Medicare, Alzheimer’s targeted in Obama budget



President Barack Obama has proposed a $3.8 trillion budget for fiscal 2013 that aims to slash the deficit by $4 trillion over 10 years but still envisions growth in the government’s major health benefit programs. The agency-by-agency breakdown:

Agency: Health and Human Services (HHS)

Spending: $921.6 billion

Percentage Change from 2012: 3.7 percent increase

Discretionary Spending: $72 billion

Highlights: The budget reflects the growing costs of providing health care to the poor, disabled and elderly as mandatory spending for Medicare and Medicaid grows by about 9 percent in Obama’s proposed blueprint. Some of the increase is a result of rising health costs, but another significant driver is the steady increase in people enrolling in government health programs. The number of elderly and disabled enrolled in Medicare will increase by 1.8 million in the coming fiscal year as more baby boomers retire.

The administration seeks to slow future growth in the two programs by about $360 billion over the next decade. It would do so by lowering payments to some health care providers and by requiring wealthier Medicare beneficiaries to pay higher monthly premiums, among other steps.

The budget for the National Institutes of Health would remain at about $31 billion to research diseases and therapies. A new $90 million HHS fund would boost research and public health services for Alzheimer’s disease.

The budget also includes fewer dollars for the Centers for Disease Control and Prevention, the Substance Abuse and Mental Health Services Administration as well as the Administration on Children and Families, which oversees social welfare programs.

The administration is also proposing giving the Federal Trade Commission authority to prohibit agreements that allow brand-name drug manufacturers to pay a generic drug manufacturer to delay entering the market.

Beginning in 2017, Obama would require Medicare beneficiaries to pay a surcharge if they purchase private insurance that supplements their Medicare coverage. Studies indicate that those who buy these Medigap policies tend to seek more health services. The administration is also proposing to charge new home health patients a $100 co-payment per visit, starting in 2017.

The administration also seeks cuts to a program that provides fuel assistance to the poor, and it will reduce the amount of money made available to state and local governments for economic development in low-income communities.


Agency: Agriculture

Spending: $154.7 billion

Percentage Change from 2012: 4.8 percent increase

Discretionary Spending: $23 billion

Highlights: Obama’s budget envisions savings of $32 billion over 10 years by cutting some farm subsidies, such as eliminating direct payments, which are made regardless of price and crop yield. Other subsidies are paid only when prices dip or a farmer’s revenue drops.

Obama and his Republican predecessor, President George W. Bush, have proposed similar cuts in every annual budget for the last several years to no avail as Congress has blocked their attempts. But the mood has shifted on Capitol Hill, where even farm-state lawmakers say that direct payments should be cut.

Lawmakers are supposed to consider a new five-year farm bill in 2012, though its fate is uncertain in an election year. In early negotiations last fall, farm-state members agreed to cut $23 billion over 10 years and eliminate direct payments. Obama’s proposal would go even further, achieving savings through reducing subsidies to crop insurance companies and consolidating some programs aimed at protecting environmentally sensitive land.

Other cuts would come through consolidation of department offices across the country that was announced earlier this year. The department would close about 260 offices and offer early retirement and targeted buyouts of employees in more than 15 agencies and offices, reducing the USDA workforce by about 900 jobs. The department has said the consolidations and other efforts to cut administrative costs would save about $150 million a year.

The budget would increase dollars for agricultural research grants and direct loans for projects in low-income rural areas, including schools, hospitals, day care facilities, fire stations and police stations.

The administration would maintain eligibility requirements for food stamps, which cost the government an estimated $75 billion last year and are the bulk of the department’s total budget. Obama’s budget also proposes to continue food-stamp benefits for some adults without dependents that were scheduled to expire.


Agency: Commerce

Spending: $9.2 billion

Percentage Change from 2012: 15.6 percent increase

Discretionary Spending: $8 billion

Highlights: Obama’s proposed budget would provide $708 million for the National Institute of Standards and Technology laboratories with the goal of making U.S. manufacturers more competitive. The president also is calling for spending $517 million on the International Trade Administration to promote U.S. exports in key markets abroad and to improve trade enforcement.

Obama’s budget blueprint calls for more than $5 billion for the National Oceanic and Atmospheric Administration, an increase of about $160 million.

