Increases and Decreases to Discretionary Spending in the President's Budget

In continuing our discussion of the President's FY 2012 budget proposal, we take a closer look at the recommendations to adjust discretionary spending. Discretionary spending has been in the hot seat over the last few weeks as many Republicans have released proposals of their own to slash this area, which only represents about 12 percent of the budget (although Republicans have excluded security spending from their cuts).

The President's budget does not go nearly as far as the Republican plans to cut discretionary spending -- or the fiscal commission's plan for that matter -- but it does make some tough decisions. His budget proposal includes his State of the Union pledge to freeze non-security discretionary spending for five years, which will save an estimated $400 billion over the next ten years.

He accomplishes this with difficult cuts in some areas in order to offset increased spending on administration priorities to "win the future." The President advocates increasing funding in the areas of education, innovation, infrastructure, opening markets, and keeping America safe. In line with these priorities, the departments with the most significant spending increases are Defense, Education and Energy.

To maintain the freeze, the President's proposal offsets these spending increases with large reductions to many other areas of the budget. The Departments of Commerce, Agriculture, and the EPA face the most severe cuts from their 2010 enacted funding levels. Savings in the Commerce Department come from the winding down of the 2010 Census and also reducing funding to low-priority programs. Similarly, cuts to the EPA and Department of Agriculture trim back non-essential initiatives and moving some of those savings to high-priority, high-return areas. In the face of spending scrutiny, this prioritization of resources is an essential trend and should be encouraged. Other significant savings in the budget come from switching to competitive grant programs to promote efficiency in government spending as well as the elimination and consolidation of many programs.

(Unfortunately, the budget does rely on a few gimmicks -- the largest being the use of the Crime Victims' Fund to make the Department of Justice budget look smaller. Absent this offset, Justice would be measured as growing by 2%, as opposed to shrinking by 24%).

Here is a break-down of how funding levels are adjusted by department in the President's FY 2012 budget request, in comparison to funding levels enacted in 2010 as well as requested 2011 funding:

Agency2010 Enacted*2011 Requested*2012 Requested*Percent Change (2010 to 2012)
Homeland Security$39.8$43.6$43.2+8.5%
Veteran Affairs$53.1$57.1$58.8+10.7%
State and Other International Programs$49.8$53.1$52.7+5.8%
Nuclear Security Administration$9.9$11.2$11.7+18.2%
Security Sub-Total$682.8$714.0$719.4+5.4%
Health and Human Services$84.4$83.4$82.2-2.6%
Housing and Urban Development$42.8$41.6$41.7-2.6%
Environmental Protection Agency$10.3$10.0$9.0-12.6%
Other Agencies$38.5$41.3$41.2+7.0%
Non-security Sub-Total$401.6
Base Discretionary Sub-Total $1,084.4$1,115.2$1,116.2+2.9%
Funding for Iraq and Afghanistan$173.2+$164.7$126.5-27.0%
Total (including war funding)$1,257.6$1,279.9$1,242.7-1.2%

* Numbers in billions of dollars.

** Includes $6.1 billion in offsets for Crime Victims' Fund and $620 million for the Asset Forfeiture Fund cancelation. Total budget authority is actually $28.2 billion and represents a 2% increase from 2010 levels.

+ Includes $6 billion of requested supplemental funding.

Later in the week we will be analyzing specific cuts in the President's proposals for terminations, reductions and savings.

Keep following our blog series throughout the week as we continue to examine the FY 2012 budget proposal.