Obama’s budget hits nonsecurity agencies hard

This story has been updated.

In the latest sign of the fiscal austerity sweeping Washington, President Obama introduced a $3.7 trillion budget on Monday that cuts funding for more than half of all major nonsecurity agencies, eliminates or merges dozens of programs, and recommends the sale of 14,000 federal buildings.

The 211 program terminations, reductions, or savings measures in the proposal will save taxpayers more than $33 billion in fiscal 2012, according to the Obama administration. As expected, the budget also called for a five-year freeze of discretionary, nonsecurity spending, a strategy Obama said will reduce the deficit by $400 billion during the next decade and reduce spending in that category to its lowest level since President Dwight D. Eisenhower left office in 1961.

"When it comes to programs we do need, we're making them work better by demanding accountability," Obama said while announcing his budget proposal at a school in Baltimore. "Instead of spending first, and asking questions later, we're rewarding folks inside and outside government who deliver results."

Among the agencies that would take the biggest hits is the Commerce Department, which includes the Census Bureau. Commerce would see its budget slashed from $13.8 billion to $8.7 billion, a decrease of 37 percent. Most of the proposed cuts are due to the completion of the 2010 Census, although the department also would lose funds for several grant and loan programs.

Administration officials conceded the cuts will be a challenge for agencies and that they will require hard work and sacrifice.

"There are more agencies on the domestic side going down than going up overall," said Jack Lew, director of the Office of Management and Budget. "And these are going to be challenging and difficult years. … Even where we are investing we are going to have to make tough trade-offs. It is going to be challenging in many departments to contend with resources that are either frozen or shrinking and challenges that are still important."

Despite the prevalent cuts, some nondefense agencies would see upticks under Obama's proposal. These include the Energy, Health and Human Services, Homeland Security, Justice, State, Treasury, and Veterans Affairs departments.

The Defense Department also is in line for an increase, with its budget rising about 4 percent from $531 billion enacted for fiscal 2010 to a proposed $553 billion in fiscal 2012. Much of the new funding would be directed to cybersecurity, satellites and nuclear security. The proposal, however, tempers the additional spending with a series of management and acquisition reforms that Defense Secretary Robert Gates recommended last year to save $78 billion through 2016. Weapons programs including the C-17 aircraft, the alternative engine for the Joint Strike Fighter and the Marine Expeditionary Fighting Vehicle would face the largest reductions.

Among the biggest new federal management priorities, Obama announced the government would begin disposing of 14,000 office buildings, lots and federally owned properties that it no longer needs, potentially saving $15 billion in three years. An independent commission would identify properties to sell and then send that information to Congress for a final vote, according to Sen. Tom Carper, D-Del., a proponent of the idea.

Administration officials emphasized that the budget cuts several programs that have long been priorities for Obama and congressional Democrats.

Community service development block grants would be trimmed by $300 million, and a home energy assistance program that helps low-income Americans pay their heating bills would be slashed for a savings of $2.5 billion. Also cut was $1 billion in grants for large airports, $100 billion from Pell Grants and other higher education programs over one decade, and nearly $1 billion in state grants for water treatment plants.

But money saved from many of the program cuts would be reinvested elsewhere in the budget. For example, the White House proposed using $18 billion for enhanced nationwide Internet service and $53 billion for high-speed rail. The administration also plans to hire and train 100,000 new science and math teachers during the next five years.

In total, 76 programs would be eliminated entirely while another 76 would face deep cuts. Other savings initiatives -- some of which agencies proposed -- include consolidating several higher education programs, no longer automatically mailing hard copies of the Federal Register to government workers, increasing paperless transactions at the Treasury Department, and making better use of videoconferencing to reduce travel costs.

While some programs would not survive another year under the proposal, the ones that do would undergo a more rigorous performance evaluation process. The administration called on agency leaders to use constructive, evidence-based data reviews to keep their organizations on track to meet a number of High-Priority Performance Goals submitted in the fiscal 2011 budget.

"Government works better when organizational leaders identify a limited number of clear, measurable and ambitious goals, and regularly review progress toward them," the 2012 budget document stated. "When leaders ask about performance on specific goals, it reinforces the message that a goal is important. When they monitor if progress is on or off track and request analyses to understand why, it illuminates a path to improvement."

Significant progress has been made on some agency priority goals, including efforts to accelerate housing and services for veterans and to reduce the number of homeless veterans, the budget stated.

OMB did not ask agencies to update or revise their high-priority goals as part of the fiscal 2012 budget process, but did encourage them to review and increase the specificity of several longer-term priorities. The next round of priority goal setting will begin in the coming months, OMB said.

In addition, OMB is holding regular, data-driven performance reviews on informational technology projects, acquisition policies and personnel management priorities. The goal-focused performance management system promotes continual improvement rather than merely compliance, officials said.

The budget also includes funding for 19 new program reviews, including examinations aimed at increasing college enrollment and completion, evaluating the federal government's telework policies, and improving the usage of Internal Revenue Service data.

Agencies that submitted proposals for the examinations are expected to demonstrate that their funding priorities are based on credible empirical evidence -- or that they have a plan to collect that evidence -- and to identify any potential impediments to program evaluations in their statutes or regulations.

The 2012 budget also enhances the administration's focus on recovering improper payments and debt collection through a host of reform efforts designed to save $167 billion during 10 years. Among the targets are deadbeat contractors. The administration plans to collect $59 million in payments owed from contractors with delinquent tax debt in fiscal 2012. An additional $64 million in outstanding tax debt would be collected from Medicare providers. The budget also would provide $10 million to create and implement a federal Do Not Pay list.

The program cuts were significantly deeper than Obama's first two budgets, in which he identified roughly 120 programs to trim or terminate, for an expected savings of about $20 billion annually. The administration saw 60 percent of its proposed discretionary cuts become law in fiscal 2010, a considerably higher rate than historical averages.

But, unlike the past two years, when the president enjoyed strong majorities in the House and Senate, this year's budget proposal is sure to face stiff opposition on Capitol Hill, where GOP lawmakers and some fiscally conservative Democrats argue it doesn't go far enough. Last week, House Republican leaders unveiled $100 billion in discretionary spending cuts as part of legislation to fund the government for the rest of the fiscal year, which ends Sept. 30.

"The president's budget is the clearest sign yet he simply does not take our fiscal problems seriously," said Senate Minority Leader Mitch McConnell, R-Ky. "It is a patronizing plan that says to the American people that their concerns are not his concerns. It's a plan that says fulfilling the president's vision of a future of trains and windmills is more important than a balanced checkbook."

George A. Warner contributed to this report.

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