By Kerry Young, CQ Roll Call

House Republican appropriators are preparing to write fiscal 2014 spending bills that would protect spending for the military and homeland security by making deep cuts to domestic programs.

House Appropriations Chairman Harold Rogers, R-Ky, is circulating a $967 billion plan for the 12 annual spending bills, known as 302(b) allocations, that are due to be approved by the panel on Tuesday.

The overall figure adheres to the spending caps set by recent budget agreements and assumes automatic, across-the-board cuts, known as the sequester, occur in fiscal 2014 without larger agreement to cut the deficit. But the division of spending for the annual bills makes it clear that Republicans have preserved national security spending at the expense of domestic programs favored by Democrats.

Calling it an “austere budget year,” Rogers said, “This is the hand that sequestration has dealt us, and we have no choice but to try and make the best of what we have.”

The allocations provide a combined $625 billion in fiscal 2014 for the Defense, Military Construction-VA and Homeland Security bills, which would be a cut of $4 billion, or less than a percent, from the current enacted level. Discretionary spending in the rest of the government — covered by the other nine spending bills — would be cut by about $72 billion, or 17 percent, from current levels.

Two Bills Would Take Hardest Hits

The biggest cuts would come from the two bills that pay for implementing two of President Barack Obama’s signature legislative achievements — the 2010 overhauls of health care (PL 111-148, PL 111-152) and financial services (PL 111-203). The Labor-HHS-Education bill would provide $121.8 billion, about $35 billion, or 22 percent, less than the current level. The Financial Services bill would provide about $17 billion, a cut of $4.5 billion, or 21 percent.

Rogers’ proposal for defense spending goes well beyond a budget cap set by a bipartisan 2011 debt-limit deal. The Budget Control Act (PL 112-25) calls for cutting defense spending, which is made up of largely the Pentagon budget but also includes the Energy Department’s nuclear weapons program and some Federal Bureau of Investigation and Coast Guard accounts, by $54 billion to $498.1 billion. The remainder of federal operating expenses would be cut by $37 billion to $468.8, according to the budget law.

Already, Rogers had designated $522.4 billion for the Pentagon’s operations and construction projects in the Defense and Military Construction-VA spending bills. Additional national-security spending will come in the proposed $30.4 billion Energy-Water allocations, which provides billions of dollars for the nation’s nuclear stockpile.

Rogers’ allocations seem in line with the House budget resolution (H Con Res 25), adopted in March, along partisan lines. It calls for moving the cap on the defense category to $552 billion, while shrinking the rest of the federal operating expenses to $414 billion.

Rosa De Lauro of Connecticut, the ranking Democrat on the House Appropriations panel that oversees Labor-HHS-Education spending, blasted the cuts and accused the GOP of targeting “poor people, kids, college students, sick people, the unemployed and the disabled.”

“The majority’s funding proposal would help create a permanent underclass in this country when we should be ensuring competitiveness in the global economy with robust education and training programs,” De Lauro added. “The majority’s funding proposal tells our most vulnerable children that they just aren’t important to us and we are content to let them struggle for the rest of their lives.”

Democrats in both chambers and Obama want to set the spending cap at $1.058 trillion level that assumes the sequester is scrapped. Senate Appropriations Chairwoman Barbara A. Mikulski, D-Md., has said that her committee will use $1.058 trillion cap in writing its spending bills.

Many Republicans, including Rogers, expect that the fiscal 2014 cap may be at least raised as part of a larger budget deal. As result, GOP appropriators may delay moving some domestic spending bill with hopes that severe cuts can be eased or reversed.

© 2013 CQ Roll Call All Rights Reserved.

January 2013

As we begin to wind down from two wars, “The defense sector is undergoing the kind of correction that happens once every 20 or 30 years,” according to Booz & Co.’s 2013 Defense Industry Perspective.

The coming defense downsizing will be challenging for the many communities across the country whose economies have been shaped by the sharp increases in military spending of the post-9/11 period.  They will need help adjusting and creating new economic opportunities to replace a jobs base that has become dependent on surging military budgets.

