The President's Budget's Terminations, Reductions, and Savings

Last week, the White House released the President’s FY 2012 budget proposal. On Wednesday, CRFB released its analysis of the budget. Today, we take a closer look at the specific proposals found in the budget’s Terminations, Reductions, and Savings.

Every year, the President’s budget proposal includes a list of potential discretionary program cuts. These programs are those identified by the Administration as ineffective, inefficient, duplicative, low-priority, or otherwise unnecessary and are either recommended for elimination or reduced funding. In the FY 2012 budget proposal, the Administration identifies 146 such program-specific cuts totaling $15 billion, along with another $10 billion in government-wide efficiency savings and other savings.

These savings, which are measured relative to 2010 (since 2011 appropriations have not yet been passed), are meant to help meet the President’s goal of freezing non-security discretionary spending through 2015 and containing defense spending growth to the rate of inflation. These savings come on top of nearly $1 billion in already implemented administrative savings, about $5 billion from freezing federal worker cost of living increases, and $13 billion in savings identified by Secretary Gates.

The 146 discretionary terminations and reductions come from 26 different agencies, spanning the federal government. Cuts range in size, from over $2.5 billion for LIHEAP reductions and termination of production of the C-17 aircraft, to only $1 million for the elimination of the Christopher Columbus Fellowship Foundation, for example.

HHS is subject to the most cuts of any one agency, with 32 individual terminations and reductions totaling savings of almost $4.7 billion in 2012 (half from LIHEAP). Though only seven cuts apply to the Defense Department, those cuts add up to $3.5 billion – the second largest savings total from any agency.

Besides the $2.53 billion reduction to the Low Income Home Energy Assistance Program (LIHEAP) and the $2.5 billion termination of the C-17, some of the largest cuts came from reducing spending on water treatment grants ($1.1 billion), cutting grants to airports ($1.01 billion), reducing various Community Development and Community Service Block Grants (over $650 million), and terminating the F-35 Alternate Engine Program ($465 million).

Among the proposals include 48 terminations and reductions – totaling just under $6 billion – which appeared in last year’s proposed terminations. Among the largest of these are the aforementioned terminations of the C-17 and the F-35 Alternate Engine, cuts to low-priority Corps of Engineers projects including Water and Wastewater Treatment Projects (almost $450 million), and reductions in regional health care facilities construction programs ($337 million). The list also contains seven recommendations – totaling $746 million – proposed by the Fiscal commission, including the reductions in grants to airports, low priority construction projects, and fossil energy research and development, to name a few. (Note that this list excludes the administrative savings, federal pay freeze, and contracting reforms which also reflect commission recommendations.)

In general, Congress has rejected the majority of terminations and reductions proposed by the President. Two years ago, however, the President had about a 60 percent success rate, according to our analysis. And while his success rate for this year is still uncertain – Congress has been operating under a Continuing Resolution (CR) with no FY 2011 budget resolution or appropriations bill – the sheer size of the cuts being demanded by House Republicans will increase the likelihood of a high success rate. We hope Congress will heed this year’s recommendations, too, as every little bit of deficit reduction helps.