President Barack Obama released the fiscal 2012 budget blueprint last week. The White House claims the budget includes one-third tax increases, two-thirds spending freezes and cuts to reduce $1 trillion in deficit over a decade. The new budget proposal predicts economic growth, plans to fix the problem with doctors’ payment in Medicare, suggests how highways spending will be fully funded over 10 years, and offers many other solutions to various ongoing problems in the United States. The budget proposal may seem hopeful to some, however, due to the recession, government spending has drastically increased over the past four years. The 2012 budget proposal is no different.
Spending is divided up into three categories ó mandatory, defense and nondefense discretionary.
Mandatory spending includes things such as entitlements, unemployment insurance and interest on debt. The budget for mandatory spending has gone from $1.9 trillion in 2007’s budget proposal to a proposed $2.6 trillion for 2012, $700 billion increase in about four years.† The rise in mandatory spending is largely due to the increased unemployment benefits coming out of the recession and a surge in claims for Social Security, Medicare and Medicaid.
It is alleged that defense spending† makes the country a safer place.† However, the $464 billion increase since 2007’s budget for defense spending has caused many people to begin to question the Pentagon and the U.S. industrial complex. Lockheed Martin, Boeing, Northrop Grumman, General Dynamics and Raytheon are the only five companies that have defense contracts worth more than $100 billion. The defense industry has become so consolidated that it is causing many to worry about how few companies are involved and what will happen if the Pentagon’s financial difficulty continues.
Nondefense discretionary spending has increased from $274 billion in 2007 to $437 billion for the 2012 budget proposal. Compared to the $700 billion increase in mandatory spending and $464 billion increase in defense, the $163 billion from the nondefense discretionary category has contributed the least to the overall increase in government spending.† Defense spending is, therefore, the most controversial spending category of the budget proposal.
The White House claimed in its budget overview that “The budget proposal supports the goals of putting one million electric vehicles on the road by 2015, doubling share of electricity from clean energy sources by 2035, and reducing buildings energy use by 20 percent by 2020.” The administration plans to pay for the programs that will help reach these goals by eliminating 12 tax breaks to oil, gas and coal companies.
Another part of the budget that is gaining attention and resistance is the 11 percent raise in federal education spending.† The increase will maintain the maximum Pell Grant award, which helps nine million students afford college each year. In addition, the plan eliminates 13 education programs and consolidates thirty eight K-12 programs into elevan to emphasize competition. The budget will also prepare 100,000 new science, technology, engineering, and math teachers.† While many Democrat congressional leaders fully support this increase, Republican leaders argue that educational spending should be primarily a state and local concern and federal spending on education should be reduced.
Due to the recent findings that American students have scored significantly lower than other country’s students when tested in math and science, Obama believes that something needs to change. Obama said, “We can’t win the future if we lose the race to educate our children,” CNN reported. He went on to explain that the country’s commitment to education will determine whether the American dream survives.
Administration believes that by cutting wasteful spending and investing to create new jobs and industries the new proposed budget plan will rebuild the economy and restore the country’s fiscal responsibility.