One other dimension of our current historical landscape suggests a way to turn this challenge into opportunity:  In a year of record droughts and attendant crop failures, followed by the punishing winds and waves of Hurricane Sandy, the signs of climate stress, and of the need for a clean energy and transportation transition, are becoming unmistakable.  As we seek to turn toward nation-building at home, the framework for federal initiatives to assist defense-dependent communities should therefore prioritize pathways to help these communities find opportunities for economic development in the emerging clean energy and transportation economy.

The framework for assistance has three parts:

1. 1. Strengthening existing programs useful for defense community transition
2. 2. Reviving programs that were the most effective in smoothing the previous defense downturn
3. 3. Initiating new programs filling critical gaps and responding to current conditions

Implementation

This framework could be attached, in whole or in part, to a job creation bill in the new congressional session, or introduced as stand-alone legislation.  Some portions could be implemented administratively.  One option for funding would follow the precedent of the previous defense downsizing with legislation to transfer funds from the Department of Defense to the Departments of Labor and Commerce.

1. 1. Strengthening existing programs

Federal assistance relevant to defense community transition is currently available in four areas: community planning, technical assistance, job retraining and finance.

Community planning

The Commerce Department offers planning grants to help communities undergoing economic dislocations to examine existing local and regional economic strengths and new areas of development.  Implementation grants are also available.  Special emphasis is given to “national strategic priorities” including initiatives for job growth and business expansion in clean energy, green technologies and sustainable manufacturing.

Recommendation: Revise the program objectives to give higher priority to helping communities adjust to private sector defense downsizing.

Through its Office of Economic Adjustment the Defense Department also offers planning grants, technical assistance and community development block grants for communities undergoing defense transitions: both for base closure and redevelopment, and for adjustment to private sector defense job loss. In recent years this office’s work has focused almost exclusively on base closure redevelopment.

Recommendation: For the coming period, until Congress authorizes another round of base closures, shift the focus of the OEA toward helping communities that are adjusting to private sector defense job loss.  Also, change the assistance model to put more emphasis on working with local planning entities and integrating defense downsizing planning with existing local masterplans.

Technical Assistance

The Commerce Department also administers a network of Manufacturing Extension Centers (MEP) helping small- and medium-sized manufacturers to innovate and grow.

A new Energy Regional Innovation Cluster (E-RIC) pilot program through MEP is intended to spur regional economic growth through the development of energy efficient building technologies, designs and systems.

Recommendation: Expand funding for MEP.  Restore the expertise that MEPs developed in the post-cold war period to assist companies adjusting to lost defense contracts.  Add a focus on helping these companies adapt their capabilities for green technology manufacture.

Job retraining

The Department of Labor’s Employment and Training Administration coordinates federal job training programs.  The Recovery Act (ARRA) funded training focused on creating a skilled energy efficiency and renewable energy workforce.  These funds have expired, and job-training funds in general have been cut back.

Recommendation: Expand job retraining programs focused on green jobs and adjustment for dislocated defense workers.

Finance

The Commerce, Energy and Treasury Departments all administer programs offering grants and loans for economic development focused on the clean energy and transportation sectors.  Some were funded by the Recovery Act, now expired.

Recommendation: Expand funding and improve coordination among programs offering support for a transition to a clean energy and transportation economy.

Additional information on all of these programs is available at: http://www.fpif.org/files/5073/federal-resources.doc.

1. 2. Restoring programs that were the most effective in smoothing the post-cold war defense downsizing.

Between 1990 and 1997, nearly $20 billion was spent for purposes broadly related to the defense transition.  Of this, $8.6 billion did not facilitate a transition to production for the civilian sector, but rather was devoted to new defense technology initiatives. Of the remaining $12.4 billion that was well-targeted to facilitate the defense transition, $3.8 billion went for separation benefits for demobilizing military personnel; nearly $1.6 billion went to assist defense workers and communities, and about $5.7 billion went to stimulate new high-tech industries.  These proportions are reasonable; since the defense economy is now much larger, the amounts must be adjusted accordingly.