The administration would increase funds for the U.S. Patent and Trademark Office to accelerate patent processing and improve patent quality.

Obama also wants $10 billion to help build an interoperable public safety broadband network. Those costs would be offset by auctioning spectrum used to expand wireless broadband access and services.


Agency: Defense

Spending: $677.7 billion

Percentage Change from 2012: 4 percent decrease

Discretionary Spending: $614 billion

Highlights: The cuts come as the Pentagon seeks to save about $260 billion over the next five years. Among the major cuts is a significant reduction in the size of the military over five years to save $50 billion, including slicing about 80,000 from the Army’s peak size of 570,000. The budget will takes steps toward cutting eight Army combat brigades, six Marine Corps battalions and 11 fighter squadrons, and will start to pull two Army brigades out of Europe.

Ending the war in Iraq and scaling back the fight in Afghanistan will save about $26 billion by trimming operations and equipment, and cutting the costs of training and equipping the Afghan security forces by nearly half. The overall budget includes $88.5 billion for the wars. The budget assumes that the military will maintain 68,000 U.S. troops in Afghanistan through Sept. 30, 2013, but officials said that the total can be changed.

There will be limited reductions in major weapons systems over the next year as the Pentagon phases in plans to reduce the number of Navy ships and F-35 Joint Strike Fighters it will buy, and eliminates one version of the Global Hawk surveillance drone. Over the next year, the Pentagon plans to buy 29 F-35s, two less than this year, for a savings of about $75 million.

While there will be a pay raise of 1.7 percent for military personnel, the Pentagon will also begin to phase in increases in health care costs for military retirees. The increases will also be based on income, so that those who make more money will pay a bit more.

The department is expected to maintain or even increase spending in three key areas: cybersecurity, special operations forces and unmanned aircraft.


Agency: Education

Spending: $55.7 billion

Percentage Change from 2012: 52 percent decrease

Discretionary Spending: $69.8 billion

Highlights: Obama seeks to shape education policy in America by using both financial carrots and sticks to get states, higher education institutions and school districts to adopt reforms he favors.

His budget seeks $850 million for his administration’s high-profile “Race to the Top” competition, which has already awarded more than $5 billion in grants. States competing have had to promise changes such as adopting meaningful teacher and principal evaluations systems. Education Secretary Arne Duncan has said the competition is being revised so that it won’t just be states competing with each other, but districts competing as well.

Seeking to reign in the rising costs of college, Obama is proposing similar competitions among colleges and universities that come up with plans that curtail spending. But he’s also targeting the growing tuition costs by threatening to take away some financial aid to universities that continue to raise prices. At a recent speech at the University of Michigan, Obama said that higher education has become an imperative for success in America, but the cost has grown unrealistic for too many families and the debt burden unbearable.

Speaking at a community college on Monday in Annandale, Va., Obama offered an $8 billion proposal to encourage colleges and businesses to work together to train 2 million workers in high-growth industries. It would institute “pay for performance” in job training, meaning there would be financial incentives to ensure that trainees find permanent jobs _ particularly for programs that place individuals facing the greatest hurdles getting work.

His college affordability efforts including proposing to set the maximum Pell grant award at $5,635, which is slightly higher than the current school year; making a tax credit for college costs permanent; and suspending a student loan interest rate set to double this summer.

In K-12 education, the president is seeking $260 million for science, technology, engineering and math programs and $534 million in “school turnaround grants” to help states and districts fix troubled schools.

The Education Department said the decrease primarily reflects that one-time federal stimulus dollars that were again requested in 2012 are not continued in 2013. A recalculation in the government’s student loan assets also contributes to the drop although discretionary spending would increase.

Obama’s approach has drawn criticism. Conservatives have accused him of executive overreach, and presidents of public universities have said his plan to link the awarding of financial aid to a school’s tuition costs could unfairly hurt students in states where severe budget cuts have led to the tuition increases.


Agency: Energy

Spending: $32.3 billion

Percentage Change from 2012: 41 percent increase

Discretionary Spending: $27.2 billion

Highlights: Obama would increase spending for two priorities: clean energy and national security. The budget calls for an additional $580 million to advance clean-energy technologies such as industrial and building energy efficiency, next generation biofuels and renewable electricity generation from solar, wind, and geothermal resources. That amounts to a 13 percent increase over current levels.

