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A New Era of Responsibility
Renewing America’s Promise

Office of Management and Budget
www.budget.gov

A A New Era of Responsibility
Renewing America’s Promise

Office of Management and Budget
www.budget.gov

Table of Contents

Page

President’s Message ������������������������������������������������������������������������������������������������������������������������������������1
Inheriting a Legacy of Misplaced Priorities ����������������������������������������������������������������������������������������������5
Jumpstarting the Economy and Investing for the Future ����������������������������������������������������������������������17
Conclusion �������������������������������������������������������������������������������������������������������������������������������������������������43
Department of Agriculture �����������������������������������������������������������������������������������������������������������������������45
Department of Commerce �������������������������������������������������������������������������������������������������������������������������51
Department of Defense �����������������������������������������������������������������������������������������������������������������������������53
National Intelligence Program �����������������������������������������������������������������������������������������������������������������57
Department of Education �������������������������������������������������������������������������������������������������������������������������59
Department of Energy ������������������������������������������������������������������������������������������������������������������������������63
Department of Health and Human Services �������������������������������������������������������������������������������������������67
Department of Homeland Security ����������������������������������������������������������������������������������������������������������71
Department of Housing and Urban Development ����������������������������������������������������������������������������������73
Department of the Interior �����������������������������������������������������������������������������������������������������������������������77
Department of Justice�������������������������������������������������������������������������������������������������������������������������������81
Department of Labor ��������������������������������������������������������������������������������������������������������������������������������83
Department of State and Other International Programs �����������������������������������������������������������������������87
Department of Transportation �����������������������������������������������������������������������������������������������������������������91
Department of the Treasury ���������������������������������������������������������������������������������������������������������������������93
Department of Veterans Affairs ���������������������������������������������������������������������������������������������������������������95
Corps of Engineers—Civil Works �������������������������������������������������������������������������������������������������������������97
Environmental Protection Agency �����������������������������������������������������������������������������������������������������������99
National Aeronautics and Space Administration ����������������������������������������������������������������������������������103
National Science Foundation������������������������������������������������������������������������������������������������������������������105
Small Business Administration��������������������������������������������������������������������������������������������������������������107
Social Security Administration ��������������������������������������������������������������������������������������������������������������109
Corporation for National and Community Service �������������������������������������������������������������������������������111
Summary Tables �������������������������������������������������������������������������������������������������������������������������������������113

GENERAL NOTES
1� All years referenced for economic data are calendar years
unless otherwise noted� All years referenced for budget
data are fiscal years unless otherwise noted�
2� At the time of this writing, only three of the appropriations
bills for 2009 had been enacted; therefore, references to
2009 spending in the text and tables reflect approximate
estimates of final likely appropriations action that set total
discretionary funding at the level assumed to conform
to the total level for appropriations in the Concurrent
resolution on the Budget for 2009� Adjustments are also
made to include the costs of the just-enacted American
recovery and reinvestment Act of 2009�
3� Details in the tables may not add to the totals due to
rounding�
4� Web address: http://www.budget.gov

U�S� GOVErNMENT PrINTING OFFICE
WASHINGTON, D�C� 2009
For sale by the Superintendent of Documents, U�S� Government Printing Office
Internet: bookstore�gpo�gov
Fax: (202) 512-2250

Phone: (866) 512-1800 DC Area: (202) 512-1800

Mail: Stop IDCC, Washington, DC 20402-0001
ISBN: 978-0-16-082552-1

PRESidENT’S MESSAGE

Throughout America’s history, there have been
some years that appeared to roll into the next
without much notice or fanfare� Budgets are proposed that offer some new programs or eliminate
an initiative, but by and large continuity reigns�
Then there are the years that come along
once in a generation, when we look at where the
country has been and recognize that we need a
break from a troubled past, that the problems we
face demand that we begin charting a new path�
This is one of those years�
We start 2009 in the midst of a crisis unlike
any we have seen in our lifetimes� Our economy
is in a deep recession that threatens to be deeper
and longer than any since the Great Depression�
More than three and a half million jobs were lost
over the past 13 months, more jobs than at any
time since World War II� In addition, another 8�8
million Americans who want and need full-time
work have had to settle for part-time jobs� Manufacturing employment has hit a 60-year low� Our
capital markets are virtually frozen, making it
difficult for businesses to grow and for families to
borrow money to afford a home, car, or college education for their kids� Many families cannot pay
their bills or their mortgage payments� Trillions
of dollars of wealth have been wiped out, leaving many workers with little or nothing as they
approach retirement� And millions of Americans
are unsure about the future—if their job will be
there tomorrow, if their children will be able to
go to college, and if their grandchildren will be
able to realize the full promise of America�
This crisis is neither the result of a normal
turn of the business cycle nor an accident of history� We arrived at this point as a result of an era
of profound irresponsibility that engulfed both

private and public institutions from some of our
largest companies’ executive suites to the seats
of power in Washington, D�C� For decades, too
many on Wall Street threw caution to the wind,
chased profits with blind optimism and little regard for serious risks—and with even less regard
for the public good� Lenders made loans without
concern for whether borrowers could repay them�
Inadequately informed of the risks and overwhelmed by fine print, many borrowers took on
debt they could not really afford� And those in
authority turned a blind eye to this risk-taking;
they forgot that markets work best when there
is transparency and accountability and when the
rules of the road are both fair and vigorously enforced� For years, a lack of transparency created
a situation in which serious economic dangers
were visible to all too few�
This irresponsibility precipitated the interlocking housing and financial crises that triggered
this recession� But the roots of the problems we
face run deeper� Government has failed to fully
confront the deep, systemic problems that year
after year have only become a larger and larger
drag on our economy� From the rising costs of
health care to the state of our schools, from the
need to revolutionize how we power our economy
to our crumbling infrastructure, policymakers in
Washington have chosen temporary fixes over
lasting solutions�
The time has come to usher in a new era—
a new era of responsibility in which we act not
only to save and create new jobs, but also to lay
a new foundation of growth upon which we can
renew the promise of America�
This Budget is a first step in that journey� It
lays out for the American people the extent of

2

the crisis we inherited, the steps we will take to
jumpstart our economy to create new jobs, and
our plans to transform our economy for the 21st
Century to give our children and grandchildren
the fruits of many years of economic growth�
It is true that we cannot depend on government alone to create jobs or to generate long-term
growth� Ours is a market economy, and the
Nation depends on the energy and initiative of
private institutions and individuals� But at this
particular moment, government must lead the
way in providing the short-term boost necessary to lift us from a recession this severe and
lay the foundation for future prosperity� That’s
why immediately upon taking office, my Administration worked with the Congress to pass the
American recovery and reinvestment Act� This
plan’s provisions will put money in the pockets
of the American people, save or create at least
three and a half million jobs, and help to revive
our economy�
This moment is one of great paradox and
promise: while there are millions of Americans
trying to find work, there is also so much work
to be done� That’s why the recovery Act and our
Budget will make long overdue investments
in priorities—like clean energy, education,
health care, and a new infrastructure—that are
necessary to keep us strong and competitive in
the 21st Century�
To finally spark the creation of a clean energy
economy, we will make the investments in the
next three years to double our Nation’s renewable energy capacity� We will modernize Federal
buildings and improve the energy efficiency of
millions of American homes, saving consumers
and taxpayers billions on our energy bills� In the
process, we will put Americans to work in new
jobs that pay well—jobs installing solar panels
and wind turbines; constructing energy efficient
buildings; manufacturing fuel efficient vehicles;
and developing the new energy technologies that
will lead to even more jobs and more savings,
putting us on the path toward energy independence for our Nation and a cleaner, safer planet
in the process�

A NEW ErA OF rESPONSIBILITy
To improve the quality of our health care while
lowering its cost, we will make the immediate investments needed to computerize all of America’s
medical records within five years while protecting the privacy of patients� This is a necessary
step to reducing waste, eliminating red tape,
and avoiding the need to repeat expensive medical tests� We also will fundamentally reform our
health care system, delivering quality care to
more Americans while reducing costs for us all�
This will make our businesses more competitive and ease a significant and growing burden
middle-class families are bearing�
To give our children a fair shot to thrive in a
global, information-age economy, we will equip
thousands of schools, community colleges, and
universities with 21st Century classrooms, labs,
and libraries� We’ll provide new technology and
new training for teachers so that students in Chicago and Boston can compete with kids in Beijing
for the high-tech, high-wage jobs of the future�
We will invest in innovation, and open the doors
of college to millions of students� We will pursue
new reforms—lifting standards in our schools
and recruiting, training, and rewarding a new
generation of teachers� And in an era of skyrocketing college tuitions, we will make sure that the
doors of college remain open to children from all
walks of life�
To create a platform for our entrepreneurs
and workers to build an economy that can lead
this future, we will begin to rebuild America for
the demands of the 21st Century� We will repair
crumbling roads, bridges, and schools as well as
expand broadband lines across America, so that
a small business in a rural town can connect and
compete with its counterparts anywhere in the
world� And we will invest in the science, research,
and technology that will lead to new medical
breakthroughs, new discoveries, and entire new
industries�
regaining our economic strength also is critical to our national security� It is a major source
of our global leadership, and we must not let it
waver� That’s why this Budget makes critical investments in rebuilding our military, securing our

3

PrESIDENT’S MESSAGE
homeland, and expanding our diplomatic efforts
because to provide for the security of the United
States we need to use all elements of our power�
Moreover, to honor the service of those who have
worn our military’s uniform, we will make the investments necessary to take care of our veterans�
For these initiatives to lay a foundation for
long-term economic growth, it’s important that
we not only change what Washington invests
in, but how Washington does business� We must
usher in a new era of responsibility in which we
empower citizens with the information they need
to hold their elected representatives accountable
for the decisions they make� We need to put tired
ideologies aside, and ask not whether our Government is too big or too small, or whether it is the
problem or the solution, but whether it is working
for the American people� Where it does not, we
will stop spending taxpayer dollars; where it has
proven to be effective, we will invest� This is the
approach, for example, we have begun in allocating funds to education, health care, and national
security� And as we continue the budgetary process, we will identify more cuts and reallocations
for the full Budget presented this spring, and undertake efforts to reform how the programs you
fund are managed so that overruns are avoided,
waste is cut, and you get the most effective and
efficient Government possible�
In the little more than a month my Administration has had in office, we have not had the time
to fully execute all the budget reforms that are
needed, and to which I am fully committed� Those
will come in the months ahead, and next year’s
budget process will look much different�
But this Budget does begin the hard work
of bringing new levels of honesty and fairness
to your Government� It looks ahead a full 10
years, making good-faith estimates about what
costs we would incur; and it accounts for items
that under the old rules could have been left
out, making it appear that we had billions more
to spend than we really do� The Budget also begins to restore a basic sense of fairness to the
tax code, eliminating incentives for companies
that ship jobs overseas and giving a generous

package of tax cuts to 95 percent of working
families�
Finally, while we have inherited record budget
deficits and needed to pass a massive recovery
and reinvestment plan to try to jump-start our
economy out of recession, we cannot lose sight of
the long-run challenges that our country faces and
that threaten our economic health—specifically,
the trillions of dollars of debt that we inherited,
the rising costs of health care, and the growing
obligations of Social Security� Therefore, while
our Budget will run deficits, we must begin the
process of making the tough choices necessary
to restore fiscal discipline, cut the deficit in half
by the end of my first term in office, and put our
Nation on sound fiscal footing�
Some may look at what faces our Nation and
believe that America’s greatest days are behind
it� They are wrong�
Our problems are rooted in past mistakes, not
our capacity for future greatness� We should never
forget that our workers are more innovative and
industrious than any on earth� Our universities
are still the envy of the world� We are still home
to the most brilliant minds, the most creative entrepreneurs, and the most advanced technology
and innovation that history has ever known� And
we are still the Nation that has overcome great
fears and improbable odds� It will take time, but
we can bring change to America� We can rebuild
that lost trust and confidence� We can restore opportunity and prosperity� And we can bring about
a new sense of responsibility among Americans
from every walk of life and from every corner of
the country�

Barack OBama

The WhiTe hOuse,
FeBruary 26, 2009.

iNhERiTiNG A LEGACy Of
MiSPLACEd PRiORiTiES
Over the decades, the United States has grown
and prospered when all Americans have shared
in the opportunities created by our economy�
Bottom-up growth that empowers hardworking
families to climb the ladder of success and raise
their children with security, opportunity, and
hope for the future lies at the heart of the American dream� It is the responsibility of our elected
leaders to create the conditions for our people to
aim high, work hard, and realize the full promise
of American life�

record profits and paid themselves millions of
dollars in compensation and bonuses� There’s
nothing wrong with making money, but there
is something wrong when we allow the playing
field to be tilted so far in the favor of so few�
This is the legacy that we inherit—a legacy
of mismanagement and misplaced priorities,
of missed opportunities and of deep, structural
problems ignored for too long� It’s a legacy of
irresponsibility, and it is our duty to change it�

yet for far too long, the resilience, optimism,
and industriousness of the American people have
been frustrated by irresponsible policy choices
in Washington� Prudent investments in education, clean energy, health care, and infrastructure were sacrificed for huge tax cuts for the
wealthy and well-connected� In the face of these
trade-offs, Washington has ignored the squeeze
on middle-class families that is making it harder for them to get ahead� Our Government has
spent taxpayer money without making sure the
numbers add up and without making it clear and
understandable to the American people where
their money was being spent� Tough choices have
been avoided, and we have failed to make the
wise investments we need to compete in a global,
information-age economy�

A Deep AnD Destructive recession
No one reading this report needs to be told
that our economy is in crisis� We have lost jobs
for 13 consecutive months for a total of 3�6 million jobs lost� According to the Bureau of Labor
Statistics, more jobs were lost last year than in
any year since data collection of this kind began
in 1939 (see Figure 1, Annual Change in Payroll
Employment, 1940-2008)� In percentage terms,
the job loss in the current recession is the worst
since the early 1980s (see Figure 2, Job Losses in
Five recessions)�
Many newly unemployed workers will be facing long odds when they try to find another good
job� Since the start of the recession, the number
of those unemployed for 27 weeks or more has
risen by 1�3 million including a 440,000-person
increase in December 2008 and January 2009�
Increasingly, workers are giving up looking for
work or involuntarily settling for part-time work;
in fact, the underemployment rate, which measures all those out of work or underemployed for
economic reasons, rose to 13�9 percent in January 2009 (see Figure 3, The Underemployment
rate)�

While middle-class families have been playing
by the rules, living up to their responsibilities as
neighbors and citizens, those at the commanding
heights of our economy have not� They have taken risks and piled on debts that while seemingly
profitable in the short-term, have now proven to
be dangerous not only for their individual firms
but for the economy as a whole� With loosened
oversight and weak enforcement from Washington, too many cut corners as they racked up

5

6

A NEW ErA OF rESPONSIBILITy
Figure 1

Annual Change in Payroll Employment
1940-2008

Millions of jobs

5
4
3
2
1
0
-1
-2
-3

ing Employment)� Housing starts
and permits continue to fall; in
fact, the U�S� Census reported that
housing starts were at the lowest
levels since monthly recording
of these data began in 1959 (see
Figure 5, Housing Starts)� At the
same time, mortgages in the foreclosure process increased 204 percent between October 2006 and
October 2008, and over 1 million
properties went into foreclosure
in 2008�

Unsurprisingly,
consumer
confidence too is at an all time
Source: Bureau of Labor Statistics.
low (see Figure 6, Consumer
Note: Values reflect December to December changes in seasonally-adjusted payroll employment.
Confidence)� Some Americans
are unable to keep up with the
mounting bills and dwindling
Every sector of our economy has been affect- prospects: last fiscal year, personal bankrupted by this recession� The automobile industry, cy filings topped 1 million, an increase of alwhich required a Government rescue this past most 30 percent from 2007� The overall picture
winter, has shed 204,000 jobs since the start of is bleak: GDP fell at a 3�8 percent annualized
this recession� Over the last year, the Big Three rate in the last quarter of 2008, the biggest
automakers have seen sales plunge anywhere economic contraction in more than a quarter
between 39 and 55 percent� Manufacturing as a of a century�
whole has been hard hit with employment falling to a 60-year low (see Figure 4, ManufacturA central cause of this sudden downturn has
been a meltdown in our capital
and credit markets� The subprime
Figure 2
mortgage crisis is the result of a
Job Losses in Five Recessions
perfect storm of excessive riskPercent decline from business cycle peaks
taking by both investors and bor0.5
rowers, inadequate disclosure,
0
non-existent or myopic oversight,
-0.5
market gatekeepers compromised
by conflicts of interest, and irre-1.0
sponsible lending to thousands of
-1.5
Americans who, when offered the
chance to own their own home,
-2.0
were advised to throw caution to
-2.5
the wind� Through sophisticated
-3.0
financial engineering, bad loans
Peak Months
APR 1960
JUL 1981
JUL 1990
MAR 2001
DEC 2007
made on Main Street made their
-3.5
way onto the books of some of the
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46
Months from Peak
largest firms on Wall Street, and
Source: Employment data from Bureau of Labor Statistics. Business cycle peak dates from National Bureau of
Economic Research.
then were sold to pension funds
and individual investors around
-4
1940

1948

1956

1964

1972

1980

1988

1996

2004

INHErITING A LEGACy OF MISPLACED PrIOrITIES

the world� Once the real estate
market began to cool, loans defaulted at alarming numbers, these
complex financial products started
to lose their value, and the credit
boom unraveled, erasing enormous
wealth for both families and business as well as the jobs fueled by
consumer spending�

7
Figure 3

The Underemployment Rate
Percent

16
14
12

U-6—Total unemployed, plus discouraged
workers, plus all other marginally attached
workers, plus total employed part time for
economic reasons as a percent of the
civilian labor force plus discouraged
workers and all other marginally attached
workers.