Technology Transfer

One of the largest and most innovative parts of the program was the Technology Reinvestment Project (TRP).  It was a multi-agency program offering nearly $800 million in grants to consortia of large and small manufacturers in both the defense and commercial sectors, nonprofits and labor unions, universities, national labs and other partners to facilitate the transfer of defense technologies to the civilian sector.  While the program had many important successes, they were limited by the excessively high priority given to dual-use projects—that is, projects designed to produce technologies applicable to both the defense and civilian sectors.

Recommendation: Institute a new Technology Reinvestment Project whose priority is developing new civilian uses for defense technology.  Selection criteria should prioritize job creation, green economy transition and technological development that contributes to the productivity of the US economy as a whole, and to the revival of U.S. manufacturing, not military use or dual-use.

Community adjustment and worker retraining

Of the core programs offering community adjustment and worker retraining assistance, the best were a small subsection of pilot programs funded by the Defense Department and administered through the Labor Department.  They funded projects testing innovative ways to help employers retool, restructure and retrain to avoid layoffs; retraining defense workers for new jobs; helping communities develop comprehensive plans to help dislocated workers; and supporting locally-initiated strategies for defense transition.

Recommendation:

Establish a fund for projects adapting these models to the conditions of the 21^st century, and prioritizing the transition of defense workers and technologies to the needs of a transition to a clean energy and transportation economy.

Finance

The Defense Department transferred a modest amount to the Small Business Administration to underwrite approximately $1 billion in loans for small and medium-sized defense businesses seeking to move into commercial areas.  While some of these loans achieved their purpose, the program was, like the TRP, hamstrung by the excessive focus on military and dual-use technology.

Recommendation: Recreate this program and refocus it toward providing defense companies with financial assistance to diversify into production for the commercial sector, giving priority to energy efficiency and clean energy and transportation technology.

1. 3. Initiating new programs filling critical gaps and responding to current conditions

National Network for Manufacturing

While the defense-dependent economy is multi-faceted, at its core—and the source of most of its high-wage, high-skill jobs—is manufacturing.  The Obama administration has prioritized the revival of American manufacturing.  Its proposal for a National Network for Manufacturing would establish as many as 15 Institutes for Manufacturing Innovation, one of which focuses on environmentally sustainable technology.  The proposal is as yet unfunded, though funding for a pilot institute has been funded with an investment of $45 million from the Departments of Defense, Energy and Commerce and the National Science Foundation.  The priorities for the initiative include an increased role for workers and communities in creating and sharing in the gains from innovative manufacturing.

Recommendation:

Increase the focus of this initiative on manufacturing to make the U.S. a leader in the growing world market for clean energy, lightweight materials, and efficient appliances, lights, computers, and vehicles. And develop mechanisms for incorporating in this initiative the national objective of creating new economic opportunity for currently defense-dependent communities.

Technology Transfer

Several of the national labs have developed a focus on clean energy technologies.  One, the National Renewable Energy Lab (NREL) is devoted solely to this purpose. For others it is a sidelight to their main focus on developing defense technology.  In the post-cold war period the labs began to set up Cooperative Research and Development Agreements (CRADAs) with private entrepreneurs to facilitate the commercialization of this technology.

Recommendation: To align the labs’operations with the national need to strengthen the economy during a period of defense downsizing, prioritize the goal of facilitating the commercialization of defense technology.

The Defense Department is spending about $1.2 billion a year from an “Operational Energy” budget to increase the energy efficiency of its operations.  These expenditures offer potential benefits for clean energy innovation for the economy as a whole.

Recommendation: In setting selection criteria for technologies to fulfill DoD’s own clean energy goals, require that the agency establish a preference for those that hold an advantage in adaptability to the civilian energy sector.

Finance

Recommendation: Provide defense companies with a tax credit to help finance research and development related to diversification into commercial markets.

[Assistance to Demobilizing Servicemembers

Recent experience indicates that servicemembers demobilizing in the downsizing will face special challenges in securing civilian employment.

Recommendation: Fix the current GI Bill by expanding the benefit to include vocational training. Pass the Veteran Employment Assistance Act (H.R. 5120/S. 3234) to provide direct assistance to veteran-owned small businesses, improve DoD’s Transition Assistance Program, help veterans secure vocational certificates based on their service, and provide a tax credit to employers who hire veterans.]