The budget would provide $310 million for the SunShot Initiative to make solar energy cost-competitive without subsidies by the end of the decade; $95 million to develop wind energy research; and $65 million for geothermal energy.

The blueprint calls for a total of $1.2 billion for energy efficiency, including initiatives to improve clean-vehicle technologies and advanced manufacturing materials. Some $770 million would go to the Office of Nuclear Energy, which includes $65 million for advanced small modular reactors and $60 million for nuclear waste research that lines up with recommendations made by a president’s commission.

The budget also includes $350 million _ a 37 percent increase over 2012 _ for the Advanced Research Projects Agency-Energy (ARPA-E), a program that seeks to fund transformative energy research.

Obama would repeal more than $4 billion per year in tax subsidies to oil, gas and other fossil fuel producers. The budget proposal says the plan “eliminates inefficient fossil fuel subsidies that impede investment in clean energy sources and undermine efforts to address the threat of climate change.”

The budget would cut about $92 million from a program to develop so-called “clean coal.”

The proposal includes $38 million to administer a stimulus-law program that provides loans and loan guarantees for renewable energy companies such as now-bankrupt Solyndra Inc. The law expired last year, and no new money was requested for additional loans.

The proposal puts on hold a planned $6 billion plutonium research laboratory in New Mexico. Critics say the proposed Chemistry and Metallurgy Research Replacement Nuclear Facility at Los Alamos National Laboratory is unnecessary.

The budget includes $5.6 billion to continue cleanup of former nuclear weapons sites across the country.


Agency: Environmental Protection Agency

Spending: $8.1 billion

Percentage Change from 2012: 2.1 percent decrease

Discretionary Spending: $8.3 billion

Highlights: Perhaps anticipating resistance from congressional Republicans, who are looking to target the Environmental Protection Agency’s budget, Obama has proposed a $175 million cut to the nation’s environmental protector. It’s the third consecutive year that the Democratic president has called for trimming the agency’s spending.

To achieve those savings, the EPA’s proposed budget reduces cleanup money for the nation’s most hazardous waste sites, leaving enough to deal with emergency releases. It also would eliminate what it calls redundant grant programs to states and tribes to help reduce indoor radon exposure and monitor beaches to ensure they’re safe enough for swimming.

To help states meet a host of new air pollution regulations finalized and in the works at EPA, the budget includes a $66 million increase for air quality programs. But it cuts money to states to improve infrastructure and treatment plants for drinking water.

Rep. Ed Whitfield of Kentucky, a top Republican on the House Energy and Commerce Committee, told reporters last week that the GOP would be taking a hard look at the agency’s assistance to states. But many of them are struggling financially and have made their own cuts to environmental programs, reducing monitoring, inspections and enforcement in communities and neighborhoods.

The budget includes $5 million for the EPA to increase the number and frequency of inspections at high-risk oil and chemical facilities.

Obama reiterated his commitment to reduce the gases blamed for global warming, and says the agency will continue to pursue ways to control greenhouse gas-pollution from power plants, factories and refineries, despite opposition from Republicans and some industry groups.


Agency: Homeland Security

Spending: $45.1 billion

Percentage Change from 2012: 5.4 percent decrease

Discretionary Spending: $45 billion

Highlights: Obama’s proposed budget would consolidate the department’s US-Visit program within its two major branches _ Customs and Border Protection, and Immigration and Customs Enforcement. It would reduce funds by about $27 million. The program is used to collect biometric data from international travelers heading to the United States. Concerns remain about the security of air travel and the government’s ability to identify would-be terrorists before they are able to board a flight bound for the U. S.

Funds and staffing at the northern and southern borders and the ports of entries would remain the same.

The budget request for ICE would continue to provide some funds for local authorities to participate in a program that allows officers to enforce immigration laws if they have the proper training. The request also includes a provision that would cut off funds if an agency is deemed to violate the rules of the program, known as 287 (g) for the section of law that governs it. Last year, DHS ended the program at the Maricopa County sheriff’s office in Arizona after a Justice Department investigation concluded there was a pattern of racial profiling against Latinos at the department.

