by between the Social Security Administrationconsolidating 38 existing authorities into 11 new and the Department of Education, with inputprograms that would give communities more from the Departments of Labor and Health andchoices in implementing activities and allow for Human Services. The Budget also includes newthe use of rigorous evidence to fund what works. resources dedicated to disconnected youth thatIn the past two years, Congress eliminated the will build knowledge about the most effectivefunding for 22 of the 38 programs, but failed to programs, provide flexible funding, and improvereplace these eliminations with the improved coordination across levels of government.program structure, funding only two (RTT and i3)of the 11 new programs. Eliminating programs Reduces Funding in Select Areas to Focusalone will not enable the Department to drive Resources on Core Activities. Consistent withthe reform that is needed in the nation’s schools. Administration-wide efforts to achieve savingsThat is why the 2013 Budget seeks funding for where possible, the Budget makes targetedall 11 of the proposed programs and continues to reductions to some programs, including theconsolidate the 38 existing program authorities, National Assessment of Educational Progressincluding the 16 programs still operating, into and the National Institute on Disability andthis new program structure. Rehabilitation Research, and generates savings by ending Impact Aid for school districts where The Budget also provides investments and the presence of Federal property does not affectflexibility to coordinate Federal, State, tribal, enrollment.and local services and improve outcomes for Department of Education (In millions of dollars) Actual Estimate 2011 2012 2013 Spending Discretionary Budget Authority: Legislative proposal, Elementary and Secondary Education Act: College and Career Ready Students (program level) ......................... 14,443 14,516 14,516 School Turnaround Grants .................................................................. 535 534 534 Race to the Top ................................................................................... 699 549 850 Investing in Innovation ........................................................................ 150 149 150 English Learner Education .................................................................. 734 732 732 Effective Teaching and Learning for a Complete Education ................ 305 362 427 College Pathways and Accelerated Learning...................................... 92 76 81 Excellent Instructional Teams (program level) ..................................... 2,977 2,864 2,941 Supporting Student Success............................................................... 1,441 1,407 1,448 Expanding Educational Options .......................................................... 281 255 255 Special Education State Grants (program level) ...................................... 12,278 12,393 12,413
  • 101. THE BUDGET FOR FISCAL YEAR 2013 99 Department of Education—Continued (In millions of dollars) Actual Estimate 2011 2012 2013 Career and Technical Education State Grants and National Activities (program level) ...................................................................... 1,130 1,131 1,131 Adult Education State Grants and National Activities .............................. 607 606 606 Federal Student Aid: Supplemental Educational Opportunity Grants ................................... 736 735 735 Federal Work Study ............................................................................. 979 977 1,127 Race to the Top: College Affordability and Completion ........................... — — 1,000 Higher Education: Minority Serving Institutions—Discretionary funding........................... 562 541 541 Minority Serving Institutions—Mandatory funding (non-add) �������������� 278 278 278 TRIO programs—Discretionary funding .............................................. 827 840 840 TRIO programs—Mandatory funding (non-add) ��������������������������������� 57 — — GEAR UP ............................................................................................ 303 302 302 Student Aid Administration....................................................................... 992 1,043 1,129 Institute of Education Sciences ................................................................ 609 594 621 All other .................................................................................................... 4,670 4,683 4,698 Subtotal, Discretionary budget authority, excluding Pell Grants............... 45,349 45,288 47,076 Federal Pell Grants .................................................................................. 22,956 22,824 22,824 Subtotal, Discretionary budget authority (program level) ............................... 68,305 68,112 69,900 Discretionary Changes in Mandatory Programs (non-add in 2012):1 Pell Grants ............................................................................................... –124 — VR State Grants (Change from baseline) ................................................ — –63 Subtotal, Discretionary changes in mandatory programs .............................. –124 –63 Changes in Advance Appropriations2 ............................................................ 41 –732 — Total, Discretionary budget authority.............................................................. 68,346 67,381 69,837 Total, Discretionary outlays ............................................................................ 89,360 79,102 67,712 Mandatory Outlays: Legislative proposal, Federal Pell Grants................................................. 14,242 15,323 13,553 Legislative proposal, Perkins Loans......................................................... –648 Legislative proposal, Federal Student Loan Programs ............................ –47,295 –34,315 –32,190 Legislative proposal, Teacher Education Assistance ............................... 12 38 19 Legislative proposal, American Jobs Act ................................................. 30,517 19,577 Education Jobs Fund ............................................................................... 5,056 3,712 — Academic Competitiveness and SMART Grants ..................................... 820 10 —
  • 102. 100 DEPARTMENT OF EDUCATION Department of Education—Continued (In millions of dollars) Actual Estimate 2011 2012 2013 Vocational Rehabilitation (VR) State Grants ............................................ 2,795 3,512 3,278 All other .................................................................................................... 524 588 625 Total, Mandatory outlays ................................................................................ –23,846 19,385 4,214 Total, Outlays ................................................................................................. 65,514 98,487 71,926 Credit activity Direct Loan Disbursements: Historically Black College and University Capital Financing .................... 137 186 186 Federal Direct Student Loans (FDSL) ...................................................... 132,804 176,266 147,282 Consolidation Loans (non-add) ����������������������������������������������������������� 24,038 63,446 28,382 TEACH Grants ......................................................................................... 127 149 120 Student Loan Acquisition ......................................................................... 3,147 907 704 Federal Perkins Loans ............................................................................. — — 2,226 Total, Direct loan disbursements .................................................................... 136,215 177,508 150,518 1 The 2012 amounts reflect OMB’s scoring of the 2012 Appropriations acts (P.L. 112–55 and 112–74) as transmitted to the Congress. These amounts are displayed as non-add entries because they have been rebased as mandatory and are not included in any 2012 discretionary levels in the 2013 Budget. 2 Reflects the cumulative changes in Department of Education advance appropriations in four accounts: College and Career Ready Students; Excellent Instructional Teams; Special Education; and Career, Technical, and Adult Education. The Budget Appendix includes, for each account, a Summary of Program Level table that shows the change in advance appropriations in each year. These advance appropriations are also discussed in the Analytical Perspectives volume’s “Budget Process” chapter.
  • 103. DEPARTMENT OF ENERGYFunding Highlights:• 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 and efficiencies are achieved through cuts to inefficient and outdated fossil fuel subsidies, low- priority and low-performing programs, and by concentrating resources on full utilization of existing facilities and infrastructure.• Increases funding for applied research, development, and demonstration in the Office of Energy Efficiency and Renewable Energy. The Budget also maintains and expands funding for the Advanced Research Projects Agency-Energy. These investments in high-performing programs will help position the United States as a world leader in the clean energy economy, and create the foundation for new industries and new jobs.• Improves the competitiveness of U.S. industries by more than doubling research and development on advanced manufacturing processes and advanced industrial materials, enabling companies to cut costs by using less energy while improving product quality.• Works through the President’s Better Building Initiative to make non-residential buildings more energy efficient by catalyzing private sector investment. Creates jobs through mandatory funding for HomeStar incentives to consumers to make their homes more energy efficient.• Promotes basic research through $5 billion in funding to the Office of Science.• Positions the Environmental Management program to meet its legally enforceable cleanup commitments at sites across the country.• Continues investments to maintain a safe, secure, and effective nuclear weapons stockpile in support of the planned decrease in deployed U.S. and Russian weapons under the New Strategic Arms Reduction Treaty.• Strengthens national security through funding for securing, disposing of, and detecting nuclear and radiological material worldwide. 101
  • 104. 102 DEPARTMENT OF ENERGY • Eliminates $4 billion annually in inefficient and outdated fossil fuel subsidies. The Department of Energy (DOE) is charged and tax incentives that accelerate fundamentalwith advancing the national, economic, and research, technology development, and commer-energy security of the United States; promoting cialization. Within EERE, the Budget increasesscientific and technological innovation in support funding by nearly 80 percent for energy efficiencyof that mission; maintaining the Nation’s nuclear activities to improve the energy productivity andweapons and reducing nuclear dangers; and en- competitiveness of our industries and businesses.suring the environmental cleanup of the national It increases funding for the development of thenuclear weapons complex. It facilitates some of next generation of advanced vehicles and biofu-the President’s highest priorities: clean energy els, and it maintains crucial support for research,and innovation, which are critical to job creation, development, and demonstration of renewablelong-term economic stability, and national secu- electricity generation, including: $310 million forrity. The President’s 2013 Budget provides $27.2 the SunShot Initiative to make solar energy cost-billion in discretionary funds for DOE to support competitive nationwide without subsidies by thethis mission, a 3.2 percent increase above the end of the decade; $95 million for wind energy,2012 enacted level. In light of the tight discre- including off-shore wind technologies; and $65tionary spending caps, this increase in funding is million for geothermal energy and enhanced geo-significant and a testament to the importance of thermal systems. The Budget also provides $770innovation and clean energy to the country’s eco- million for the Office of Nuclear Energy, whichnomic future. While the Budget includes funding includes funding for advanced small modularincreases in these critical areas, the Administra- reactors R&D. Other priority activities includetion has identified areas for savings and efficien- R&D on storage, transportation, and disposal ofcy, such as pursuing alternative approaches to the nuclear waste that supports the implementationPit Disassembly and Conversion project and re- of recommendations put forward by the Blue Rib-structuring plans for maintaining the necessary bon Commission on America’s Nuclear Future.plutonium capabilities for the nuclear stockpile, The Budget includes funding to maintain andtransitioning the Second Line of Defense program expand the deployment of new models of energyto a sustainment phase, and concentrating funds research pioneered in the last several years, in-on fully utilizing our investments in scientific cluding $350 million for the Advanced Researchfacilities. Projects Agency–Energy, a program that seeks to fund transformative energy research.Invests in Clean Energy, Innovation, Supports Critical Natural Gas Researchand Jobs of the Future Initiative. As part of an overall investment of $421 million in fossil energy R&D, the Budget Funds Clean Energy Research, Develop- includes $12 million to fund a multi-yearment, and Deployment to Keep America research initiative aimed at advancing technol-Competitive. To lead in the industries of tomor- ogy and methods to safely and responsibly devel-row, it is critical that we invest in research and op America’s natural gas resources. Specifically,development (R&D) today. The Budget includes DOE, in collaboration with the Environmental$2.3 billion for the Office of Energy Efficiency Protection Agency and the U.S. Geological Survey,and Renewable Energy (EERE). These funds are will focus on understanding and reducing thepart of a broad energy strategy that emphasizes environmental, health, and safety risks of naturalpriorities in clean energy and advanced manu- gas and oil production from hydraulic fracturingfacturing, through grants, financing assistance, in shale and other geologic formations.
  • 105. THE BUDGET FOR FISCAL YEAR 2013 103 Saves Manufacturers Money by Im- to understand the molecular structure of materi-proving Energy Efficiency. The President’s als and the processes of chemical reactions.Advanced Manufacturing Partnership invests ina national effort to develop and commercialize theemerging technologies that will create high qual- Cuts Wasteful Spending and Improvesity manufacturing jobs and enhance our global Efficiencycompetitiveness. By coordinating across Federalagencies and collaborating with the private sec- Eliminates Inefficient Fossil Fuel Sub-tor, it will provide the platform for inventing new sidies. As we continue to pursue clean energymanufacturing technologies, speeding ideas from technologies that will support future economicthe drawing board to the manufacturing floor, growth, we should not devote scarce resourcesscaling-up first-of-a-kind technologies, and devel- to subsidizing the use of fossil fuels produced byoping the infrastructure and shared facilities to some of the largest, most profitable companies inallow small and mid-sized manufacturers to inno- the world. That is why the Budget eliminates in-vate and compete. As an integral part of this ini- efficient fossil fuel subsidies that impede invest-tiative, the Budget provides DOE with $290 mil- ment in clean energy sources and undermine ef-lion to expand R&D on innovative manufacturing forts to address the threat of climate change. Theprocesses and advanced industrial materials that Budget proposes to repeal over $4 billion per yearwill enable U.S. companies to cut the costs of man- in tax subsidies to oil, gas, and other fossil fuelufacturing by using less energy, while improving producers.product quality and accelerating product devel-opment. The Budget also continues to support the Reduces Buildings’ Energy Use. The 80 bil-development of competitive new manufacturing lion square feet of non-residential building spaceprocesses for advanced vehicles, biofuels, solar in the United States present an opportunity toenergy, and other new clean energy technology, to realize large gains in energy efficiency. In 2010,help ensure that the technologies invented here commercial buildings consumed roughly 20 per-are manufactured here. The Budget also helps cent of all energy in the U.S. economy. The Admin-consumers save money through the continued istration continues to call on the Congress to passintroduction of appliance efficiency standards. the HomeStar bill, or other mandatory funding legislation aimed at creating jobs by encouraging Invests in Long-Range R&D to Keep Americans to invest in energy saving home im-America Competitive. The Office of Science, provements. The Budget also supports increasedthe largest civilian source of physical sciences R&D on innovative building efficiency technolo-research funding, will receive $5 billion to gies and the continued introduction of appliancecontinue cutting-edge R&D that is the founda- efficiency standards that save consumers andtion of the U.S. economic competitiveness. This companies’ money while improving performance.also funds investments in critical national assets, Through the Federal Energy Managementsuch as national supercomputers, which are Program, DOE will help other Federal agenciesessential to competing in the global economy and improve the energy efficiency of all Federal build-to maintaining our national security. The Office ings (representing over 3 billion square feet) withof Science funds research grants and scientific agencies’ total investment to exceed $2 billionactivities in key areas of science, including phys- through performance-based contracts over theics, materials, and chemistry. In addition, the next two years, all at no net cost to the taxpayer.Office of Science operates U.S. light sources that This is achieved through contracts that provideare used by both biologists and physical scientists enough savings in energy to more than pay for the investments.
  • 106. 104 DEPARTMENT OF ENERGYProtects Americans from the Threat of Protects the Public from Harmful Ex-Nuclear Harm and Pollution posure to Radioactive Waste and Nuclear Materials. The Budget includes $5.65 billion to Maintains a Safe, Secure, and Effective ensure our Nation’s legacy of nuclear wastes fromNuclear Deterrent. The Administration pro- the production of weapons during the Cold Warposes $7.6 billion for Weapons Activities, an in- are processed, secured, and safely disposed of increase of $363 million or 5 percent above the 2012 a timely manner. The Environmental Manage-enacted level, to maintain a safe, secure, and ef- ment program continues to clean up waste andfective nuclear deterrent as described in the Ad- contamination, focusing on its legally enforceableministration’s Nuclear Posture Review (NPR) of regulatory commitments. The program’s cleanup2010. This Budget meets the goals of the NPR actions include removing radioactive wastes fromby continuing nuclear weapon life extension pro- underground storage tanks, decontaminating andgrams—such as upgrades to the W76 and B61 decommissioning old production facilities, and in-nuclear weapons—by improving and replacing stalling groundwater monitoring wells primarilyaging facilities —such as increasing investments at sites in Washington, South Carolina, Idaho,in funding for the Uranium Processing Facility— Tennessee, Kentucky, Ohio, and New Mexico.and by sustaining the existing stockpile throughunderlying science, surveillance, and other sup- Reduces the Proliferation of Nuclear Ma-port programs. However, to meet the NPR goals, terial and Weapons. The Budget includes $2.5but still stay within the discretionary spending billion, a $163 million or 7 percent increase abovecaps, the National Nuclear Security Administra- the 2012 enacted level, which reflects completiontion (NNSA) and the Department of Defense are of accelerated efforts to secure vulnerable nucle-reducing and stretching out the schedule of sev- ar materials within four years, the President’seral weapons life extension programs and are re- stated timeframe. This proposal fully funds Ad-structuring plans for maintaining plutonium ca- ministration priorities to secure and dispose ofpabilities. As a result, the 2013 Budget provides nuclear material, to develop technologies to pre-$372 million less for Weapons Activities than the vent, deter, or detect nuclear proliferation, and toAdministration projected in last year’s request implement international nonproliferation trea-and reported to the Congress in the “Section 1251 ties, regulatory controls, and safeguards. DOEReport” on nuclear weapons plans. will have removed more than 4,300 kilograms— over 170 nuclear warheads worth—of vulnerable The Administration also proposes $1.1 billion, nuclear material from sites around the world bya $9 million increase above the 2012 enacted the end of 2013. The savings that make it possiblelevel, to support work on naval reactors, including to fund these priorities come from restructuringcontinued operational support of nuclear-powered the Pit Disassembly and Conversion project andsubmarines and aircraft carriers, and reactor transitioning the Second Line of Defense (SLD)development for a replacement to the OHIO class program to a sustainment phase. By the end ofballistic missile submarine. 2012, SLD will have exceeded its original goals, having installed radiation detection equipment Finally, reflecting their close partnership and at almost 500 foreign ports or crossing sites, in-shared commitment, the Budget assumes that a cluding all 383 customs sites in Russia. SLD willportion of future funding for NNSA will continue continue its efforts to improve deployed capabili-to be included in the Department of Defense’s ties and continue to provide foreign partners withbudget, with allocations made to NNSA each mobile detection equipment.budget year.
