2012 United States federal budget

(States Twitter)-2012 United States federal budget is the United States federal budget to fund government operations for the fiscal year 2012, which is October 2011–September 2012. The budget is the subject of a spending request by President Barack Obama, while the Republican-held House of Representatives and the Congressional Progressive Caucus have announced competing plans for the 2012 budget. The budget plans are intended to focus on deficit reduction, but differ in their changes to taxation, entitlement programs, defense spending, and research funding. The actual appropriations for Fiscal Year 2012 must be authorized by the full Congress before it can take effect, according to the United States budget process.

Total spending

The Obama administration's spending request contains $2.627 trillion in receipts and $3.729 trillion in outlays for 2012. The Republican plan contains $2.533 trillion in revenues and $3.529 trillion in outlays.

Overview

In February 2010, President Barack Obama formed a bipartisian commission, called the Bowles–Simpson Commission, to recommend steps that could be taken to reduce future budget deficits. The commission released its report on November 10, 2010, which recommended deep domestic and military spending cuts, reforming the tax system by eliminating many tax breaks in return for lower overall rates, and reducing benefits for Social Security and Medicare. The plan did not receive the supermajority vote within the commission which it needed to be directly sent to Congress, and portions of the plan were rejected by both parties.

The Obama administration proposed his 2012 budget on February 14, 2011. Obama's budget proposal aimed to reduce annual deficits to more sustainable levels by making selective cuts in spending, while increasing support in specific areas such as education and clean energy to foster long-term economic growth. The plan did not contain specific proposals to rein in spending on entitlement programs such as Medicare, Medicaid, and Social Security, which are expected to make up much of the increase in the deficit in future years. The budget represented a shift from the Obama administration's strategy in previous years of using increased government spending, such as the American Recovery and Reinvestment Act of 2009, to combat the late 2000s recession. The 2012 budget plan was instead projected to reduce deficits by $1.1 trillion over the next ten years. Republicans criticized the plan for not going far enough to reduce future deficits.

A competing plan, called The Path to Prosperity, was announced by House Republicans, led by Representative Paul Ryan, on April 5, 2011. This plan would reportedly cut $5.8 trillion in spending over ten years, but would also reduce tax income by $4.2 trillion below current projections. The plan would make no further reduction in defense spending beyond the Obama administration's plan, but would make major changes to Medicare, Medicaid, and Social Security which would pass much of the cost of these programs onto individuals. It would also cut energy research and other applied research and development. This plan was criticized for disproportionately cutting programs which benefit the disadvantaged and stifling innovation, while not cutting defense spending further and containing deep tax cuts.

In response to the Republican plan and a recent deal on the 2011 budget, President Obama on April 13, 2011 presented an alternative plan in a major policy speech. This new plan would cut deficits by $4 trillion over 12 years through a combination of broad spending cuts and tax increases, including the expiration of the Bush tax cuts for incomes over $200,000 and proposed a cap on increases in Medicare and Medicaid spending. Obama criticized the Republican plan for enriching the wealthy through tax cuts while placing a greater economic burden on the elderly through Medicare cuts. Obama's plan was criticized by Republicans for its large cuts in defense spending and for its lack of specific detail.