The budget also includes requests for funds to replace aging equipment at ICE, CBP, and continue funding for upgrades for the Coast Guard.


Agency: Housing and Urban Development

Spending: $44 billion

Percentage Change from 2012: 21.3 percent decrease

Discretionary Spending: $35.3 billion

Highlights: Obama’s proposed budget would provide $2.3 billion for the administration’s goal to end chronic homelessness. HUD’s programs serve primarily the poor, elderly and disabled.

The blueprint also seeks $34.8 billion to preserve rental housing assistance to 4.7 million low-income families and $154 million to expand affordable housing to seniors and persons with disabilities. Obama is also asking for $650 million for housing for Native American tribes.

Obama’s proposal would keep funding for the Community Development Block Grant program at 2012 levels. States and cities use the money to build streets and sidewalks, provide water and build sewers and make other infrastructure improvements in low-income neighborhoods. Local officials struggling to balance budgets support the program.


Agency: Interior

Spending: $11.4 billion

Percentage Change from 2012: 2.1 percent decrease

Discretionary Spending: $11.4 billion

Highlights: Obama makes good on his dual promises to boost oil and gas production on public lands and back newer, cleaner forms of energy on public property. However, his budget would slashes nearly $50 million for ongoing and new construction of dams, canals and other water projects that supply power and drinking water in the West.

The proposal includes a $28 million increase for the two agencies formed after the Gulf oil spill disaster to continue reforms and to boost oversight of offshore oil and gas drilling. The additional money would pay for new oil and gas inspectors, real-time monitoring of drilling operations, and help expedite the review of oil and gas drilling permits _ a process that Republicans and the industry have criticized as being too slow following a temporary moratorium on new exploratory drilling.

The budget again floats new fees for the oil and gas industry to pay for the processing of permits and to expedite drilling on leased parcels where no production is occurring. But those ideas have made little headway in Congress.

In a move that is sure to irk coal-state lawmakers and the industry, Obama again calls for changing how the fees collected from industry to clean up abandoned coal mines are distributed. Instead of the money being dispersed to states based on how much coal they produce, the Interior budget suggests that it should be given to states through a competitive process that focuses on the most hazardous mines. States with no abandoned mines to clean up would not receive payments.

The budget also calls for charging companies mining for silver, gold and copper an abandoned mine cleanup fee and royalties.

On the conservation side, the budget sets aside $450 million for a grant program aimed at preserving public lands and improving outdoor recreation.


Agency: Justice

Spending: $30 billion

Percentage Change from 2012: 15.3 percent decrease

Discretionary Spending: $17.9 billion

Highlights: Obama wants to spend more than $700 million to investigate and prosecute financial crimes that take place from Wall Street to Main Street, an increase of $55 million over the current budget. The extra money would pay for additional FBI agents, prosecutors, civil attorneys and accountants. The types of misconduct the law enforcement money would target include securities and commodities fraud, investment scams like the infamous Ponzi scheme of Bernard Madoff, mortgage foreclosure schemes and fraud against economic recovery programs.

The administration is proposing to spend nearly $40 million to combat intellectual property theft, an increase of $5 million from the current budget. Criminals using the Internet have cashed in on the explosion in online commerce by trafficking in counterfeit goods and copyrighted products. The Obama administration has worked with law enforcement officials from more than 30 countries to round up criminals running the illicit networks.

The department also is proposing $12.444 billion for its four key law enforcement components, $38 million less than the current spending level. The four agencies are the FBI, the Drug Enforcement Administration, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the U.S. Marshals Service. Since 2001, the year of the Sept. 11 terrorist attacks, the Justice Department’s law enforcement components have grown by 106 percent. The administration says it is encouraged by the downward trend in violent crime rates and that the Justice Department has identified $138 million in savings that will be carried out by consolidating or eliminating some offices.

The Justice Department disclosed Monday that it is closing one of the long-time pet projects of former Rep. John Murtha _ the National Drug Intelligence Center in Johnstown, Pa.

The intelligence collection center in Murtha’s old district was financed with congressionally earmarked funds during the congressman’s long and controversial chairmanship of the House Appropriations defense subcommittee. Justice Department officials said 57 of the 140 center staffers would be offered jobs with the Drug Enforcement Administration in the Washington area. The rest would be offered early retirement or assistance in finding other jobs within the department.