Conclusion

As our nation begins its post-Iraq and Afghanistan war defense downsizing, we must provide for the workers and communities that will be affected. If we do this right, this challenge can become an opportunity to support the clean energy and transportation transition we must undertake.

May 1, 2013                                                                                860-240-8820

SENS. HARP, LOONEY EARN SENATE APPROVAL FOR BILL TO MAP ‘ECONOMIC CONVERSION’ THROUGH FUTURES COMMISSION

Hartford – State Senator Toni N. Harp (D-New Haven) was joined today by Senate Majority Leader Martin M. Looney (D-New Haven) to secure an overwhelming vote for her initiative to establish a Futures Commission to help Connecticut prepare for and adapt to changing global economic conditions. Senators Harp and Looney said Connecticut must be prepared to compete in an economy that is likely to include fewer and fewer federal defense contracts over time.

According to the nonpartisan Office of Legislative Research, ‘This bill reactivates a dormant economic development advisory commission… and broadens its charge to include policies encouraging defense contractors and subcontractors to engage in environmentally sustainable and civilian product manufacturing.’

“The proposed Futures Commission will set up a framework that allows us to convert many of our military related jobs and infrastructure into non-military industries,” Senator Harp said. “If we want to take advantage of the green economy that the Obama Administration is pushing, we need to have the infrastructure and trained workers in our state to do so.”

“Connecticut has some of the best high-skilled manufacturing workers in the world,” Senator Looney said. “As needs of the national and world economy evolve, we must ensure that Connecticut’s economy is ready to adapt and our workers are well trained for the jobs of tomorrow.”

The commission would include representatives from the following areas of expertise: economic development, labor, education, higher education, business and industry, science and engineering, social justice, and environmental protection. It would produce a report by December 1, 2014.

“As wars of the past decade wind down, that spending will decrease and jobs in the defense industry will disappear,” Senator Harp said. “That is why this bill is so important. It will set up a commission that will allow Connecticut to adapt to changes in the national and global economies before they happen, giving our state the competitive advantage it needs to retain and create jobs.”

Prior to today’s vote, the bill had been approved unanimously by members of the legislature’s Commerce Committee. After today’s 32 – 3 Senate vote, SB619 now advances to the House of Representatives for its consideration.    ##

You can forward this list to others and find updated action lists here.

Hagel’s speech came exactly one week before the White House’s Fiscal Year 2014 budget request is expected.  Reportedly, the administration will request $526.6 billion for the Pentagon’s base budget (excluding war costs and mandatory spending) in FY14, and in doing so, ignore the onset of sequestration.  Commenting on the forthcoming budget request, Todd Harrison of the Center for Strategic and Budgetary Assessments observes, “The Pentagon, White House, and Congress are all planning as if the defense budget will jump back next year like sequestration never happened…The reality is that the budget caps remain in effect, and the mechanism of sequestration applies to fiscal year 2014 and beyond if the budget caps are exceeded… Congress and the White House are no closer to reaching a compromise to alter or eliminate the budget caps now than they were in August of 2011 when the Budget Control Act was passed. They thought it would never happen for fiscal year 2013, yet it did. Now they are talking the same way about fiscal year 2014.”

As evidence that it is truly ignoring the automatic cuts, the Pentagon is expected to request $8.4 billion in FY14 funding for the troubled Joint Strike Fighter program, most of which will be used to purchase 29 aircraft – the same amount that had been planned before sequestration occurred.  Meanwhile, the former service chief of the Navy, retired Admiral Gary Roughead, has suggested that the Air Force drop its plans for the F-35A variant, and instead begin purchasing the Navy’s carrier-based F-35C.

If last year was any indication, the President’s FY14 budget request will likely receive little to no support in Congress.  Still, POLITICO’s Tim Mak and Austin Wright wonder what the forthcoming request portends for the military over the coming year: Will the budget request break the so-called ‘golden ratio’ in which all three services generally receive an equal share of the budget pie because of the administration’s recent ‘pivot to Asia?’  The duo also wonders if the Pentagon will again attempt to cut Guard and Reserve, the Global Hawk Block 30 drone, or the M1 Abrams tank after being rebuffed by Congress for similar attempts last year.  Early indicators are that the administration will again propose mothballing the Global Hawk Block 30 UAV as well as its Block 40 cousin.