  • 107. THE BUDGET FOR FISCAL YEAR 2013 105 Department of Energy (In millions of dollars) Estimate Actual 2011 2012 2013 Spending Discretionary Budget Authority: National Defense: National Nuclear Security Administration ............................................. 10,504 11,000 11,536 Other Defense Activities ....................................................................... 796 823 736 Energy Resources .................................................................................... 3,613 3,666 4,307 Science ..................................................................................................... 4,897 4,874 4,992 Environmental Management ..................................................................... 5,665 5,711 5,650 Corporate Management ............................................................................ 134 168 166 Power Marketing Administration ............................................................... 107 85 85 Offsetting receipts ..................................................................................... –23 –26 –26 Subtotal, Discretionary budget authority .......................................................... 25,693 26,301 27,446 Discretionary Changes in Mandatory Programs (non-add in 2012):1 Strategic Petroleum Reserve ..................................................................... –500 –291 Northeast Home Heating Oil Reserve ....................................................... –100 — Subtotal, Discretionary changes in mandatory programs ................................ –600 –291 Total, Discretionary budget authority................................................................ 25,693 26,301 27,155 Total, Discretionary outlays .............................................................................. 37,970 42,308 35,563 Mandatory Outlays: Existing law ................................................................................................ –5,231 –1,747 –1,080 Legislative proposals: Ultradeep Water, Oil, and Gas Research and Development ................. 30 Home Energy Retrofit Rebate Program (HomeStar) ............................. 300 Advanced Vehicles, Community Development Challenge ..................... 150 Total, Mandatory outlays .................................................................................. –5,231 –1,747 –600 Total, Outlays ................................................................................................... 32,739 40,561 34,963 Credit activity Direct Loan Disbursements: Title 17 Innovative Technology Direct Loan Financing Account 2 ............... 1,544 8,888 10,862 Advanced Technology Vehicles Manufacturing Direct Loan Financing Account .................................................................................................. 2,452 18,713 1,368 Total, Direct loan disbursements ...................................................................... 3,996 27,601 12,230
  • 108. 106 DEPARTMENT OF ENERGY Department of Energy—Continued (In millions of dollars) Estimate Actual 2011 2012 2013 Guaranteed Loan Disbursements by Private Lenders: Title 17 Innovative Technology Guarantee Loans Financing Account 2 ..... 1,670 2,116 1,177 Total, Guaranteed loan disbursements by private lenders ............................... 1,670 2,116 1,177 1 The 2012 amounts reflect OMB’s scoring of the 2012 Appropriations acts (P.L. 112–55 and 112–74) as transmitted to the Congress. These amounts are displayed as non-add entries because they have been rebased as mandatory and are not included in any 2012 discretionary levels in the 2013 Budget. 2 The commitments noted here include disbursements of loan guarantee commitments by the government, not “conditional commitments” under Title XVII which are legally contingent on the satisfaction of various conditions precedent.
  • 109. DEPARTMENT OF HEALTH AND HUMAN SERVICESFunding Highlights:• Provides $76.4 billion, or $0.3 billion above the 2012 funding level. The Budget maintains investments in Administration priorities such as Affordable Care Act implementation and Head Start. Savings are achieved through difficult trade-offs, such as the consolidation of environmental health and substance abuse prevention grant programs.• Supports innovative medical research by maintaining funding for the National Institutes of Health at $31 billion while implementing new grant management policies to increase the number of new research grants awarded and continue to focus resources for first-time grantees.• Consolidates funding for disease-specific chronic diseases with common risk factors into a comprehensive program to improve public health outcomes for the leading chronic disease causes of death and disability and enhance efficiency.• Eliminates the Preventive Health and Health Service Block Grant because the activities it supports can be more effectively implemented through the Consolidated Chronic Disease Program and Prevention and Public Health Fund investments.• Supports implementation of the Affordable Care Act’s health insurance coverage improvements in 2014 by helping States establish Affordable Insurance Exchanges and developing the infrastructure to provide cost sharing and premium assistance to make coverage affordable.• Strengthens Medicare, Medicaid, and other health programs by implementing payment innovations and other reforms that encourage high-quality and efficient care, improve program integrity, and preserve the fundamental compact with seniors, individuals with disabilities, and low-income Americans these programs represent. These improvements will save approximately $364 billion over the next decade.• Accelerates research on the discovery and development of new therapeutic interventions through the National Center for Advancing Translational Sciences.• Improves access to health care services for American Indians and Alaska Natives. 107
  • 110. 108 DEPARTMENT OF HEALTH AND HUMAN SERVICES • Invests approximately $3.3 billion for discretionary HIV/AIDS prevention and treatment activities across the Department to expand access to affordable health care, prevention, and treatment services and align activities with the National HIV/AIDS Strategy. • Bolsters food and medical product safety activities by increasing the Food and Drug Administration’s total resources by $654 million above the 2012 level and supports a new effort to improve food and drug import safety. • Strengthens national preparedness for all threats to public health, including naturally occurring threats and deliberate attacks, through funding the advanced development of next generation medical countermeasures against chemical, biological, radiological, nuclear threats, and pandemic influenza. • Invests in high-quality early childhood programs, with increased funding in Child Care and Head Start to improve outcomes for America’s children and prepare them for the future. To make sure that every Head Start dollar is used to provide high quality services, the Budget also supports the implementation of new regulations to strengthen Head Start by requiring low-performing grantees to compete for continued funding. • Supports the President’s fatherhood agenda by modernizing the child support program to promote stronger family relationships and increase the payment of child support. • Adjusts the Low Income Home Energy Assistance Program to reflect rising winter costs, particularly in areas of the country that rely on heating oil. • Reforms foster care to improve outcomes for children including promoting their social and emotional well-being. The Department of Health and Human Servic- Improves Health Care Access andes (HHS) is the principal Federal agency charged Quality of Servicewith protecting the health of all Americansand providing essential human services. The Implements the Affordable Care Act. ThePresident’s Budget includes $76.4 billion to sup- Affordable Care Act (ACA) will ensure that everyport HHS’s mission. Within this level, the De- American can access high-quality, affordable cov-partment is carrying out significant responsibili- erage, providing health insurance to 34 millionties such as implementing the Affordable Care Americans who would otherwise be uninsured.Act and strengthening program integrity across The ACA does this by establishing State-based Af-major entitlement programs. The Budget also fordable Insurance Exchanges, competitive mar-invests in Head Start and health care services ketplaces that will provide millions of Americansfor American Indians and Alaska Natives. These and small businesses with “one-stop shopping”increases are offset by tough cuts to worthy pro- for affordable coverage beginning in 2014. It alsograms like the Community Services Block Grant provides premium assistance to make coverageas well as through new grants management poli- affordable for low-income Americans. Efficientlycies at the National Institutes of Health (NIH) and effectively implementing these coverage ex-and the consolidation of various public health pansions is one of the Administration’s highestfunding streams. priorities. The Budget provides resources in sup- port of these efforts, such as building capacity and
  • 111. THE BUDGET FOR FISCAL YEAR 2013 109creating infrastructure to establish exchanges, of primary care services in underserved com-including the Federally-facilitated Exchange, and munities. The ACA provides the Health Centerdevelops systems to help individuals enroll in the Program with $7.3 billion over the 2013–2015right health insurance coverage option. period. These resources complement the funding that the program receives annually through the Accelerates the Issuance of State Innova- discretionary appropriations process. To ensuretion Waivers. This proposal empowers States that health centers continue to provide criticalto develop their own innovation strategies to en- access and services to millions of Americans insure their residents have access to high quality, 2013 and for many years to come, the Budget pro-affordable health insurance, achieving the same motes a policy of steady and sustainable healthoutcomes as the ACA. Similar to legislation pre- center growth by distributing ACA resources overviously introduced in the Senate and endorsed by the long term, including in years after 2015. Thisthe President, it would make “State Innovation policy safeguards resources for existing healthWaivers” available starting in 2014, three years centers to continue services and avoids the fund-earlier than under current law. These State strat- ing shortfall that would otherwise occur whenegies would need to provide affordable insurance the ACA funding ends in 2015. In addition, thecoverage to at least as many residents as those Budget provides sufficient funding to open newwithout the waiver and must not increase the health centers in areas in the country where theyfederal deficit. The Administration is committed do not currently exist, through 2015 and beyond.to the budget neutrality of these waivers. In total, the Budget invests $3.1 billion for health center services in 2013 to support the creation of S t r e n g t h e n s t h e H e a l t h Wo r k f o r c e . more than 25 new health center sites across theStrengthening the primary care workforce is crit- country. In 2013, health centers are estimated toical to reforming America’s health care system. serve nearly 21 million patients.Increasing access to primary care health provid-ers can help prevent disease and illness, ensure Maintains Continuity of Coverage forall Americans have access to high-quality care, Low-income Individuals. The Budget con-and reduce costs by decreasing the need for more tinues to fund transitional medical assistance,invasive treatment that could have been pre- which provides continued Medicaid eligibility forvented through early care. To increase access, low-income adults transitioning to work. It alsothe Administration provides increased resources maintains funding for the qualified individualsfor primary care training programs and support program, which pays Medicare Part B premiumsfor health care providers who choose to train and for qualified low-income seniors.practice in medically underserved areas. In total,the Budget initiates investments that will help Supports Biomedical Research at NIH.train more than 2,800 additional primary care Biomedical research contributes to improvingproviders estimated to enter the workforce over the health of the American people as well as thethe next five years. economy. The Budget includes $31 billion for NIH to support research on-campus and at academic Continues Funding for Health Centers. and independent research institutions across theHealth centers are a key component of the country. Tomorrow’s advances in health care de-Nation’s health care safety net. These clinics of- pend on today’s investments in basic research onfer comprehensive, high quality, primary and the fundamental causes and mechanisms of dis-preventive health care services to all Americans ease, new technologies to accelerate discoveries,regardless of their ability to pay. Health centers advancing translational sciences, and encourag-will continue to be a critical element of the health ing new investigators and new ideas. In 2013, NIHsystem as the United States expands insurance will implement new grants management policiescoverage through the ACA, largely because they to increase the number of new research grantscan provide an accessible and dependable source
  • 112. 110 DEPARTMENT OF HEALTH AND HUMAN SERVICESawarded and continue to focus on resources for budget authority and $4.5 billion in total pro-new investigators. gram resources for the Food and Drug Adminis- tration (FDA). This includes $10 million in new Improves Access to Health Care for Amer- resources to improve food safety and medicalican Indians and Alaska Natives (AI/ANS). product imports to the United States through aThe Budget includes $5.5 billion for the Indian greater FDA presence in foreign countries suchHealth Service (IHS) to strengthen Federal, trib- as China. The Budget also includes new user feeal, and urban programs that serve two million programs to support implementation of key ele-AI/ANS at over 650 facilities in 35 States. The ments of the Food Safety Modernization Act, andBudget provides increased resources for contract to bring more safe, effective, and affordable ge-Health Services to purchase health care servic- neric drugs and generic biologics, also known ases provided outside of the Indian health system biosimilars, to the American public. To better pro-when services are not available at IHS-funded tect public health in response to natural or inten-facilities. In addition, the Budget funds construc- tional threats, the Administration also invests intion of new hospitals and health clinics and staff FDA’s efforts to advance regulatory science andand operating costs at new facilities to increase support the review of new medical countermea-access to health care services and improve the sures for chemical, radiological, biomedical, andIndian health system. nuclear threats. Expands Access to HIV/AIDS Treatment, Strengthens National Preparedness forCare, and Prevention. The Budget expands All Hazards, Including Naturally Occurringaccess to HIV/AIDS prevention and treatment Threats and Intentional Attacks. The Budgetactivities and supports the goals of the national includes $547 million to enhance the advancedHIV/AIDS Strategy to reduce HIV incidence; in- development of next generation medical counter-creases access to care and optimizing health out- measures against chemical, biological, radiologi-comes for people living with HIV; and reduces cal and nuclear threats. In addition, the BudgetHIV-related health disparities. The Budget in- includes $50 million to establish the Strategiccludes $2.4 billion, an increase of $75 million, for Investor, an independent venture capital entitythe Health Resources and Services Administra- in the Office of the Assistant Secretary for Pre-tion’s Ryan White program to expand access to paredness and Response, and continues fundingcare for persons living with HIV/AIDS who are for the NIH Concept Acceleration Program to as-otherwise unable to afford health care and re- sist investigators with developing promising newlated support services. The Budget also includes countermeasures, and the FDA’s Medical Coun-$1 billion for the AIDS Drug Assistance Program termeasures Regulatory Science Initiatives. The(ADAP), an increase of $67 million, to expand Department has invested $6.9 billion since 2005access to lifesaving HIV-related medications for to enhance America’s ability to rapidly responduninsured and underinsured individuals living to an influenza pandemic. In 2013, HHS plans towith HIV/AIDS and help distressed State ADAP use remaining pandemic influenza resources toprograms eliminate waiting lists. The Budget support the new U.S.-based advanced develop-includes an increase of $30 million for Centers ment and manufacturing facilities for vaccinesfor Disease Control and Prevention (CDC) HIV/ and other biologics.AIDS prevention activities. The Budget also al-lows CDC and States to transfer up to 10 percent Targets Funding for Mental Health andof total funding across HIV/AIDS, tuberculosis, Substance Abuse Prevention Efforts. Withinsexually transmitted diseases, and hepatitis pro- the Substance Abuse and Mental Health Servicesgrams to improve coordination and integration. Administration (SAMHSA), the Budget requests $460 million for prevention services targeting Strengthens the Safety of U.S. Food and early risk factors that can improve behavioralMedicines. The Budget includes $2.5 billion in health outcomes for children and young adults.