U-6—Underemployment Rate

10
8

The resulting collapse laid low
6
some of the most prominent fi4
nancial institutions in the AmeriU-3—Official Unemployment Rate
can economy, and has wiped out
2
trillions of dollars in wealth and
0
retirement savings for millions of
1994
1995
1997
1999
2001
2003
2005
2006
2008
Americans who thought they had
Source: Bureau of Labor Statistics.
successfully provided for their
golden years� Uncertainty about
how far and wide the contagion
has spread has brought our financial system An Anemic recovery AlreADy HAs Hurt
to a near standstill� Loans to consumers, small AmericAn FAmilies
businesses, and other borrowers are hard to
Adding insult to injury, American families have
come by, and likewise, the mortgage squeeze
acts as a brake on the return of housing de- entered this recession weakened by the anemic
mand� The injection of unprecedented amounts recovery from the last downturn at the beginning
of funds by the Federal reserve and through of this decade� For millions of Americans, the rethe Troubled Asset relief Program (TArP) at- covery from 2001 through 2007 was hardly one at
tempted to restore confidence in the financial all� Measured by job gains, the economic recovery
markets to get capital flowing
once more and has slowed or perFigure 4
haps halted the meltdown—but it
Manufacturing Employment is Lower than at
has not been enough to fully reAny Time Since 1946
Millions of employees
store confidence and the smooth
20
operation of credit markets� A
lack of trust still pervades mar19
kets� When that happens, inves18
tors pull their money out of the
17
market, depositors make runs at
banks, and banks stop lending
16
to companies and to one anoth15
er� Because of this lack of trust,
14
our credit markets are effectively
still frozen� As a result, business13
es are unable to expand, families
12
are unable to finance a new home,
11
a new car, or a college education
1946
1953
1960
1967
1974
1981
1988
1995
2002
2009
for their kids; and our economy
Source: Bureau of Labor Statistics.
suffers�

8

A NEW ErA OF rESPONSIBILITy
Figure 5

Figure 7, 2000s Economic recovery Brought Weakest Job Gains)�
real wages also showed very little
improvement in the latest expansion, rising on average at an annualized rate of just 0�1 percent each
month, compared with 0�7 percent
during the 1990s expansion�

Housing Starts have Reached
an All-Time Low
Millions of housing units per month

3.0
2.5
2.0
1.5
1.0
0.5
0
1960

1966

1972

1978

1984

1990

1996

Source: U.S. Census Bureau.

in the 2000s was the weakest one in a generation�
From 2001 to 2007, the period in which the economy was expanding as measured by the growth in
output, only 99,000 jobs were created each month
on average� The period began with an outright
decline in employment that did not end until
2003� Average job gains were more than twice as
large during the expansions of the 1980s (228,000
a month) and the 1990s (200,000 a month) (see

On top of that, this was the first
economic recovery since World
War II where real median household income did not rise above its
previous peak (see Figure 8, real
Median Household Incomes)� Between 2000 and 2007, median in2002
2008
come among households headed
by those under 65 fell by $1,951�
To keep up, more and more Americans have turned to credit and
debt: by 2007, household debt as a percentage
of disposable personal income was 133�7 percent� And some Americans have not been able
to keep up, falling out of the middle class and
into poverty� From 2000 to 2007, the number of
Americans living in poverty increased by nearly 5�7 million, and 1�7 more children lived in
poverty in 2007 than in 2000� In fact, 18 percent of children, about 13 million in total, lived
in poverty in 2007�

Figure 6

Consumer Confidence Has Fallen to a
Forty-Year Low
1985 = 100
160
140
120
100
80
60
40
20
0
1967

1972

1977

1982

1987

1992

Source: Conference Board, monthly values interpolated 1966-1977.

1998

2003

2008

ignoring our long-term
cHAllenges
As the typical family saw its
income decline and the underpinnings of our economic growth
become increasingly unsustainable, nothing was done to address these mounting problems�
These problems then were made
worse by policies that benefited
those at the top at the expense
of almost all Americans and by
a failure to tackle some of the
most significant, structural impediments to long-term economic
growth�

INHErITING A LEGACy OF MISPLACED PrIOrITIES

Growing Imbalance: Accumulating
Wealth and Closing Doors to the Middle
Class
For the better part of three decades, a disproportionate share of the Nation’s wealth has been
accumulated by the very wealthy� Technological
advances and growing global competition, while
transforming whole industries—and birthing
new ones—has accentuated the trend toward rising inequality� yet, instead of using the tax code to
lessen these increasing wage disparities, changes
in the tax code over the past eight years exacerbated them�
According to the Internal revenue Service, the
Nation’s top 400 taxpayers made more than $263
million on average in 2006, but paid income taxes
at the lowest rate in the 15 years in which these
data have been reported� In constant dollars, the
average income of the top 400 taxpayers nearly
quadrupled since 1992�

9

beyond has become harder and harder to climb�
The American dream has slowly slipped beyond
the grasp of millions as we have deliberately ignored the very investments in our people that
strengthen the middle class and neglected the
drivers of economic growth that will sustain our
economy for the long run�

Education
We know that the key to success in the 21st
Century lies in investing in our people—in giving the chance to get a world-class education
from cradle to career� Economists from across the
spectrum agree that in this digital age, a highlyeducated and skilled workforce is critical not only
to individual opportunity, but also to the overall
success of our economy� The more people we educate to the highest standards possible, the better off all of us will be� yet too many children are
not getting the world-class education that they
deserve and that they need to thrive in this information-age economy�

It’s no surprise, then, that wealth began to be
research has shown that there is a high return
ever more concentrated at the top� By 2004, the
wealthiest 10 percent of households held 70 per- for investments made in high-quality, comprecent of total wealth, and the combined net worth hensive programs supporting disadvantaged chilof the top 1 percent of families was larger than dren, and their families, from birth� Some studies
that of the bottom 90 percent� In fact, the top 1 show that for every dollar invested, there is a $4
percent took home more than 22
Figure 7
percent of total national income,
2000s Economic Recovery Brought
up from 10 percent in 1980 (see
Weakest Job Gains in a Generation
Figure 9, Top One Percent of EarnAverage Net Jobs Per Month, 1974-2008
ers)� And these disparities are felt
Thousand jobs per month
far beyond one’s bank statement
500
Average of 228,000
Average of 200,000
Average of 99,000
as several studies have found a
Jobs/Month During
Jobs/Month During
Jobs/Month During
400
1980s Expansion
1990s Expansion
2000s Expansion
direct correlation between health
300
outcomes and personal income�
There is nothing wrong with
people succeeding and making
money� But there is something
wrong when the opportunity for
all Americans to get ahead, to enter the middle class, and to create
a better life for their children becomes more and more elusive� That
is what has been happening: The
ladder into the middle class and

200
100
0
-100
-200
-300

1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007
Source: Bureau of Labor Statistics, Establishment Survey, dates for expansions from National Bureau of
Economic Research.

10

A NEW ErA OF rESPONSIBILITy
Figure 8

Real Median Household Incomes Have Not
Returned to the Levels Reached in the 1990s
Dollars in thousands

75
Family Head Age 45 to 54

70
65
60
Family Head Age 35 to 44

55
50
45

Family Head Age 25 to 34

40
35
30
1967

1971

1975

1979

1983

1987

1991

1995

1999

Source: U.S. Census Bureau.

to $9 return to society in higher earnings, higher
graduation and employment rates, less crime,
decreased need for special education services,
less use of the public welfare system, and better
health� However, we have yet to make a serious
commitment to our youngest learners�
From kindergarten through high school, too
many of our students are falling behind� According to the National Assessment of Educational
Progress, the Nation’s report Card, in 2007 only
one-third of fourth-graders was able to demonstrate solid academic performance in reading�
Similarly, only 31 percent of eighth-graders demonstrated solid academic performance, a percentage that has remained stagnant since 1992�
Achievement levels are similarly disappointing
in mathematics�
We have not yet created a credible system of
accountability for strong outcomes and a way to
provide teachers and principals with the tools
they need to get results� The problem is exacerbated by our failure to invest in the physical
structures of our schools� A 2004 report by the
National Center for Education Statistics found
that 8�5 percent of public schools have exceeded
their capacity; in almost one out of five schools,
teachers have to teach in common areas such as

gyms and cafeterias; and one in
four schools report that teachers
do not have their own classrooms
in which to teach�

Another part of the problem is
that when these students graduate from high school and look toward continuing their education,
they face high costs of college
attendance� The average tuition
and fees at public, four-year institutions between the 2000-2001
school year and 2008-2009 year
increased by more than 26 percent, after adjusting for inflation
2003 2007
and increases in tax credits and
financial aid (see Figure 10, Average Annual Undergraduate Tuition)� It’s no surprise, then, that
60 percent of college students graduate with
debt, and the typical debt load is over $20,000�
Facing numbers like these, many students will
simply decide that they cannot afford college,
and many more already in college will decide
that they cannot afford to stay� While 94 percent of high school students in the top quintile
of socioeconomic status continue on to post-secondary education, only 54 percent of those in the
bottom quintile do so�
If all our young children are not able to go to
a high-quality school with modern facilities and
great teachers and if older students are unable
to afford to go to college and stay there until
graduation, there is no way that our economy will
be able to expand opportunity, strengthen the
middle class, and compete in a global economy�

Health Care
One of the other big drains on family budgets and on the performance of the economy as
a whole has been the increasing costs of health
care� yet the evidence suggests that substantial
reductions in costs could be achieved without sacrificing the quality of health care delivered� And
in part because of the high costs of the current
system, too many Americans remain uninsured

INHErITING A LEGACy OF MISPLACED PrIOrITIES

or underinsured—causing them to
forgo needed care and to bear unnecessary financial risks�
Since 2000, health insurance premiums have increased faster than
worker’s earnings� After adjusting
for inflation, family health insurance premiums have increased by
58 percent while workers’ wages
have increased only 3 percent (see
Figure 11, Family Health Insurance
Premiums)� In 2007, 17 million insured Americans spent more than
10 percent of their salary on health
care, and 25 million Americans are
underinsured, without enough coverage to keep costs in check�

11
Figure 9

Top One Percent of Earners Have Been
Increasing Their Share
Share of total income accruing to top one percent

25%

20%

15%

10%

5%

0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006
Source: Piketty and Saez (2003), updated by authors.

Over the past eight years, the
number of uninsured in America has jumped by
6�9 million and now totals 45�7 million Americans� Moreover, the number of people who have
gone without health insurance for at least some
portion of the previous 12 months tops 60 million� Many of those are people whom insurers
will not cover because they have existing medical problems� Millions more have insurance, but
could lose access as soon as they develop a serious medical problem� These Americans suffer, but
their lack of health care options impacts all of us:
every time an uninsured person walks into an
emergency room because there is nowhere else to
turn, a hidden tax is imposed on other citizens as
premiums go up�
At the same time, health care costs are imposing large burdens on families—often in unexpected ways� Workers’ take-home pay is constrained
by health insurance costs to a degree that is
both underappreciated and unnecessarily large�
For instance, as mentioned earlier, at the state
government level, evidence suggests that rising health care costs have crowded out support
for higher education—raising tuition levels and
impairing the quality of public higher education� Overall, health care is consuming an everincreasing amount of our Nation’s resources: in
1970, health care expenditures were 7 percent of

GDP; now, it’s 16 percent; and at this rate will hit
nearly 20 percent by 2017�
We have a substantial opportunity to improve
the efficiency of our health sector� Costs vary widely across areas of the United States, but evidence
suggests that the high-cost areas do not generate
better health outcomes than the lower-cost ones�
Costs are twice as high at some of our Nation’s
leading medical centers than at others—and
again the high-cost centers do not generate better
outcomes than the lower-cost ones� Academic researchers suggest that costs could be reduced by
as much as 30 percent—or roughly $700 billion a
year—while protecting the quality of health care
delivered if the high-cost areas and hospitals adopted the practices of the low-cost ones� According to Institute of Medicine estimates, as many as
100,000 Americans die each year due to preventable medical errors� Only four cents of every dollar spent on health care goes to preventive care�
And while the United States leads the world in
health care expenditures by a wide margin, our
health outcomes often fall short of those achieved
by other developed countries�
The bottom line is that the current path of rising health care costs is unsustainable, not only

12

A NEW ErA OF rESPONSIBILITy
Figure 10

Average Annual Undergraduate Tuition, Room and Board
for Public Four-Year Institutions (List and Net Prices)
Dollars in thousands

16
14
12

List Price
Net Price (net of average grant and education tax benefits)

Investing in the future has been
critical to long-term economic
growth and creating high-paying
jobs for our people throughout our
history� yet, over the past several
years, we’ve been delinquent in
making these down payments on
future growth�

10
8

Infrastructure

As our society becomes more
mobile and interconnected, the
4
need for 21st Century transpor2
tation networks has never been
greater� As our economy slows,
0
1994-95 1996-97 1998-99 2000-01 2002-03 2004-05 2006-07 2008-09
repairing and upgrading our inSource: College Board.
frastructure is an effective way
to revive it and create new jobs�
In the longer term, infrastrucfor the Federal Budget but also for family bud- ture investment will enable the United States
gets�
to compete with the rest of the world and keep
good jobs here at home� After all, in this day
and age, businesses can now locate almost anyFAilure to invest in tHe Future
where in the world and bring the jobs they create with them—and a modern infrastructure is
America’s prosperity has always risen from critical if those jobs are to come to and stay in
the ground up, seeded by the hard work and America�
ingenuity of our workers, inventors, and entrepreneurs� But germs of a good idea or a
yet too many of our Nation’s railways, highnew way of doing business cannot take root ways, bridges, airports, and neighborhood streets
and flourish without the Nation preparing the are not keeping up with the needs of our Nation
conditions for growth� That takes sound man- due to lack of investment and strategic longagement of the economy; access to capital; and term planning� The American Society of Civil
investments in science, technology, and infra- Engineers gives our country’s infrastructure the
structure� That’s why we built the great land- grade of a “D�” The unsatisfactory condition and
grant universities as our Nation expanded operational performance of our roads and bridges
west, sent the Greatest Generation to college carries real costs from billions of dollars in car
on the G�I� Bill, and invested in science and repairs to wasted fuel and time� The Texas Transtechnology at the height of the Cold War� It’s portation Institute 2007 Urban Mobility report
why previous generations built the Erie Canal estimates that drivers experienced over 4�2 bilat the start of the 19th Century, the transcon- lion hours of delay and wasted approximately 2�9
tinental railroad after the Civil War, and the billion gallons of fuel in 2005�
interstate highway system in the 1950’s� It’s
why we electrified rural America during the
Looking forward, we are behind in building
depths of the Great Depression and laid fiber the infrastructure that we need to compete in
optic cables in our own time�
the global, information-age economy and are at
risk of losing our Nation’s scientific dominance�
Over the last three decades, Federal funding
6

INHErITING A LEGACy OF MISPLACED PrIOrITIES

13

Figure 11
for the physical, mathematical,
Since 2000 Family Health Insurance Premiums Have
and engineering sciences has
Increased Much Faster than Workers' Real Earnings
declined as a percentage of GDP
Index Levels 2000 = 100
at a time when other countries
170
are substantially increasing their
Inflation Adjusted Family Health Insurance Premiums
own research budgets� At one
160
Have Increased 58% Since 2000
point not long ago, the United
150
States led the world in broadband
140
deployment; now, that leadership
is in question� Wireless networks
130
in many countries abroad are
120
faster and more advanced than
While Real Hourly Earnings
our own� Our electrical grid is
110
Have Increased Just 3% Since 2000
still constructed around the
100
same model of 100 years ago, and
in some places is as old� Power
90
2000
2001
2002
2003
2004
2005
2006
2007
2008
interruptions and outages cost
Source: Kaiser Family Foundation / Bureau of Labor Statistics.
Americans at least $80 billion
each year� Finally, because of
an insistence on putting dogma
ahead of science, the United States has fallen why they are racing to dominate these industries
behind in some of the most important, cutting- and to transform their economies�
edge research such as stem-cell research�
yet, the last Administration approached our
Clean Energy
energy needs by focusing on finding more of the
fossil fuels we use now� As a result, we are still
This lack of investment in the future is most addicted to fossil fuels and more dependent on
glaring in the area of clean energy� For decades, foreign oil than ever before� We have yet to make
we have talked about the security imperative we important policy changes and critical investments
have to wean our Nation off foreign oil, which is in the clean energy infrastructure that we’ll need
often controlled by those whose interests are in- to transform our economy� Beyond clean energy,
imical to ours� And in recent years, a consensus we have not kept up with investing in the basic
has developed over the need to limit greenhouse science and research that will power this sector
gas emissions, which produce global warming and and the entire economy in decades to come� In fact,
increase the risk of severe storms and weather as a share of GDP, American Federal investment
conditions that might ruin crops, devastate cities, in the physical sciences and engineering research
and destabilize whole regions� All of these facts has dropped by half since 1970�
are reason enough to invest in clean energy technologies� But there is an economic imperative to
eroDing trust AnD AccountAbility
embrace these investments as well�

The clean energy sector presents us with immense promise—to develop and dominate a new
industry sector and to create high-paying jobs
here at home� From new, highly fuel-efficient cars
to renewable sources of power, there are a host of
emerging technologies that can spur the growth
of new business while creating millions of new
jobs� Our economic competitors know that� That’s

Government is able to work on behalf of the
people and attend to their immediate needs and
long-range problems when it truly is a government of, by, and for the people� Part of what ails
our economy is a profound disconnect between
our leaders in Washington and the rest of the Nation�

14

Over the past eight years, policy was made behind closed doors� In many cases, unprecedented
levels of secrecy have been invoked to block public scrutiny� In such an environment, the well connected and those who are able to hire high-priced
lobbyists were able to carve out huge loopholes in
our tax code, win massive subsidies that shifted
the tax burden to small businesses and the middle class, and obtain exemptions from the basic
rules of the road for themselves and their clients�
And they did this all without paying for it or being held to account� This must change�

Fiscal Irresponsibility
Another manifestation of irresponsibility is
the large budget deficits we are inheriting� These
deficits, over time, will harm economic growth
and impose burdens on our children and grandchildren� For the past eight years, in a time of economic growth, the Government spent recklessly
on tax cuts for the few and hand-outs for the welloff and well-connected, mismanaged billions of
dollars in taxpayer money, and failed to honor the
responsibilities we have to future generations�
Massive new programs have routinely been omitted from the Budget to mask their true cost, while
a new entitlement program and massive tax cuts
were proposed and signed into law without any

