FY 2011 Budget
JANUARY 25, 2009
Jenn Castagna, Vice President
Washington Partners, LLC
At 2:00 p.m. today, the Office of Management and Budget (OMB) hosted a Conference Call to discuss the Administration’s Fiscal Year (FY) 2011 proposed three-year budget spending freeze, which will cut $250 billion from the Federal deficit over the next decade.
Christina M. Tchen, Director of the White House Office of Public Engagement, hosted the call, while Rob Nabors, Deputy Director of OMB, provided a summary of the Administration’s proposal and responded to questions. Kenneth Baer, Associate Director for Communications and Strategic Planning at OMB, also participated in the call and responded to questions.
Summary of Proposed FY11 Budget Spending Freeze – Rob Nabors
Rob Nabors opened the discussion of the Administration’s FY 2011 Budget by providing a context for the proposed three-year spending freeze. He stated that when President Obama entered the White House, the economy was “on the brink” of a staggering depression and the Administration needed to take immediate and extraordinary steps. Nabors asserted that one year later, the economy is bouncing back, but more needs to be done to reverse the decline’s adverse effects on middle class families. He continued that the President intends to change “business as usual” and to take common sense steps, including ending programs that do not work, streamlining those that do, and reducing the influence of special interest groups with regard to budget priorities.
To accomplish this, Nabors said that the Administration’s FY 2011 Budget will propose to freeze nonsecurity, nondefense discretionary spending for FY 2011 and the two subsequent fiscal years. He noted that the proposed spending freeze would be government-wide, with the exception of defense, homeland security, veterans, and international spending. Also, the spending freeze will not impact mandatory spending programs, such as, Medicare, Medicaid, and Social Security. Additionally, the freeze will not be “across the board”. Nabors stated that the Administration has gone through the budget “line by line” to eliminate programs that are not working and cut those that are not considered priorities. As a result, according to Nabors, some programs will see proposed increases, while others will see proposed cuts or eliminations. According to the Administration’s estimates, the proposed budget spending freeze will save an estimated $250 billion over the next decade.
Nabors and others invited those listening to pose questions. A representative of the United Church of Christ began with a question regarding the President’s commitment to reducing poverty in half over the next ten years and whether he has “abandoned” that pledge. Nabors stated the President remains committed to addressing poverty and that some programs focused on those populations will see increases, as well as additional assistance in the pending JOBS package.
The next questioner referred to press reports that in FY 2011 there will be a $15 billion reduction in discretionary spending as a result of the freeze. Assuming that to be the case, Administration representatives were asked if the larger share of the cumulative $250 billion in cuts could be expected in the “out years”, and whether the FY 2011 budget proposal would outline those proposed cuts. Nabors responded that the $250 billion in savings is realized by comparing proposed spending to baseline spending in the future. The FY 2011 budget proposal will show which programs are above and below the baseline in out years.
An individual also inquired as to whether all international spending would be exempted from the proposed freeze, versus just a portion of the spending. Nabors confirmed that all international spending would be exempt, as the Administration understands that in a time of war, freezing international spending would undermine military and diplomatic efforts. He also noted that global health spending would be exempt from the spending freeze.
When asked how federal employee pay would be treated under the proposal, Nabors could not answer the question and said those details would be revealed when the FY 2011 budget proposal is unveiled on Monday, February 1, 2010.
Nabors stepped away from the call, and Kenneth Baer managed the remainder of the call. The first question to Baer was whether the administrative costs of Medicare and Medicaid would be frozen since those costs are paid with discretionary funds. Baer acknowledged that he did not know the answer and would have to follow up with a response.
Joel Packer of the Raben Group then asked whether the three-year proposed spending freeze considers inflation, as well as how the Administration is proposing to enforce the proposed freeze among appropriators on Capitol Hill. Baer responded that the freeze is in nominal spending and would not take into account inflation. As for “enforcement”, Baer said that the Administration is committed to working with Congress to adopt the budget. Another caller then inquired as to whether other strategies to address the deficit would be included in the budget, such as, tax increases to raise revenue. Baer noted that the President has already unveiled one revenue raiser – the responsibility fee levied on large banks to repay TARP. He said that a range of other measures are being considered and would not be finalized until the FY 2011 budget is unveiled on Monday.
Cynthia Littlefield from the Association of Jesuit Colleges and Universities then asked about the President’s commitment to education as a priority for this Administration. Baer said “technically” education falls into the category of discretionary spending, so is not exempt from the proposed freeze. He did note, however, that the cuts and freezes in spending will be targeted and are not across the board. According to Baer, the President has clearly demonstrated that education is a high priority and has already unveiled two education investments that will be included in the FY2011 budget: 1) an expansion of Race to the Top funding for K-12 education and 2) assistance for individuals facing student loan debts. He employed the analogy that, in tough times, decisions must focus on “the essentials” and that the President has shown that education is essential to his goals. Littlefield followed up with a question as to whether the FY 2011 budget would presume passage of pending SAFRA legislation. Baer responded that he was unable to “get into details” and that the whole budget will be available on Monday.
Individuals then asked about the impact of the spending freeze on specific programs of interest to Native Americans and the Ryan White program.
Baer ended the call by stating that information on specific funding levels for programs would be available Monday, February 1, 2010.
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