Murtha, who died two years ago, was known as one of the champions of earmarking funds for his district, often to favored defense contractors who bankrolled his political campaigns. The center was budgeted at $20 million in the current year and $34 million for last year.


Agency: Labor

Spending: $89 billion

Percentage Change from 2012: 35.7 percent decrease

Discretionary Spending: $12 billion

Highlights: Most of the cuts at Labor would come from an expected decrease in spending on unemployment insurance programs as the overall unemployment rate declines and fewer people claim benefits.

But those projections also assume there will be no further spending on long-term unemployment benefits beyond Feb. 29. That’s when a temporary extension of benefits that Congress enacted late last year will expire. House and Senate negotiators are working on a deal that would extend those benefits past the end of the month as part of broader discussions on extending the payroll tax cut. The deal is likely to reduce the maximum number of 99 weeks that unemployed people are allowed to seek benefits.

Like last year’s plan, the budget would trim $450 million from Labor’s share of a program that helps train older workers for jobs and community service programs. The program would be transferred to the U.S. Department of Health and Human Services.

The agency also is expected to save about $245 million from a reduced work load in processing unemployment benefit claims.

The budget would increase spending on wage enforcement and workplace safety programs, including $10 million to crack down on companies that cheat workers out of minimum wage and overtime payments. It would also boost a program that identifies workers misclassified as independent contractors.

Another $15 million increase would go to programs that offer employment and training services to help the long-term unemployed return to the workforce.

The department is requesting an additional $17 million to help reduce the backlog of mine safety cases.


Agency: NASA

Spending: $17.7 billion

Percentage Change from 2012: 0.3 percent decrease.

Discretionary Spending: $17.7 billion

Highlights: Obama’s proposed space agency budget entails a large shift within NASA for how the same amount of money is essentially spent. The biggest loser is the planet Mars, along with exploring the rest of the planets in our solar system. The president proposed cutting $309 million for studying planets this year, with more cuts in future years. After an already mostly built Mars mission in 2013, future journeys to the red planet are eliminated, put on hold or restructured. While the study of planets would be sliced 21 percent, spending for the overall budget and long delayed James Webb Space Telescope would increase 21 percent. The telescope which may cost $8 billion is the successor to the Hubble Space Telescope and would peer further into the universe and back in time than ever.

The president wants to double the amount of money spent to help private firms develop their own spaceships that could eventually carry astronauts and others to the International Space Station as taxis. This would replace the now retired space shuttle program and the dependence on Russia for rides into orbit. The president wants to spend $829.7 million to help these companies, but Congress has regularly cut his commercial space proposals. The budget includes the last bit of spending on the retired space shuttles: $71 million.

Much of the spending continues a trend shifting from current space missions to developing the next generation of rockets and capsules for flights out of Earth’s orbit to an asteroid or even to Mars. The president proposes an extra $345 million in spending on developing new rocketry and space technology. That overall proposal includes $1.8 billion for a congressionally mandated large rocket that could carry bigger loads further into space and $1 billion for the Orion crew capsule to take astronauts to new places. A first test flight of the spaceships _ without astronauts _ could be as early as 2017, with astronauts flying in them no earlier than 2021.


Agency: State

Spending: $69 billion

Percentage Change from 2012: 13.8 percent increase

Discretionary Spending: $54.3 billion

Highlights: Obama’s proposed budget for the State Department and U.S. foreign assistance calls for spending $11.8 billion for civilian operations and aid in Iraq ($4.8 billion), Afghanistan ($4.6 billion) and Pakistan ($2.4 billion). It retains major military aid programs to Israel, which will get $3.1 billion; Egypt, which is slated for $1.3 billion, and Jordan, which is to get $300 million.

The spending plan sets aside $770 million for the creation of a new Middle East and North Africa Incentive Fund to promote democracy, good governance and free market economies in Arab nations roiled by revolt. It allocates $2.7 billion in economic assistance to support transitions in other parts of the developing world, including the world’s newest nation, South Sudan, Liberia, Haiti and Myanmar.

The proposal maintains billions of dollars in spending on international health projects, including the President’s Emergency Plan for AIDS Relief, which will cost $5.4 billion and expects to have treated six million people, many in Africa, by the end of 2013.