A NEW ErA OF rESPONSIBILITy
attempt to pay for them� Between 2000 and 2008,
real Government outlays increased at a 3�6 percent annual average rate, three times the 1�2 percent annual average rate between 1992 and 2000�
This has helped turn a surplus of $236 billion at
the end of the Clinton Administration, that was
projected to grow still larger over time, into a deficit of more than $1 trillion in 2009� (see Figure
12, Surpluses Have Turned to Deficits)� Furthermore, the amount of debt held by the public has
nearly doubled to $6�4 trillion from 2001 to 2008�
We are now living with the fallout of this deep fiscal irresponsibility�
Unfortunately, we are also inheriting the worst
economic crisis since the Great Depression—
which will force us to increase deficit spending
temporarily as we try to jumpstart economic
growth� This is an extraordinary response to an
extraordinary crisis, and as we come out of this
recession, we must return to the path of fiscal responsibility� It will mean tough choices—choices
that are tougher because of the legacy of fiscal
irresponsibility left to us�

Erosion of Market Oversight

Our Nation depends on private initiative and
on free markets� But the financial crisis has reminded us that without a watchful
eye, the markets can spin out of
Figure 12
control� In recent years, a dogmatic
deregulatory approach to our capiSurpluses Have Turned to Deficits
tal markets, driven by ideology
Surpluses (Deficits) as share of GDP
4
rather than pragmatism, has now
put those very markets—the envy
2
of the world—in their most serious
0
crisis in decades� Policymakers forgot that markets work when there
-2
is transparency of financial infor-4
mation for investors and consum-6
ers alike; independent oversight;
and accountability enforced by ac-8
tive and uncompromised regula-10
tors� Because of deliberate policy
Projected (2009)
-12
decisions, balance sheets did not
accurately reflect the risks that
-14
1980
1984
1988
1992
1996
2000
2004
2008
firms were taking; large pools of
capital were left unregulated while

INHErITING A LEGACy OF MISPLACED PrIOrITIES

more and more investors were exposed to them;
and conflicts of interest compromised the credit
rating agencies upon which investors relied� Investors and consumers ended up participating
in complex transactions without full disclosure
of the relevant risks, and eventually these mortgages, credit card debts, and other loans ended up
costing many Americans dearly�
Because our regulatory system atrophied and
its patchwork quilt of different regulators and
standard-setters was left untouched, it failed to
keep pace with financial innovation� As a result,
investors were led into investments that they
neither understood nor were appropriate to their
risk profile, and many people took on debts that
they never could have hoped to pay� Corners were
cut, and rules were bent� At every level, some of
the most important market actors failed to live up
to their responsibilities and failed to do what investors need of them to invest their hard-earned
money wisely�

An Unresponsive Government
It is no coincidence that the policy failures of the
past eight years have been accompanied by unprecedented Governmental secrecy and unprecedented access by lobbyists and the well-connected
to policymakers in Washington� Consequently,
the needs of those in the room trump those of
their fellow citizens� We saw this with the Energy
Task Force convened in 2002� When a Supreme
Court order finally opened up its proceedings to
review, it became apparent that regulatory decisions were made that reflected specific requests
by industry representatives with the Government’s ear�

15

The growth of Federal contracting is another
instance where special interests benefited from
special access� Federal spending on contracts
more than doubled from about $208 billion in
2000 to more than $423 billion in 2006—and yet
the number of contract officers overseeing these
contracts remained flat� The value of contracts
not subject to full and open competition grew
from $48�6 billion to $112�5 billion during the
same period� Cost-type contracts that are particularly vulnerable to waste since they provide no
incentive to control costs increased more than 75
percent under the previous Administration�
This special-interest driven use of taxpayer
dollars shows up in the billions of dollars in improper overpayments for Medicare and Medicaid, the billions that Federal taxpayers pay out
to fund corporate loopholes; and in the $4 billion
in Iraq-related spending auditors estimate is lost
to waste and ineffective programs� Most egregiously, we see this irresponsibility in the tens of
thousands of Federal contractors and Medicare
service providers who make money off of the Government, but fail to pay all their taxes—costing
us billions�
For the Nation to move out of this economic
crisis, and to put our country on the path to
productivity and growth, the American people
need its leaders to live up to their responsibilities�
That means opening the doors to citizen input;
holding those entrusted with taxpayer dollars
accountable for their use; and setting strong,
enforceable rules of the road to keep our
markets free and fair� With a government that is
accountable to the people, we can jumpstart our
economy in a way that is both quick and wise,
and begin to make the long-term investments in
areas long neglected�

JuMPSTARTiNG ThE ECONOMy ANd
iNvESTiNG fOR ThE fuTuRE

There are no quick and easy fixes to the recession plaguing our economy� This crisis has been
many years in the making, and it is likely to get
worse before it gets better� There is no doubt
that our Nation has the creativity, capability,
and industriousness to lift ourselves out of this
downturn and begin the process of transforming our economy for the 21st Century� As we do
this, we need to remember that throughout our
history, the United States has grown and prospered when all Americans have shared in the
opportunities created by our economy� While our
economy has made the transition from an agrarian economy to an industrial one and on to an
information-age economy, this essential truth
has not changed: America thrives when all our
people have the chance to succeed�
The past eight years have discredited once and
for all the philosophy of trickle-down economics—that tax breaks, income gains, and wealth
creation among the wealthy eventually will work
their way down to the middle class� In its place,
we need economic opportunity to trickle up� We
need policies that will strengthen the middle
class and create the conditions to spur innovation and sustainable economic growth� Some
may say that in this current environment this
is aiming too high� Settling never has been the
American way, and now is no time to lower our
sights� While we have inherited unprecedented
budget deficits and a weakened economy, now
is precisely the time for the country to make
the long overdue investments that will fundamentally transform our economy so that we can
compete and thrive in the decades ahead� As we
jumpstart our economy out of this recession, the
American people expect and demand that their
Government does so with unprecedented transparency and accountability so that they know

where their tax dollars are going and how these
funds are being spent�

immeDiAte relieF AnD economic stimulus
As the year started, it became clear there was
a wide and growing shortfall between what the
economy could produce and what it was producing� If we kept on this course, economists predicted that the economy would shed millions of
additional jobs, the unemployment rate could exceed 10 percent, and over the next two years, the
country would lose roughly $2 trillion in income�
With traditional monetary policy levers largely
exhausted, the Congress passed and the President signed into law the American recovery and
reinvestment Act of 2009 (the “recovery Act”),
a nationwide effort to create jobs and transform
our economy to compete in the 21st Century�
Because speed is of the essence when it comes
to acting to save our economy and millions of
jobs, approximately three-quarters of the funds
in this package will be spent out over the next
18 months� Many of the long-term investments
will stimulate the economy too as these elements
of the package are simultaneously designed to
spark economic growth, save or create 3 to 4 million jobs, and help families through these tough
times� To provide immediate relief and get the
economy moving again, the Administration will:
Make Permanent the $800 “Making Work
Pay” Tax Cut for Workers and Their families. The recovery Act created the Making Work
Pay tax credit, a refundable income tax credit,
which will offset the payroll tax on up to the
first $6,450 of earnings for about 95 percent of
all American workers while still preserving the

17

18

important principle of a dedicated revenue source
for Social Security� This helps small business owners struggling to meet expenses� And with families squeezed, this tax cut will put needed money
in their pockets for them to make ends meet and
cover the costs of necessities� This is the firststage of a middle-class tax cut promised during
the presidential campaign� The Budget will make
Making Work Pay permanent�
Continue to Cut Taxes for the families
of Millions of Children Through an Expansion of the Child Tax Credit. By expanding
the Child Tax Credit, the recovery Act provided
a new tax cut and increased the generosity of the
existing credit to millions of children—fulfilling
the promise that a family that works hard and
plays by the rules will be able to raise their children above the poverty line� The Budget makes
this tax cut permanent�
increase food Stamp Benefits for Over 30
Million Americans. Even in tough times, our
Nation is a nation of plenty, and no one should
have to go hungry� The recovery Act will spend
nearly $20 billion to increase food stamp benefits
for overstretched families, and provide additional
support for food banks, school lunch programs,
and the Special Supplemental Nutrition Program
for Women, Infants, and Children (WIC) program�
Provide Nearly 60 Million Retired and
disabled Americans an immediate $250
Through Temporarily increasing Benefits.
These vulnerable populations are the first ones
to feel an economic downturn� Through the recovery Act, we will spend almost $15 billion to
provide nearly 60 million retired Americans and
Americans with disabilities an immediate $250
through temporarily increasing Social Security,
Supplemental Security Income, and Veterans
benefits�
Extend, Expand, and Reform unemployment insurance (ui) Benefits. With unemployment on the rise and those out of work going
longer without new jobs, we have provided both
a boost to our economy and to these workers’
well-being by extending the Emergency Unem-

A NEW ErA OF rESPONSIBILITy
ployment Compensation program through December 2009, increasing weekly UI benefits by
$25, and providing financial incentives for States
to modernize their UI systems to expand coverage� Beyond this year, the Administration will
update the Nation’s UI system to better address
the challenges and realities of the 21st Century
workforce� The Budget proposes changes to make
the UI program a more responsive and effective
social safety net and economic stabilizer� The Administration will propose to make the permanent
Extended Benefit program more responsive to
changing economic conditions, making benefits
available more quickly and avoiding the delays
associated with special, temporary extended unemployment programs� Finally, despite the efforts
of States to reduce improper benefit payments,
over $3�9 billion in UI benefits were erroneously
paid in 2008� The Administration will tackle this
problem by increasing funding for program integrity and proposing legislative changes that would
have the direct and indirect effect of reducing UI
improper payments by $3�9 billion and reducing
employer tax evasion by almost $300 million over
10 years�
Reform Asset Tests. The Administration
would like to work with the Congress to revisit
asset limits for Federal means-tested programs
in the wake of new and expanded refundable tax
credits� Current asset rules across a variety of
programs are antiquated, inconsistent, and present obstacles for low-income individuals who aspire to achieve self-sufficiency� The intersection
of the new credits and outdated asset rules may
disqualify new and current individuals and families from Federal benefits, including Medicaid
and Supplemental Nutrition Assistance Program
(formerly Food Stamps)�

creAting Jobs AnD investing in long-term
economic growtH
These tax and benefit provisions of the recovery plan will provide an immediate stimulative effect on the economy� The other part of the
stimulus comes from expenditures on projects
that will promote medium-term economic activ-

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
ity while also providing some lift to the economy
in the near term—as homes are weatherized, and
health records are digitized—to name just a few�
In addition to immediate hiring and expansion
as these projects begin, the American people will
reap benefits from these investments for years to
come because the economic benefits of modern infrastructure, world-class schools, investments in
research and development, health care reform,
and clean energy will be enjoyed by generations
of Americans� The expenditures in many of these
areas then serve a dual role: to revive the economy in the short term and to restore its health for
the long term� Through ambitious investments
in clean energy, health care, education and other
key areas, the plan will address long-ignored national priorities and make a historic down payment on our Nation’s economic future� The 2010
Budget will support, and in some cases extend as
well as expand the down payments made in the
recovery Act�

Building a 21st Century Infrastructure
A century ago, Theodore roosevelt called together leaders from business and government
to develop a plan for a 20th Century infrastructure� More than 50 years ago, republican Dwight
Eisenhower and Democrat Al Gore, Sr� worked
together to launch the Interstate Highway System� Today, however, too many of our Nation’s
railways, highways, bridges, airports, and neighborhood streets are aging and congested due to
lack of investment and strategic long-term planning� In the short term, modernizing our infrastructure will create new jobs and provide a boost
to the economy� In the longer term, infrastructure
investment will provide our Nation a foundation
for long-term economic growth� The Budget will:
Establish a National infrastructure Bank.
The Budget proposes to expand and enhance existing Federal infrastructure investments through a
National Infrastructure Bank designed to deliver
financial resources to priority infrastructure projects of significant national or regional economic
benefit� The mission of this entity will be to not
only provide direct Federal investment but also
to help foster coordination through State, munici-

19

pal, and private co-investment in our Nation’s
most challenging infrastructure needs� These
projects will directly and indirectly support jobs
and stimulate substantial long-term economic
growth�
invest in Our Nation’s Roads, Bridges,
and Mass Transit. The President is committed
to instituting accountability for the $35�9 billion
provided in the recovery Act and to responsibly
reauthorizing the Nation’s highway and mass
transit programs� The Administration intends to
work with the Congress to reform surface transportation programs both to put the system on a
sustainable financing path and to make investments in a more sustainable future, enhancing
transit options and making our economy more
productive and our communities more livable�
Further, our surface transportation system must
generate the best investments to reduce congestion and improve safety� To do so, the Administration will emphasize the use of economic analysis
and performance measurement in transportation
planning� This will ensure that taxpayer dollars
are better targeted and spent�
initiate a New federal Commitment to
high-Speed Rail. To provide Americans a 21st
Century transportation system, the Administration proposes a $1 billion-a-year high-speed rail
State grant program, in addition to the $8 billion provided in the recovery Act� This proposal
marks a new Federal commitment to give the
traveling public a practical and environmentally
sustainable alternative to flying or driving� Directed by the States, this investment will lead to
the creation of several high-speed rail corridors
across the country linking regional population
centers�
improve and Modernize Air Traffic Control. Because of an outdated air-traffic control
system and over-scheduling at airports already
operating at full capacity, an ordinary trip to a
business meeting or to visit family can become
marred by long delays� The Budget provides $800
million for the Next Generation Air Transportation System in the Federal Aviation Administration, a long-term effort to improve the efficiency,

20

safety, and capacity of the air traffic control system� The 2010 Budget supports moving from a
ground-based radar surveillance system to a more
accurate satellite-based surveillance system; development of more efficient routes through the
airspace; and improvements in aviation weather
information�
Maintain Rural Access to the Aviation
System. The Administration is committed to
maintaining small communities’ access to the
National Airspace System� The Budget provides
a $55 million increase over the 2009 level to fulfill current program requirements as demand
for subsidized commercial air service increases�
However, the program that delivers this subsidy
is not efficiently designed� Through the budget
process, the Administration intends to work with
the Congress to develop a more sustainable program model that will fulfill its commitment while
enhancing convenience for travelers and improving cost effectiveness�
Enhance Security at Over 90 Major Ports,
to improve homeland Security, increase international Trade and Commerce, and Create Jobs. This investment will help make our
Nation’s ports a vital and secure link to the global
economy, not a vulnerable entry point for those
who seek to harm us� The Administration is committed to improving the protection of our critical port infrastructure� The Budget continues to
provide risk-based funding through the Port Security Grant Program and builds upon the over
$1�4 billion provided for port security grants over
the past few years� These awards can be used by
grantees to purchase a wide variety of securityenhancing investments including watercraft for
increased patrolling of facilities, canine, bombsniffing units, and updating port vulnerability
assessments� Additional funding will be used by
Customs and Border Protection to purchase technology enhancements, such as non-intrusive inspection X-ray equipment and radiation portal
monitors to detect nuclear materials�
invest in Clean and Safe drinking Water.
The Budget requests $3�9 billion for the Environmental Protection Agency’s Clean Water State

A NEW ErA OF rESPONSIBILITy
revolving Fund and the Drinking Water State
revolving Fund (SrFs), in addition to the $6
billion provided in the recovery Act� With this
historic increase, the programs will fund over
1,000 clean water and nearly 700 drinking water
projects annually based on average project costs�
In addition, the recovery Act will support over
1,300 new wastewater projects and over 700 new
drinking water SrF projects� Through recovery
Act funding for the Department of Agriculture’s
(USDA’s) rural water and wastewater grants and
loans, the Administration will support a $3�8 billion program level for the repair, upgrade, and
construction of 2,000 rural water and sewer systems, providing new or improved service to 3 million people� Together with funding increases for
the SrFs, the Administration will pursue SrF
program reforms that will put resources for these
ongoing needs on a firmer foundation�
Expand Access to Broadband. As a country,
we have made significant public investments so
that, regardless of economic status, Americans
have access to telephone service and electricity� In
this day and age, we must do the same for broadband� Like any network, the more people who are
a part of it, the stronger we all are� The more communities that have access to high-speed Internet
connections, the more businesses can grow and
jobs can be created� When that happens, the entire Nation wins� That is why the recovery Act included $7�2 billion for broadband expansion and
the 2010 Budget includes $1�3 billion in USDA
loans and grants for the Department of Agriculture to increase broadband capacity and improve
telecommunication service as well as education
and health opportunities in rural areas�
invest in the Sciences. Investments in science and technology foster economic growth;
create millions of high-tech, high-wage jobs
that allow American workers to lead the global
economy; improve the quality of life for all Americans; and strengthen our national security� The
recovery Act included a $5 billion investment
in key science programs, which is by itself an almost 50-percent increase for these programs over
2008 and represents a significant down-payment
toward the President’s plan to double the fund-

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
ing for these agencies over 10 years� Under the
President’s doubling plan, the Budget provides a
16-percent increase over 2008 funding levels for
the National Science Foundation and similarly
large increases for the Department of Energy’s Office of Science and the Department of Commerce’s
National Institute of Standards and Technology�
The Budget also increases support for promising,
but exploratory and high-risk research proposals that could fundamentally improve our understanding of climate, revolutionize fields of science,
and lead to radically new technologies� In addition, the Budget funds cutting-edge, fundamental
research in traditional and emerging disciplines
to help transform the Nation’s air transportation system and to support future aircraft� The
National Aeronautics and Space Administration
(NASA) research in aeronautics will focus on how
to increase airspace capacity and mobility, enhance aviation safety, and improve aircraft performance while reducing noise, emissions, and
fuel consumption�

Creating a Clean Energy Economy
The high gas prices of last summer only underscored what we have known for decades: we cannot afford to depend so heavily on foreign oil and
other fossil fuels to power our economy� While the
national security implications have been clear
for some time, the more we learn about global
warming, the more we see that failure to wean
ourselves off of fossil fuels also jeopardizes our
economy and our entire planet�
Countries and companies around the world recognize this and are working day and night to develop clean energy technologies that will change
everything from how we generate our electricity
to how we power our cars and trucks� While the
challenge is great, the promise of the moment is
unparalleled� If we lead the world in the research
and development of clean energy technology, we
can create a whole new industry with high-paying
jobs that cannot be shipped overseas� Some compare the promise of this sector to information technology� The difference is that with clean energy we
can bring new jobs to rural areas long left behind
in economic growth� Moreover, if we take the time