  • 113. THE BUDGET FOR FISCAL YEAR 2013 111The Budget proposes to merge SAMHSA preven- Supports Responsible Fatherhood. Thetion programs to enhance efficiency and improve Budget modernizes the child support program,efforts to prevent substance abuse and mental which touches the lives of more than half of poorhealth disorders. The Budget also includes $140 children as well as many middle-class families.million for behavioral health supportive ser- These policy changes, which will encourage fa-vices for homeless individuals and for families thers to take responsibility for their childrenwith mental and substance abuse disorders, to include: increasing financial support for Stateshelp them transition into permanent supportive that pass through child support payments tohousing. families rather than retaining them; ending the Federal expectation of reimbursement for pay- ments that are distributed to families receivingMakes Tough Choices While Continuing assistance through the Temporary Assistance forto Serve Vulnerable Populations Needy Families program; and encouraging States to provide access and visitation services that can Cuts and Reforms the Community improve a father’s relationship with his family.Services Block Grant (CSBG). CSBG providesfunding for the important work of community ac- Adjusts LIHEAP for Rising Winter Fueltion agencies, but the program’s current structure Costs. The President’s Budget provides $3 bil-does too little to hold these agencies accountable lion for the Low Income Home Energy Assistancefor outcomes. The Budget provides $350 mil- Program (LIHEAP) to help struggling familieslion and proposes to use competition to target make ends meet by offsetting some of their homethe funds to high-performing agencies that are heating and cooling costs. While the costs of fu-most successful in meeting important community els used by most LIHEAP households remain low,needs. the price of heating oil has been on the rise. In response, the Budget provides an additional $450 Continues Strong Support for High-Qual- million over the 2012 request, and targets fundsity Early Childhood Programs. Research has to States with vulnerable households facing highshown that effective early childhood programs home heating costs for winter 2012–2013.help children succeed in school and beyond. In-creasing Federal investments in high quality Reforms Foster Care to Improve Out-early education is a key part of a broader edu- comes for Abused and Neglected Children.cation agenda that will strengthen the Nation’s The Administration proposes $2.5 billion over 10competiveness and help every child reach his or years in new mandatory funding for incentiveher potential. The Budget includes over $8 bil- payments to States that demonstrate real, mean-lion for Head Start and Early Head Start to serve ingful improvements on measures of child out-approximately 962,000 children and families, comes, including child abuse and neglect, and ser-maintaining the historic expansion undertaken vice quality. These incentives would help Statesin 2009–2010. The Budget supports the imple- finance innovative services and encourage con-mentation of new regulations to strengthen Head tinuous improvement in the foster care system.Start by requiring low-performing grantees tocompete for continued funding for the first timein the program’s history. The Budget also in- Improves the Way Federal Dollars arecludes an additional $7 billion over the next 10 Spent and Strengthens Long-Termyears to support low-income children with child Viability of Current Programscare subsidies. Finally, the Budget supports criti-cal reforms to the Child Care Development Block Reduces Waste, Fraud, and Abuse in Medi-Grant and provides an additional $300 million care, Medicaid, and the Children’s Healthfor States to improve child care quality, and ulti- Insurance Program (CHIP). Significant prog-mately help children succeed in school. ress has been made in achieving the President’s
  • 114. 112 DEPARTMENT OF HEALTH AND HUMAN SERVICESgoal of reducing the Medicare fee-for-service im- payments to certain providers, to address pay-proper payment rate in half by 2012 and in im- ments that exceed patient care costs. It also re-plementing the ACA’s anti-fraud provisions. The duces Medicare’s payments to providers for ben-Budget builds on this progress through a robust eficiaries’ non-payment of their deductibles andset of proposals to strengthen Medicare, Medicaid, copayments. The Budget also aligns Medicareand CHIP program integrity. The Budget invests drug payment policies with Medicaid policies for$610 million in discretionary program integrity low-income beneficiaries. These, along with otherfunding to implement activities that reduce pay- Medicare proposals, would extend the solvency ofment error rates, prevent fraud and abuse, target the Hospital Insurance trust fund for an estimat-high risk services and supplies, and enhance civil ed two years.and criminal enforcement for Medicare, Medic-aid, and CHIP. For example, the Budget proposes Encourages Beneficiaries to Seek High-to authorize civil monetary penalties or other Value Services. The Budget includes struc-intermediate sanctions for providers who do not tural changes that will help encourage Medicareupdate enrollment records and permits exclusion beneficiaries to seek high-value health care ser-of individuals affiliated with entities sanctioned vices. To help improve the financial stability offor fraudulent or other prohibited actions from the Medicare program, the Budget reduces theFederal health care programs. The Budget also Federal subsidy of Medicare costs for those ben-affirms Medicaid’s position as a payer of last re- eficiaries who can most afford them, and alsosort when another entity is legally liable to pay introduces a modified Part B deductible for newclaims for beneficiaries. These new resources and beneficiaries beginning in 2017. To encourage ap-authorities will better enable the Administra- propriate use of home health services that are nottion to minimize improper payments and provide preceded by inpatient care, new beneficiaries be-greater value for program expenditures to benefi- ginning in 2017 would be responsible for a mod-ciaries and taxpayers. est copayment for home health services in certain cases. Research indicates that beneficiaries with Supports Permanent, Fiscally Responsi- Medigap plans that provide first dollar or near-ble Reform to Medicare’s Payments to Phy- first dollar coverage have less incentive to con-sicians. Medicare payments to physicians are sider the costs of health care services, thus rais-determined under a formula, commonly referred ing Medicare costs and Part B premiums for allto as the “sustainable growth rate” (SGR). This beneficiaries. The Budget applies a premium sur-formula has called for reductions in physician charge for new beneficiaries beginning in 2017 ifpayment rates since 2002, which the Congress they choose such Medigap coverage. In addition,has consistently overridden for nearly 10 years. it strengthens the Independent Payment Adviso-Under the SGR, physician payment rates would ry Board to reduce long-term drivers of Medicarebe reduced by nearly 28 percent later this year. cost growth.The Administration is committed to working withthe Congress to fix the SGR, providing predict- Establishes a More Flexible and Account-able Medicare physician payments that incentiv- able Medicaid Program. Medicaid is criticallyize quality and efficiency in a fiscally responsible important to providing health care to the poorestway. Failing to do so masks the long-run deficit. in our country, including children, seniors, and individuals with disabilities. The Administra- Improves Medicare’s and Medicaid’s Sus- tion opposes efforts to turn it into a block granttainability by Encouraging High-Quality, and slash its funding. Instead, the Budget seeksEfficient Care. The Budget contains several to make Medicaid more efficient by streamliningproposals that build on initiatives included in the financing and reimbursement policies. Specifi-ACA to help extend Medicare’s solvency while cally, the Budget proposes to reduce the Medic-encouraging provider efficiencies and improved aid provider tax threshold beginning in 2015 topatient care. Specifically, the Budget modifies promote integrity of Federal-State financing. The
  • 115. THE BUDGET FOR FISCAL YEAR 2013 113Administration also proposes a single blended alize our public health lab system and producematching rate for Medicaid and CHIP spending long-term cost savings by improving efficienciesto replace the current complicated patchwork of across labs. The Budget includes $39 million formatching formulas starting in 2017. In addition, CDC activities to reduce health care associatedthe Budget would implement more efficient reim- infections (HAIS) and expand reporting of HAISbursement rates for durable medical equipment in hospitals and nursing homes. The Budget alsobased on Medicare rates. Finally, the Budget includes a Comprehensive Chronic Disease Pre-better aligns Medicaid supplemental hospital vention Program that combines select chronicpayments by rebasing Disproportionate Share disease programs into one main program. ThisHospital allotments in 2021. These Medicaid will provide States with additional flexibility toproposals are projected to save approximately address the leading causes of chronic disease and$51 billion over 10 years. disability, while increasing accountability and improving health outcomes through performance Prioritizes Effective Prevention and Pub- incentives. CDC’s Consolidated Chronic Diseaselic Health Programs. The Budget promotes Program along with investments from the Pre-wellness and focuses on reducing the national vention Public Health Fund, will also supportburden of chronic disease by allocating $1.25 bil- some of the activities previously funded throughlion from the Prevention and Public Health Fund the Preventive Health and Health Services Block(Fund) for activities to help improve health out- Grant. The Budget includes an increase of $15comes and reduce health care costs, such as im- million to eradicate polio within India and reducemunizations, and activities to reduce health-care transmission of the wild polio virus in Pakistan,associated infections. The Fund was authorized Afghanistan and Nigeria by the end of 2013.and funded by the ACA. The Budget also pro-poses a new lab consolidation program to region- Department of Health and Human Services (In millions of dollars) Actual Estimate 2011 2012 2013 Spending Discretionary Budget Authority: Food and Drug Administration 1 ................................................................. 2,403 2,506 2,517 Program Level (non-add)����������������������������������������������������������������������� 3,636 3,832 4,486 Health Resources and Services Administration ......................................... 6,284 6,228 6,088 Indian Health Service ................................................................................. 4,069 4,307 4,422 Centers for Disease Control and Prevention .............................................. 5,726 5,732 5,068 National Institutes of Health ....................................................................... 30,470 30,702 30,702 Substance Abuse and Mental Health Services Administration .................. 3,380 3,347 3,152 Agency for Healthcare Research and Quality Program Level (non-add)����������������������������������������������������������������������� 392 405 409 Centers for Medicare and Medicaid Services (CMS) 2............................... 3,537 3,828 4,821 Discretionary Health Care Fraud and Abuse Control ................................. 310 311 311
  • 116. 114 DEPARTMENT OF HEALTH AND HUMAN SERVICES Department of Health and Human Services—Continued (In millions of dollars) Actual Estimate 2011 2012 2013 Administration on Children and Families (ACF) 3 ....................................... 17,210 16,489 16,194 Administration on Aging ............................................................................. 1,497 1,471 1,978 General Departmental Management ......................................................... 655 474 306 Office of Civil Rights................................................................................... 41 41 39 Office of the National Coordinator for Health Information Technology ....... 42 16 26 Program Level (non-add)����������������������������������������������������������������������� 61 61 66 Office of Medicare Hearing and Appeals ................................................... 70 72 84 Public Health and Social Services Emergency Fund ................................. 675 568 642 Office of Inspector General ........................................................................ 50 50 59 All other ...................................................................................................... 51 43 37 Subtotal, Discretionary budget authority 4 ........................................................ 76,472 76,186 76,446 Discretionary Changes in Mandatory Programs (non-add in 2012): 5 Children’s Health Insurance Program Reauthorization Act of 2009— Performance Bonuses ........................................................................... –6,368 –6,706 Consumer Operated and Oriented Plan (CO-OP) Program ...................... –400 — High Risk Pool ........................................................................................... 44 — ACF ........................................................................................................... — –13 Subtotal, Discretionary changes in mandatory programs ................................ –6,724 –6,719 Total, Discretionary budget authority ............................................................... 76,472 76,186 69,727 Discretionary Cap Adjustment:6 Program Integrity ....................................................................................... — 270 299 Rescission of Balances of Funds Provided by P.L. 111–32 ....................... –1,259 — — Total, Discretionary outlays 2 ............................................................................ 86,528 84,160 80,605 Mandatory Outlays: Medicare Baseline Outlays 7 ................................................................................. 480,202 479,338 528,556 Legislative proposal .............................................................................. 215 –4,807 Medicaid and Children’s Health Insurance Program (CHIP) Existing law ........................................................................................... 283,597 265,011 292,856 Legislative proposal .............................................................................. 155 190 All other 8.................................................................................................... Existing law ........................................................................................... 41,007 43,057 42,901 Legislative proposal .............................................................................. 1 639 Total, Mandatory outlays .................................................................................. 804,806 787,777 860,335
  • 117. THE BUDGET FOR FISCAL YEAR 2013 115 Department of Health and Human Services—Continued (In millions of dollars) Actual Estimate 2011 2012 2013 Total, Outlays ................................................................................................... 891,334 871,937 940,940 Credit activity Direct Loan Disbursements: CO-OP Financing....................................................................................... — 225 1,844 Total, Direct loan disbursements ...................................................................... 225 1,844 Guaranteed Loan Disbursements by Private Lenders: Health Center Guaranteed Loan Finance .................................................. 25 13 10 Total, Guaranteed loan disbursements by private lenders ............................... 25 13 10 1 FDA budget authority reported to Treasury for 2011 is $54 million lower than actual available budget authority due to the timing of FDA user fee collections. 2 The CMS budget authority and outlay total for 2011 includes approximately $129 million that is misclassified as discretionary rather than mandatory. 3 ACF’s BA as displayed here in 2013 is $13 million higher than the actual BA, reflecting the repurposing of $13 million in Abstinence Education Funds, displayed here as a discretionary change in a mandatory program (CHIMP). 4 Amounts, approximately $2 billion each year, appropriated to the Social Security Administration (SSA) from the Hospital Insurance and Supplementary Medical Insurance accounts are included in the corresponding table in the SSA chapter. 5 The 2012 amounts reflect OMB’s scoring of the 2012 Appropriations acts (P.L. 112–55 and 112–74) as transmitted to the Congress. These amounts are displayed as non-add entries because they have been rebased as mandatory and are not included in any 2012 discretionary levels in the 2013 Budget. 6 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget authority available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations. Amounts in 2011 are not so designated but are shown for comparability purposes. 7 Includes $280 million in 2011, $1,501 million in 2011, and $368 million in 2012 of CMS Program Management mandatory funding. SSA funding from the Medicare Improvements for Patients and Providers Act is included in the corresponding table of the SSA chapter. 8 Funding for the Centers for Medicare and Medicaid Innovation is included with all other mandatory outlays.
  • 118. DEPARTMENT OF HOMELAND SECURITYFunding Highlights:• Provides $39.5 billion, a decrease of 0.5 percent or $191 million, below the 2012 enacted level. The Budget continues strong investments in core homeland security functions such as the prevention of terrorist attacks, border security, aviation security, disaster preparedness, and cybersecurity. Savings are created through cuts in administrative costs and the elimination of duplicative programs. The Budget also supports disaster relief through a cap adjustment, consistent with the Budget Control Act.• Makes $853 million in cuts to administrative categories including travel, overtime, and fleet management, and eliminates duplicative and low-priority programs.• Maintains front-line homeland security operations, supporting 21,186 Customs and Border Protection officers and 21,370 Border Patrol agents to facilitate legitimate travel and the movement of goods while strengthening border security.• Supports the recovery of States and communities that have been devastated by disasters and emergencies with $6.1 billion for FEMA’s Disaster Relief Fund, which includes $5.5 billion in disaster relief cap adjustments pursuant to the designation established in the Budget Control Act.• Strengthens Government cybersecurity by providing $769 million to improve security of Federal civilian information technology networks while enhancing outreach to State and local governments and critical infrastructure sectors.• Promotes innovation and economic growth by providing $650 million to fund important research and development advances in cybersecurity, explosives detection, and chemical/ biological response systems.• Eliminates duplicative, stand-alone FEMA grant programs, consolidating them into a new National Preparedness Grant Program to better develop, sustain, and leverage core capabilities across the country while supporting national preparedness and response. 117
  • 119. 118 DEPARTMENT OF HOMELAND SECURITY • Aligns resources with risk in immigration detention by focusing on criminal aliens, repeat immigration law violators, recent border entrants, immigration fugitives, and other priorities, and expanding resources for electronic monitoring and intensive supervision. • Initiates acquisition of a new polar icebreaker and continues recapitalization of Coast Guard assets, including $658 million to construct the sixth National Security Cutter. The Department of Homeland Security’s Supports Border Security and Facilitates(DHS’s) mission is to ensure a homeland that is Trade and Travel. The Budget includes fundingsafe, secure, and resilient against terrorism and to support 21,186 Customs and Border Protectionother hazards. DHS does this by securing and officers, and 21,370 Border Patrol agents, andmanaging America’s borders, enforcing and ad- to continue deployment of border surveillanceministering immigration laws, safeguarding and technology along the Southwest border. Thesesecuring cyberspace, and ensuring resilience to resources will reduce wait times at our Nation’sdisasters. The President’s 2013 Budget includes ports of entry, increase seizures of unlawful$39.5 billion to support these missions, $191 items, and continue to strengthen the security ofmillion less than the 2012 enacted level. Tough our borders.choices were made to meet the discretionary tar-gets in place. Savings are realized through cuts to Invests in Cybersecurity. The Administra-administrative areas including travel, overtime, tion proposes $769 million to support the opera-fleet management, the elimination of duplicative tions of the National Cyber Security Division,and low-priority programs, and strategic sourcing which protects Federal computer systems andand acquisition reform initiatives. These savings sustains efforts under the Comprehensive Na-help enable increased funding for core homeland tional Cybersecurity Initiative to protect U.S.security functions such as cybersecurity, border information networks from the threat of cyber-protection, and aviation security. attacks or disruptions. The benefits of this invest- ment extend beyond the Federal sphere and will help strengthen State and local governments’ andProtects the Homeland the private sector’s capabilities to address cyber threats. Enhances Aviation Security with NewTechnology. The Budget includes $117 million Establishes an Effective Response to Di-in funding to support new explosives detection sasters. The Administration also supports di-systems in U.S. airports. The Administration also saster response and resilience efforts by fundingproposes $58 million to continue to modernize the Disaster Relief Fund (DRF) at $6.1 billion,and streamline transportation security vetting including disaster-related adjustments to theand credentialing for individuals who require ac- Budget Control Act’s discretionary caps. The DRFcess to America’s transportation infrastructure, is used by the Federal Emergency Managementwhich will reduce redundant Transportation Agency (FEMA), in the event of a presidentially-Security Administration processes and systems. declared disaster or emergency, to assist StateThe Budget provides resources to implement and local governments in response, recovery, andrisk-based screening initiatives and focuses on mitigation.enhanced targeting and information sharingefforts to interdict threats and dangerous people Sustains Essential Fire and Emergencyat the earliest point possible. Response Coverage. To retain an acceptable level of fire and emergency response coverage in
  • 120. THE BUDGET FOR FISCAL YEAR 2013 119the current constrained budgetary environment, prevent, protect against, respond to, and recoverthe Budget anticipates $1 billion in immediate from all hazards and homeland security threats.assistance for the retention, rehiring, and hir-ing of firefighters in 2012, as requested by the Invests in Upgrading the Coast GuardPresident in the American Jobs Act. In addition, Fleet. The Budget includes $658 million to con-departments will gain a preference for imple- struct the sixth Coast Guard National Securitymenting programs and policies that focus on the Cutter and $8 million for the Coast Guard to ini-recruitment of post–9/11 veterans for firefighter tiate acquisition of a new polar icebreaker. Thesepositions. new assets will replace aging vessels that are well past their service life and will provide stron- Improves Immigration Verification Pro- ger platforms for the execution of Coast Guardgrams. The President’s Budget proposes $132 missions.million for verification programs at U.S. Citizen-ship and Immigration Services and supports thenationwide deployment of E-Verify Self Check. E- Makes Tough ChoicesVerify Self Check is a free service that empowersindividuals to check their own employment eligi- Consolidates and Restructures Duplica-bility status and allows workers to protect them- tive FEMA Grant Programs While Accel-selves from potential workplace discrimination. erating Expenditure of Already-AwardedAdditionally, the Budget supports enhancements Grants. Americans rely on first responders toto the Systematic Alien Verification for Entitle- help them through crises, from natural disastersments (SAVE) program, which assists Federal, to terrorist attacks. Accordingly, the Budget pro-State, and local benefit-granting agencies in de- vides $2.9 billion for State and local programs totermining eligibility for benefits by verifying ap- equip, train, exercise, and hire first responders.plicants’ immigration status. E-Verify Self Check To better target these funds, the Budget proposesand the SAVE program both promote compliance eliminating duplicative, stand-alone grant pro-with immigration laws while preventing individ- grams, and consolidating them into the Nationaluals from obtaining benefits they are not eligible Preparedness Grant Program. This new initiativeto receive. is designed to build, sustain, and leverage core capabilities as established in the National Pre- Promotes Citizenship and Integration. paredness Goal. Using a competitive risk-basedThe Administration continues support for inte- model, the National Preparedness Grant Pro-grating new immigrants into our American fam- gram will use a comprehensive process for iden-ily, proposing $11 million to promote citizenship tifying and prioritizing deployable capabilities;through education and preparation programs, the limit periods of performance to put funding toreplication of promising practices in integration work quickly; and require grantees to regularlyfor use by communities across the country, and report progress in the acquisition and develop-the expansion of innovative English-language ment of these capabilities.learning tools. While the Budget’s proposed consolidated grant Funds Critical Scientific Research Efforts. structure will strengthen State and local capabili-Research and Development (R&D) programs are ties through smarter regional investments, accel-critical to improving homeland security through erating the expenditure of already-awarded grantstate-of-the-art solutions and technology. DHS funds will improve first responders’ capabilitiesrelies on R&D investments to discover, develop, and grow the economy now. The Administrationand demonstrate high-payoff and game chang- will implement a series of measures to put the $9ing technologies. The Administration proposes billion of grant funding currently in the pipeline$650 million to equip DHS and its State and local to work immediately. Similar to the successful ef-partners with tools to effectively and efficiently fort that accelerated the American Recovery and
  • 121. 120 DEPARTMENT OF HOMELAND SECURITYReinvestment Act spending, the Administration lars, the Budget includes flexibility to transferhas planned strong incentives to speed up spend- funding between jail detention and other formsing of State and local grant balances by providing of detention such as electronic monitoring and in-additional flexibility to grantees, waiving some tensive supervision, commensurate with the leveladministrative requirements, and proposing of risk a detainee presents. Consistent with itsregulatory reforms to further reduce the backlog stated enforcement priorities and recent policyof unspent grants. Simultaneously, the Admin- guidance, ICE will continue to focus resources onistration will set and enforce aggressive expira- those individuals who have criminal convictionstion dates for awarded grant funds, designating or fall under other priority categories. For lowunexpended balances as “use or lose” to ensure risk individuals, ICE will work to enhance thefirst responders receive the support they need as effectiveness of Alternatives to Detention, whichquickly as possible. costs significantly less than detention. Cuts Administrative Costs and Elimi-Improves the Way Federal Dollars are nates Duplicative Programs. In order to focusSpent limited resources on the highest priorities, the Budget cuts more than $853 million from admin- Aligns Resources with Risk in Immigra- istrative categories such as travel, overtime, andtion Detention. Under this Administration, U.S. fleet management. It also eliminates duplica-Immigration and Customs Enforcement (ICE) tive and low-priority programs. These reductionshas focused its immigration enforcement efforts result from the Secretary of Homeland Securi-on identifying and removing criminal aliens ty’s department-wide Efficiency Review and theand those who fall into other priority catego- government-wide Campaign to Cut Waste. Theseries, including repeat immigration law violators, cost savings allow DHS to prioritize mission op-recent border entrants, and immigration fugi- erations that safeguard the traveling public,tives. As ICE continues to focus on criminal and strengthen the border, and prioritize the removalother priority cases, it expects to reduce the time of criminal aliens to secure our communities.removable aliens spend in detention custody. Toensure the most cost effective use of Federal dol- Department of Homeland Security (In millions of dollars) Actual Estimate 2011 2012 2013 Spending Discretionary Budget Authority: Departmental Management and Operations .............................................. 1,169 1,135 1,135 Office of the Inspector General .................................................................. 130 141 144 Office of Health Affairs ............................................................................... 140 167 166 Citizenship and Immigration Services ........................................................ 131 101 143 United States Secret Service ..................................................................... 1,527 1,665 1,601 Immigration and Customs Enforcement ..................................................... 5,482 5,526 5,333 Customs and Border Protection ................................................................. 9,613 10,145 10,353
  • 122. THE BUDGET FOR FISCAL YEAR 2013 121 Department of Homeland Security—Continued (In millions of dollars) Actual Estimate 2011 2012 2013 Transportation Security Administration ...................................................... 5,384 5,425 5,106 Federal Law Enforcement Training Center ................................................. 270 271 258 National Protection and Programs Directorate .......................................... 1,165 1,214 1,217 United States Coast Guard ........................................................................ 8,622 8,656 8,319 Federal Emergency Management Agency ................................................. 7,155 4,246 4,528 Science and Technology ............................................................................ 767 668 831 Domestic Nuclear Detection Office ............................................................ 330 289 328 Subtotal, Discretionary budget authority .......................................................... 41,885 39,649 39,462 Discretionary Changes in Mandatory Programs (non-add in 2012):1 Citizenship and Immigration Services ........................................................ –4 –4 Total, Discretionary budget authority................................................................ 41,885 39,649 39,458 Discretionary Cap Adjustment:2 Disaster Relief........................................................................................... — 6,400 5,481 Overseas Contingency Operations ........................................................... 254 258 — Total, Discretionary outlays .............................................................................. 47,474 58,845 54,884 Mandatory Outlays: Citizenship and Immigration Services ........................................................ 2,386 2,928 3,059 Customs and Border Protection ................................................................. 1,017 1,659 1,634 United States Coast Guard ........................................................................ 1,838 1,465 1,694 Federal Emergency Management Agency ................................................. –1,296 1,398 36 All other ..................................................................................................... –5,653 –5,840 –5,950 Total, Mandatory outlays .................................................................................. –1,708 1,610 473 Total, Outlays ................................................................................................... 45,766 60,455 55,357 Credit activity Direct Loan Disbursements: Disaster Assistance ................................................................................... 18 12 18 Total, Direct loan disbursements ...................................................................... 18 12 18 1 The 2012 amounts reflect OMB’s scoring of the 2012 Appropriations acts (P.L. 112–55 and 112–74) as transmitted to the Congress. These amounts are displayed as non-add entries because they have been rebased as mandatory and are not included in any 2012 discretionary levels in the 2013 Budget. 2 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget authority available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations. Amounts in 2011 are not so designated but are shown for comparability purposes.