The White House may also consider terminating or further delaying one of two ground vehicles being developed by the services, either the Ground Combat Vehicle (GCV) or the Joint Light Tactical Vehicle (JLTV), the latter of which only barely survived recent budget battles while the former’s development was delayed in the Pentagon’s last budget request.  However, if the Pentagon thought that delaying the GCV would help save the program, it could be terribly wrong: Just this week, the Congressional Budget Office examined the ground vehicle program and found that potential alternatives were both cheaper and more capable.  CBO found that purchasing the German-manufactured Puma infantry fighting vehicle or recapitalizing the current Bradley Fighting Vehicle would both be cheaper and more effective than purchasing the new GCV.  “Fielding Pumas or upgraded Bradleys would cost $14 billion and $9 billion less, respectively, than the Army’s program for the GCV and would pose less risk of cost overruns and schedule delays,” CBO found.  All told, the Army plans on purchasing more than 1,700 GCVs at a total estimated cost of $28.8 billion.  Separately, U.S. Special Operations Command is soon expected to award a $670 million seven-year contract for the development of the Ground Mobility Vehicle intended to replace the HUMVEE for special operator use.

Last month, the Government Accountability Office released its annual selected acquisition report, which examines cost growth and progress in the Pentagon’s acquisition portfolio.  Unlike recent years, this year’s report found that the Pentagon has made significant progress in reducing the cost of most programs in its portfolio.  The report found that eight of the Pentagon’s most costly programs saw a total reduction in estimated costs of $4.9 billion, with the notable exceptions being the F-35 Joint Strike Fighter and first Ford-class supercarrier, whose estimated costs rose by $101 million and $533 million respectively.  Surprisingly, the watchdog agency found that none of the reductions in estimated costs came as a result of decreased procurement buys, but rather, “in several cases — notably ship programs — the cost decreases were due to changes in program estimating assumptions.”

One last problem area identified by GAO is the ground-based midcourse (GMD) missile defense system whose development and testing cost projections have ballooned from $236 million to the current estimate of $1.2 billion.   Separately, Inside Defense reports that the Navy is stepping back from plans to invest more than $15 billion in the Air and Missile Defense Radar (AMDR) system.  The service is expected to reduce the total cost estimate for the program by 62 percent, which would amount to $5.7 billion in savings once a contractor is selected as soon as next month.  

Project on Defense Alternatives Perspective A POLTICO article this week by Philip Ewing calls attention to the growing perception of a zero-sum competition between the budgets for military equipment, ordnance, and supplies (procurement), and the budgets for salaries and benefits of soldiers and their families (personnel). Both these accounts grew rapidly during the last decade, but with easy money getting much harder to find at the Pentagon, defense industry representatives are beginning to call for reigning in personnel costs. Of course, tensions rise in any institution when money is tight.  However, there is no reason to reduce the options at the Pentagon to a trade-off between buying equipment or buying health care for soldiers.  There are other factors that can be adjusted and thereby reduce the pressures on personnel and procurement accounts. For example, the end strength of the armed forces should be reduced further than current plans.  Lower end strength means lower personnel costs and will reduce the requirement for procurement of equipment and supplies.  Lowered recruitment targets will also open some room to cut benefits, if that is considered necessary and desirable.  Overall, end strength reductions are the most straightforward, balanced, and effective way to reduce defense spending. A practical way to mitigate any risks attending to a reduced active component military is to put proportionally more troops in the reserve.  Because most reserve personnel are part-time, reserve units are much less expensive to maintain than the active duty units. The relatively large active component of the military we have today is an artifact of the military activism of the last fifteen years and the high rate of routine forward deployment of soldiers, ships and planes.  If we are willing to be more selective in our military activism, deploy fewer troops forward in peace time, and commit to superior training of our reserves, we will reap large budget savings from a military with a smaller active component and a stronger strategic reserve.  One other important benefit:  If presidents must first mobilize significant reserves before entering into medium and large-scale wars, they will be much more likely to restrain themselves from sending the military into harm’s way when it is not essential to do so.   That’s good for the military and good for America.