21

now to start transforming our economy, we will
enjoy the benefits of a lower cost and more efficient energy supply for years to come� As a down
payment on an energy independent, clean energy
economy, in this Budget, the Administration will:
Begin a Comprehensive Approach to
Transform Our Energy Supply and Slow
Global Warming. The Administration is developing a comprehensive energy and climate change
plan to invest in clean energy, end our addiction
to oil, address the global climate crisis, and create new American jobs that cannot be outsourced�
After enactment of the Budget, the Administration will work expeditiously with key stakeholders and the Congress to develop an economy-wide
emissions reduction program to reduce greenhouse gas emissions approximately 14 percent
below 2005 levels by 2020, and approximately 83
percent below 2005 levels by 2050� This program
will be implemented through a cap-and-trade
system, a policy approach that dramatically reduced acid rain at much lower costs than the traditional government regulations and mandates of
the past� Through a 100 percent auction to ensure
that the biggest polluters do not enjoy windfall
profits, this program will fund vital investments
in a clean energy future totaling $150 billion over
10 years, starting in Fy 2012� The balance of the
auction revenues will be returned to the people,
especially vulnerable families, communities,
and businesses to help the transition to a clean
energy economy�
Provide the Capital to double Renewable
Energy Generating Capacity. renewable power has grown dramatically over the past several
years� Unfortunately, the current credit crisis has
brought this dynamic progress to a halt� The programs in the recovery Act will help to revive the
renewable industry, doubling the amount of renewable energy generated� Collectively, the loan
guarantees provided in the recovery plan and in
this Budget are expected to leverage tens of billions of dollars in private capital� The recovery
Act also extends the production tax credit (PTC)
to 2012 for wind and 2013 for other renewable
sources of energy� This extension creates three
years of certainty for investors, eliminating the

22

delays historically associated with the PTC� The
Act also expands authority for clean renewable
energy bonds and creates new manufacturing tax
credits to spur domestic manufacturing of clean
energy equipment
develop Low-Carbon Emission Technologies. The recovery Act provides funding to meet
the President’s campaign commitment to build
five commercial scale coal-fired plants with carbon capture and storage technology through public-private partnerships� The Energy Department
will also scale up its demonstration projects for
geologic storage for carbon dioxide� Combined,
this funding will set the foundation for significant efforts to mitigate greenhouse gas emissions
from coal-fired power plants�
Modernize federal Buildings and Slash
the federal Government’s Energy Bill by 25
Percent. The Federal Government is the largest
energy consumer in the world� Making substantial investments to reduce Federal energy consumption can spur job creation while delivering
long-term Government savings through lower
energy bills� The Budget will build upon the more
than $11 billion provided for building moderization in the recovery Act to achieve the President’s
25 percent energy efficiency improvement goal by
2013�
Weatherize Low-income homes, Saving
Working families on Average $350 Per year.
Across the Nation, families spend a significant
portion of their budget running their furnaces
and air conditioners as well as keeping the lights
on� By upgrading a home’s furnace, sealing leaky
ducts, and adding insulation, a homeowner can
cut their energy bills by 20 to 40 percent, and the
substantial savings accrue in summer as well as
winter and for years to come� By adding-energy
efficient appliances and lighting, the savings are
even greater� The Department of Energy’s weatherization budget of $227 million in 2008 could
only provide benefits for 76,000 U�S� homes� While
the Nation has weatherized about six million lowincome homes since 1976, more than 28 million
remain eligible� The Budget will build upon the
$5 billion provided in the recovery Act for weath-

A NEW ErA OF rESPONSIBILITy
erization assistance in order to spur development
of an industry that will have the capacity to meet
the President’s goal of weatherizing one million
homes annually�
use Title Xvii Loan Guarantee to Reduce
Greenhouse Gas Emissions. Loan guarantee
volume under Title XVII of the Energy and Policy
Act of 2005 will support innovative and advanced
technologies that avoid, reduce, or sequester anthropogenic greenhouse gas emissions or air pollutants� The Budget will support a wide-range of
eligible projects such as renewable energy systems, electric system transmission projects, and
carbon capture and sequestration projects that
will result in a cleaner environment and potentially, a transformed energy sector�
help State and Local Governments be
More Energy Efficient. After the Federal Government, State and local governments are some
of the largest users of energy� Facing budget
shortfalls, many States and local governments
now lack sufficient financial resources to tap the
full potential of clean energy development and
deployment� This situation is exacerbated by private sector financing drying up as a result of the
recent credit crisis� The Budget will build upon
$6�3 billion provided for clean energy and energy
efficiency grants to state and local governments
in the recovery Act to help support their efforts
to reduce their energy use�
Green Our Nation’s farms. The Budget
increases funding levels over those provided in
previous years for programs, such as the Conservation Stewardship Program and the Environmental Quality Incentives Program that provide
incentives for farmers to better conserve their
lands and reduce pollution such as from animal
feeding operations� In addition, USDA intends to
work with farmers to help them take advantage
of opportunities to participate in emerging markets for carbon credits, alternative energy and
in other environmental services, such as wildlife
habitat, clean water, and clean air�
Modernize the Electric Grid. We know
that the existing electricity grid today is insuf-

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
ficient and outdated� In order to bring significant amounts of renewable energy online, tens of
thousands of miles of new, high-voltage national
transmission is necessary� For example, North
Dakota—a State with significant wind energy
potential—cannot carry the energy to the population centers that need the electricity without
a new transmission superhighway� The Budget
will build on efforts in the recovery Act to create
this new, smarter electric grid for the integration
and use of greater amounts of renewable energy; increased utilization of innovative efficiency
technologies; and a reduction in the electric congestion that costs ratepayers billions of dollars
each year� The recovery Act includes funds to
complete additional significant work in improving the national grid with regional transmission
planning and interconnection based transmission
planning� Included is a $100 million workforce
training program� To make the grid smarter, millions of Smart Meters—a key first step to a Smart
Grid—will be deployed as well as investments in
a host of other smart grid technologies�

Preparing Our Children for the 21st
Century Economy
America faces few more urgent challenges
than preparing our children to compete in a global economy� The decisions our leaders make about
education in the coming years will shape our future for generations to come� The Administration
is committed to meeting this challenge, and its
vision for a 21st Century education begins with
demanding more reform and accountability coupled with the resources needed to carry out that
reform; asking parents to take responsibility for
their children’s success; and recruiting, retaining, and rewarding an army of new teachers to
teach at new, successful schools that prepare our
children for success in college and the workforce�
Throughout our history, our Nation’s schools from
the local elementary school to the large university have been the gateway into the middle class
and a better life for millions� That is why it’s so
important that the investments we make in education are ones that work—that help children
learn and pursue their dreams� When it comes
to our children’s future, we cannot waste dollars

23

on methods, programs, and initiatives that are
not effective and efficient� Consequently, in this
Budget, the Administration makes significant
investments in approaches that have proven to
deliver for our children and will reallocate funds
away from and terminate programs that do not�
To restore the promise of America’s public education and to help America’s children again lead the
world in achievement, creativity, and success, the
Budget will:
Make A New investment in Early Childhood Education. We know that a dollar invested in early education will pay off handsomely as
these children grow older� That is why the Administration is proposing to help States strengthen
their early education programs� The Administration will broaden the reach of these programs
and boost their quality—encouraging new investment, a seamless delivery of services, and better
information for parents about program options
and quality� In addition, through funds from the
recovery Act and this Budget, the President will
provide funding to double the number of children
served by Early Head Start and expand Head
Start, both of which have proven to be successful
with younger children� Finally, the Department
of Health and Human Services will begin a major
effort to ramp up a new Nurse-Home Visitation
program� rigorous research has shown that a
well-structured program can have large and measurable impacts in helping at-risk expectant and
new parents give their children a healthy start
in life�
Support high Standards and Rigorous
Assessments Aligned with the demands
of the Global Economy. Students need to
meet high standards, and tests need to measure the full range of skills that children
must learn� Building on investments made
through the recovery Act, the Administration
will help States strengthen their standards
so they are rigorous and reflect readiness for
success in college and a career� resources will
also be available to improve the quality of
assessments, including assessments for students with disabilities and English language
learners� Such reforms will lay the ground-

24

work for reauthorizing the Elementary and
Secondary Education Act�
Prepare and Reward Effective Teachers
and Principals. Almost all successful students
can remember a teacher who had an outsized impact on their education� Indeed, the quality of the
education workforce is a critical factor in educational success� The Budget builds on the investments funded under the recovery Act designed
to significantly upgrade the skills and effectiveness of the education workforce� The Administration will invest in efforts to strengthen and
increase transparency around results for teacher
and principal preparation programs, including
programs in schools of education, alternative certification programs, and teacher and principal
residency programs� The Budget supports additional investments in State and local efforts, developed in consultation with teachers and other
stakeholders, to implement systems that reward
strong teacher performance and help less effective teachers improve or, if they do not, exit the
classroom� resources are also included to develop
better systems and strategies for recruiting, evaluating, and supporting teachers and other educators to provide a better supply and distribution of
well-prepared and effective education workforce�
increase Support for Effective Charter
Schools. The President’s Budget will promote
successful models of school reform by taking
the first major step to fulfilling its commitment
to double support for charter schools� The Department of Education will help create new,
high-quality charter schools, ensure that States
properly monitor and support these schools, and,
in the case of chronic underperformance, close existing charter schools�
Expand Pell Grants and Put the Program
on Sure footing. Because the Administration
is committed to making college affordable for all
Americans, the 2010 Budget builds on the recovery Act by supporting a $5,550 Pell Grant maximum award in the 2010-2011 school year� But it’s
not enough just to make Pell Grants more generous and to put on a short-term patch� Fourteen
times since 1973, the maximum Pell Grant has

A NEW ErA OF rESPONSIBILITy
failed to increase even in nominal dollars� To
make sure that we have a highly educated workforce and that the opportunity to go to college is
not determined by how much money you have,
the Budget puts the Pell Grant program on sure
footing� The Administration will index Pell grants
to the Consumer Price Index plus 1 percent in order to account for inflation in this sector� In addition, the Administration proposes to make the
Pell Grant program mandatory to provide a regular stream of funding and eliminate the practice
of “backfilling” billions of dollars in Pell shortfalls
each year�
Stabilize the Student Loan Program for
Students and Save Billions of dollars for
Taxpayers. right now, the subsidies in the
Government-guaranteed student loan program
are set by the Congress through the political process� That program has not only needlessly cost
taxpayers billions of dollars, but has also subjected students to uncertainty because of turmoil
in the financial markets� The President’s Budget
asks Congress to end the entitlements for financial institutions that lend to students, and instead
to take advantage of low-cost and stable sources of
capital so students are ensured access to loans—
while providing high-quality services for students
by using competitive, private providers to service
loans� The approach in the Budget, originating all
new loans in the direct lending program, saves
more than $4 billion a year, and reinvests it in
aid to students� The Budget also makes campusbased, low-interest loans more widely available through a new modernized Perkins Loan
program, overhauling the inefficient and inequitable current Perkins program�
help At-Risk Students Complete College.
It is not enough for our Nation to enroll more students in college; we also need to graduate more
students from college� A few States and institutions have begun to experiment with these efforts
to accomplish this, but there is much more they
can do� The Budget includes a new five-year, $2�5
billion Access and Completion Incentive Fund to
support innovative State efforts to help low-income students succeed and complete their college
education� The program will include a rigorous

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
evaluation component to ensure that we learn
from what works�
Make Permanent the New American Opportunity Tax Credit. If we do not make college
more affordable, we run the risk of losing a whole
generation of potential and productivity� To help
students pay for college, the Administration created a new $2,500 American Opportunity Tax
Credit in the recovery Act� The credit makes college more affordable for millions of middle-class
families and for the first time makes college tax
incentives partially refundable� The Budget proposes to make this tax cut permanent�
Eliminate or Cut Education Programs
with Records of Low Performance. When it
comes to educating our children, we cannot afford
to waste a dollar� The Administration proposes to
eliminate, cut, or place under intensive review
Education Department programs that are not
helping to improve educational outcomes for students� These are efforts that lack strong evidence
to justify taxpayer support and that, in many
cases, could be funded in competitive funding
streams that require evidence of results�
invest in innovations and in What Works.
While it is important to increase support for
education, it is also critical to invest in learning
which programs are effective and in growing the
ones that are� Through the Innovation Fund, the
Administration will invest in school systems and
non-profit organizations with demonstrated track
records of success in raising student achievement
to expand their work or implement new innovative approaches� For instance, the Harlem Children’s Zone aims to improve college-going rates
by combining a rigorous K-12 education with a
full network of supportive services—from early
childhood education to after school activities to
college counseling—in an entire neighborhood
from birth to college� It has yielded encouraging
results, and the President’s Budget provides funds
to expand this concept by supporting “Promise
Neighborhoods,” a new effort to test innovative
strategies to improve academic achievement and
life outcomes in high-poverty areas� The Budget
also increases funding for rigorous evaluation in

25

a first step toward doubling the Department of
Education’s support for education research� The
Department’s Institute of Education Sciences
will use this funding to conduct rigorous evaluations of approaches to improve student learning
and achievement with a focus on evaluating and
scaling up promising innovative practices�
Triple the Number of Graduate fellowships in Science to help Spur the Next
Generation of home-Grown Scientific innovation. The industries of tomorrow will begin with ideas dreamed up in the classrooms and
laboratories of today� Without investments in
human capital today, we will not be able to reap
the benefits of scientific innovation� That is why
the Administration provided in the recovery Act
funds to be used as a down-payment toward the
goal of tripling the number of graduate fellows in
science�

Lowering Health Care Costs and Ensuring
Broader Health Care Coverage
One of the biggest drains on American pocketbooks is the high cost of health care� Many families are one illness or accident away from financial
ruin� Health insurance costs reduce workers’
take-home pay to a degree that is both underappreciated and unnecessarily large� At the same
time, health care costs are consuming a growing
share of Federal and State government budgets�
The United States spends over $2�2 trillion on
health care each year—almost $8,000 per person�
That number represents approximately 16 percent of the total economy and is growing rapidly�
By 2017, almost 20 percent of the economy—more
than $4 trillion—will be spent on health care�
Across our Nation, health care costs vary substantially, yet the higher-cost areas do not generate better health outcomes than the lower-cost
areas� Even among our Nation’s leading medical
centers, costs vary significantly—with costs at
some centers twice as high as others—but the
higher-cost centers do not achieve higher quality
than the lower-cost centers� Some researchers believe that health care costs could be reduced by
a stunning 30 percent—or about $700 billion a

26

year—without harming quality if we moved as a
Nation toward the proven and successful practices adopted by the lower-cost areas and hospitals�
Capturing this opportunity would help to boost
family take-home pay and put the Nation on a
sounder fiscal path� It will require many steps,
including expanding the use of health information technology, more aggressively studying what
works and what doesn’t, experimenting with
different payment systems to health care providers, and promoting prevention and healthy living—many of which are advanced dramatically
through the recovery Act�
At the same time that we strive to contain
costs, we cannot stand by as tens of millions of
American lack health care coverage� An unhealthy workforce leads to an unhealthy economy,
and moving to provide all Americans with health
insurance is not only a moral imperative, but it
is also essential to a more effective and efficient
health care system�
The President has already begun the process of
reforming health care by:
instituting Temporary Provisions to Make
health Care Coverage More Affordable for
Americans Who have Lost Their Jobs. As
part of the recovery Act of 2009, the Administration will provide Americans who lose their jobs or
have recently lost their jobs a tax credit to keep
their health insurance through COBrA� These
steps are estimated by the Joint Committee on
Taxation to help provide coverage for approximately seven million Americans�
increasing health Care Coverage for Children. In one of his first official acts, the President signed into law the reauthorization of the
Children’s Health Insurance Program (CHIP)—
bipartisan legislation vetoed twice by the previous President� It provides the support, options,
and incentives for States to provide coverage for
an additional four million children on average in
CHIP and Medicaid who are now uninsured� The
President is committed to implementing this law
quickly and aggressively to help families whose

A NEW ErA OF rESPONSIBILITy
children are at risk of losing coverage in this
weak economy�
Computerizing America’s health Records
in five years. The current, paper-based medical
records system that relies on patients’ memory
and reporting of their medical history is prone to
error, time-consuming, costly, and wasteful� With
rigorous privacy standards in place to protect
sensitive medical record, we will embark on an effort to computerize all Americans’ health records
in five years� This effort will help prevent medical errors, and improve health care quality, and
is a necessary step in starting to modernize the
American health care system and reduce health
care costs�
developing and disseminating information on Effective Medical interventions.
Medicine is changing so rapidly it is almost impossible for any individual physician to keep abreast
of all the latest research studies� Without the
most recent information on effective treatments,
it is increasingly more difficult for a doctor to give
a patient the type of individualized treatment he
or she deserves� Each month, for instance, nearly
500 articles are published on breast cancer alone�
Despite this profusion of research, there are often
gaps especially an absence of data that compares
how well different diagnostic tests and treatments
work for the very same conditions and diseases�
To help physicians get the information they need
to provide the highest quality care for patients,
the recovery Act of 2009 devotes $1�1 billion to
comparative effectiveness research—the reviews
of evidence on competing medical interventions
and new head-to-head trials� The information
from this research will improve the performance
of the U�S� health care system�
investing in Prevention and Wellness. Over
a third of all illness is the result of poor diet, lack of
exercise, and smoking� Indeed, obesity alone leads
to many expensive, chronic conditions including
high blood pressure, heart disease, diabetes, and
even cancer� Furthermore, there are important
vaccines that can prevent diseases, and screening
tests that can detect cancer and other diseases at
an early stage when they are more curable� yet

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
many Americans are not getting these effective
interventions� For instance, according to the Centers for Disease Control and Prevention fewer
than 75 percent of women get mammograms, and
fewer than 50 percent of Americans receive any
type of colon cancer screening� The President has
devoted in the recovery Act an unprecedented $1
billion for prevention and wellness interventions�
This will dramatically expand community-based
interventions proven to reduce chronic diseases�
These investments made in the recovery Act
will help, in the long-run, to slow health care cost
growth which is the key driver of the Nation’s
overall long-term fiscal gap� Specifically, the investments in information technology will provide
not only higher quality of care and less hassle
for patients, but also the data necessary to examine what works and what doesn’t—which, in
turn, will be the focus of the research on effective
medical interventions� The emphasis on prevention and wellness will help reduce the incidence
of diseases and chronic conditions and lead to a
healthier, more productive America� All in all,
these investments will create the underpinnings
of a more efficient health care system—one that
delivers better care rather than just more care—
and will put the Nation on a much sounder longterm fiscal path�

trAnsForming AnD moDernizing AmericA’s
HeAltH cAre system
To build on these steps, the Budget sets aside
a reserve fund of more than $630 billion over 10
years that will be dedicated towards financing reforms to our health care system� The President
recognizes that while a very large amount of
money and a major commitment, $630 billion is
not sufficient to fully fund comprehensive reform�
But this is a first crucial step in that effort, and
he is committed to working with the Congress to
find additional resources to devote to health care
reform� The Administration will explore all serious ideas that, in a fiscally responsible manner,
achieve the common goals of constraining costs,
expanding access, and improving quality� This
past year, for instance, the President proposed to