On the savings side, the budget pares aid to eastern European and Eurasian countries by 18 percent, cuts back on a planned expansion of State Department personnel and reduces an ambitious overseas construction program that was to build new secure embassies.


Agency: Transportation

Spending: $74.3 billon

Percentage Change from 2012: 39.4 percent decrease

Discretionary Spending: $13.8 billion

Highlights: Obama’s proposed transportation budget includes a six-year, $476 billion surface transportation bill to be paid for by user fees and some of the savings from reducing military operations in Iraq and Afghanistan. That’s a decrease from the bare bones, six-year, $556 billion surface transportation bill he proposed last year.

A key difference is that last year Obama’s plan _ which was largely ignored by Congress _ didn’t include proposals to pay transportation investments. Also, both last year’s plan and this year’s plan far exceed the spending called for under transportation bills in the House and Senate, where lawmakers have struggled to find money to pay for highway and transit projects. The House bill would spend $260 billion over 4 1/2 years; the Senate $109 billion over less than two years.

Like last year, Obama’s proposal calls for significant funding for high-speed trains _ $47 billion over six years. That’s about $6 billion less than last year’s proposal. But neither the House nor the Senate bills contain any money for high-speed rail. Nor is there any money in the current budget.

Obama’s budget also repeats his call last year for a $50 billion “upfront” infusion for roads, bridges, transit systems, border crossing railways and runways in the current fiscal year to spur job creation _ money Congress so far has been unwilling to provide. The fiscal 2012 transportation budget is $72.7 billion, or 2 percent less than Obama’s request for fiscal 2013. However, when the $50 billion is added to the administration’s request for 2012, the total is $122 billion, or 39.4 percent less than his request for 2013.

The idea of taking war “savings” to pay for other programs is budgetary sleight of hand. The wars in Iraq and Afghanistan have been largely financed through borrowing, so stopping the wars doesn’t create a pool of ready cash, just less debt.


Agency: Treasury

Spending: $519.5 billion.

Percentage change from 2012: 0.8 percent decrease.

Discretionary Spending: $13.2 billion.

Highlights: The bulk of Treasury’s spending is for interest on the public debt, an ever increasing component of the federal budget.

The overall decrease in spending would be achieved through various initiatives to improve efficiency in the operations of various Treasury agencies, including consolidating the operations of the Bureau of the Public Debt, which handles the government’s borrowing needs on its growing debt, and the Financial Management Service, the agency which pays the government’s bills.

Treasury is also seeking to save money by halting the production of new $1 coins, which it projects will save the U.S. Mint $50 million annually, and by seeking legislation to allow the Treasury secretary to change the composition of coins to more cost-effective materials. Treasury estimates that it costs 2.4 cents to make a penny and 11.2 cents to make a nickel.

In all, the administration budget is seeking more than $75 million in savings in 2013 through cost cutting in the production of coins and paper currency.


Agency: Veterans Affairs

Spending: $137.4 billion

Percentage Change from 2012: 10.6 percent increase

Discretionary Spending: $61 billion

Highlights: Obama’s budget reflects the growing number of veterans who will need health care through the VA. The budget projects that about 610,000 veterans of the Iraq and Afghanistan wars will get health care through VA’s hospitals and clinics this fiscal year. The budget seeks spending increases for virtually all health services provided, including a 5 percent increase for mental health services, which has become a top priority among congressional oversight committees, and a double-digit increase for health programs designed to assist female veterans.

The budget also proposes $1 billion over five years for a Veterans Jobs Corps, a new initiative that would put veterans to work rebuilding roads, trails and other infrastructure on public lands.

The budget seeks a 33 percent increase in spending to combat homelessness among veterans. The administration has set a goal of eliminating homelessness among veterans by 2015. The money would be used to hire coordinators who will help veterans with disability claims, housing problems and other needs. Additional money would be provided to nonprofits that help house veterans and their families.

Obama also is seeking more money to deal with the growing number of disability claims that the department is getting from veterans. Veterans who served in Iraq and Afghanistan are filing claims that include about 8.5 disabilities per veteran, a rate nearly double that for claims from veterans of previous wars. — AP