]]> http://newprioritiesnetwork.org/reset-defense-bulletin-4-4-2013/feed/ 0 http://newprioritiesnetwork.org/in-obama-budget-social-programs-face-a-cutback/ http://newprioritiesnetwork.org/in-obama-budget-social-programs-face-a-cutback/#comments Fri, 05 Apr 2013 10:10:10 +0000 staff http://newprioritiesnetwork.org/?p=2982 New York Times, April 5th, 2013: President Obama next week will take the political risk of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal. Continue Reading… .

In Obama Budget, Social Programs Face a Cutback

By JACKIE CALMES

WASHINGTON — President Obama next week will take the political risk of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal, administration officials say.

In a significant shift in fiscal strategy, Mr. Obama on Wednesday will send a budget plan to Capitol Hill that departs from the usual presidential wish list that Republicans typically declare dead on arrival. Instead it will embody the final compromise offer that he made to Speaker John A. Boehner late last year, before Mr. Boehner abandoned negotiations in opposition to the president’s demand for higher taxes from wealthy individuals and some corporations.

Congressional Republicans have dug in against any new tax revenues after higher taxes for the affluent were approved at the start of the year. The administration’s hope is to create cracks in Republicans’ antitax resistance, especially in the Senate, as constituents complain about the across-the-board cuts in military and domestic programs that took effect March 1.

Mr. Obama’s proposed deficit reduction would replace those cuts. And if Republicans continue to resist the president, the White House believes that most Americans will blame them for the fiscal paralysis.

Besides the tax increases that most Republicans continue to oppose, Mr. Obama’s budget will propose a new inflation formula that would have the effect of reducing cost-of-living payments for Social Security benefits, though with financial protections for low-income and very old beneficiaries, administration officials said. The idea, known as chained C.P.I., has infuriated some Democrats and advocacy groups to Mr. Obama’s left, and they have already mobilized in opposition.

As Mr. Obama has before, his budget documents will emphasize that he would support the cost-of-living change, as well as other reductions that Republicans have called for in the popular programs for older Americans, only if Republicans agree to additional taxes on the wealthy and infrastructure investments that the president called for in last year’s offer to Mr. Bohener.

Mr. Obama will propose other spending and tax credit initiatives, including aid for states to make free prekindergarten education available nationwide — a priority outlined in his State of the Union address in February. He will propose to pay for it by raising federal taxes on cigarettes and other tobacco products.

“The president has made clear that he is willing to compromise and do tough things to reduce the deficits, but only in the context of a package like this one that has balance and includes revenues from the wealthiest Americans and that is designed to promote economic growth,” said a senior administration official, who, like others, declined to be identified confirming details about the coming budget.

“That means,” the official added, “that the things like C.P.I. that Republican leaders have pushed hard for will only be accepted if Congressional Republicans are willing to do more on revenues.”

But just this week, Representative Eric Cantor, Republican of Virginia, the House majority leader, reiterated the party’s antitax stance and called for reducing spending by cutting waste and making changes in federal programs. The growth in the so-called entitlement programs, especially for health care, is a main driver behind projections of mounting federal debt as baby boomers age and medical costs rise.

Mr. Obama’s budget was due in February but administration officials said it was delayed by the year-end fiscal negotiations and resulting tax changes. It will arrive on Capitol Hill hours before the president dines on Wednesday evening with a dozen Senate Republicans — his second such parlay in recent weeks.

While the group is likely to also discuss gun-safety and immigration legislation, the timing of Mr. Obama’s budget release is all but certain to make it a prime topic.

Some Senate Republicans have been urging the president to speak out more to Americans about his ideas for reducing the growth of entitlement programs. While the White House posted the offer to Mr. Boehner on its Web site this year, aides previously said that Mr. Obama would not include its provisions in his official budget documents. To do so, some said, would expose him to Democrats’ criticism that he is too quick to compromise and allow Republicans to embrace the proposals for spending cuts, in particular the C.P.I., but ignore those for tax increases.