  • 123. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENTFunding Highlights:• Provides $44.8 billion, an increase of 3.2 percent, or $1.4 billion, above the 2012 program funding level. Increases are made to protect vulnerable families, revitalize distressed neighborhoods, and advance investments in sustainable development. Savings are created through measured reforms to the Department’s rental assistance programs without reducing the number of families served.• Invests $2.3 billion to continue progress toward the Administration’s goal to end chronic homelessness and homelessness among veterans and families, implementing an innovative, multi-agency strategic plan.• Increases support for housing counseling services, including assistance for families in danger of foreclosure, and continues to offer loss mitigation solutions for FHA-insured borrowers similarly at risk.• Revitalizes affordable rental housing and surrounding neighborhoods by providing $150 million to continue the Department’s transformative investments in high-poverty neighborhoods where distressed HUD-assisted public and privately owned housing is located.• Restores the 2011 funding level of $100 million for the Sustainable Communities Initiative to create incentives for more communities to develop comprehensive housing and transportation plans that result in sustainable development, increased transit-accessible housing, lower energy costs for consumers, and reduced air pollution that impacts public health and the climate.• Preserves funding for the Community Development Block Grant and HOME Investment Partnerships programs at 2012 levels to enable State and local governments to continue to address infrastructure, affordable housing, and economic development needs in their communities.• Provides $34.8 billion to preserve rental housing assistance to 4.7 million low-income families, $154 million to expand the supply of affordable housing to seniors and persons with disabilities, and $650 million to address the housing needs of Native American Tribes. The Budget also provides $1 billion to capitalize the Housing Trust Fund to expand the supply of housing targeted to very-low income families. 123
  • 124. 124 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT • Reduces Project-Based Rental Assistance by $640 million below 2012 without affecting families served and increases minimum rents across-the-board to $75 per month for all HUD- assisted households, a rate comparable to the minimum rent enacted in 1998 when adjusted for inflation. • Increases employment opportunities for over 30,000 Public Housing residents by providing up to $50 million to pilot an expansion of the successful Jobs-Plus demonstration, and expands local flexibility to use HUD funding to connect residents to supportive services. • Simplifies and improves the Public Housing program by converting it to a single subsidy stream, and proposes changes to the Housing Opportunities for Persons with AIDS program to target funds to areas with the highest needs. The Department of Housing and Urban FHA financing was used for 37 percent of homeDevelopment (HUD) supports home ownership, purchase loans in 2010, with 60 percent ofaccess to affordable housing free from African American and 59 percent of Hispanicdiscrimination, and community development. borrowers who purchased homes using FHA. ItAffordable housing and a healthy mortgage also is an important financing source for first-market are especially critical to America’s time homeowners, 56 percent of whom usedcontinued recovery and long-term economic FHA insured financing in 2009 and 2010. FHAhealth and are a central part of the American also provides vital assistance to homeownersdream to which middle-class families aspire. The facing foreclosure. FHA’s loss mitigation programPresident’s 2013 Budget provides $44.8 billion minimizes the risk of financially strugglingfor HUD programs to support these efforts, an borrowers going into foreclosure, and since theincrease of $1.4 billion over 2012. The constrained start of the mortgage crisis, it has helped more thanfiscal environment forced difficult choices, a million homeowners stay in their homes. Theincluding a reduction of $640 million in Project- Budget includes the recently enacted increasesBased Rental Assistance, which will not affect in FHA premium levels. These will boost FHA’sfamilies served by the program, and an increase capital reserves—to better protect taxpayersin the minimum rent charged to HUD-assisted against the risk of credit losses by the program—households. Consistent with Administration and increase Federal revenues. The Budget alsopriorities, funding increases were provided includes $141 million for housing and homeownerto protect the homeless and other vulnerable counseling through HUD and the Neighborhoodfamilies, revitalize distressed neighborhoods, and Reinvestment Corporation (NeighborWorks).support sustainable community development. Over half of these funds are dedicated to foreclosure assistance. NeighborWorks’ National Foreclosure Mitigation Counseling program hasSupports the Housing Sector and assisted over one million households since itsDelivers on Administration Priorities inception in 2008. Supports the Mortgage Market and Helps Funds the Federal Strategic Plan to EndBorrowers Who are at Risk of Foreclosure. Homelessness. The President’s Budget contin-The Administration projects that the Federal ues the Administration’s commitment to the goalsHousing Administration (FHA) will insure $149 laid out in the Federal Strategic Plan to Preventbillion in mortgage loans in 2013, supporting and End Homelessness. The Budget requestsnew home purchases and re-financed mortgages $2.2 billion for Homeless Assistance Grants tothat significantly reduce borrower payments. maintain existing units and expand prevention,
  • 125. THE BUDGET FOR FISCAL YEAR 2013 125rapid re-housing, and permanent supportive ly integrate goals for mobility, regional housinghousing. The Budget also provides $75 million in choices and economic development. In addition,new housing vouchers set aside for homeless vet- $46 million will be invested in neighborhoodserans that are paired with health care and other and communities to update building codes, zon-services from the Department of Veterans Affairs. ing, and local planning efforts as complementaryThese investments will make further progress to- strategies to the regional grants.ward the goals laid out in the Federal StrategicPlan. Preserves HUD’s Major Block Grant Pro- grams for Community Development and Rehabilitates and Transforms HUD-As- Housing. The Budget provides $3 billion for thesisted Housing and Distressed Neighbor- Community Development Block Grant (CDBG)hoods. The Budget provides $150 million for formula program and $1 billion for the HOMEthe Choice Neighborhoods Initiative to continue Investment Partnerships program, both equal totransformative investments in high-poverty 2012 funding. These funding levels for CDBG andneighborhoods where distressed HUD-assisted HOME reflect the Administration’s commitmentpublic and privately-owned housing is located. in a constrained Federal budget to supporting mu-The Budget will reach four to six neighborhoods nicipalities and States as they navigate throughwith implementation grants that primarily fund their challenging fiscal climate. CDBG fundingthe preservation, rehabilitation and transforma- will allow over 1,200 State and local governmentstion of HUD-assisted public and privately-owned to invest in needed public infrastructure im-multifamily housing, and will also engage local provements, rehabilitate affordable housing, andgovernments, nonprofits, and for-profit devel- create and retain jobs. The Budget request foropers in partnerships to improve the economic HOME will provide funding to about 645 Stateconditions in their surrounding communities. and local governments to increase the supply ofThis initiative is a central element of the Admin- affordable housing for low-income families.istration’s inter-agency, place-based strategy tosupport local communities in developing the toolsthey need to revitalize neighborhoods of concen- Makes Tough Choicestrated poverty into neighborhoods of opportunity. Reforms Rental Assistance Programs Restores Funding for Sustainable Com- While Maintaining the Number of Familiesmunities and Innovative Infrastructure Served. The Budget includes a menu of reformsPlanning. The Budget supports the multi- to HUD rental assistance programs that saveagency Partnership for Sustainable Communi- over $500 million in 2013 without reducing theties, an Administration initiative that integrates number of families served. In the Project-Basedresources and expertise from HUD, the Depart- Rental Assistance program, savings are achievedment of Transportation, and the Environmen- by improving oversight of market rent stud-tal Protection Agency. In particular, the Budget ies used to set subsidy payment levels, cappingrestores $100 million for the Sustainable Com- annual subsidy increases for certain properties,munities Initiative, which creates incentives for and using excess reserves to offset HUD pay-communities to develop comprehensive housing ments to landlords. The Budget also aligns policyand transportation plans to achieve sustainable across rental assistance programs and reducesdevelopment, reduce energy consumption and costs by increasing the minimum rent to $75 pergreenhouse gas emissions, and increase afford- month for all HUD-assisted households, whichable housing near public transit. This includes is comparable to the minimum rent enacted in$46 million to fund about 20 additional regional 1998, adjusted for inflation. Recognizing the po-planning grants to help enable communities to tential burden that this higher minimum rentalign public and private investments in housing, may impose, the Budget maintains the currenttransportation, and infrastructure to strategical- exemption for families facing financial hardship.
  • 126. 126 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENTIn addition, the Budget reduces costs by simpli- the successful Jobs-Plus demonstration to overfying administration of the medical expense de- 30,000 Public Housing residents.duction, better targeting rental assistance to theworking poor, and setting Public Housing flat Provides Flexibility for PHAs to Improverents closer to market levels. Supportive Services for Assisted House- holds. The Budget proposes streamlining and Reduces Upfront Funding for Some flexibility measures to help PHAs improve sup-Project-Based Rental Assistance (PBRA) portive services for assisted families. The FamilyContracts. The Budget provides $8.7 billion for Self-Sufficiency (FSS) program will be consolidat-PBRA, which is $640 million below 2012. The ed and aligned to enable PHAs to more uniformlyPBRA program provides critically-needed afford- serve both Housing Choice Voucher and Publicable housing to 1.2 million low-income households Housing residents. This program, which the Bud-through contracts between HUD and private get also expands to residents of PBRA housing,landlords. These savings in 2013 are generated aims to connect residents to resources and ser-by providing less than 12 months of funding up- vices to find and retain jobs that lead to economicfront on some PBRA contracts that straddle fis- independence and self-sufficiency. In addition,cal years. This change will not reduce or delay the Budget authorizes PHAs to use a portion ofpayments to landlords nor impact the number of their Public Housing and Housing Voucher fund-families served by the program. ing to augment case management and supportive services provided through FSS or provide other supportive services to increase opportunities forImproves the Way Federal Dollars are residents.Spent Modernizes the Housing Opportunities Consolidates the Public Housing Operat- for Persons with AIDS (HOPWA) Program.ing and Capital Funds. The Budget proposes to The Budget proposes to update the HOPWA pro-combine the separate Operating Fund and Capi- gram to better reflect the current understandingtal Fund programs into a single Public Housing of HIV/AIDS and ensure that funds are directedsubsidy stream. The current structure presents in a more equitable and effective manner. Thisrestrictions that are difficult to implement and modernization includes a new formula that willregulate, and underscores the isolation of Pub- distribute HOPWA funds based on the currentlic Housing properties from mainstream real es- population of HIV-positive individuals, fair mar-tate financing and management practices. This ket rents, and poverty rates in order to targetproposed merger will simplify the program and funds to areas with the most need. It also makesreduce the administrative burden on State and the program more flexible, giving local commu-local public housing authorities (PHAs) that own nities more options to provide targeted, timely,and manage these properties. As a first step to- and cost-effective interventions. The Budget’sward consolidation, the Budget provides all PHAs $330 million investment in HOPWA, in combina-with full flexibility to use their operating and tion with the proposed modernization, will assistcapital funds for any eligible capital or operating local communities in keeping individuals withexpense. The Budget requests a total of $6.6 bil- HIV/AIDS housed, making it easier for them tolion for Public Housing, a critical investment that stay in therapy, and therefore improving healthwill help 1.1 million extremely low- to low-income outcomes for this vulnerable population.households to obtain or retain decent, safe andsanitary housing. In addition, the Budget pro-vides up to $50 million to pilot the expansion of
  • 127. THE BUDGET FOR FISCAL YEAR 2013 127Provides Housing Opportunities and Housing for Persons with Disabilities pro- grams, which includes $154 million to support Preserves Affordable Rental Opportuni- 5,300 additional supportive housing units. Doingties. The President’s Budget requests $19 billion more with less, the Budget proposes reforms tofor the Housing Choice Voucher program to help the Housing for the Elderly program to targetmore than two million extremely low- to low-in- resources to help those most in need, reduce thecome families afford decent housing in neighbor- up-front cost of new awards, and better connecthoods of their choice. The Budget funds all exist- residents with the supportive services they needing mainstream vouchers and provides 10,000 to age in place and live independently.new vouchers targeted to homeless veterans. TheAdministration remains committed to working Addresses the Housing Needs of Nativewith the Congress to improve the management American Tribes. The Budget provides $650and budgeting for the Housing Choice Voucher million for the Native American Housing Blockprogram, including reducing inefficiencies, and Grant program, which will provide much-neededre-allocating PHA reserves to high performers. In funds to over 550 Tribes to help mitigate severeaddition, the Budget provides $1 billion in manda- housing needs and overcrowding on reservations.tory funding in 2013 for the Housing Trust Fund This program is the primary source for housing onto finance the development, rehabilitation, and tribal lands and provides funding for vital hous-preservation of affordable housing for extremely- ing activities such as construction, rehabilitation,low income families. and operations. In addition, the Budget provides $60 million in Indian Community Development Expands the Supply of Supportive Block Grant funding that Tribes use to improveHousing for Seniors and Persons with their housing stock, create community facilities,Disabilities. The Budget provides a total of make infrastructure improvements, and expand$625 million for the Housing for the Elderly job opportunities. Department of Housing and Urban Development (In millions of dollars) Actual Estimate 2011 2012 2013 Spending Discretionary Budget Authority: Community Development Fund................................................................. 3,501 3,308 3,143 Sustainable Housing and Communities (non-add) ������������������������������� 100 — 100 HOME Investment Partnerships Program ................................................. 1,607 1,000 1,000 Homeless Assistance Grants .................................................................... 1,901 1,901 2,231 Housing Opportunities for Persons with AIDS .......................................... 334 332 330 Tenant-based Rental Assistance .............................................................. 18,371 18,264 19,074 Project-based Rental Assistance .............................................................. 9,257 9,340 8,700 Public Housing Operating Fund ................................................................ 4,617 3,962 4,524 Public Housing Capital Fund..................................................................... 2,040 1,875 2,070
  • 128. 128 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Department of Housing and Urban Development—Continued (In millions of dollars) Actual Estimate 2011 2012 2013 Jobs-Plus Pilot (non-add) ��������������������������������������������������������������������� — — 50 Choice Neighborhoods ............................................................................. 65 120 150 Native American Housing Block Grant ...................................................... 649 650 650 Housing for the Elderly.............................................................................. 399 375 475 Housing for Persons with Disabilities ........................................................ 150 165 150 Housing Counseling .................................................................................. — 45 55 Federal Housing Administration (FHA) ..................................................... 207 207 215 Fair Housing .............................................................................................. 72 71 68 Lead Hazard Reduction ............................................................................ 120 120 120 Policy Development and Research ........................................................... 48 46 52 Salaries and Expenses ............................................................................. 1,326 1,351 1,370 Office of the Inspector General ................................................................. 125 124 126 All other ..................................................................................................... 468 133 256 Subtotal, Discretionary budget authority .......................................................... 45,257 43,389 44,759 Receipts and Other Program Level Adjustments: Federal Housing Administration (FHA) ..................................................... –7,231 –4,333 –8,776 Government National Mortgage Association (GNMA) .............................. –841 –653 –636 Other Adjustments .................................................................................... –41 –232 — Total, Discretionary budget authority................................................................ 37,144 38,171 35,347 Discretionary Cap Adjustment:1 Disaster Relief.............................................................................................. — 100 — Total, Discretionary outlays .............................................................................. 46,602 47,890 41,091 Mandatory Outlays: FHA ........................................................................................................... 8,818 7,797 –40 GNMA ....................................................................................................... 726 164 197 Neighborhood Stabilization Program ........................................................ 1,123 1,013 898 Project Rebuild.......................................................................................... — 50 4,650 Housing Trust Fund ................................................................................... — — 10 All other programs..................................................................................... –267 –126 –523 Total, Mandatory outlays .................................................................................. 10,400 8,898 5,192 Total, Outlays ................................................................................................... 57,002 56,788 46,283
  • 129. THE BUDGET FOR FISCAL YEAR 2013 129 Department of Housing and Urban Development—Continued (In millions of dollars) Actual Estimate 2011 2012 2013 Credit activity Direct Loan Disbursements: Emergency Homeowners’ Relief ............................................................... — 210 — FHA ........................................................................................................... — 50 50 GNMA ....................................................................................................... — 9 9 Green Retrofit Program for Multifamily Housing ....................................... 27 — — Total, Direct loan disbursements ...................................................................... 27 269 59 Guaranteed Loan Disbursements by Private Lenders: FHA ........................................................................................................... 245,956 251,244 237,942 GNMA ....................................................................................................... 350,398 291,000 239,000 All other ..................................................................................................... 793 616 1,158 Total, Guaranteed loan disbursements by private lenders ............................... 597,147 542,860 478,100 1 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget author- ity available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations.