27

use rescission of the high-income tax provisions�
Others have proposed different ideas to finance
expanded health coverage such as capping the
tax exclusion for employer-sponsored health insurance, a value-added tax, or additional offsets
in existing health care programs� To achieve these
goals and finance reform, the President looks forward to working with the Congress over the coming year, and as he does, the President will adhere
to the following set of eight principles:
• Protect Families’ Financial Health. The plan
must reduce the growing premiums and other costs American citizens and businesses
pay for health care� People must be protected
from bankruptcy due to catastrophic illness�
• Make Health Coverage Affordable. The plan
must reduce high administrative costs, unnecessary tests and services, waste, and other inefficiencies that consume money with
no added health benefits�
• Aim for Universality. The plan must put the
United States on a clear path to cover all
Americans�
• Provide Portability of Coverage. People
should not be locked into their job just to
secure health coverage, and no American
should be denied coverage because of preexisting conditions�
• Guarantee Choice. The plan should provide
Americans a choice of health plans and physicians� They should have the option of keeping their employer-based health plan�
• Invest in Prevention and Wellness. The plan
must invest in public health measures proven to reduce cost drivers in our system—such
as obesity, sedentary lifestyles, and smoking—as well as guarantee access to proven
preventive treatments�
• Improve Patient Safety and Quality Care.
The plan must ensure the implementation
of proven patient safety measures and provide incentives for changes in the delivery
system to reduce unnecessary variability in
patient care� It must support the widespread
use of health information technology and the
development of data on the effectiveness of

28

A NEW ErA OF rESPONSIBILITy
medical interventions to improve the quality
of care delivered�

• Maintain Long-Term Fiscal Sustainability.
The plan must pay for itself by reducing the
level of cost growth, improving productivity,
and dedicating additional sources of revenue�
financing health Care Reform. The reserve fund is financed by a combination of rebalancing the tax code so that the wealthiest
pay more as well as specific health care savings
in three areas: promoting efficiency and accountability, aligning incentives toward quality, and
encouraging shared responsibility (see Table 1)�
Taken together, the health care savings would
total $316 billion over 10 years while improving
the quality and efficiency of health care, without
negatively affecting the care Americans receive�
These savings include:
• Reducing Medicare Overpayments to Private
Insurers Through Competitive Payments.
Under current law, Medicare overpays Medicare Advantage plans by 14 percent more
on average than what Medicare spends for
beneficiaries enrolled in the traditional feefor-service program� The Administration
believes it’s time to stop this waste and will
replace the current mechanism to establish payments with a competitive system in
which payments would be based upon an average of plans’ bids submitted to Medicare�
This would allow the market, not Medicare,
to set the reimbursement limits, and save
taxpayers more than $175 billion over 10
years, as well as reduce Part B premiums�
• Reducing Drug Prices. Prescription drug
costs are high and rising, causing too many
Americans to skip doses, split pills, or not
take needed medication altogether� The Administration will accelerate access to make
affordable generic biologic drugs available
through the establishment of a workable
regulatory, scientific, and legal pathway for
generic versions of biologic drugs� In order
to retain incentives for research and development for the innovation of breakthrough
products, a period of exclusivity would be
guaranteed for the original innovator prod-

uct, which is generally consistent with the
principles in the Hatch-Waxman law for traditional products� Additionally, brand biologic manufacturers would be prohibited from
reformulating existing products into new
products to restart the exclusivity process,
a process known as “ever-greening�” The Administration will prevent drug companies
from blocking generic drugs from consumers by prohibiting anticompetitive agreements and collusion between brand name
and generic drug manufacturers intended to
keep generic drugs off the market� Finally,
the Budget will bring down the drug costs
of Medicaid by increasing the Medicaid drug
rebate for brand-name drugs from 15�1 percent to 22�1 percent of the Average Manufacturer Price, apply the additional rebate
to new drug formulations, and allow States
to collect rebates on drugs provided through
Medicaid managed care organizations� All
the savings would be devoted to the health
care reserve fund�
• Improving Medicare and Medicaid Payment
Accuracy. The Government Accountability
Office (GAO) has labeled Medicare as “highrisk” due to billions of dollars lost to overpayments and fraud each year� The Centers
for Medicare and Medicaid Services (CMS)
will address vulnerabilities presented by
Medicare and Medicaid, including Medicare
Advantage and the prescription drug benefit
(Part D)� CMS will be able to respond more
rapidly to emerging program integrity vulnerabilities across these programs through
an increased capacity to identify excessive
payments and new processes for identifying
and correcting problems�
• Improving Care after Hospitalizations and
Reduce Hospital Readmission Rates. Nearly 18 percent of hospitalization of Medicare
beneficiaries resulted in the readmission of
patients who had been discharged in the hospital within the last 30 days� Sometimes the
readmission could not have been prevented,
but many of these readmissions are avoidable� To improve this situation, hospitals
will receive bundled payments that cover not
just the hospitalization, but care from cer-

29

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
Table 1.
Reserve for Health Reform
$ in billions

2010

2011

2012

2013

2014

2010-14

2010-19

Federal Health Savings �������������������������������

-1.8

-5.1

-18.0

-24.5

-34.3

-83.7

-316.0

Aligning incentives toward quality .............................

0.0

-0.4

-1.3

-1.7

-2.1

-5.4

-20.5

Promoting efficiency/accountability ..........................

-1.8

-4.3

-16.2

-22.2

-31.5

-75.9

-287.4

Encouraging shared responsibility............................

0.0

-0.4

-0.6

-0.7

-0.8

-2.4

-8.1

New Revenues .......................................................

........

-11.1

-30.8

-33.5

-35.5

-110.8

-317.8

Subtotal: Reserve for Health Reform ..........

-1.8

-16.2

-48.8

-58.0

-69.8

-194.6

-633.8

0.0

0.0

0.0

0.0

0.0

0.0

0.0

Additional resources and new benefits, to
be determined with Congress
Net Cost—Reserve Fund ..................................

tain post-acute providers the 30 days after
the hospitalization, and hospitals with high
rates of readmission will be paid less if patients are re-admitted to the hospital within
the same 30-day period� This combination
of incentives and penalties should lead to
better care after a hospital stay and result
in fewer readmissions—saving roughly $26
billion of wasted money over 10 years� The
money saved will also be contributed to the
reserve fund for health care reform�
• Expanding the Hospital Quality Improvement Program. The health care system
tends to pay for quantity of services not
quality� Experts have recommended that
hospitals and doctors be paid based on delivering high quality care, or what is called
“pay for performance�” The President’s
Budget will link a portion of Medicare payments for acute in-patient hospital services
to hospitals’ performance on specific quality
measures� This program will improve the
quality of care delivered to Medicare beneficiaries, and the higher quality will save
over $12 billion over 10 years� Again, the
money saved will be contributed to the reserve Fund for health care reform�
• Reforming the Physician Payment System to
Improve Quality and Efficiency. The Administration believes that the current physician

payment system, while it has served to limit
spending to a degree, needs to be reformed to
give physicians incentives to improve quality and efficiency� Thus, while the baseline
reflects our best estimate of what the Congress has done in recent years, we are not
suggesting that should be the future policy�
As part of health care reform, the Administration would support comprehensive, but
fiscally responsible, reforms to the payment
formula� The Administration believes Medicare and the country need to move toward
a system in which doctors face better incentives for high-quality care rather than simply more care�
• Reducing Itemized Deduction Rate for Families With Incomes Over $250,000. Lowering health care costs and expanding health
insurance coverage will require additional
revenue� In the health reform policy discussions that have taken place over the past
few years, a wide range of revenue options
have been discussed—and these options
are all worthy of serious discussion as the
Administration works with the Congress to
enact health care reform� The Administration’s Budget includes a proposal to limit
the tax rate at which high-income taxpayers can take itemized deductions to 28 percent—and the initial reserve fund would be

30

A NEW ErA OF rESPONSIBILITy
funded in part through this provision� This
provision would raise $318 billion over 10
years�

Restoring America’s Place in the World
and Keeping America Safe
Just as a strong economy bolsters our standing in the world and enhances our national security, strong leadership in the world helps us
thrive in an interdependent, global economy� The
line between economic policy and foreign policy is
now very hard to draw� In the past, our greatest
threats came from distant countries with armies
and navies who engaged us in direct battle� Now,
our open, interdependent world that makes it so
easy to do business, travel, or communicate with
people from all over the globe also makes us vulnerable to new threats and security challenges�
As we all learned on September 11th, a small
band of terrorists has the ability to kill thousands
of civilians who are just going about their lives�
Dangerous weapons, including nuclear materials, could fall into the hands of terrorists� Programmers sitting in their local coffee shop could
launch cyber-attacks on the Pentagon, the CIA, or
key parts of our security infrastructure� A small
nation thousands of miles away which slips into
chaos and anarchy could become a failed state
that incubates terrorists and regional conflict� An
outbreak of a deadly infectious disease in a rural, undeveloped corner of the world can quickly
make its way to our biggest cities�
America alone cannot defeat these threats, but
neither can the world defeat them without America� That is why the Administration will invest
in our Armed Forces and our wounded warriors
to ease the burdens of two wars and multiple
deployments, while also asking more of our allies in Afghanistan and elsewhere� And it is why
the Administration will increase investments in
other elements of our national power—like diplomacy, economic development, and education—so
that we end the reliance on our military alone to
defeat emerging threats� In addition, the Administration will make critical investments for America’s veterans to make sure that they receive the
funding and the care they deserve for defending
this country�

Taken together, this will restore America’s
leadership role in the world after years of disregarding our allies and ignoring the values that
have earned America respect the world over� Already, the President has pledged to close the detention facility at Guantanamo Bay, Cuba within
a year and has overhauled detention and interrogation practices� He is committed to responsibly
redeploying our combat brigades from Iraq while
bringing all the elements of American power
to bear on the threat posed by extremists from
Afghanistan and Pakistan� The President will
work with our allies to ensure that Iran lives up
to its responsibilities to the world community, and
rededicate America to the agreement at the heart
of the Nuclear Nonproliferation Treaty to work
toward a world without nuclear weapons while
working over the next four years to lock down all
loose fissile material�
These are big challenges, and while we recognize the perils we face, we must not forget that it
is also a time of immense promise� We can rebuild
our alliances and rally the world to tackle these
truly transnational challenges, replace despair
with hope, and keep America secure, prosperous,
and free� To achieve these goals, we need to allocate our resources to reflect the reality of the
threats we face today and do so in a way that limits waste� The Administration will:
increase funding for the department of
defense (dOd). As we look to the challenges
facing our Nation, it’s imperative that we invest
our defense dollars effectively and wisely� To that
end, the President is committed to supporting
the men and women who make our military the
best in the world� He wants to increase the size of
the Army and Marine Corps, improve the pay for
our men and women in uniform, and improve the
medical treatment of wounded servicemembers�
At the same time, the President will pursue a
reform of the acquisition process to make sure
that funds are not being wasted on expensive and
outdated weapon systems� To fund these efforts,
the Administration requests for DOD an increase
of $20�4 billion, or 4 percent, from the 2009 enacted level of $513�3 billion excluding funding in the
recovery Act� This funding increase allows DOD

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
to address the President’s highest priorities� In
addition, the Administration will request sufficient funding to enable the Department to carry
out the recommendations of the 2005 Defense
Base Closure and realignment Commission and
meet the mandated September 2011 implementation deadline, which will help to align DOD’s
domestic bases and medical facilities with operational needs—and will go a long way to preventing the mistreatment reported at Walter reed
Army Medical Center over the past few years�
Responsibly Remove Combat forces from
iraq and focus on the fight in Afghanistan.
The Budget recognizes and funds the President’s
strategy to increase our resources in Afghanistan
while responsibly removing combat brigades from
Iraq� To address the costs of military operations
in Iraq and Afghanistan, the Administration requests $75�5 billion for the remainder of 2009 and
$130 billion for 2010� The Administration will
provide the details of the 2009 supplemental appropriations request to the Congress in the next
few weeks, and will transmit the detailed 2010
request with the President’s 2010 Budget�
increase the Size of the Army and Marine
Corps. While the best technology and up-to-date
equipment are important to maintaining the
predominance of our military, our Armed Forces
ultimately rely on the commitment and skill of
the men and women who wear its uniform� recognizing this, the Budget supports additional
permanent forces in the Army and Marine Corps,
which will increase to 547,400 and 202,000, respectively, by the end of 2010� This growth is two
years ahead of schedule and will reduce stress on
servicemembers and their families, while providing heightened readiness for a full spectrum of
military operations anywhere in the world�
increase Pay for Men and Women in uniform. After years of asking more and more from
our troops and their families, this Budget reflects the priorities of an Administration that
is committed to caring for the servicemembers
who protect our security and the families who
support them� The Budget includes funding for
a 2�9 percent pay raise for men and women in

31

uniform, an amount that will improve their purchasing power�
improve Mental health Care for Soldiers
and veterans. The Budget funds expanded efforts at DOD to address mental health needs�
Post-traumatic stress disorder, traumatic brain
injury (TBI) and associated ailments are, and
will continue to be, key military medical challenges facing the Armed Forces for years to come�
DOD will fully implement a comprehensive TBI
registry including a single point of responsibility to track incidents and recovery� The armed
services will expand the number of integrated
mental health professionals with their deployed
units to better channel medical attention to those
who need help quickly� In addition, the National
Intrepid Center of Excellence for Psychological
Health and TBI will be dedicated in the late fall
of 2009� This will serve as the clinical research
and educational arm of DOD’s Center of Excellence for psychological health and TBI� The Budget expands the mental health screening and
treatment services offered by the Department of
Veterans Affairs (VA) and focuses on reaching veterans in rural areas� The VA also will increase the
number of Vet Centers and mobile health clinics
to expand access to mental health screening and
treatment in rural areas� In addition, new funding ensures that veterans and their families are
informed of these resources and are encouraged
to pursue needed care�
Reform defense department Acquisition.
When it comes to the defense of our Nation, it’s
critical that every dollar is spent in the most effective way possible� Funds need to be allocated
in ways that take into the account the needs of today as well as the threats of tomorrow� Moreover,
we must make sure that the men and women who
serve our Nation in its defense have the training, resources, material, and support they need
to do the job� We know that DOD’s new weapons
programs are among the largest, most expensive,
and technically difficult that the Department has
ever tried to develop� Consequently, they carry a
high risk of performance failure, cost increases,
and schedule delays� With this in mind, the Administration is committed to reforming the de-

32

fense acquisition process so that taxpayer dollars
are not wasted� The Administration will set realistic requirements and stick to them and incorporate “best practices” by not allowing programs to
proceed from one stage of the acquisition cycle to
the next until they have achieved the maturity
to significantly lower the risk of cost growth and
schedule slippage�
Put the united States on a Path to double
foreign Assistance. It has become clear over
the past decade that all the elements of American
power must be developed to protect our people,
interests, and values� That is why the Administration is committed to placing the Nation on
a path to double foreign assistance to $50 billion� Doing so, the United States will reach out
to the global community, lay the groundwork for
stability and security at home and abroad, and
strengthen its role as a leader in global development and diplomacy� These are important investments that will help bring stability to other parts
of the globe and greater security for our Nation�
Through increased foreign assistance funding,
the United States will embark on several new
initiatives that will give children in the poorest
countries access to education; foster global food
security through sustainable agriculture; expand
goodwill and inspire service by increasing the
size of the Peace Corps; and help stabilize postconflict states, creating room for them to plant
the seeds of democracy�
Expand the Size of the foreign Service.
To face the threats of the 21st Century, we need
to use all the instruments of our power, including diplomacy, to ensure the safety and security
of the United States� The 2010 Budget includes
funding for the first year of a multi-year effort to
significantly increase the size of the Foreign Service at both the Department of State and the U�S�
Agency for International Development (USAID)�
An increased cadre of State and USAID Foreign
Service officers will help advance our critical foreign policy goals and deliver on our expanding
U�S� foreign assistance commitments�
increase funding for Global health Programs. Boosting the quality of health around

A NEW ErA OF rESPONSIBILITy
the world is not only a moral consideration; it is
also in the country’s interest as pandemics and
poor health care can destabilize whole regions
as well as travel around the globe� In the Budget, the United States will continue to build on
its commitment to save lives through increasing
investments in global health programs, including in areas such as maternal and child health,
family planning and other core health programs,
while also emphasizing a commitment to HIV/
AIDS, malaria, and tuberculosis through successful programs such as the President’s Emergency
Plan for AIDS relief and the Malaria Initiative�
In addition, together with our multilateral partners, the Administration will continue to provide
global leadership to improve the health status of
the world’s poorest populations�
Reinvigorate Counter-Proliferation, AntiTerrorism, and Transnational Crime-fighting Efforts. The Budget will fund reinvigorated
efforts to counter nuclear proliferation, terrorism,
and transnational crime� Specifically, the Budget includes first-year funding for a multi-year
counterterrorism and law enforcement assistance program that strengthens the capabilities
of our international partners in the Western
Hemisphere and other critical regions around the
world� The Budget also provides additional nonproliferation and counter-proliferation funding to
help secure nuclear materials and promote safe
civilian uses of nuclear energy�
Meet Our Challenges in Afghanistan, Pakistan, and iraq. The 2010 Budget refocuses U�S�
resources toward addressing the resurgence of al
Qaeda and the Taliban in Afghanistan and Pakistan� The Administration increases non-military
assistance to both countries, providing additional
funding for governance, reconstruction, counternarcotics, and other development activities that
will help counter extremists� It expands the
number of civilian personnel in Afghanistan and
Pakistan in an effort to stabilize strategic areas
of the countries, build government capacity, and
successfully manage expanded assistance programs� In Iraq, the Administration strengthens
our assistance to those who have been displaced
from their homes because of the war, and realigns