Neither the president nor senior aides privately hold much hope that Republican leaders — Mr. Boehner and Senator Mitch McConnell of Kentucky, the Senate Republican leader — will compromise. So Mr. Obama’s strategy of reaching out to other Senate Republicans reflects a calculation that enough of them might cut a budget deal with the Democratic Senate majority. If that happens, the reasoning goes, a Senate-passed compromise would put pressure on the House to go along.

According to administration officials, the president’s budget plan would reduce projected annual deficits by $1.8 trillion over 10 years, even with the select spending increases. To offset the initiatives’ cost and avoid adding to deficits, Mr. Obama will propose the tobacco tax increase, a limit of $3 million on how much people can accumulate in tax-preferred savings accounts and repeal of a loophole that allows people to collect both disability and unemployment benefits.

Together with the $2.5 trillion in deficit reductions that Mr. Obama and Congressional Republicans have agreed to since 2010, that would bring the total deficit reduction to more than $4.3 trillion over 10 years by the administration’s computations — just over the goal that both parties have set for stabilizing the growth of the national debt.

The deficit, which for this fiscal year is expected to be equal to 5.5 percent of the size of the economy, as measured by the gross domestic product, would decline to 1.7 percent by 2023, according to officials.

Of the more than $2.5 trillion to date in projected 10-year budget savings, nearly 80 percent would result from spending cuts. The rest would derive from tax increases on high incomes that became law on Jan. 1, in the tax agreement that the two parties reached at year-end when the efforts for a broader deficit-reduction deal collapsed.

Mr. Obama’s proposals to reduce deficits $1.8 trillion more over a decade track his offer to Mr. Boehner, adjusted for the roughly $600 billion in higher taxes that became law in January. He will propose more than $600 billion in new revenues — his last offer had called for $1.2 trillion in taxes — mostly by limiting to 28 percent the deductions that individuals in higher tax brackets can claim. Congress has ignored that idea in past years.

Deficits would be reduced another $930 billion through 2023 as a result of spending cuts and other cost-saving changes to domestic programs, and $200 billion more due to reduced interest payments on the federal debt.

Mr. Obama’s proposed spending reductions include about $400 billion from health programs and $200 billion from other areas, including farm subsidies, federal employee retirement programs, the Postal Service and the unemployment compensation system.

In Medicare, the savings would mostly come from payments to health care providers, including hospitals and pharmaceutical companies, but Mr. Obama also proposes that higher-income beneficiaries pay more for coverage.

• 70% of deficit reduction has come from cuts so far and only 30% from revenues.
• Under these cuts, non-defense discretionary spending will fall to its lowest levels on record in relation to the Gross Domestic Product.
• 93% of the country’s economic growth in 2010 was captured by the top 1%.

A summary of the CPC Budget is here, the full Back to Work Budget and links are here, and a good, detailed technical analysis is here.

A side-by-side comparison of the Ryan, Murray and CPC budgets is here.

Analyses of the Ryan/House Republican budget are at Path to Prosperity? How about Path of Austerity and Ryan proposes another path to fewer jobs and slower growth.

By DAMIAN PALETTA

http://online.wsj.com/article/SB10001424127887323826704578355382184797540.html?mod=djemTAR_h

Reuters House Budget Committee Chairman Paul Ryan unveils the Republican budget resolution on Tuesday in Washington.

WASHINGTON—Republican budget standard-bearer Paul Ryan on Tuesday offered his party’s most provocative fiscal framework in years, calling for Medicare and Medicaid overhauls and new limits on defense spending not previously endorsed by party leaders.

These changes, almost all of which the White House and Democrats have said they oppose, would combine with January’s tax increases to eliminate the government’s budget deficit in 2023, a top GOP goal, says Mr. Ryan, chairman of the House Budget Committee. Prior House GOP budget resolutions called for changes that would have taken several decades to eliminate the deficit.

“Unless we change course, we will have a debt crisis,” the House GOP budget proposal says. “Pressed for cash, the government will take the easy way out: It will crank up the printing presses. The final stage of this intergenerational theft will be the debasement of our currency.”