  • 130. DEPARTMENT OF THE INTERIORFunding Highlights:• Provides $11.4 billion in discretionary funding, an increase of about one percent above the 2012 enacted level. This reflects an ongoing commitment to critical landscapes and infrastruc- ture, as well as savings achieved through administrative efficiencies and reductions in con- struction funding to focus on projects necessary for health and safety.• Invests in the safety, reliability, and efficiency of America’s water infrastructure and in the protection and restoration of fragile aquatic ecosystems.• Conserves landscapes and promotes outdoor recreation in national parks, refuges, and on other public lands through the America’s Great Outdoors initiative.• Invests $386 million to strengthen oversight of offshore oil and gas operations so that energy development can proceed in a safe and sustainable manner.• Supports tribal priorities in Indian Country by increasing funding for public safety and justice, natural resources, and compensation to Tribes that assume responsibility for managing Federal programs.• Reforms mining oversight and reduces the environmental impacts of coal and hardrock mining by dedicating and prioritizing funds to reclaim abandoned mines and by evaluating integration of activities between bureaus.• Continues the Administration’s commitment to land conservation by providing $450 million for the Land and Water Conservation Fund.• Improves the return to taxpayers from mineral production on Federal lands and waters through royalty reforms and industry fees.• Saves over $200 million from 2010 levels through administrative efficiencies and reduced spending in travel, printing, supplies, and advisory services. 131
  • 131. 132 DEPARTMENT OF THE INTERIOR • Reduces construction funding by $49.4 million, or 16 percent. • Continues efforts to restore significant ecosystems such as the California Bay-Delta, the Everglades, the Great Lakes, Chesapeake Bay, and the Gulf Coast, helping to promote their ecological sustainability and resilience. The Department of the Interior’s (DOI’s) mis- new projects and construction of ongoing projectssion is to protect and manage America’s natural have been severely curtailed; the Budget propos-resources and cultural heritage; provide scientific es to merge the Central Utah Project Completionand other information about those resources; and Act Office (CUPCA) with the Bureau of Reclama-honor its trust responsibilities and special com- tion; and water reuse, recycling and conservationmitments to American Indians, Alaska Natives, programs are emphasized over new construction.and Insular areas. In support of this mission, thePresident’s 2013 Budget provides $11.4 billion Makes Public Lands Available for Privatefor DOI, about a one percent increase over the Investments for the Development of Clean2012 enacted level. This is close to the average Energy. To enhance energy security and createfor the past five years, and in light of the tight green jobs in new industries, the Administrationdiscretionary budget caps, a sign of the Adminis- proposes key funding increases for renewable en-tration’s commitment to these priorities. To free ergy development and Federal natural resourceup resources, the Budget also includes legislative stewardship. The Budget includes $86 millionproposals that would save a net total of approxi- to maintain capacity to review and permit newmately $2 billion over 10 years, including reforms renewable energy projects on Federal lands andto fees, royalties, and other payments related to waters, with the goal of permitting 11,000 mega-oil, gas, coal, and other mineral development on watts of new solar, wind, and geothermal electric-Federal lands and waters. ity generation capacity on DOI-managed lands by the end of 2013.Promotes Economic Growth by Investing Funds Development of the Nation’s Off-in Our Natural Heritage and Energy shore Oil and Gas Resources. The Adminis-Resources tration proposes $164 million and $222 million, respectively, to fund the new Bureau of Ocean Protects and Restores Water Resources Energy Management (BOEM) and Bureau ofand Infrastructure. The Budget invests in the Safety and Environmental Enforcement (BSEE).safety, reliability, and efficiency of our water in- Together, BOEM and BSEE will work to aggres-frastructure, to ensure the continued delivery sively—but responsibly—conduct the remainingof water and power to millions of customers and Gulf of Mexico lease sale pursuant to the 2007-serve as a foundation for a healthy economy, es- 2012 Outer Continental Shelf Five-Year Oil andpecially in the arid West. The Budget continues Gas Leasing Program. In addition, the Bureausinvestments in the protection and restoration of will work to finalize and begin implementation offragile aquatic ecosystems, such as California’s the Administration’s proposed 2012-2017 leasingBay-Delta, to ensure that such environmental program, which would make more than 75 percenttreasures are available for future generations. of undiscovered technically recoverable oil andThese investments are made possible by making gas resources estimated on the Outer Continentaldifficult choices elsewhere, finding savings and Shelf (OCS) available for development.consolidations, and reaping the benefits of smartchoices made in previous years. Both study of
  • 132. THE BUDGET FOR FISCAL YEAR 2013 133 Conserves Landscapes, Creates Jobs, and Strengthens Tribal Nations. The Admin-Promotes Outdoor Recreation. The America’s istration supports the principle of tribal self-de-Great Outdoors (AGO) initiative supports Fed- termination and improved outcomes with a $9eral, State, local, and tribal conservation efforts million increase to compensate Tribes when theywhile reconnecting Americans, particularly young manage Federal programs themselves underpeople, to the outdoors. Investments for AGO pro- self-determination contracts and self-governancegrams support conservation and outdoor recre- compacts. Administration efforts to combat crimeation activities nationwide that create millions of in Indian Country through cooperation amongjobs, generate hundreds of millions of dollars in Federal, State and tribal entities are makingtax revenue, and spur billions in total national progress, as demonstrated by a pilot program toeconomic activity. These programs include oper- reduce violent crime on selected reservations. Theating national parks, refuges, and public lands, Budget builds on this progress with increasedwhich are critical for conserving natural and cul- funds for operating tribal courts, staffing new de-tural resources; protecting wildlife; and drawing tention centers, and coordinating community po-recreational tourists from across the country and licing programs to reduce crime. The Budget alsothe world. They also include grant programs that includes increases to meet the needs due to grow-assist States, Tribes, local governments, land- ing enrollment in tribal colleges and to protectowners, and private groups (such as sportsmen) natural resources in Indian Country.in preserving wildlife habitat, wetlands, historicbattlefields, regional parks, and the countless oth-er sites that form the mosaic of our cultural and Improves Oversight and the Use ofnatural legacy. The Budget provides $450 mil- Federal Dollarslion for the Land and Water Conservation Fund(LWCF), programs in the Departments of the In- Reorganizes and Reforms the Managementterior and Agriculture. Of this amount, $270 mil- and Oversight of Offshore Drilling. Inlion is proposed to conserve lands within national the wake of the Deepwater Horizon disasterparks public lands, refuges, and forests, including and subsequent oil spill, the Administration$109 million in collaborative funds for Interior has initiated comprehensive reforms to theand the U.S. Forest Service to jointly and stra- management of offshore oil and gas drilling ontegically conserve the most critical landscapes. the OCS. In addition to establishing greaterIn addition, reauthorization of the Federal Land independence for safety regulators through theTransaction Facilitation Act would allow DOI to creation of a separate Bureau of Safety anduse proceeds from the sale of low-conservation Environmental Enforcement, the Administrationvalue lands to acquire additional high-priority is aggressively implementing managementconservation lands. reforms to strengthen oversight of OCS oil and gas operations. These investments are consistent Protects Communities and Ecosystems with recommendations for stronger oversightfrom Wildfire Damage. The Budget continues made by the National Commission on the BPthe long-standing practice of fully funding the Deepwater Horizon Oil Spill and Offshore10-year average cost of wildland fire suppression Drilling in its January 2011 report. The Budgetoperations. The Budget also continues the prac- includes $386 million, a $28 million increase overtice of targeting hazardous fuels reduction fund- the 2012 enacted level, to complete reforms to theing for activities near communities (known as the two bureaus that now oversee offshore oil and gas“wildland-urban interface”) where they are most development. This includes funding to hire new oileffective. Priority is given to projects in commu- and gas inspectors, engineers, scientists, and othernities that have met “Firewise” standards (or the staff to oversee industry operations; establishequivalent), identified acres to be treated, and in- real-time monitoring of key drilling activities;vested in local solutions to protect against wild- conduct detailed engineering reviews of offshoreland fire. drilling and production safety systems; improve
  • 133. 134 DEPARTMENT OF THE INTERIORoil spill research and development activities; and Provides a Better Return to Taxpayersimplement more aggressive reviews of company from Mineral Development. The publicoil spill response plans. These reforms will also received above $10 billion in 2011 from fees,facilitate the timely review of offshore oil and gas royalties, and other payments related to oil, gas,permits. coal, and other mineral development on Federal lands and waters. A number of recent studies by Reforms Mining Operations and Reduces the Government Accountability Office and DOI’sthe Environmental Impacts of Mining. The Inspector General have found that taxpayersBudget addresses the environmental impacts of could earn a better return through more rigorouspast mining by dedicating and prioritizing funds oversight and policy changes, such as chargingto clean up abandoned mines. Currently, DOI appropriate fees and reforming how royalties arecharges the coal industry an abandoned mine set. The Budget proposes a number of actions tolands (AML) fee and allocates receipts to States ensure that taxpayers receive a fair return frombased on production, rather than on the most the development of U.S. mineral resources:pressing needs for cleaning up abandoned mines. • Charging a royalty on select hardrockThe Administration proposes to target these coal minerals (such as silver, gold and copper);AML fee receipts at the most hazardous sitesthrough a new competitive allocation process with • Terminating unwarranted payments to coal-State participation. It also proposes to establish a producing States and Tribes that no longernew AML fee on hardrock mining, with receipts need funds to clean up abandoned coal mines;allocated through a competitive process to • Extending net receipts sharing, where Statesreclaim abandoned hardrock mines, so that the receiving mineral revenue payments helphardrock mining industry is held responsible in defray the costs of managing the mineralthe same manner as the coal mining industry. leases that generate the revenue;The Administration is also evaluating a betteralignment of mining oversight and cleanup • Charging user fees to oil companies foroperations by integrating certain functions of processing oil and gas drilling permits andthe Office of Surface Mining and Bureau of Land inspecting operations on Federal lands andManagement. A new organizational structure waters;would allow the two bureaus to gain efficiencies • Establishing fees for new non-producing oilthrough shared administrative costs, while and gas leases (both onshore and offshore) tobuilding on their respective strengths. encourage more timely production; and • Making administrative changes to Federal oil and gas royalties, such as adjusting royalty rates and terminating the royalty- in-kind program.
  • 134. THE BUDGET FOR FISCAL YEAR 2013 135 Department of the Interior (In millions of dollars) Estimate Actual 2011 2012 2013 Spending Discretionary Budget Authority: Bureau of Land Management (BLM).......................................................... 1,100 1,098 1,146 Bureau of Ocean Energy Management ..................................................... 161 161 164 Bureau of Safety and Environmental Enforcement (BSEE) ....................... 145 197 222 Office of Surface Mining ............................................................................. 162 150 141 Bureau of Reclamation/CUPCA ................................................................. 1,045 1,024 994 U.S. Geological Survey .............................................................................. 1,084 1,068 1,102 Fish and Wildlife Service ............................................................................ 1,505 1,476 1,548 National Park Service ................................................................................ 2,641 2,610 2,609 Bureau of Indian Affairs ............................................................................. 2,594 2,531 2,527 Office of the Special Trustee ...................................................................... 161 152 146 Wildland Fire .............................................................................................. 779 575 818 All other ...................................................................................................... 472 500 502 Subtotal, Discretionary budget authority .......................................................... 11,849 11,542 11,919 Discretionary Changes in Mandatory Programs (non-add in 2012):1 LWCF Contract Authority ........................................................................... –30 –30 Coastal Impact Assistance Program Balances ......................................... — –200 Net Receipts Sharing ................................................................................. –42 –40 Palau Compact Extension .......................................................................... 14 — Subtotal, Discretionary changes in mandatory programs ................................ –58 –270 Receipts and Collections: Offsetting OCS Collections (rents/cost recovery) ...................................... –155 –160 –162 OCS Inspection Fees (BSEE) .................................................................... –10 –62 –65 Onshore Oil and Gas Inspection Fees (BLM) ............................................ — — –48 Total, Discretionary budget authority................................................................ 11,684 11,320 11,374 Total, Discretionary outlays .............................................................................. 13,121 12,416 12,258 Mandatory Outlays: Existing law ................................................................................................ 558 –1,101 938 Legislative proposals ................................................................................ 29 254 Total, Mandatory outlays .................................................................................. 558 –1,072 1,192 Total, Outlays ................................................................................................... 13,679 11,344 13,450
  • 135. 136 DEPARTMENT OF THE INTERIOR Department of the Interior—Continued (In millions of dollars) Estimate Actual 2011 2012 2013 Credit activity Guaranteed Loan Disbursements by Private Lenders: Indian Guaranteed Loan Program ............................................................. 84 73 73 Total, Guaranteed loan disbursements by private lenders ............................... 84 73 73 1 The 2012 amounts reflect OMB’s scoring of the 2012 Appropriations acts (P.L. 112–55 and 112–74) as transmitted to the Congress. These amounts are displayed as non-add entries because they have been rebased as mandatory and are not included in any 2012 discretionary levels in the 2013 Budget.
  • 136. DEPARTMENT OF JUSTICEFunding Highlights:• Provides $27.1 billion in discretionary funding, a decrease of 0.4 percent below the 2012 level. Savings are achieved by prioritizing uniquely Federal responsibilities and streamlining programs and operations. Core Federal programs including law enforcement, litigation, and prisons and detention, however, are funded at 1.2 percent above 2012 levels.• Invests more than $700 million to investigate and prosecute financial crimes, an increase of $55 million over 2012. The Budget provides funding for additional FBI agents, criminal prosecutors, civil litigators, in-house investigators, and forensic accountants to improve the Department’s capacity to investigate and prosecute the full spectrum of financial fraud.• Supports the Department’s national security mission by fully funding the National Security Division and providing for FBI programs critical to mitigating and countering terrorism threats.• Finances efforts to combat transnational criminal organizations and maintain the security of the Southwest border with new investments in intelligence capabilities and nearly $2 billion in Southwest border enforcement spending.• Increases funding for the investigation and deterrence of intellectual property crime by $5 million for additional attorneys and FBI agents, bringing total spending to nearly $40 million annually.• Maintains safe and secure capacity in Federal prisons and detention facilities and continues activation of completed but not yet occupied prisons to address population growth.• Prioritizes uniquely Federal responsibilities, streamlines programs, and redirects funding to improve the capabilities of the Department of Justice law enforcement agencies.• Consistent with Administration-wide efforts to help States maximize effective activities, the Budget continues to assist State and local criminal justice programs with more than $2 billion in program assistance for police hiring, general purpose criminal justice assistance, violence against women programs, and Second Chance Act grants; the same as in 2012. 137
  • 137. 138 DEPARTMENT OF JUSTICE The Department of Justice (DOJ) is responsible penalties, an increase of more than 167 percentfor enforcing laws and defending the interests of since 2008.the United States; ensuring public safety againstforeign and domestic threats; providing Federal Counters the Threat of Terrorism andleadership in preventing and controlling crime; Strengthens National Security. Combatingpunishing those guilty of unlawful behavior; and the threat of terrorism remains a top priority forensuring fair and impartial administration of DOJ—not only for the safety of our citizens, butjustice for all Americans. On April 25, 2011, the also the security of our economy and informationAttorney General laid out four priorities to guide infrastructure, which are critical to America’sand focus the Department’s future work: protect- global competitiveness. The Budget thereforeing Americans from terrorism; protecting Ameri- maintains recent increases related to intelligencecans from violent crime; protecting Americans gathering and surveillance capabilities. Fund-from financial fraud; and protecting the most vul- ing is preserved for the Comprehensive Nationalnerable members of our society. The President’s Cybersecurity Initiative, the High-Value Detain-Budget supports these priorities and protects ee Interrogation Group, the Joint Terrorism Taskthe progress that has already been made in key Forces, as well as other critical counterterrorismprograms, including civil rights enforcement. The and counterintelligence programs.Budget also reflects the need to operate withintight fiscal constraints while continuing to sup- Combats Transnational Organized Crimeport ongoing requirements such as keeping pace and Maintains the Security of the Southwestwith the continuing growth in the Federal prison Border. The Budget provides enhancements forpopulation. the International Organized Crime Intelligence and Operations Center and efforts to disrupt and dismantle the most significant drug traffickingEnforces Laws and Protects U.S. organizations and their related entities. WorkingInterests cooperatively, DOJ components and other law en- forcement agencies develop a list of Consolidated Combats Financial Fraud. Honest and fair Priority Targets. These targets become the focuscompetition, based on transparent rules equally for investigative and prosecutorial resources. Theapplied, is the cornerstone of our economy and Administration is also making a concerted effortour competitiveness. To continue its aggressive to combat crime along the Southwest border andefforts to combat financial, mortgage, and other provides nearly $2 billion in funding support forfraud, the Administration proposes more than the Administration’s Southwest border security$700 million, an increase of $55 million over the priorities; including those priorities started with2012 enacted level. These funds will support the the passage of the 2010 Southwest Border Securi-Department’s investigation and prosecution of ty Supplemental Appropriations Act, (Public Lawthe broad range of crimes that fall under the defi- 111–230).nition of financial fraud, including securities andcommodities fraud, investment scams, mortgage Promotes Innovation by Protecting Intel-foreclosure schemes, and efforts to defraud eco- lectual Property Rights. Recent technologicalnomic recovery programs. The Department also advances, particularly in methods of manufactur-plays a leading role in coordinating referrals of ing and distribution, have created new opportu-cases from other agencies and will work to im- nities for businesses of all sizes to innovate andprove capacity Government-wide to respond to grow. These advancements, however, have alsofraud. Additional resources will allow the agen- created new vulnerabilities, which tech-savvycies, as well as different DOJ components, to criminals are eager to exploit. As a result, therebetter assist each other in the investigation and has been an alarming rise in intellectual prop-litigation efforts. In 2011, these efforts led to the erty (IP) crimes, illegal activities that not onlyrecovery of more than $5.6 billion in fines and devastate individual lives and legitimate busi-
  • 138. THE BUDGET FOR FISCAL YEAR 2013 139nesses, but undermine our financial stability and Strategically Invests in Law Enforcementprosperity. Therefore, the Administration is de- by Streamlining Activities and Reducingvoting nearly $40 million to identify and defeat Duplication. DOJ’s law enforcement componentsintellectual property criminals, an increase of $5 have grown 106 percent from 2001 to 2012 andmillion over 2012. The Administration’s efforts now encompass more than 50 percent of thehave already resulted in shutting down 350 web- Department’s total budget. Recognizing this, thesites engaged in the illegal sale and distribution Administration proposes to strategically alignof counterfeit goods and copyrighted works. Addi- the Department’s law enforcement resourcestionally, international partnerships and joint ini- and invest $12.4 billion in the FBI, the Drugtiatives have enabled experts to train or educate Enforcement Administration, the Bureau ofin IP protection more than 2,500 foreign judges, Alcohol, Tobacco, Firearms and Explosives,prosecutors, investigators, and other officials and the U.S. Marshals. Although this fundingfrom over 30 countries. is slightly below the 2012 enacted level, the Administration is encouraged by the continuing Maintains Safe and Secure Prison downward trend in violent crime rates. DespiteCapacity. The Budget proposes $8.5 billion, these improvements, however, the Administrationa 4 percent increase over 2012, for Federal remains vigilant and understands that forprisons and detention facilities. These funds are progress to continue, Federal law enforcementprovided to staff and operate recently completed must be aligned with today’s criminal justiceprisons as well as address additional capacity challenges. As such, the Department is focusingrequirements due to projected growth in the its law enforcement resources foremost onFederal detainee population. An additional $13 preventing, protecting against, and mitigatingmillion is provided to expand inmate re-entry terrorist threats; disrupting and dismantlingprograms that help ensure inmates are well organized and sophisticated criminal enterprises;prepared to re-enter society and become positive defending against the penetration of the Nation’sand productive members of their communities. critical information infrastructure; and ensuringThe Administration will also continue to explore the safety of those most at risk. In addition,opportunities to reduce the prison population, the Department has identified $138 millionwith a focus on non-violent offenders. in savings and administrative efficiencies. For example, task forces with similar missions and geographic commonality will be considered forImproves the Way Federal Dollars are consolidation or elimination; offices, facilities,Spent and information technology systems will be restructured and condensed; and gang and drug Explores Improvements to the Prosecu- intelligence and operations will be streamlined,tion of Criminals. The Administration is com- reduced, or eliminated. mitted to a smarter allocation of resources forcrime prevention and public safety; one that uti-lizes Federal resources more efficiently and ef- Makes Targeted Investments for Statefectively to address the wide range of criminal and Local Assistance Initiativesjustice and national security threats facing thecountry. The U.S. Attorneys will continue to lead Provides Funding for Juvenile Justiceefforts to ensure that law enforcement investi- and Child Safety Programs. The Budget pro-gations are conducted in a manner that leads to vides $312 million for Juvenile Justice and Childstrong case presentation and results in effective Safety programs that assist States with their ju-and successful prosecutions, thereby improving venile justice systems. Research indicates thatthe effectiveness of all the Department’s law more than 60 percent of children have been ex-enforcement activities. posed to violence, crime, and abuse. This prob- lem has significant consequences for individuals,
  • 139. 140 DEPARTMENT OF JUSTICEfamilies, and communities at-large, which makes response has changed the civil and criminalthese Juvenile Justice and Child Safety programs justice systems for the better—encouragingan essential part of the State and local assistance victims to file complaints, improving prosecutionportfolio. The Budget also provides $20 million of sexual assault and domestic violence cases,for the Adam Walsh Act implementation. and increasing the issuance and enforcement of protection orders. The increased availability Invests in First Responders. The Budget of legal services for victims seeking protectionprovides $257 million to support America’s first orders has made it easier to obtain such ordersresponders and the hiring and retention of police when they are needed, and has helped reduceofficers and sheriffs’ deputies across the country, domestic violence and improve their quality ofand includes a preference for the hiring of post– life.9/11 veterans. This funding builds on the $166million in COPS Hiring Grants funding enacted Invests in Jail Diversion Programs. Thein 2012. These investments assist in building Budget provides $153 million in prisoner re-capacity to enable State and local law enforcement entry and jail diversion programs, including $80partners to make the most of their resources and million for the Second Chance Act programs andencourage their most promising and effective $52 million for problem-solving grants supportingpublic safety efforts. The Budget includes $4 drug courts, mentally ill offender assistance,billion in immediate assistance for the retention, and other problem-solving approaches. Withrehiring, and hiring of police officers in 2012, as 2.3 million people in U.S. prisons and 1 in 32requested by the President in the American Jobs American adults under some kind of correctionalAct. States and localities will gain a preference supervision, these programs aim to divertfor implementing programs and policies that individuals from incarceration, reduce recidivism,focus on the recruitment of post–9/11 veterans for and achieve public safety in a more sensible way.law enforcement positions. Supports Neighborhood Revitalization Reinforces Efforts to Combat Violence Initiative. The Budget provides $20 million forAgainst Women. The Budget provides $413 the Byrne Criminal Justice Innovation Program,million to continue efforts to combat the hundreds which supports the Administration’s multi-of thousands of violent crimes against women agency Neighborhood Revitalization Initiativethat are committed each year. Violence Against by directing resources where they are neededWomen Act funding plays a critical role in building in higher-risk neighborhoods, integrating publica coordinated community response. In turn, this safety, housing services, and other investments. Department of Justice (In millions of dollars) Estimate Actual 2011 2012 2013 Spending Discretionary Budget Authority: Federal Bureau of Investigation ................................................................. 7,822 8,108 8,070 Federal Prison System............................................................................... 6,381 6,596 6,844 Drug Enforcement Administration .............................................................. 2,053 2,037 2,035 United States Attorneys ............................................................................. 1,931 1,960 1,974 Federal Prisoner Detention ........................................................................ 1,516 1,580 1,668
  • 140. THE BUDGET FOR FISCAL YEAR 2013 141 Department of Justice—Continued (In millions of dollars) Estimate Actual 2011 2012 2013 Office of Justice Programs, Office of Community Oriented Policing Services, Office on Violence Against Women ........................................ 2,695 2,053 1,675 United States Marshals Service ................................................................. 1,143 1,185 1,199 Bureau of Alcohol, Tobacco, Firearms, and Explosives ............................. 1,113 1,152 1,140 General Legal Activities ............................................................................. 866 862 904 Organized Crime and Drug Enforcement Task Forces............................... 527 527 525 National Security Division .......................................................................... 88 87 90 All other ...................................................................................................... 1,117 1,059 980 Subtotal, Discretionary budget authority .......................................................... 27,252 27,206 27,104 Discretionary Changes in Mandatory Programs (non-add in 2012):1 Less Crime Victims’ Fund discretionary offset ........................................... –7,113 –8,125 Less Assets Forfeiture Fund cancellation .................................................. –675 –675 Subtotal, Discretionary changes in mandatory programs ................................ –7,788 –8,800 Less Hart-Scott-Rodino Antitrust Premerger Filing Fee Receipts.............. –96 –110 –118 Less U.S. Trustee Fee Receipts and Interest on U.S. Securities................ –267 –267 –267 Total, Discretionary budget authority ............................................................... 26,889 26,829 17,919 Discretionary Cap Adjustment:2 Overseas Contingency Operations ............................................................ 101 — — Total, Discretionary outlays .............................................................................. 28,547 28,795 23,861 Mandatory Outlays: Existing law ................................................................................................ 1,978 3,369 10,967 Legislative proposal ................................................................................... 2,400 1,700 Total, Mandatory outlays .................................................................................. 1,978 5,769 12,667 Total, Outlays ....................................................................................................... 30,525 34,564 36,528 1 The 2012 amounts reflect OMB’s scoring of the 2012 Appropriations acts (P.L. 112–55 and 112–74) as transmitted to the Congress. These amounts are displayed as non-add entries because they have been rebased as mandatory and are not included in any 2012 discretionary levels in the 2013 Budget. 2 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget authority available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations. Amounts in 2011 are not so designated but are shown for comparability purposes.
  • 141. DEPARTMENT OF LABORFunding Highlights:• Provides $12 billion in discretionary funding, a slight reduction from the comparable 2012 level. The Budget continues critical investments in job training and resources for job seekers. It also includes savings from administrative efficiencies, consolidation of regional offices, and the elimination of overlapping job training programs.• Preserves a strong Unemployment Insurance safety net, ensuring that all Americans who have lost their jobs have the help they need to improve their skills and return to the workforce, and creates subsidized employment opportunities for long-term unemployed and low-income adults and youth. To improve program integrity and cost-effectiveness, the Budget also works to reduce improper payments in the Unemployment Insurance program.• Improves access to services for workers and job-seekers and invests $125 million in a competitive Workforce Innovation Fund in the Departments of Labor and Education to engage States and localities in identifying better ways of delivering services, breaking down program silos, and paying providers for success.• Introduces bold reforms to strengthen Job Corps by improving its outcomes and cost- effectiveness.• Provides improved re-employment services to newly separated veterans.• Increases support for agencies that protect workers’ wages, benefits, health, and safety and invests in preventing and detecting the inappropriate misclassification of employees as independent contractors.• Safeguards workers’ pensions by encouraging companies to fully fund their employees’ promised pension benefits and assuring the long-term solvency of the Federal pension insurance system.• Creates new opportunities for Americans to save for retirement by establishing a system of automatic workplace pensions and doubling the small employer pension plan start-up credit.• Assists workers who need to take time off to care for a child or other family member by helping States launch paid leave programs. 143
  • 142. 144 DEPARTMENT OF LABOR The Department of Labor (DOL) is charged training system so that individuals can quicklywith promoting the welfare of American work- gain the training they need for the jobs createders, job seekers, and retirees, which is critical to as our economy evolves, the Budget proposes aAmerica’s continued economic recovery and long- universal core set of services where the focus isterm competitiveness. To support this mission, on helping all dislocated workers find new jobs.the Budget provides almost $12 billion in discre-tionary funding for DOL, a small reduction from Building on successful Recovery Act programsthe comparable 2012 level. This funding level that provided job opportunities for long-term un-makes substantial investments and introduces employed and low-income adults and youths, thesignificant reforms to better help workers gain Budget also includes a $12.5 billion Pathwaysskills, regain their footing after a job loss, and Back to Work Fund to make it easier for work-find new employment opportunities. Investments ers to remain connected to the workforce andare also made for the enforcement of critical wage gain new skills for long-term employment. Thisand hour, whistleblower, and worker safety laws. initiative will include support for summer- andThe Budget achieves savings through the consoli- year-round jobs for low-income youth, subsidizeddation of several DOL regional offices, and the employment opportunities for unemployed andelimination of duplicative programs. low-income adults, and other promising strate- gies designed to lead to employment.Invests in a Competitive Workforce and Promotes New Approaches to Job Train-Protects American Workers ing. As the economy changes, training and employment programs that help Americans navi- Preserves a Strong Unemployment Insur- gate those changes must continuously adapt toance Safety Net and Gives All Dislocated remain effective. To spur job training innovationand Low-Income Workers the Help They among States and localities, the Budget providesNeed to Find New Jobs. Particularly during $125 million in the Departments of Labor andthis time of high unemployment, the Administra- Education for the Workforce Innovation Fundtion believes it is critical to provide both a helping (Fund). Paired with broader waiver authority, thehand and a viable path back to employment. Over Fund will test new ideas and replicate proventhe past several years, unemployment insurance strategies for delivering better employment and(UI) benefits have helped American families stay education results at a lower cost. Both agenciesafloat, keeping 3.2 million individuals—includ- will jointly administer the Fund, in consulta-ing nearly 1 million children—from falling into tion with other agencies that fund employmentpoverty in 2010. The American Jobs Act proposed services, such as the Department of Health andan extension of federally funded benefits as well Human Services. The initiative will fund a com-as the Reemployment NOW program, which in- petition among States and regions to implementcludes a number of reforms to help UI claimants bold systemic reforms that break down barriersget back to work quickly. The Budget continues between programs and provide rewards based onthis support for extending federally funded bene- outcomes, particularly in serving disadvantagedfits through December 2012 and instituting inno- populations. Within the Fund, $10 million is ded-vative approaches to better connect UI claimants icated to building knowledge of what interven-with job opportunities. tions are most effective with disconnected youth. Like DOL’s existing Trade Adjustment Assistance Nearly 7 million of the Americans who lost Community College and Career Training Grants,jobs in 2009 were displaced from jobs that are the Fund will create incentives for grantees tounlikely to come back, and those who do find consider evidence in designing their programs,reemployment, on average, suffer significant collect better data to know what is working wellearnings losses. As part of the Administration’s and what is not, and find ways to make programeffort to reform and modernize the Nation’s job dollars stretch further.