The White House criticized Mr. Ryan’s budget proposal Tuesday, calling it the “wrong course” to reduce the deficit. The House Republican plan would burden the middle class by slashing spending without raising taxes on upper-income households, White House Press Secretary Jay Carney said in a written statement.

“Deficit reduction that asks nothing from the wealthiest Americans has serious consequences for the middle class,” he added.

Photo: Getty Images.

Neither the House Republican framework—nor a counterproposal soon to be released by Senate Democrats—is likely to be enacted, but the two plans set out the battle lines for tax and spending fights that are likely to dominate Washington in the next few months. The White House is expected to offer its own budget blueprint in April, further cementing the differences between Democrats and Republicans.

“These budgets will establish the priorities of both parties, and then the challenge will be to see if there’s a way to bridge the differences. Obviously, that’s a large chasm to bridge,” said Rep. Chris Van Hollen of Maryland, the ranking Democrat on the budget committee. “At least it establishes the two poles for the debate.”

Perhaps nowhere are the differences more stark than in health-care spending. The GOP budget says it would accomplish roughly 40% of its $4.6 trillion in spending cuts over 10 years by repealing the White House’s controversial 2010 health-care law. Democrats and President Barack Obama are sure to challenge both Mr. Ryan’s goal and his budget math, since they defend the law as good policy and say it reduces deficits.

Mr. Ryan, a Wisconsin Republican, plans to move his budget resolution to the House floor by next week.

In order to balance the budget in 10 years, Mr. Ryan would cut spending from a projected 22.9% of gross domestic product to 19.1%. Spending then would match recent projections from the Congressional Budget Office that say estimated total federal revenue will grow to 19.1% of GDP in 2023 as a result of, among other factors, a tax increase on high wage-earners enacted in January.

The cuts would begin almost immediately and build over time. The House GOP plan would reduce spending in 2015 to $3.498 trillion, $40 billion less than the government spent in 2012 and $405 billion less than the Congressional Budget Office projects it will spend in 2015.

Still, spending would grow under the plan, though more slowly than under current projections. Mr. Ryan says spending would increase by 3.4% each year, compared with 5% under current law.

Much of the initial and future cuts would come from repealing the health-care law, the GOP plan says. Other large cuts would come from turning Medicaid into a state block-grant program, which Mr. Ryan says would reduce spending by roughly $750 billion over 10 years. Medicaid is the health-care program for the poor and disabled funded jointly by states and the federal government.

Medicare, meanwhile, would also go through a transformation, but the budget savings would be minor in the next decade. The budget would create an optional premium-support mechanism that would allow newly eligible seniors in 2024 to determine whether to continue using traditional Medicare or have the government assist in paying the premiums of a private plan. In the next 10 years, the GOP budget plan would reduce Medicare spending by $129 billion, much less than was forecast in the 2012 budget resolution. That could be partly because congressional budget analysts recently lowered their projections for future health-care costs.

Proposals in the plan to limit defense spending are likely to draw scrutiny from both Democrats and Republicans. Mr. Ryan’s plan doesn’t provide great detail about where the cuts would fall but says it would authorize $560.2 billion in defense spending in the fiscal year that begins in October, totaling more than $6 trillion for defense spending over 10 years.

“While this is significantly less than the levels in previous budget resolutions passed by the House, it is approximately $500 billion more than will be available absent changes in the Budget Control Act,” the budget resolution says, citing the 2011 law that implemented the across-the-board sequester cuts and new caps on discretionary spending. This contrasts with the proposals of Mr. Ryan’s running mate in the 2012 election, GOP presidential nominee Mitt Romney, who called for a large investment in defense spending in the coming years.

On taxes, Mr. Ryan repeats the GOP goals of overhauling the tax code and creating two tax brackets for individuals, at 10% and 25%. He vows to limit or eliminate tax breaks.

The proposal would lower the top corporate tax rate to 25% from the current 35%. The White House last year called for lowering the top corporate rate to 28%.

The GOP budget doesn’t propose any new tax increases, but neither does it call for repealing the January fiscal-cliff deal that raised tax rates on upper-income households and is projected to bring in more than $600 billion in revenue over 10 years. Mr. Ryan broke with many in his party when he supported that plan.