  • 143. THE BUDGET FOR FISCAL YEAR 2013 145 The Budget also funds a new initiative Transition Assistance Program (TAP) workshopsdesigned to improve access to job training and that are offered to separating servicemembers.employment services across the Nation and The Budget builds on these efforts by boostingprovide $8 billion in the Departments of Labor funding for the Department’s TAP program andand Education to support State and community grants for employment services to veterans by $8college partnerships with businesses to build the million, or 34 percent, over 2012 levels.skills of American workers. Maintains Strong Support for Worker Reforms Job Corps. The Administration Protection. The Budget includes nearly $1.8strongly supports Job Corps and, with the planned billion for the Department’s worker protectionaddition of centers in New Hampshire and Wyo- agencies, putting them on sound footing to meetming, is committed to having a Job Corps cen- their responsibilities to protect the health, safety,ter in every State to reach disadvantaged youth wages, working conditions, and retirement secu-across the country. However, the Administration rity of American workers. In doing so, the Budgetalso believes the program could be more effective preserves recent investments in rebuilding theand efficient. The 2013 Budget launches a bold Department’s enforcement capacity and makesreform effort for Job Corps to improve program strategic choices to ensure funding is used for theoutcomes and strengthen accountability. Specifi- highest priority activities.cally, the Administration proposes to close by pro-gram year 2013 the small number of Job Corps • Protect the Health and Safety of America’scenters that are chronically low-performing, Miners. The Budget maintains fundingwhich will be identified using criteria the Admin- within DOL and the Federal Mine Safetyistration will publish in advance. The program and Health Review Commission (FMSHRC)will also shift its focus toward the strategies that to continue efforts to address FMSHRC’swere proven most cost-effective in evaluations large case backlog. It also preserves fund-of the Job Corps model. The Administration also ing to allow the Mine Safety and Healthplans to undertake other efforts to improve the Administration (MSHA) to effectively en-program, including changes to strengthen the force safety and health laws, while achievingperformance measurement system and report efficiencies and reallocating resources fromcenter-level performance in a more transparent lower priority activities into coal and metal/way. non-metal enforcement. The Administration continues to support legislation that would Improves Career Transitions for Newly- provide MSHA with stronger enforcementSeparated Veterans. The President places a tools to ensure mine operators meet theirhigh priority on delivering effective education, responsibility to protect their workers.employment, and other transition servicesthat enable newly separated veterans to • Enhance Protections for Whistleblowers. Themove successfully into civilian careers. The Budget includes an additional $5 millionAdministration has created resources to help over the 2012 level to bolster the Occupa-veterans translate their military skills to the tional Safety and Health Administration’scivilian workforce, built new online tools to help (OSHA’s) enforcement of the nearly 20 lawsveterans and their family connect with jobs, and that protect workers and others who arepartnered with the private sector to make it retaliated against for reporting unsafe andeasier to connect veterans with employers that unscrupulous practices. These resources willwant to hire them. The VOW to Hire Heroes Act, be paired with administrative efforts to im-signed into law by the President on November prove the transparency and effectiveness of21, 2011, expands tax credits to encourage the the program.hiring of veterans, and expands access to the
  • 144. 146 DEPARTMENT OF LABOR • Increase Enforcement of Worker Protection Department to provide services to citizens at the Laws. The Budget provides an increase of local level, several DOL components have more $6 million for the Wage and Hour Division regional offices than they need to be effective. for increased enforcement of the Fair Labor The Budget proposes adopting a leaner, more Standards Act and the Family and Medical efficient approach for five offices within the Leave Act, which ensure that workers receive Department: the Women’s Bureau, OSHA, the appropriate wages, overtime pay, and the Office of the Solicitor, the Employee Benefits right to take job-protected leave for family Security Administration, and the Office of Public and medical purposes. Affairs. In 2013, each of these components will consolidate their regional offices to ensure that • Detect and Deter the Misclassification of they are strategically placed to perform DOL’s key Workers as Independent Contractors. When functions across the country while eliminating employees are misclassified as independent unnecessary administrative costs. contractors, they are deprived of benefits and protections to which they are legally entitled, such as overtime and unemploy- Increases Efficiency, and Reduces ment benefits. Misclassification also costs Future Liabilities taxpayers money in lost funds for the Trea- sury and in the Social Security, Medicare, Strengthens the UI Safety Net and Im- and Unemployment Insurance Trust Funds. proves Program Integrity. The combination The Budget includes $14 million to combat of chronically underfunded reserves and the eco- misclassification, including $10 million for nomic downturn has placed a considerable finan- grants to States to identify misclassification cial strain on States’ UI operations. Currently, 28 and recover unpaid taxes and $4 million for States owe more than $37 billion to the Federal personnel at the Wage and Hour Division to UI trust fund. As a result, employers in those investigate misclassification. States are now facing automatic Federal tax in- creases, and many States have little prospect of paying these loans back in the foreseeable future.Makes Tough Cuts and Consolidations At the same time, State UI programs have large improper payment rates—12 percent in fiscal Ends Overlapping Training Programs. In a year 2011. The Administration proposes to putconstrained environment, we must make difficult the UI system back on the path to solvency and fi-choices to preserve core functions. The 2013 Bud- nancial integrity by providing immediate relief toget ends funding for Women in Apprenticeship employers to encourage job creation now, reestab-in Non-Traditional Occupations, whose mission lishing State fiscal responsibility going forward,of expanding apprenticeship opportunities for and working closely with States to eliminate im-women can be met through DOL’s work to expand proper payments. Under this Budget proposal,registered apprenticeships and ensure equal ac- employers in indebted States would receive taxcess to apprenticeship programs. The Budget also relief for two years. To encourage State solvency,ends the Veterans Workforce Investment Pro- the proposal would also raise the minimum levelgram, instead supporting service delivery inno- of wages subject to unemployment taxes in 2015vations through the Workforce Innovation Fund. to a level slightly less in real terms that it was in 1983, after President Reagan signed into law Consolidates Regional Offices to Increase the last wage base increase. The higher wageEfficiency. Consistent with Administration-wide base will be offset by lower tax rates to avoid aefforts to improve efficiency and find savings, the Federal tax increase. Further, the AdministrationBudget proposes to streamline agency operations has taken a number of steps to address programby reforming the Department’s regional office integrity in States that have consistently failedstructure. While regional offices allow the to place enough emphasis on combating improper
  • 145. THE BUDGET FOR FISCAL YEAR 2013 147payments in their UI programs. The Adminis- force—lack employer-based retirement plans.tration’s aggressive actions have given States a The Budget proposes a system of automatic work-number of tools to prevent improper payments, place pensions that will expand access to tens ofand reducing State UI error rates remains an millions of workers who currently lack pensions.Administration priority. Under the proposal, employers who do not cur- rently offer a retirement plan will be required Shores Up the Pension Benefit Guaranty to enroll their employees in a direct-deposit IRACorporation to Protect Worker Pensions. account that is compatible with existing direct-The Pension Benefit Guaranty Corporation deposit payroll systems. Employees may opt-out(PBGC) acts as a backstop to protect pension if they choose. To minimize burdens on smallpayments for workers whose companies have businesses, those with ten and fewer employeesfailed. Currently, the PBGC’s pension insurance would be exempt. Employers would also be en-system is itself underfunded, and the PBGC’s li- titled to an additional credit of $25 per participat-abilities exceed its assets. The PBGC receives no ing employee—up to a total of $250 per year—fortaxpayer funds and its premiums are currently six years.much lower than what a private financial insti-tution would charge for insuring the same risk. To make it easier for small employers to offerThe Budget proposes to give the PBGC Board the pensions to their workers in connection with theauthority to adjust premiums and directs PBGC automatic IRA proposal, the Budget will increaseto take into account the risks that different spon- the maximum tax credit available for small em-sors pose to their retirees and to PBGC. This will ployers establishing or administering a new re-both encourage companies to fully fund their pen- tirement plan from $500 to $1,000 per year. Thission benefits and ensure the continued financial credit would be available for four years.soundness of PBGC. In order to ensure that thesereforms are undertaken responsibly during chal- Encourages State Establishment of Fam-lenging economic times, the Budget would re- ily Leave Initiatives. Too many Americanquire a year of study and public comment before workers must make the painful choice betweenany implementation and the gradual phasing-in the care of their families and a paycheck theyof any premium increases. This proposal is esti- desperately need. While the Family and Medicalmated to save $16 billion over the next decade. Leave Act allows workers to take job-protected unpaid time off, millions of families cannot afford to use unpaid leave. A handful of States have en-Provides Greater Security for American acted policies to offer paid family leave, but moreWorkers and Retirees States should have the chance to follow their example. The Budget supports a $5 million State Establishes Automatic Workplace Pen- Paid Leave Fund within DOL to provide tech-sions and Expands the Small Employer Pen- nical assistance and support to States that aresion Plan Startup Credit. Currently, 78 million considering paid-leave programs.working Americans—roughly half the work-
  • 146. 148 DEPARTMENT OF LABOR Department of Labor (In millions of dollars) Estimate Actual 2011 2012 2013 Spending Discretionary Budget Authority: Training and Employment Services............................................................ 3,216 3,189 3,232 Unemployment Insurance Administration .................................................. 3,250 3,236 3,001 Employment Service/One-Stop Career Centers ........................................ 787 785 868 Office of Job Corps1 ................................................................................... 1,630 2,393 1,650 Community Service Employment for Older Americans2 ............................. 449 448 — Bureau of Labor Statistics .......................................................................... 610 609 618 Occupational Safety and Health Administration ......................................... 559 565 565 Mine Safety and Health Administration ...................................................... 362 373 372 Wage and Hour Division ............................................................................ 227 227 238 Office of Federal Contract Compliance Programs ..................................... 105 105 106 Office of Labor-Management Standards .................................................... 41 41 42 Office of Workers’ Compensation Programs .............................................. 118 118 122 Employee Benefits Security Administration ............................................... 159 183 183 Veterans Employment and Training............................................................ 256 264 259 Bureau of International Labor Affairs ......................................................... 92 92 95 Office of the Solicitor .................................................................................. 119 129 131 Foreign Labor Certification......................................................................... 66 65 66 Office of Disability Employment Policy ....................................................... 39 39 39 State Paid Leave Fund............................................................................... — — 5 Office of the Inspector General .................................................................. 84 84 85 All other ...................................................................................................... 285 293 293 Subtotal, Discretionary budget authority .......................................................... 12,456 13,240 11,970 Proposed Cancellations ............................................................................. –10 Total, Discretionary budget authority................................................................ 12,456 13,240 11,960 Discretionary Cap Adjustment:3 Program Integrity ....................................................................................... — — 15 Total, Discretionary outlays .............................................................................. 14,599 14,043 13,244 Mandatory Outlays: Unemployment Insurance Benefits: Existing law .......................................................................................... 116,466 84,433 55,235 Legislative proposal ............................................................................. — 21,295 19,273 Trade Adjustment Assistance..................................................................... 770 1,133 1,637 Pension Benefit Guaranty Corporation: Existing law 4 ......................................................................................... –1,166 –237 –1,575
  • 147. THE BUDGET FOR FISCAL YEAR 2013 149 Department of Labor—Continued (In millions of dollars) Estimate Actual 2011 2012 2013 Legislative proposal5 ............................................................................. — — — Black Lung Benefits Program..................................................................... 297 302 309 Federal Employees’ Compensation Act: Existing law ........................................................................................... 191 347 393 Legislative proposal .............................................................................. — — –13 Energy Employees Occupational Illness Compensation Program Act....... 1,249 1,302 1,260 American Jobs Act: Legislative proposal .............................................................................. — 5,062 12,147 All other ...................................................................................................... 809 –498 –221 Total, Mandatory outlays4 ................................................................................. 118,616 113,139 88,445 Total, Outlays ................................................................................................... 133,215 127,182 101,689 1 In a departure from historic practice the 2012 Appropriations Act funded program year 2012 entirely with regular 2012 appropriations rather than funding $691 million of these costs in 2013 via an advance appropriation. Job Corps’ program year 2013 level reflects a $53 million (3 percent) reduction from program year 2012. 2 The 2013 Budget proposes to transfer this program to the Department of Health and Human Services. 3 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget authority available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations. 4 Net mandatory outlays are negative when offsetting collections exceed outlays. 5 The Budget proposal that would increase PBGC premiums would have no outlay effects until 2014.
  • 148. DEPARTMENT OF STATE AND OTHER INTERNATIONAL PROGRAMSFunding Highlights:• Provides $51.6 billion in discretionary funding for the Department of State and U.S. Agency for International Development (USAID), an increase of 1.6 percent, or $0.8 billion over the 2012 enacted level when including Overseas Contingency Operations (OCO) resources. Within tightly capped budget constraints, the Budget makes investments in key priorities including the Middle East, Iraq, Afghanistan and Pakistan, plus continues funding for critical initiatives such as global health, climate change and food security.• State Department and USAID OCO programs are described along with Department of Defense OCO programs in a separate chapter on OCO resources. OCO funding is also shown in this chapter in order to provide a more complete picture of total State Department and USAID resources.• Responds to the Arab Spring by supporting the aspirations of people in the Middle East and North Africa, with more than $800 million to assist countries in transition and create incentives for long-term economic, political, and trade reforms.• Advances the President’s aggressive HIV-prevention goal, including his plan to support 6 million HIV patients on antiretroviral treatment by the end of 2013 through a $7.9 billion investment in the President’s Global Health Initiative. This builds on the Initiative’s strong progress in fighting infectious disease and child and maternal mortality.• Fully funds the Administration’s historic pledges to the Global Fund to Fight AIDS, Tuberculosis, and Malaria and the Global Alliance for Vaccines and Immunizations.• Continues a multi-year plan to make strategic investments to address the root causes of hunger and poverty and to help prevent crises such as the 2011 famine in the Horn of Africa.• Provides $2.9 billion to the Department of the Treasury for U.S. international commitments to the multilateral development banks and bilateral debt relief, supporting poverty reduction, economic growth, and U.S. national security. The Administration’s request prioritizes the most important commitments, while pursuing a multi-year strategy designed to promote U.S. leadership in multilateral institutions and leverage other donors’ resources. 151
  • 149. 152 DEPARTMENT OF STATE AND OTHER INTERNATIONAL PROGRAMS • Provides $432 million to strengthen efforts at five international trade-related agencies to promote and enforce international trade, and meet the goals of the National Export Initiative. • Separate from the term-limited and extraordinary level of transition expenses in OCO, base budget funding strengthens core diplomatic, development and security activities in Iraq, Afghanistan, and Pakistan to ensure ongoing activities in military to civilian operations. • Makes significant investments to support the Administration’s new National Strategy for Counterterrorism. • Makes strategic investments to encourage climate-resilient development, investment from the private sector in clean energy and low carbon infrastructure, and meaningful reductions in greenhouse gas and national emissions trajectories. • Rationalizes assistance to Europe, Eurasia, and Central Asia by transitioning funds into other assistance accounts, recognizing the successes of transition in the region. • Reduces operational costs through administrative savings and procurement reform. The Department of State, the U.S. Agency for Spring. The Administration continues to priori-International Development (USAID), and other tize funding for food security to reduce hungerinternational programs advance the national and to help prevent political instability; for cli-security interests of the United States through mate change to promote low-emission growth;global engagement, partnerships with nations and for global health to reduce the incidence ofand their people, and the promotion of universal disease and strengthen local health systems. Atvalues. By investing in civilian diplomacy and de- the same time, the Department of State and US-velopment, we foster stability around the world AID are committed to finding efficiencies, cuttingto protect our national security and make con- waste, and focusing on key priorities. Accordingly,flicts less likely. This work also supports economic savings are created by focusing resources on thedevelopment in the United States, opening new highest priorities worldwide and reducing opera-markets for U.S. businesses and increasing trade tional and administrative costs.to create jobs at home. The President’s 2013 Budget proposes $51.6 Maintains U.S. Global Leadershipbillion for the Department of State and USAID,including costs for OCO, a 1.6 percent increase Assists Countries in Transition and Pro-from 2012. The Budget provides the necessary motes Reforms in the Middle East andbase resources to sustain critical diplomatic and North Africa. Building on the Administration’sdevelopment efforts around the world. To support significant and continuing response to the trans-the Administration’s ongoing programs in key formative events in the Middle East and Northregions in transition, significant levels of fund- Africa region, the Budget provides over $800 mil-ing are continued for diplomatic operations and lion to support political and economic reform inassistance in Iraq, Afghanistan, and Pakistan. the region. The Budget expands our bilateral eco-The Budget also makes a substantial investment nomic support in countries such as Tunisia andin economic and political reform in the Middle Yemen where transitions are already underway.East and North Africa in the wake of the Arab Consistent with the President’s May 2011 speech,
  • 150. THE BUDGET FOR FISCAL YEAR 2013 153the Budget establishes a new $770 million Mid- diseases and child and maternal mortality bydle East and North Africa Incentive Fund, which focusing resources on interventions that havewill provide incentives for long-term economic, been proven effective and by pushing for morepolitical, and trade reforms to countries in transi- integrated and efficient programming. The Bud-tion—and to countries prepared to make reforms get supports an aggressive effort to prevent HIVproactively. This new Fund builds upon other re- infections, including the President’s goal of sup-cently announced programs in the region, includ- porting 6 million HIV patients on antiretroviraling up to $2 billion in regional Overseas Private treatment by the end of 2013. The Budget contin-Investment Corporation (OPIC) financing, up to ues efforts to reduce maternal and child deaths$1 billion in debt swaps for Egypt, and approxi- through proven malaria interventions and sup-mately $500 million in existing funds re-allocated port for a basic set of effective interventions toto respond to regional developments in 2011. address maternal and child health. The Budget fully funds the balance of the Administration’s Invests in Long-Term Partnerships in historic three-year, $4 billion pledge to the GlobalIraq, Afghanistan, and Pakistan. The Budget Fund to Fight AIDS, Tuberculosis, and Malaria,continues significant levels of funding for opera- in recognition of this multilateral partner’s keytions and assistance in Iraq, Afghanistan, and role in global health and its progress in institut-Pakistan within the base budget, while extraordi- ing reform. In addition, the Budget fully funds thenary and temporary costs are requested as OCO Administration’s pledge to the Global Alliance forfunding. Base resources requested to support Vaccines and Immunizations in order to expandstrong, long-term partnerships with these coun- access to immunization for children globally.tries include core diplomatic and developmentoperational support funding, as well as economic Fights Hunger by Improving Food Secu-development, health, education, governance, se- rity. As part of a multi-year plan to address thecurity, and other assistance programs necessary root causes of hunger and poverty, the Adminis-to reinforce development progress and promote tration continues funding for agriculture devel-stability. opment and nutrition programs. The 2011 famine in the Horn of Africa has underscored the need Maintains Counterterrorism Capabilities. for targeted programs to help prevent future fam-The Department continues to make significant ines and crises in the Horn and elsewhere. There-investments to support the Administration’s Na- fore, Administration programs are intended totional Strategy for Counterterrorism. The Admin- reduce extreme poverty, increase food security,istration remains committed to improving U.S. and reduce malnutrition for millions of familiesGovernment programs and developing partner by 2015. The Administration provides fundingcapabilities to prevent terrorist attacks on the through the President’s Feed the Future Initia-United States and other countries. The Budget tive and the multi-donor Global Agriculture andprotects resources in this high-priority area, in- Food Security Program, directing funding to poorcluding the establishment of a new Counterter- countries that commit to policy reforms and ro-rorism Bureau overseeing investments to protect bust country-led strategies to address internalthe homeland, defeat al Qaeda and its affiliates, food security needs. Assistance helps countriescounter violent extremism, build partner capac- increase agricultural productivity, improve agri-ity, and prevent the development, acquisition, cultural research and development, and expandtrafficking, and use of weapons of mass destruc- markets and trade, while monitoring and evalu-tion by terrorists. ating program performance. The Administration also maintains strong support for food aid and Supports Global Health by Focusing on other humanitarian assistance, including over $4High-Impact Interventions. The Administra- billion to help internally displaced persons, refu-tion is building on recent progress in the Glob- gees, and victims of armed conflict and naturalal Health Initiative’s fight against infectious disasters.
  • 151. 154 DEPARTMENT OF STATE AND OTHER INTERNATIONAL PROGRAMS Combats Global Climate Change by Pro- new markets for American companies and foster-moting Low-Emission, Climate-Resilient ing stability in regions critical to U.S. nationalEconomic Growth. The Administration contin- security. By fully funding the current round ofues to promote global reductions in greenhouse General Capital Increases and replenishmentsgas emissions and reduce vulnerabilities in key of concessional lending facilities, the Administra-sectors to climate-related events by supporting tion makes essential contributions to global de-clean energy, combating deforestation, and build- velopment priorities, while pursuing a multi-yearing climate-resilience in developing countries. strategy to meet our commitments, promote U.S.The Administration is working in partnership leadership in multilateral institutions, and lever-with national and local governments, and the age other donors’ resources. The Budget also pro-private sector, to make effective investments in vides for bilateral debt relief to Sudan, in supportthree key programmatic areas: 1) multilateral of the commitments made in the Comprehensiveinstitutions and bilateral activities that focus on Peace Agreement.energy efficiency, renewable energy, and energysector reforms; 2) sustainable land use to combat Encourages Economic Growth Throughunsustainable forest clearing for agriculture and Support for the National Export Initiativeillegal logging, and promote forest governance; and Tourism Promotion. A critical componentand 3) programs to build resilience of the most of stimulating domestic economic growth is en-vulnerable communities and countries to climate suring that U.S. businesses can actively partici-change, and reduce the risk of damage, loss of pate in international markets by increasing theirlife, and broader instability that can result from exports of goods and services. The Administrationextreme weather and climate events. launched the National Export Initiative (NEI) in 2010 to improve the private sector’s ability to ex- Leverages International Organizations port American goods and services. The NEI ad-to Support Cooperation and Security. The vances the Administration’s goal of doubling ex-Administration will advance the President’s vi- ports over five years by working to remove tradesion of robust multilateral engagement as a cru- barriers abroad, helping firms—especially smallcial tool in advancing U.S. national interests, businesses—overcome the hurdles to enteringaccomplished through our contributions to the new export markets, assisting with trade financ-United Nations, peacekeeping operations and in- ing, and pursuing a Government-wide approachternational organizations. Our contributions en- to export advocacy abroad. To that end, the Ad-able U.S. participation in over 40 international ministration provides $432 million, an increaseorganizations that maintain peace and security, of $19 million over 2012 levels, for the Export-Im-promote economic growth, and advance human port Bank, U.S. Trade and Development Agency,rights around the world. Peacekeeping assess- the U.S. Trade Representative, U.S. Internationalments fund peacekeeping activities directed to Trade Commission, and OPIC. These invest-the maintenance or restoration of international ments will strengthen international trade promo-peace and security, and promote the peaceful tion and enforcement efforts. In parallel with theresolution of conflict. NEI, the State Department Bureau of Consular Affairs will promote tourism and travel to the Prioritizes Poverty Reduction, Econom- United States from the world’s fastest growingic Growth, and U.S. National Security. The economies by expanding visa processing capacityBudget provides $2.9 billion to the Department of in emerging economies such as Brazil and China.the Treasury for our international commitmentsto multilateral development banks (MDBs) andbilateral debt relief. The MDBs are a key inter- Reduces Costs and Improves Efficiencynational forum for advancing U.S. foreign policyobjectives in economic development, climate Rationalizes the Foreign Assistancechange, and food security. U.S.-supported MDB Funding Structure for Europe, Eurasia, andactivities help developing nations grow, opening Central Asia. The Administration proposes
  • 152. THE BUDGET FOR FISCAL YEAR 2013 155to transition programs funded through the costs, building on the Administrative EfficiencyAssistance for Europe, Eurasia, and Central Asia Initiative to increase the efficiency of operations.(AEECA) account into the Economic Support The agencies will reduce travel, printing supplies,Fund, International Narcotics Control and Law and other costs below 2010 levels by increasingEnforcement, and Global Health Programs ac- the use of phone, web-based and digital videocounts. The normalization of the AEECA assis- conferencing; reducing unnecessary or duplicativetance structure, which was established in the im- reports and publishing critical reports online;mediate aftermath of the fall of the Iron Curtain and streamlining purchasing of equipment andand the collapse of the Soviet Union, reflects the supplies. The agencies will also seek to reduceneed to be able to focus resources on the high- the use of contractors for management supportest global priorities. While the United States services by reducing contract spending on theseremains deeply engaged in the region, using its services by up to 15 percent below 2010 levels.diplomatic and assistance resources to advancenational security interests and address difficult Reforms Contract Procurement. USAIDdevelopment challenges, the successful transition will continue to increase the efficiency of U.S.of a number of countries over time to market de- foreign assistance through the Implementa-mocracies has also enabled us to reduce the levels tion and Procurement Reform Initiative, whichof assistance. streamlines procurement policies, procedures, and processes; increases the use of small business Improves Efficiency of Foreign Affairs and host country systems; and strengthens theOperations. The Department of State and local capacity of partner countries.USAID will continue to reduce administrative Department of State and Other International Programs (In millions of dollars) Estimate Actual 2011 2012 2013 Spending Discretionary Budget Authority, State and USAID: Administration of Foreign Affairs ............................................................... 11,228 8,859 9,589 International Organizations and Peacekeeping ........................................ 3,463 3,278 3,669 Economic Support, Democracy, and Development Assistance ................ 9,171 6,256 7,374 Global Health Programs............................................................................ 7,830 8,168 7,854 Middle East and North Africa Incentive Fund ........................................... — — 770 International Narcotics Control and Law Enforcement ............................. 1,659 1,061 1,457 Migration and Refugee Programs ............................................................. 1,745 1,673 1,675 Non-proliferation, Anti-terrorism, Demining Programs .............................. 739 590 636 Foreign Military Financing ......................................................................... 5,374 5,210 5,472 USAID Operations .................................................................................... 1,528 1,269 1,448 Other State and USAID programs ............................................................ 2,319 1,928 2,033 Overseas Contingency Operations 1 ......................................................... 297 11,188 8,245 Rescissions of Unobligated Balances ....................................................... –371 –114 — USDA Food for Peace Title II (non-add in total line)���������������������������������� 1,497 1,466 1,400 Subtotal, Department of State and USAID (including Food for Peace)............ 46,479 50,832 51,622
  • 153. 156 DEPARTMENT OF STATE AND OTHER INTERNATIONAL PROGRAMS Department of State and Other International Programs—Continued (In millions of dollars) Estimate Actual 2011 2012 2013 Discretionary Budget Authority, Other International Programs: Treasury International Programs ............................................................... 2,028 2,660 2,901 Millennium Challenge Corporation ............................................................ 898 898 898 Peace Corps ............................................................................................. 374 375 375 Broadcasting Board of Governors............................................................. 748 747 720 Export-Import Bank ................................................................................... 2 –266 –359 Overseas Private Investment Corporation ................................................ –198 –197 –192 Other International Programs.................................................................... 271 266 274 Overseas Contingency Operations ........................................................... — 14 — Rescissions of Unobligated Balances ....................................................... –275 –400 — Total, Discretionary budget authority 2 ............................................................. 48,830 53,463 54,839 Discretionary Cap Adjustment (included in totals above):3 Overseas Contingency Operations ............................................................ 297 11,203 8,245 Total, Discretionary outlays .............................................................................. 47,108 53,406 56,093 Total, Mandatory outlays .................................................................................. –1,882 2,552 3,420 Total, Outlays ................................................................................................... 45,226 55,958 59,513 Credit activity Direct Loan Disbursements: Export-Import Bank .................................................................................... 2,590 25 25 All other ...................................................................................................... 2,460 5,399 5,402 Total, Direct loan disbursements ...................................................................... 5,050 5,424 5,427 Guaranteed Loan Disbursements by Private Lenders: Export-Import Bank .................................................................................... 17,892 21,500 26,750 All other ...................................................................................................... 964 5,234 963 Total, Guaranteed loan disbursements by private lenders ............................... 18,856 26,734 27,713 1 Overseas Contingency Operations (OCO) funds were first appropriated to the Department of State, USAID, and Other International Programs in 2012. In 2011, OCO reflects a transfer from the Department of Defense to the Department of State. 2 Funding for International Food Aid programs in the Department of Agriculture (Food for Peace Title II food aid and the McGovern-Dole International Food for Education and Child Nutrition) are not included in the totals above. Funding for these programs are included in International Function 150, and are classified as Security pursuant to Title I of the Budget Control Act of 2011. 3 The Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA), as amended by the Budget Control Act of 2011, limits—or caps—budget authority available for discretionary programs each year through 2021. Section 251(b)(2) of BBEDCA authorizes certain adjustments to the caps after the enactment of appropriations. Amounts in 2011 are not so designated but are shown for comparability purposes.
  • 154. TRAN T OF SP EN OR TM TAT DEPAR ION IC A UN IT ER D E ST M A T ES O F A DEPARTMENT OF TRANSPORTATIONFunding Highlights:• Invests a total of $74 billion in discretionary and mandatory budgetary resources for the Department of Transportation, an increase of 2 percent, or $1.4 billion, above the 2012 enacted level. This includes job-creating infrastructure investments as well as savings from reductions to grant programs for larger airports.• Jump starts job creation in 2012 with $50 billion in immediate investments to support critical infrastructure projects, improving America’s roads, bridges, transit systems, border crossings, railways, and runways.• Proposes an urgently needed six-year, $476 billion surface reauthorization plan to modernize the country’s transportation infrastructure, and pave the way for long-term economic growth.• Pays for these investments with the “peace dividend” from ramping down overseas military operations. Because rebuilding the Nation’s transportation infrastructure is an immediate need, the Budget uses near-term savings from reduced overseas operations to support increased investments in the reauthorization proposal.• Provides $2.7 billion in 2013 and $47 billion over six years to develop high-speed passenger rail corridors and improve intercity passenger rail service to significantly enhance the national rail network.• Supports a more robust, rigorous, and data-driven pipeline safety program to ensure the highest level of safety for America’s pipeline system.• Invests over $1 billion for 2013 in the Next Generation Air Transportation System, a revolutionary modernization of our aviation system.• Initiates Transportation Leadership Awards, which will encourage innovation by allowing States to compete for grants to pursue critical transportation policy reforms.• Reduces funding for airport grants by over $900 million, focusing Federal support on smaller airports, while giving larger airports additional flexibility to raise their own resources. 157
  • 155. 158 DEPARTMENT OF TRANSPORTATION A well-functioning transportation system is is committed to working with the Congress on acritical to America’s economic future. Whether financing mechanism.it is by road, transit, aviation, rail, pipeline, orwaterway, we rely on our transportation system Creates Jobs Now. To spur job growth andto move people and goods safely, facilitate com- allow States to initiate sound multi-year invest-merce, attract and retain businesses, and support ments, the Budget assumes enactment of an ad-jobs. The President’s 2013 Budget provides a to- ditional $50 billion in transportation investmentstal of $74 billion in discretionary and mandatory in 2012. Although infrastructure projects takefunding plus an additional $50 billion above what time to get underway, these investments wouldhas been provided to date in 2012 to jump-start generate hundreds of thousands of jobs in theeconomic growth and job creation. Recognizing first few years—and in industries suffering fromthe fiscal realities, the Budget again proposes protracted unemployment. Not only will job mar-significant reforms to surface transportation pro- kets and municipal transportation programs ac-grams, including a consolidation of over 55 dupli- cess much-needed support in the near-term, butcative, often earmarked highway programs into Federal taxpayers will reap the benefits of histor-five streamlined ones. ically competitive pricing in construction. To help these funds flow into our communities without Invests in Infrastructure Critical for delay, key Federal agencies have been directed toLong-Term Growth. Much of the country’s find ways to expedite permitting and approvalstransportation infrastructure was built decades for infrastructure projects.ago and is in desperate need of repairs and up-grades to meet current economic demands. The Provides Dedicated Funding for HighPresident’s Budget again includes a multi-year Speed Rail Investments. The Budget providesreauthorization proposal for critical highway, $47 billion over six years to fund the developmenttransit, highway safety, passenger rail, and multi- of high-speed rail and other passenger rail pro-modal programs. This proposal would provide grams as part of an integrated national strategy.$476 billion over six years, which together with This system will provide 80 percent of Americansthe additional $50 billion requested in 2012, rep- with convenient access to a passenger rail sys-resents an increase of approximately 80 percent tem, featuring high-speed service, within 25above the previous surface transportation reau- years. The proposal includes merging Amtrak’sthorization, plus annual appropriated funding for stand-alone subsidies into the high-speed railpassenger rail funding in those years. This pro- program as part of a larger, competitive Systemposal seeks not only to fill a long overdue funding Preservation initiative.gap, but also to reform how Federal dollars arespent to ensure that they are directed to the most Helps Communities Become More Liv-effective programs. It reflects a need to balance able and Sustainable. Fostering livable com-fiscal discipline with efforts to expedite our eco- munities—places where coordinated transporta-nomic recovery and job creation. It emphasizes tion, housing, and commercial development givesfixing existing assets, moving toward cost-benefit people access to affordable and environmentallyanalysis of large transportation projects, and con- sustainable transportation—is a transforma-solidating duplicative, often-earmarked highway tional policy shift. The Administration’s reau-programs. Consistent with Administration policy, thorization proposal adopts a multi-pronged ap-this proposal does not contain earmarks. Addi- proach to help communities achieve this goal.tionally, the reauthorization proposal will not add For example, the Administration proposes to per-to the deficit as the Budget proposes to use the manently authorize the Transportation Invest-“peace dividend” from ramping down military op- ment Generating Economic Recovery (TIGER)erations overseas to offset all costs. After the six- program, which has supported projects likeyear reauthorization period, the Administration multi-modal transportation hubs (where differ- ent forms of transportation converge) and streets
  • 156. THE BUDGET FOR FISCAL YEAR 2013 159that accommodate pedestrian, bicycle, and tran- to improve efficiency; and the improvement ofsit access. The proposal also seeks to harmonize aviation weather information.State and local planning requirements and fa-cilitate more cooperation—and includes com- Enhances Roadway Safety Research, Datapetitive grant funding ($200 million in 2012 and Collection and Data Analysis. The Budget$1.2 billion over six years) to improve those en- creates an Integrated Highway Safety Programtities’ ability to deliver sound, data-driven, and Office to enable best practices in highway safety,collaboratively-developed transportation plans. and to streamline highway safety research andThe Budget also includes $108 billion for transit data collection and analysis, in order to reduceprograms over six years, more than doubling the the paperwork burden of grantees and to enhancecommitment to transit in the prior reauthoriza- the Department’s approach to safety. In addition,tion for both existing capacity and capacity ex- the Budget continues to support a performance-pansion. This unprecedented increase for buses, based program to advance commercial motorsubways, and other systems of public transporta- vehicle safety. It also expands research andtion will help improve and expand travel options, development in vehicle safety technology, with acut energy use, and help make our communities focus on electronic systems, to continue progressmore livable. towards safer vehicles and safer transportation. Enhances Pipeline Safety. In order to en-sure the highest safety standards for the U.S. Improves the Way Federal Funds Arepipeline system, the Budget proposes to both Spentenhance and revamp the Department’s PipelineSafety program. The Budget increases the size Encourages Innovative Solutions Throughof the State Pipeline Safety Grant program by Competition. The Administration’s six-year50 percent and institutes several reforms to the reauthorization plan would dedicate approxi-Federal program. It funds the first phase of a mately $20 billion for a competitive grant programthree-year effort to more than double the num- designed to create incentives for State and localber of Federal pipeline safety inspectors to make partners to adopt critical reforms in variety of ar-certain that more pipelines are inspected on a eas, including safety, livability, and demand man-regular basis. In addition, the Budget modernizes agement. Federally-inspired safety reforms suchpipeline data collection and analysis, improves as seat belt and drunk driving laws saved thou-Federal investigation of pipeline accidents of all sands of American lives and avoided billions insizes, and expands the public education and out- property losses. This initiative will seek to repeatreach program. the successes of the past across the complete spectrum of transportation policy priorities. Spe- Modernizes the Air Traffic Control Sys- cifically, the Department will work with Statestem. The Budget provides over $1 billion for and localities to set ambitious goals in different2013, an increase of more than $99 million from areas—for example, passing measures to contin-the 2012 enacted level, for the Next Generation ue our successes in distracted driving (safety) orAir Transportation System (NextGen). NextGen modifying transportation plans to include massis the Federal Aviation Administration’s multi- transit, bike, and pedestrian options (livability)year effort to improve the efficiency, safety, ca- —and to tie resources to goal achievement.pacity, and environmental performance of theaviation system. These funds would continue to Adopts a “Fix It First” Approach for High-support the transformation from a ground-based way and Transit Grants. Too many elements ofradar surveillance system to a more accurate the U.S. surface transportation infrastructure—satellite-based surveillance system; the develop- our highways, bridges, and transit assets—fallment of 21st Century data communications ca- short of a state of good repair. This can impactpability between air traffic control and aircraft the capacity, performance, and safety of our
  • 157. 160 DEPARTMENT OF TRANSPORTATIONtransportation system. At the same time, States urgent need, the Budget uses savings from ramp-and localities have incentives to emphasize new ing down overseas military operations to fullyinvestments over improving the condition of the offset the President’s six-year surface transporta-existing infrastructure. The Administration’s re- tion proposal. The Budget also proposes closingauthorization proposal will underscore the im- loopholes in budgetary treatment to make sureportance of preserving and improving existing that surface transportation programs are trans-assets, encouraging its government and industry parently reflected in the budget and paid for inpartners to make optimal use of current capac- both the short- and the long-term. Beyond the re-ity, and minimizing life cycle costs through sound authorization window, the Budget assumes thatasset management principles. Accountability is a the President and the Congress will work togeth-key element of this system: States and localities er to develop other fiscally responsible solutions.will be required to report on highway conditionand performance measures. Reduces Funding in Targeted Areas. In support of the President’s call for spending re- Consolidates Highway Programs. The Ad- straint, the Budget lowers funding for the air-ministration’s proposal would consolidate over 55 port grants program to $2.4 billion, a reduction ofduplicative, often earmarked highway programs $926 million, by eliminating guaranteed fundinginto five streamlined programs. This would give for large and medium hub airports. The BudgetStates and localities greater flexibility to direct focuses Federal grants to support smaller com-resources to their highest priorities. In the inter- mercial and general aviation airports that doest of taxpayer value and accountability, that flex- not have access to additional revenue or otheribility will come with reformed requirements on outside sources of capital. At the same time, theStates to establish and meet performance targets Budget would allow larger airports to increasetied to national goals and to move toward rigor- non-Federal passenger facility charges, therebyous cost-benefit analyses of major new projects giving larger airports greater flexibility to gen-before they are initiated. erate their own revenue. Also, given difficult fis- cal circumstances, the Budget reduces the an- Pays for the Six-Year Reauthorization nual grant to the Washington Metropolitan AreaPlan Using Real Savings. The President is Transit Authority by $15 million. The President’scommitted to working with the Congress to en- surface transportation plan would substantiallysure that funding increases for surface trans- increase overall transit funding and would bene-portation do not increase the deficit. Because re- fit both the Washington area and transit systemsbuilding our transportation infrastructure is an nationwide. Department of Transportation (In millions of dollars) Estimate Actual 2011 2012 2013 Spending Discretionary Budgetary Authority: Federal Aviation Administration ................................................................. 12,417 12,553 12,748 Federal Motor Carrier Safety Administration ............................................. — 1 — National Highway Traffic Safety Administration 1 ........................................ 3 — — Federal Railroad Administration 1............................................................... 223 214 152 Federal Transit Administration 1.................................................................. 150 150 134
  • 158. THE BUDGET FOR FISCAL YEAR 2013