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
our assistance efforts in Iraq to ensure that Iraqis can assume more responsibility for their own
political and economic future�
Boost Compensation to disabled Military
Retirees. The Budget contains a proposal to expand concurrent receipt of military retired pay
and Veterans Disability Compensation to retirees
who were medically retired from active service�
Under current law, these benefits are offset� Disabled military retirees would receive significantly
greater compensation when the offset is removed�
improve the Quality of Life for Our Armed
forces. The Administration is committed to improving the quality of life for American military
personnel� Therefore, the Budget continues to
sustain and modernize barracks and dormitories
housing service members around the world and
works to end all inadequate housing for military
families� It provides funds to build or renovate
base facilities at a rate sufficient to ensure the
safety and functionality of all structures while
meeting the needs of users�
Care for Wounded, ill, and injured Servicemembers. DOD will continue its efforts to
improve the medical care and housing for wounded, ill, and injured servicemembers� DOD will
add 21 more Warrior in Transition Complexes at
posts throughout the continental United States,
as well as sites in Alaska, Hawaii and Germany�
DOD and the VA will expand pilot programs to
expedite processing of injured troops through the
Disability Evaluation System� The expedited system substantially reduces the time required to
determine disability rating and, more importantly, alleviates frustration caused by a needlessly
complex process�
increase funding for vA by $25 Billion
Over the Next five years. The President’s Budget increases funding for VA by $25 billion over
the next five years in order to honor our Nation’s
veterans and expand the services they receive�
Some of these funds will be used to transform
VA into a 21st Century organization, including
investments in information technology that directly benefit veterans in the areas of both health

33

care and benefits� Through improved electronic
medical records, VA will more efficiently retrieve
active duty health records from DOD and enable
all VA care sites to access the records of veterans
needing care� The VA will also invest in the development of rules-based electronic processes to
increase accuracy, consistency, and timeliness in
veterans’ receipt of benefits�
dramatically increase funding for vA
health Care. The President’s Budget funds VA
medical care with the resources it needs to provide 5�5 million veterans with timely and high
quality care� This funding also enables VA to create Centers of Excellence for hearing and vision
impairment and to provide additional veteranoriented specialty care in areas including prosthetics, spinal cord injury, aging, and women’s
health�
Restore health Care Eligibility for Modest-income veterans. For the first time since
January 2003, the President’s Budget restores
eligibility for VA health care to non-disabled veterans earning modest incomes� By 2013, this initiative will bring over 500,000 additional veterans
into the VA health care system while maintaining
high quality and timely care for the lower-income
and disabled veterans who currently rely on VA
medical care�
Combat homelessness by Safeguarding
vulnerable veterans. The Administration expands VA’s current services to homeless veterans through a collaborative pilot program with
non-profit organizations� This pilot will help
maintain stable housing for veterans who are at
risk of falling into homelessness while helping
VA to continue providing them with supportive
services�
facilitate Timely implementation of the
Comprehensive Education Benefits veterans Earn Through Their dedicated Service.
This Budget supports VA’s prompt, accurate, and
efficient implementation of the Post-9/11 GI Bill-providing unprecedented levels of educational
assistance to the men and women who have
served our country through active military duty�

34

cHAnging tHe wAy wAsHington Does
business
Just as important as changing what Washington does is to change how it does it� We cannot
begin to tackle the challenges we face in the short
term to revive our economy and in the long term
to put us on the path to growth without restoring
responsibility and accountability to Government�
Being entrusted with Americans’ tax dollars is
a huge responsibility, and for far too long, there
has been insufficient regard for how those funds
are spent; a high tolerance of waste, fraud, and
abuse; and a passive acceptance of inefficiencies
and ineffectiveness� Changing this will take time,
and in the few weeks that the Administration has
been in office, it has started that lengthy process�

Restoring Fiscal Discipline and
Planning for the Future
Over the past eight years, fiscal recklessness
replaced fiscal responsibility� Huge tax cuts and
spending increases were undertaken without being paid for� Large extra-budgetary expenses put
a veneer on our fiscal situation� Special interestdriven spending grew out of control� Long-term
challenges to our country and our fiscal situation
were ignored� Taken together, this has put the
Nation in an even more precarious fiscal position
as we confront this economic crisis� In light of this
inheritance of irresponsibility, the Administration in its first weeks has taken the initial steps
to restore fiscal discipline by requesting and
signing into law an economic recovery bill that
is free of all earmarks and by instituting a system whereby the public will be able to track how
and where recovery funds are actually used� To
continue this progress in the months and years
ahead, the Administration will:
Cut the deficit in half by End of the President’s first Term. The current economic crisis
has resulted in a $1 trillion a year gap between
what the economy can produce and what it is actually producing� With all the monetary policy
levers already employed, the Government had
to step in to stimulate the economy and avoid an
economic catastrophe� While the recovery Act

A NEW ErA OF rESPONSIBILITy
has entailed increasing deficit spending—since
that is the fastest and surest way to create jobs in
a recession—we cannot see this as a new norm� It
is an extraordinary response to an extraordinary
crisis� So while this Budget will add to our national deficit in the short-term, the President is
committed to cutting in half by the end of his first
term in office the deficit he inherited on January
20, 2009�
Review the Budget Line-By-Line for
Waste. The President believes that we should
be investing taxpayer dollars in efforts and programs with proven records of success and reallocating or cutting programs that do not work or
whose benefits are not worth their cost� To this
end, the Administration has begun an exhaustive line-by-line review of the Federal Budget, the
first stage of which will be partially reflected in
the spring release of the full Fy 2010 Budget and
will continue in subsequent years� However, already the Administration has identified cuts and
savings that include:
• Increasing Federal Health Savings. As
discussed in detail above, the President
is proposing substantial savings in health
care by aligning incentives toward quality, promoting efficiency, and encouraging
responsibility�
• Eliminating Cotton Storage Credits. The
President’s Budget proposes to eliminate the
requirement for the Government to pay the
storage costs of cotton that is put under loan
with USDA� Cotton is the only commodity
for which this assistance is provided without exception� Storage credits for cotton have
been found to have a negative impact on the
amount of cotton on the market� Because
cotton storage is covered by the Government,
producers may store their cotton for longer
than necessary� There is no reason the Government should be paying for the storage of
cotton, particularly since it does not provide
this assistance for most other commodities�
• Eliminating Mine Clean-Up Payments to
States that Have Completed Clean-Up. Abandoned Mine Lands (AML) payments from the
Office of Surface Mining are made to States

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
with abandoned coal mines requiring clean
up� These AML payments were originally intended to be used only for clean-up efforts�
In 2006, a provision was added that provided
payments, available for unrestricted use, for
States that have completed clean-up of all of
their abandoned coal mines� This proposal
would eliminate these unrestricted payments to States that have completed cleanup, saving close to $200 million in 2014�
• Eliminating the Resource Conservation and
Development (RC&D) Program. The Budget
eliminates funding for rC&D� First begun
in 1962, the program was intended to build
community leadership skills through the establishment of rC&D councils that would
access Federal, State and local programs for
the community’s benefit� After 47 years, this
goal has been accomplished� These councils
have developed sufficiently strong State and
local ties that the Administration believes
they are now able to secure funding for their
continued operation without Federal assistance�
• Reforming the Market Access Program
(MAP). The Budget reforms MAP by reducing program funding for overseas brand
promotion and minimizes the benefits that
large for-profit entities may indirectly gain
as members of trade associations who participate in MAP� An annual funding reduction
of 20 percent will improve the program by
placing greater emphasis on promoting generic American agricultural products overseas and assisting small business entities�
• Reducing Direct Payments to Farmers. The
President wants to maintain a strong safety
net for farm families and beginning farmers
while encouraging fiscal responsibility� As
part of a broad effort to move farmers from
a program of direct payments to a program
where agricultural producers earn payments
from environmental improvements, the
President’s Budget phases out direct payments over three years to farmers with sales
revenue of more than $500,000 annually�
Presently, direct payments are made to even
large producers regardless of crop prices, in-

35

come, and profits or whether the land is still
farmed�
• Increasing Collection of Delinquent Tax From
Federal Contractors. Federal contractors owe
billions of dollars in unpaid Federal taxes�
IrS currently collects some of this debt by
levying Federal payments made to these
debtors� In some cases, administrative procedures prevent IrS from collecting this debt�
In fact, IrS loses the opportunity to collect
approximately $114 million per year in tax
debt because of administrative delays� The
Budget proposes to address this problem by
streamlining administrative processes in order to make it easier for IrS to collect tax
debt owed by Federal contractors�
• Eliminating or Reforming Small, Ineffective Housing and Urban Development Programs. Programs that are either ineffective or duplicative divert us from achieving
their ultimate policy goals and are a waste
of taxpayer dollars� The Administration
proposes eliminating a list of programs
that includes: the American Dream Downpayment Initiative, which is too small to
operate effectively and the Community
Development Loan Guarantee program,
which is not structured effectively to encourage communities to finance large-scale
development; plus reform the rural Housing and Economic Development program so
that it is not duplicative of similar USDA
programs�
• Eliminating Education Programs With Records of Low Performance. When it comes to
educating our children, we cannot afford to
waste a dollar� The Administration proposes to immediately terminate, or intensively
review with an expectation of overhauling
or terminating, a series of small Education
Department programs� Many of these programs have long provided funding for narrowly focused curricula, staffing choices, or
school types� None has strong evidence to
justify this support; the programs either
have never been seriously evaluated or have
received weak evaluations; and the programs often could be funded in competitive

36

A NEW ErA OF rESPONSIBILITy
funding streams that could require evidence
of results�

• Return to honest Budgeting. Too often
in the past several years, budget tricks were
used to make the Government’s books seem
stronger than they actually were� If this
Budget used the gimmicks employed in recent
budgets, it would show in excess of another
$250 billion annually in available funds each
year, and a bottom line that would appear
approximately $2�6 trillion better over 10
years� Pretending that the Budget has this
money available may be gratifying, but it’s
an accounting sleight-of-hand, not reality�
We should not tolerate these kinds of tricks
when it comes to accounting for the public’s
tax dollars� This Budget, therefore, provides
a projected cost for the wars in Iraq and
Afghanistan; does not assume that all of the
2001 and 2003 tax legislation magically disappears at the end of 2010; does not allow
the alternative minimum tax to take over
the tax code, which almost every observer
agrees is unrealistic; recognizes the statistical likelihood of natural disasters instead
of assuming that there will be no disasters
over the next decade; includes a contingent
reserve as a placeholder in case further legislative action becomes necessary to stabilize the financial system; and provides a 10year rather than a 5-year look into our fiscal
situation�
Account for future Emergencies. One can
never know what kind of disaster or unexpected
emergency may occur that will require the help
of the Federal Government� If we do not account
for these costs as we project the Federal Government’s future fiscal health, we run the risk of
allowing these unforeseen events to cause even
more economic pain and derail our long-term
growth� In the past, budgets assumed that there
would not be any natural disasters in our Nation
that would necessitate Federal help—no major
earthquakes, hurricanes, floods, or man-made disasters� This omission is irresponsible, and has
permitted past Administrations to project deficits
that were lower than were likely to occur� Breaking with past practice, the President’s Budget

puts more than $20 billion annually (the statistical probability of the costs of dealing with these
emergencies) in its budget projections�
Return to Pay-As-you-Go Budgeting.
While the economic crisis we have inherited is a
once-in-a-generation meltdown, it should not be
seen as an opportunity to abandon the fiscal discipline that we owe each and every taxpayer in
spending their money� This discipline is critical
to keeping the United States strong in a global,
interdependent economy� Moving forward, we
need to return to pay-as-you-go budgeting that
we had in the 1990s for all non-emergency measures� The President and his economic team look
forward to working with the Congress to develop
budget enforcement rules that are based on the
tools that helped create the surpluses of a decade
ago, including statutory pay-as-you-go rules�
Create a Reserve for financial Stabilization Efforts. The Nation has inherited deep
problems in its financial system� Additional action is likely to be necessary to stabilize the financial system and thereby facilitate economic
growth� Although the Administration is not requesting additional funds from the Congress at
this point and although it is not yet possible to
provide a precise estimate of how much additional Federal action may be involved should the
Administration need to request such funds, the
President’s Budget nonetheless includes a $250
billion contingent reserve for further efforts to
stabilize the financial system� The approach for
this financial stabilization reserve is similar in
spirit to the one adopted with regard to future
war costs; the Budget includes a placeholder for
future war costs even though such costs if any are
difficult to predict� Estimates of the value of the
financial assets acquired by the Federal Government to date suggest that the Government will
get back approximately two-thirds of the money
spent purchasing such assets—so the net cost to
the Government is roughly 33 cents on the dollar� These transactions are typically reflected in
the budget at this net cost, since that budgetary
approach best reflects their impact on the Government’s underlying fiscal position� The figure
recorded in this Budget as a placeholder simi-

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
larly reflects this net cost concept� The $250 billion reserve would support $750 billion in asset
purchases�
The existence of this reserve in the Budget does
not represent a specific request� rather as events
warrant, the Administration will work with the
Congress to determine the appropriate size and
shape of such efforts, and as more information becomes available the Administration will define an
estimate of potential costs� In addition, should a
request become necessary, the Administration is
committed to working with the Congress so that
to the maximum extent possible, taxpayers are
paid back over time for any additional emergency
assistance provided to the financial system� The
compensation to taxpayers could include requiring dividend payments, warrants, equity and other forms of upside opportunities from those firms
receiving assistance� The compensation could
also include a fee or assessment on financial institutions or financial activity, which would have
to commence only when the financial system had
stabilized and which would be designed to minimize adverse effects on the long-term recovery of
our financial system�
Limit Pay increases in the federal Workforce. As families are tightening their belts in
this economic crisis across the country, the President ordered a freeze of White House senior staff
pay� In this Budget, Federal employees also will
be asked to do their part: the 2010 pay increase
for Federal civilian employees, 2�0 percent, is responsive to the current economic climate, bringing Federal pay and benefit practices more in line
with the private sector�
Making Saving for Retirement Easier as
the Economy Recovers. Over the long-term
families need personal savings, in addition to
Social Security, to prepare for retirement and
to fall back on during tough economic times like
these� However, 75 million working Americans—
roughly half the workforce—currently lack access
to employer-based retirement plans� In addition,
the existing incentives to save for retirement are
weak or non-existent for the majority of middleand low-income households� The President’s 2010

37

Budget lays the groundwork for the future establishment of a system of automatic workplace
pensions, on top of and clearly outside Social Security, that is expected to dramatically increase
both the number of Americans who save for retirement and the overall amount of personal savings for individuals� research has shown that the
key to saving is to make it automatic and simple�
Under this proposal, employees will be automatically enrolled in workplace pension plans—and
will be allowed to opt out if they choose� Employers who do not currently offer a retirement
plan will be required to enroll their employees in
a direct-deposit IrA account that is compatible
with existing direct-deposit payroll systems� The
result will be that workers will be automatically
enrolled in some form of savings vehicle when
they go to work—making it easy for them to save
while also allowing them to opt out if their family
or individual circumstances make it particularly
difficult or unwise to save� Experts estimate that
this program will dramatically increase the savings participation rate for low and middle-income
workers to around 80 percent�

Creating a More Ethical and Transparent
Government and Improving Oversight
Washington cannot be responsive to the American people if the doors of Government are shut
to everyone except those with lobbyists and influence� An unresponsive Government not only offends our democratic sensibilities; it also leads to
disastrous policy outcomes—initiatives and programs that are constructed to serve a select few
and not the public interest�
That is why in his first days in office, the President signed an executive order that: prohibits
executive branch employees from accepting gifts
from lobbyists; closes the revolving door that allows Government officials to move to and from
private sector jobs in ways that give that sector
undue influence over Government; and requires
that Government hiring be based upon qualifications, competence, and experience—not political
connections� The President has ordered every one
of his appointees to sign a pledge abiding by these
tough new rules as a down payment on the change

38

he has promised to bring to Washington� In three
separate Presidential Memoranda, the President
instructed all members of his Administration to
operate under principles of openness, transparency, and of engaging citizens with their Government; and ended the practice of having others
besides the President assert executive privilege
for records after an administration ends�
Building on his career working for a more ethical and transparent Government, the President
will:
Shine a Bright Light on Washington Lobbying. The Administration will take steps to
make sure that the public has specific, useful,
and meaningful information about how lobbyists
are trying to influence Federal spending and tax
policy� A centralized, online database will contain
lobbying reports, disclose how much money Federal contractors are spending on lobbying, and
provide other relevant information�
Let Americans Track how Their Tax dollars Are Spent. Americans have a right to know
how the Government spends their tax dollars, but
that information is usually hard to find and often
not made available at all� The President is committed to changing that by making this data easy
to find and review� He will:
• Maintain Recovery.gov, an unprecedented effort to bring transparency and accountability to the money spent in the American recovery and reinvestment Act� This site will
allow taxpayers learn where recovery funds
are going, for what purpose, and to what result�
• Give the public five days to review all nonemergency bills before they are signed into
law�
• Disclose each earmark and the name of the
legislator who asked for each earmark, and
make this information available on a searchable public website�
• Clean up military contracting by establishing the reporting requirements, accounting,
and accountability needed for good gover-

A NEW ErA OF rESPONSIBILITy
nance and cost savings, and by scrutinizing
no-bid contracting�
increase Transparency in Earmarks.
From 1994 until 2006, the cost and number of
Congressional earmarks expanded dramatically, raising concerns that lawmakers were
funneling Federal money home to projects that
may not be the best use of taxpayer dollars� In
2007 and 2008, the Congress took important
steps to shine light on the allocation of congressional earmarks by requiring members’ names
to be listed next to requests funded in appropriations bills and reports, while also reducing
the total funding for earmarks� However, more
work needs to be done� The Administration will
continue to work with the Congress to provide
greater transparency and accountability of earmarks, and to ensure that the American people
are made well aware of how and where Federal
money is spent�
Bolster Oversight of the financial Markets. robust markets depend on clear rules of
the road enforced by strong, impartial regulators�
This past year, the consequences of poor market
oversight became abundantly clear� The Budget,
therefore, will increase resources for the Securities and Exchange Commission (SEC) by over
13 percent and the Commodity Futures Trading
Commission (CFTC) by over 44 percent relative to 2008 levels� In 2010, the SEC will build
its staff and technology resources and pursue a
risk-based, efficient regulatory structure that
will better detect fraud and strengthen markets�
The CFTC will implement new program responsibilities promulgated in the Farm Bill—filling
gaps in regulatory oversight of energy and overthe-counter derivatives trading, as well as foreign exchange�

Making Government More Effective
For decades, the argument in Washington has
been between those who say that government is
the cause of every problem and those who say
that it’s the answer� What has become clear over
the past eight years, especially in light of the
Federal Government’s response to Hurricane Katrina, is that what bothers Americans is bad gov-

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
ernment—government that does not to do its job
effectively and efficiently� To make Government
more effective, the Administration will:
Eliminate Wasteful Redundancy. Too often,
Federal departments take on functions or services that are already being done or could be done
elsewhere within the Federal Government more
effectively� The result is unnecessary redundancy
and the inability of the Government to benefit
from economies of scale and integrated, streamlined operations� The Administration will conduct
an immediate and periodic public inventory of
administrative offices and functions and require
agency leaders to work together to root out redundancy� Where consolidation is not the right
strategy to improve efficiency, the Administration
will improve information-sharing and use of common assets to minimize wasteful duplication�
Streamline Government Procurement.
The President will implement the GAO’s recommendations to reduce erroneous Federal payments, reduce procurement costs with purchase
cards, and implement better management of surplus Federal property�
Reform federal Contracting and Acquisition. The Administration will take several steps
to make sure that taxpayers get the best deal
possible for Government expenditures� We will
review the use of sole source, cost-type contracts;
improve the quality of the acquisition workforce;
and use technology to create transparency around
contracting� We will review acquisition programs
that are on the GAO high-risk list for being overbudget and prone to abuse� The Administration
also will clarify what is inherently a governmental function and what is a commercial one; critical
Government functions will not be performed by
the private sector for purely ideological reasons�
Put Performance first. The President is
creating a focused team within the White House
that will work with agency leaders and the Office
of Management and Budget (OMB) to improve results and outcomes for Federal Government programs while eliminating waste and inefficiency�
This unit will be composed of top-performing and

39

highly-trained Government professionals and
will be headed by a new Chief Performance Officer (CPO)� The CPO will work with Federal agencies to set tough performance targets and hold
managers responsible for progress� The President
will meet regularly with cabinet officers to review
the progress their agencies are making toward
meeting performance improvement targets�
Enforce Standards in Addition to Measuring Performance. The Administration will fundamentally reconfigure the Program Assessment
rating Tool� We will open up the insular performance measurement process to the public, the
Congress and outside experts� The Administration will eliminate ideological performance goals
and replace them with goals Americans care
about and that are based on congressional intent
and feedback from the people served by Government programs� Programs will not be measured
in isolation, but assessed in the context of other
programs that are serving the same population or
meeting the same goals�
increase use of Technology. Meeting 21st
Century challenges will require a Government
that leverages 21st Century technologies and
keeps up with the private sector� The President
will appoint the Nation’s first Chief Technology
Officer (CTO) to ensure that our Government and
all its agencies have the right infrastructure, policies and services for the 21st Century� The CTO
will work with each of the Federal agencies, to ensure that they use best-in-class technologies and
share best practices�
Make Sure that Taxpayer dollars Are
Spent Wisely in Our Large Entitlement
Programs. With billions of dollars being spent
in programs such as Social Security, Medicare,
and Medicaid upon which so many Americans
rely, it is important that they are run efficiently
and effectively� The Administration will make
significant investments in activities to ensure
that taxpayer dollars will be spent correctly,
expanding oversight activities in the largest
benefit programs and increasing investments
in tax compliance and enforcement activities�

40

A NEW ErA OF rESPONSIBILITy

The Administration proposes a significant
increase in program integrity activities at the
Social Security Administration (SSA), the Department of Health and Human Services (HHS),
the Department of Labor (DOL), and the Internal revenue Service (IrS)� The Administration
proposes a multi-year strategy, which will permit
the agencies to pay closer attention to the risk
of improper payments, commensurate with the
large and growing costs of the programs administered by these agencies, including Social Security,
Medicare, Medicaid, and Unemployment Insurance (UI)� As an example, the funding provided
for SSA will enable the agency to work down a
backlog of Continuing Disability reviews, which
determine whether an individual continues to
qualify for Disability Insurance or Supplemental
Security Income� The number of these reviews
has fallen in recent years even as the Disability
Insurance program has grown�

billion in lower spending and additional tax revenue over the next 10 years, with additional savings accruing after the 10-year period�
In addition to the initiatives described above,
the Administration will launch a new Federal-State partnership to reduce error and improper payments in Federal means-tested
programs administered by States� Many Stateadministered programs—such as Medicaid
and the Supplemental Nutrition Assistance
Program (formerly Food Stamps)—operate
independently of each other yet serve similar
low-income populations� Integrating and modernizing processes will provide opportunities
to improve services to beneficiaries, improve
eligibility determination, and reduce errors�
Through this initiative, the Federal Government will collaborate with States to identify
the most promising approaches and fund development and rigorous testing to determine
which ones have a high return on investment
that could be replicated on a broader scale�

There is solid and rigorous evidence that these
investments can significantly decrease the rate of
Table 2�

Program Integrity Savings from Increased Investment in Years 2010 through 2014
(in billions of dollars)

2011

2012

2013

2014

2010-2014

2010-2019

SSA �����������������������������������

–1.7

–2.5

–3.4

–4.4

–12.1

–27.9

HHS �����������������������������������

–0.5

–0.5

–0.6

–0.6

–2.7

–2.7

UI ���������������������������������������

–0.2

–0.2

–0.3

–0.3

–1.1

–1.2

IRS�������������������������������������

–1.1

–2.3

–3.9

–5.7

–13.3

–16.6

Total Savings �������������������

–3.5

–5.6

–8.1

–11.0

–29.2

–48.5

Increased revenue due to IRS enforcement funding is shown as a negative for consistency. Numbers may not add to totals
due to rounding.

improper payments and recoup many times their
initial investment� For every $1 spent by SSA on
a disability review, $11 is saved in erroneous payments� Similarly, for every $1 spent by HHS to
fight health care fraud, approximately $1�60 is
saved or averted, and the IrS activities recoup $5
for every $1 spent� As shown in Table 2, the initial five-year investment of $13�5 billion for 2010
through 2014 is estimated to result in nearly $50

OMB will oversee the development of rigorous
methodologies for measuring the potential savings from these investments, including both
administrative efficiency gains and reductions
in erroneous payments� No projects would be
funded unless they demonstrate their potential to result in more than one dollar in administrative and program savings for each dollar
invested once the project is fully in effect� The

41

JUMPSTArTING THE ECONOMy AND INVESTING FOr THE FUTUrE
Table 3�
Program Integrity Allocation Adjustment Requests
(budget authority in millions of dollars)
2010
SSA Program Integrity

2011

Base

273

Allocation adjustment

485

HHS Health Care Fraud and Abuse
Control Program

Base (mandatory)

DOL Unemployment Insurance
Improper Payments

Base

10

Allocation adjustment

50

IRS Enforcement
Federal-State Partnership

Allocation adjustment

Base

2013

2014

20102014

722

837

1,020

1,225

4,289

327

343

361

381

1,723

55

60

65

70

300

1,115

1,357

1,724

2,105

7,191

1,179
311

7,100*

Allocation adjustment

890

Allocation adjustment

175

Total Allocation Adjustment Request

2012

1,911

175
2,219

2,597

3,170

3,781

13,678

* The IRS enforcement base total should be considered a placeholder pending final approval and will be updated in subsequent Budget documents.

results of the pilots will be reported to the
Congress and used to inform administrative
and legislative policies for achieving programmatic savings in future years�
Budget Mechanism for Improving Program
Integrity
The Administration proposes to protect the dollars requested for these activities in the appropriations process through allocation adjustments, a
mechanism that has been used by past administrations and Congresses� Allocation adjustments
are increases in the ceiling or allocation for annual

appropriations, but these increases are granted
only if appropriations bills increase funding for
the specified programs integrity purposes above
specified base levels� This budget mechanism will
ensure that this funding will not supplant other
Federal spending on these activities or be diverted
to other purposes� The base level of funding assumed in each appropriations request and the allocation adjustment for each agency is listed in the
table�

CONCLuSiON
At this moment of economic crisis and uncertainty, our country is being tested� We can
continue the irresponsible ways of the past and
pretend that our problems are not there� We can
put off for tomorrow what must be done today�
And we can just concern ourselves with ourselves—pursuing profits without any regard for
principles� Or we can take a new path, usher in
a new era of responsibility, and renew America’s
promise� We can jumpstart our economy and create or save millions of jobs� We can invest now
to address the long-term drags on our economic
competitiveness� And we can create a government that is open and responsive to the people
it serves�
Especially now, this may seem like a difficult
course to take� But it is precisely in these tough
times that America has always come through�
Through Depressions and disasters, world wars
and the Cold War, our Nation has turned moments of adversity into opportunities of great
progress� Once again, we face such a moment,
and it is up to each of us to roll up our sleeves
and show, once again, that we are equal to the
task at hand; that we are committed to the hard
work of getting America moving again�
This Budget lays out a plan for our Nation to
get back on its feet and restore our competitiveness in this new century� It details how we are
going to steer the United States out of this deep
recession, and begins laying the groundwork for
long-term growth� It makes overdue investments
in improving our schools and opening up opportunities to learn for all our children� It explains
how we are going to build the infrastructure
upon which our entrepreneurs and inventors will
build the industries and create the jobs of tomorrow� The Budget includes a bold commitment to

improving our health care system and reforming
it so that it no longer is a weight on our economy�
recognizing how critical it is to tackle climate
change as well as the immense opportunity that
investments in clean energy technology present
to our economy, the Budget invests in this promising sector� Finally, the Budget reflects how
important it is that we keep our people safe and
keep America leading in the world, with investments in our armed services and international
capabilities�
This Budget also reflects the belief that Americans deserve a government that is open, honest,
and accountable� New transparency and program
integrity initiatives will be started that will open
the doors of the Government to the public and
help make sure that taxpayer dollars are spent
wisely and carefully� Moreover, the Budget itself does not use budget gimmicks or accounting
sleights-of-hand to hide our plans or the status
of our economy� It is forthright in the challenges
we face and the sacrifices we must make� It is
honest in evaluating what programs work and
which do not; shifting resources from the latter
to the former�
Overcoming the problems we have inherited will not be completed in one budget, in one
month, or in one year� It will take months and
years of ingenuity and innovation, courage and
commitment� It will take all Americans, including those in Washington and beyond living up
to the responsibilities we have to each other as
neighbors and citizens� But if we come together
and pull together, there is little doubt that America will be growing, innovating, and creating jobs
for generations to come�

43

Department of Agriculture
Funding Highlights:
•

Provides over $20 billion in loans and grants to support and expand rural development activities,
including small businesses, renewable energy, and telecommunications.

•

Includes a $50 million increase to address deferred maintenance on the most critical health and
safety infrastructure within our national forests.

•

Supports the implementation of a $250,0001 commodity program payment limit.  The payment
limit will help ensure that payments are made to those who most need them.

•

Reflects the President’s commitment to wildfire management and community protection by
fully funding suppression costs at the 10-year average, establishing a discretionary contingent
reserve for wildfires, and including program reforms to ensure fire management resources are
focused where they will do the most good.

•

Fully funds the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
to serve all eligible individuals.

•

Includes $1 billion per year for the Child Nutrition reauthorization.

•

Supports a pilot program to help increase senior participation in the Supplemental Nutrition
Assistance Program.

•

Reflects the President’s commitment to supporting independent producers through improved
enforcement of the Packers and Stockyards Act and investing in the full diversity of agricultural
production, including organic farming and local food systems.

•

Reflects the President’s commitment to fiscal responsibility by reducing direct payments to
the largest farmers, reducing crop insurance subsidies, eliminating cotton storage credits,
eliminating funding for the Resource Conservation and Development program, and reducing
program funding for overseas brand promotion.

1

This page corrects an amount erroneously included in the printed version of A New Era of Responsibility.

The United States Department of Agriculture
(USDA) provides leadership on food, agriculture, natural resources, and related issues based
on sound public policy, the best available science, and efficient management. USDA focuses
on further developing alternative markets for
agricultural products and activities, providing fi-

nancing needed to help expand job opportunities
and improve housing, utilities and infrastructure
in rural America, enhancing food safety by taking steps to reduce the prevalence of foodborne
hazards from farm to table, improving nutrition and health by providing food assistance and
nutrition education and promotion, supporting

45

46

A New Era of REsponsibility

Department of Agriculture
Discretionary budget authority in billions of dollars

30

Actuals, including emergencies
Projections

25.3

25

In addition, the Recovery Act
includes $6.9 billion.

26.1
24.6

26.0

22.5
20
15
10
5
0

2006

2007

2008

2009

2010

Note: Includes international food aid .

international agricultural and economic development, and managing and protecting America’s
public and private lands working cooperatively
with other levels of government and the private sector. This Budget provides $26 billion in
discretionary budget authority to support this
mission.
Supports Strong Farm and Rural Economic Development. The President’s Budget
targets farm programs to family farmers and
provides the stability and predictability they
need. The Budget will also provide American
farmers with protection from market disruptions and weather disasters. At the same time,
program effectiveness will be improved through
restrictions on commodity payments to wealthy
farmers. The President supports the implementation of a $250,0001 commodity program
payment limit, which will help ensure that payments are made only to those that most need
them. To spur the development of small business
and value-added agriculture in rural America,
the President’s Budget provides $61 million for
five Rural Development programs: the rural
microentrepreneur assistance program, rural
cooperative development grants, value-added
producer grants, grants to minority producers,
and cooperative research agreements.
1

This page corrects an amount erroneously included in the printed
version of A New Era of Responsibility.

Develops Rural Broadband Services.
Modern technology is critical to the expansion
of business, education, and health care opportunities in rural areas and the competitiveness
of the Nation’s small towns and rural communities. The Budget provides $1.3 billion in loans
and grants to increase broadband capacity and
improve telecommunication service and education and health opportunities in rural areas.
Promotes Rural America’s Leadership in
Developing Renewable Energy. America’s
farmers have been on the forefront of the renewable fuels movement. The President has been
a strong proponent for increasing the national
supply of home-grown American renewable fuels. This Budget ensures that the Nation’s rural
areas continue their leadership in this arena by
supporting an additional $250 million in loans
and grants. Rural America is poised to produce
and refine more American biofuels; provide more
wind power than ever before; and create millions
of new jobs across the country.
Supports Rural Revitalization, Education, and Land Grant Programs. The Budget
includes an additional $70 million for rural areas, for competitive research grants that provide
incentives for teachers working in rural areas

DEPArTMENT OF AGrICULTUrE
to pursue professional development, and to enhance existing rural research and extension
programs at land grant and minority-serving
institutions�
Protects the Nation’s forests. The Budget reflects the President’s commitment to
protecting and restoring our national forests
as a cornerstone of a healthy, sustainable environment� The Budget provides a $50 million
increase (plus inflation) for national forest operations to protect natural resources and maintain
facilities, including those that are restored with
2009 American recovery and reinvestment Act
investments�
Responsibly Budgets for Wildfires. The
Budget fully funds the 10-year average suppression costs, establishes a discretionary
funding reserve, and ensures fire management
resources are used in a cost-effective manner
in high-priority areas� The $282 million discretionary contingent reserve provides funding for
firefighting when the $1�1 billion appropriated
10-year average is exhausted� This proposal will
ensure that fire management resources are sufficient to allow for other critical Forest Service
activities�

47

conservation tax incentives that were provided
in the 2008 Farm Bill�
Strengthens Nutrition Assistance. The
President’s Budget supports a strong Child Nutrition and WIC reauthorization package that
will ensure that low-income children receive the
nutrition assistance they need and help fulfill
the President’s pledge to end childhood hunger
by 2015� The Budget provides an increase of
$1 billion annually for program reforms aimed
at improving program access, enhancing the
nutritional quality of school meals, expanding
nutrition research and evaluation, and improving program oversight� Funding is also provided
to support over 9�8 million participants in the
WIC program, which is critical to the health of
pregnant women, new mothers, and their infants�

Conserves New Lands. The Budget includes $119 million, a $34 million increase, in
Forest Service funding through the Land and
Water Conservation Fund to acquire easements
on forested lands under significant development
pressures� These conservation easements will
protect air and water quality, provide access to
national forests, and provide habitat for threatened or endangered wildlife and fish�

Responds to the Needs of Low-income
Americans. The President supports the nutrition provisions incorporated in the American
recovery and reinvestment Act, including a
temporary increase in the Supplemental Nutrition Assistance Program (SNAP), formerly Food
Stamps, to help strengthen the food purchasing
power of low-income families during these tough
economic times� The President also supports
additional resources for food banks and community-based food providers, which help many
families put food on the table� Additionally,
the Budget provides funding for an innovative
pilot initiative to increase participation among
low-income seniors, who are among the most
vulnerable and hardest-to-reach populations in
SNAP, to ensure they receive the benefits for
which they qualify�

Supports Conservation. The Administration fully supports partnering with landowners
to conserve land, protect wetlands, improve
wildlife habitat, expand hunting and fishing
opportunities, and promote other conservation
initiatives� In this vein, the Administration
funds several vital conservation programs including the Conservation Stewardship Program,
the Conservation reserve Program, and the Environmental Quality Incentives Program and

Enhances food Safety. The President’s
Budget takes steps to improve the safety of the
Nation’s supply of meat, poultry and processed
egg products and to ensure that these products
are wholesome, and accurately labeled and packaged� The Budget provides additional resources
to improve food safety inspection and assessment and the ability to determine food safety
risks� This will lead to a reduction in foodborne
illness and improve public health and safety�

48

A NEW ErA OF rESPONSIBILITy

Supports independent Producers. Protecting producers against unfair, deceptive, and
fraudulent practices is essential to a fair and efficient marketing system� Additional resources
are provided to improve the enforcement of the
Packers and Stockyards Act to help accomplish
this� The Budget also proposes increased funding to enhance the National Organic Program
through additional education and outreach, as
well as enforcement to maintain labeling credibility�

• Reduce Crop insurance Premium
Subsidies and underwriting Gains. This
proposal would reduce the Federal subsidy
to both insurance companies and farmers�
Over the last several years, subsidies for
crop insurance companies have grown
rapidly without improving program coverage
or customer service for farmers� Current
subsidy levels exceed what is necessary to
encourage farmer participation and they do
not constitute a sound value to taxpayers�

Pursues
fiscal
Responsibility.
As
part of the President’s commitment to fiscal
responsibility, the Budget includes several
significant offsets�
The proposals include
programmatic changes that:

• Eliminate Cotton Storage Credits. The
President’s Budget proposes to eliminate the
requirement for the Government to pay the
storage costs of cotton that is put under loan
with USDA� Cotton is the only commodity for
which this assistance is provided� Storage
credits for cotton have been found to have a
negative impact on the amount of cotton on
the market� Because cotton storage is covered
by the Government, producers may store their
cotton for longer than necessary�

• Reduce direct Payments. As part of an
effort to transition large farms from direct
payments provided to owners of base acres
to increased income from revenue derived
from emerging markets for environmental
services, the President’s Budget phases out
direct payments over three years to farmers
with sales revenue of more than $500,000
annually� Presently, direct payments are
made to even large producers regardless
of crop prices, losses, or whether the land
is still under production� The program
was introduced in the 1996 Farm Bill as a
temporary payment scheduled to expire, but
was included in the 2002 and 2008 Farm
Bills� The President wants to maintain
a strong safety net for farm families and
beginning farmers while encouraging fiscal
responsibility�
Large farmers are well
positioned to replace those payments with
alternate sources of income from emerging
markets
for
environmental
services,
such as carbon sequestration, renewable
energy production, and providing clean air,
clean water, and wildlife habitat� USDA
will increase its research and analytical
capabilities and conduct Government-wide
coordination activities to encourage the
establishment of markets for these ecosystem
services�

• Eliminate the Resource Conservation
and development (RC&d) program. The
Budget eliminates funding for the rC&D
program� First begun in 1962, the program
was intended to build community leadership
skills through the establishment of rC&D
councils that would access Federal, State
and local programs for the community’s
benefit� After 47 years, this goal has been
accomplished� These councils have developed
sufficiently strong State and local ties that the
Administration believes they are now able to
secure funding for their continued operation
without Federal assistance�
• Reform the Market Access Program
(MAP). The Budget reforms MAP by reducing
program funding for overseas brand promotion
and minimizes the benefits that large for-profit
entities indirectly gain as members of trade
associations who also participate in MAP� An
annual funding reduction of 20 percent will
reduce Federal spending and place a greater
emphasis on promoting generic American
products overseas�

DEPArTMENT OF AGrICULTUrE
Support Economic Recovery. The recovery
Act provides USDA with a total of $27�6 billion,
most of which will fund increased benefits to
low income families through the Supplemental
Nutrition Assistance Program ($20 billion)� In
addition, the Act provides $6�9 billion in discretionary appropriations for rural development

49

activities such as construction and renovation of
rural water and wastewater systems, low income
housing loans, broadband infrastructure in rural
areas, rural business programs, and construction
of Forest Service facilities� Finally, the Act provides $700 million in mandatory farm disaster
assistance�

dEPARTMENT Of COMMERCE
Funding Highlights:
•

Mobilizes resources to conduct the 2010 Decennial Census.

•

Improves prediction and monitoring of the planet’s weather and climate and sustainable
management of marine fisheries and ocean resources.

•

Invests in America’s economic competitiveness by promoting innovation in U.S. manufacturing,
deploying broadband, and advancing measurement science, standards, and technology.

•

Expands economic development through the promotion of regional innovation clusters and the
creation of a national network of public-private business incubators.

•

Promotes opportunities for U.S. exporters in new markets and eliminates barriers to U.S. sales
abroad.

•

Protects intellectual property rights created through patents and trademarks.

Conducts the decennial Census. The President’s Budget ensures the Census Bureau will
have the resources it needs to complete the 2010
Decennial Census effectively, efficiently, and ontime by providing over $4 billion of additional
funding� These funds are in addition to the $1 billion recently provided by the American recovery
and reinvestment Act� The decennial census is
the Nation’s largest peacetime mobilization, and
will entail the hiring of approximately half of a
million temporary workers, as well as extensive
advertising and partnership activities to encourage participation by hard-to-reach populations
and completion of an accurate count�
improves Weather forecasting, Climate
Monitoring, fisheries Management and
Ocean Programs. The Budget helps ensure
continuity of National Oceanic and Atmospheric Administration (NOAA) satellite coverage
needed for weather forecasting and climate

data records by providing over $1�3 billion to
fund the development and acquisition of vital
weather satellites and climate sensors� Funding
is also provided to advance climate and ocean
research, including efforts to understand and
monitor ocean acidification� In addition, the
Budget fully supports implementation of the
Magnuson-Stevens Act and its requirement to
eliminate overfishing by 2011� All of these activities build upon the recently enacted recovery
Act, which provides $600 million for the construction and maintenance of NOAA research
facilities, vessels, and satellites, as well as $230
million for habitat restoration, hydrographic
services, research, and management operations�
invests in America’s Competitiveness.
The Budget supports the Nation’s technology infrastructure by funding advanced measurement
and standards development at the National Institute of Standards and Technology (NIST)�

51

52

A NEW ErA OF rESPONSIBILITy

Department of Commerce
Discretionary budget authority in billions of dollars

14
12

13.8

Actuals, including emergencies
Projections
In addition, the Recovery Act
includes $7.9 billion.

10

9.3
7.9

8
6.6

6.6

2006

2007

6
4
2
0

2008

2009

2010

Note: The increase in 2010 includes approximately $4 billion of additional funding, above the 2009 level,
provided to conduct the 2010 Decennial Census.

These activities will build upon the recovery Act,
which includes $240 million for NIST’s scientific
research activities and lab equipment and $180
million for construction of NIST facilities� The
2010 Budget also provides $70 million for the
Technology Innovation Program, which invests
in high-impact research that will address critical
national needs and advance innovation� The Hollings Manufacturing Extension Partnership will
receive $125 million to enhance the competitiveness of the Nation’s manufacturers by facilitating
the adoption of more efficient manufacturing
processes� In addition, Commerce’s National Telecommunications and Information Administration
will be focused on administering the $4�7 billion
provided by the recovery Act for programs to expand broadband deployment, adoption, and data
collection�
Spurs Regional Economic development
and Creation of New Businesses. The Budget provides $50 million in regional planning
and matching grants within the Economic Development Administration (EDA) to support the
creation of regional innovation clusters that leverage regions’ existing competitive strengths

to boost job creation and economic growth� The
Budget also launches a $50 million initiative in
EDA that will create a nationwide network of
public-private business incubators to encourage
entrepreneurial activity in economically distressed areas� The recovery Act provides EDA
$150 million to distribute as economic adjustment assistance and infrastructure funding, with
priority for areas experiencing severe job losses�
Promotes Opportunities for American
Exporters in New Markets. The Budget
fully supports the International Trade Administration’s efforts to promote exports from small
businesses and eliminate barriers to sales of U�S�
products�
Promotes innovation. The President’s Budget gives the U�S� Patent and Trademark Office
full access to its fee collections, which will provide resources to strengthen the Office’s ability to
encourage innovation and safeguard the value of
intellectual property through more efficient and
higher quality patent and trademark examinations�

dEPARTMENT Of dEfENSE
Funding Highlights:
•

Provides $533.7 billion for the Department of Defense base budget in 2010, a four-percent
increase over 2009.

•

Includes $75.5 billion in supplemental appropriations for 2009 and $130.0 billion for 2010 to
support ongoing overseas contingency operations, while increasing efforts in Afghanistan and
drawing down troops from Iraq responsibly.

•

Supports a transparent budget process, which simultaneously and separately requests
estimated base budget and overseas contingency operations costs.

•

Expands concurrent receipt of military retired pay and Veterans Disability Compensation for
those disabled upon retirement from active duty.

•

Improves efforts to care for wounded servicemembers and to treat mental health needs.

The U�S� military, the strongest and most capable in the world, faces a host of external and
internal challenges� Meeting these challenges requires evaluating the country’s strategic priorities and aligning scarce resources to accomplish
the highest of those priorities efficiently and effectively�
External challenges include undertaking a
responsible drawdown of troops from Iraq, and
focusing the appropriate resources on achieving
U�S� objectives in Afghanistan� In addition, we
must leverage allied support to help struggling
states such as Pakistan, which are the keystone
for regional stability� The military must also vigilantly anticipate and meet threats from asymmetrical and non-conventional attacks, such as
those posed by cyber, biological, radiological, and
nuclear warfare, whether instigated by nationstates or non-state aggressors�

The military’s internal challenges focus on
three general areas: continuing to restructure
the Nation’s forces to better address long-term
warfare challenges; continuing to support, care
for, and compensate military professionals commensurate with their service while seeking reforms that will improve service and protect a
benefit package that is sustainable and affordable; and reforming the costly and inefficient
weapon development and acquisition process�
How the country should meet its strategic
goals will be addressed in an upcoming Defense
review, which will identify and prioritize goals
and assess how best to achieve them within
available resources�
Finally, this Budget will transparently present the full costs of providing national security�
The Budget will clearly show the costs of the

53

54

A NEW ErA OF rESPONSIBILITy

Department of Defense
Discretionary budget authority in billions of dollars

900

Base Request

In addition, the Recovery Act
includes $7.4 billion.

Base Enacted

800
700

Overseas Contingency Operations & Other Enacted
Overseas Contingency Operations Request

666.0

654.7

663.7

2008

2009

2010

600.9

600
534.5

500
400
300
200
100
0

2006

2007

Note: Overseas contingency operations includes costs in support of operations in Iraq and Afghanistan. Other
funding includes supplemental appropriations that supported responses to hurricanes and the 2004 Tsunami
and that funded base activities such as Base Realignment and Closure implementation. Also, 2009 includes
amounts transferred to the Coast Guard.

base defense budget and the incremental costs of
ongoing military operations in Iraq and Afghanistan for 2010� For the years beyond, the Budget
includes placeholder numbers with the understanding that these should be considered subject
to change as policy decisions are made�
2010 Base funding
The 2010 Budget for the Department of Defense (DOD) requests $533�7 billion, or an increase of four percent from the 2009 enacted
level of $513�3 billion (excluding funding from
the American recovery and reinvestment Act
of 2009)� This funding increase allows DOD to
address its highest priorities, such as the President’s commitment to meet the military’s goal
to increase the size of the Army and Marine
Corps, to continue to improve the medical treatment of wounded servicemembers, and to reform
the acquisition process� In addition, the Budget
will incorporate into the base those items previously funded in emergency supplementals that
should be considered base or ongoing activities,
including certain medical services, family support initiatives, security assistance to foreign
governments, and enhancements to intelligence,
surveillance, and reconnaissance�

increases the Size of the Army and Marine
Corps. The 2010 Budget supports additional permanent forces in the Army and Marine Corps,
which will increase to 547,400 and 202,000, respectively, by the end of 2009� This growth is two
to three years ahead of schedule and will reduce
stress on servicemembers and their families,
while ensuring heightened readiness for a full
spectrum of military operations�
Cares for Men and Women in uniform. The
Administration is committed to caring for the
servicemembers who protect American freedom
and the families who support them� To that end,
the Budget proposes pay and benefits that keep
pace with or exceed those of the private sector�
The 2010 Budget includes funding for a 2�9 percent pay raise for men and women in uniform, an
amount that will improve their purchasing power�
The Budget also contains a proposal to expand
concurrent receipt of military retired pay and Veterans Disability Compensation to all retirees receiving disability retired pay� Under current law,
the prohibition on concurrent receipt means that
these benefits offset each other so that disabled
military retirees cannot receive full DOD retirement and Veterans disability payments� When

DEPArTMENT OF DEFENSE
the offset is removed, disabled military retirees
would receive additional monthly compensation�
Reforms Acquisition. DOD’s new weapons
programs are among the largest, most expensive
and technically difficult that the Department has
ever tried to develop� As a consequence, they carry a high risk of performance failure, cost increases, and schedule delays� The Administration will
set realistic requirements and stick to them and
incorporate “best practices” by not allowing programs to proceed from one stage of the acquisition cycle to the next until they have achieved the
maturity to clearly lower the risk of cost growth
and schedule slippage�
improves facilities. The Administration
is committed to improving the quality of life for
American Soldiers, Sailors, Airmen and Marines�
Therefore, the Budget continues to sustain and
modernize barracks and dormitories housing servicemembers around the world and works to end
all inadequate housing for military families� In
addition, it builds or renovates base facilities at a
level sufficient for safe operation of all structures
while meeting the needs of users�
The Administration will request sufficient
funding to enable the Department to continue its
efforts to meet the requirements of the Base realignment and Closure 2005 Commission, which
will help to align DOD’s domestic bases with
meeting operational needs�
Cares for Wounded, ill, and injured Servicemembers (Wii). The Department will
continue its efforts to improve the medical care
and housing for WII� DOD will complete additional Army wounded warrior complexes at posts
throughout the continental United States, as well
as sites in Alaska, Hawaii, and Germany� DOD
and the Department of Veterans Affairs will expand pilot programs to expedite processing of
injured troops through the Disability Evaluation

55

System� The expedited system substantially reduces the time required to determine disability
rating and, more importantly, to alleviate frustration caused by a needlessly complex process�
Addresses Mental health issues. The Department is also doing more to address mental
health needs� Post-traumatic stress disorder,
traumatic brain injury (TBI) and associated ailments are, and will continue to be, the signature
military medical challenges facing the Department for years to come� DOD will fully implement
a comprehensive TBI registry including a single
point of responsibility to track incidents and recovery� The Services will expand the number of
integrated mental health professionals with their
deployed units to better channel medical attention to those who need help quickly� The National
Intrepid Center of Excellence for psychological
health and traumatic brain injury will be dedicated in the late fall of 2009� This will serve as the
clinical research and educational arm of DOD’s
Center of Excellence for psychological health and
TBI�
funding for Overseas Contingency
Operations
The President is working with his military commanders to increase the number of U�S� troops in
Afghanistan while responsibly removing combat
forces from Iraq� To address the costs of military
operations in Iraq and Afghanistan, the Administration requests $75�5 billion for the remainder of
2009 and $130�0 billion for 2010� The Administration will provide the details of the 2009 supplemental appropriations request to the Congress in
the next few weeks, and will transmit the detailed
2010 request with the President’s 2010 Budget�
The Budget includes placeholder estimates of
$50 billion per year for 2011 and beyond� These
estimates do not reflect any policy decisions about
specific military or intelligence operations�

NATiONAL iNTELLiGENCE PROGRAM
Funding Highlights:
•

Strengthens the capabilities of the Nation’s intelligence agencies to furnish timely, accurate, and
insightful intelligence on the capabilities and intentions of foreign powers, including international
terrorist groups.

•

Enhances Federal cybersecurity capabilities.

•

Prioritizes resources to support a U.S. Government-wide counterterrorism action plan.

•

Improves the sharing of terrorist-related information with Federal, State, local, tribal and foreign
partners.

•

Increases collection capabilities and continues transforming intelligence analysis.

The National Intelligence Program (NIP)
funds intelligence activities in several Departments and the Central Intelligence Agency (CIA)�
NIP’s budget is classified, so the 2010 Budget does not publicly disclose funding requests
for intelligence activities� However, since NIP
supports key elements of America’s national security, this chapter highlights some NIP-funded
activities without detailing funding information�
To protect America’s national security, the
Intelligence Community (IC) provides effective intelligence collection, the analysis of that
intelligence, and the production of finished intelligence products� IC is responsible for ensuring
timely and effective dissemination of intelligence
to those who need it, ranging from the President,
to heads of Executive Departments, military
forces, and law enforcement agencies� To meet
this country’s national security challenges, IC is
strengthening its components’ abilities to collect
intelligence, increasing the security of Federal cyber networks, and protecting against the

threat of international terrorism in the United
States�
The 2010 budget for NIP will support the Administration’s national security objectives� The
Director of National Intelligence, the Director of
the CIA, and Department Secretaries with intelligence organizations will use 2010 NIP funds
to defeat terrorist networks, prevent the spread
of weapons of mass destruction, penetrate and
analyze the most difficult targets of U�S� foreign
policy, and anticipate developments of strategic
concern�
The Administration will request funding for
IC for the remainder of 2009 and for 2010 to cover the costs of global intelligence operations� The
details of the 2009 supplemental appropriations
request will be provided to the Congress in the
next few weeks while the detailed 2010 request
will be transmitted with the President’s 2010
Budget request�

57

58

increases funding for Cybersecurity. The
threat to Federal information technology networks is real, serious, and growing� To address
this threat, the President’s 2010 Budget includes
substantial funding for cybersecurity efforts;
such activities will take an integrated and holistic approach to address current cybersecurity
threats, anticipate future threats, and continue
innovative public-private partnerships� These
efforts encompass the homeland security, intelligence, law enforcement, military and diplomatic
mission areas of the U�S� Government�
implements Counterterrorism Plan. The
National Counterterrorism Center (NCTC) has
developed a U�S� Government-wide counterterrorism action plan� This plan lays out broad strategic
objectives aligned with policy objectives to guide
the overall implementation of this national strategy on counterterrorism� The Administration will
work with NCTC, IC, and relevant Departments

A NEW ErA OF rESPONSIBILITy
such as Defense, State, and Homeland Security
to direct resources in support of counterterrorism
implementation objectives�
facilitates information Sharing.
The
President’s 2010 Budget will support initiatives
to improve the sharing of intelligence, including
terrorist-related information, with Federal, State,
local, tribal and foreign partners� These efforts include advancing the National Suspicious Activity
reporting Initiative; establishing agency-based,
outcome-oriented performance targets for information sharing; and institutionalizing the use of
effective business practices�
improves Collection and Analysis Capabilities. The 2010 Budget provides funding to
improve mission performance by increasing intelligence collection capabilities and continuing to
transform intelligence analysis in IC�

dEPARTMENT Of EduCATiON
Funding Highlights:
•

Creates incentives and supports for States to build comprehensive, coordinated, high-quality
early childhood “Zero to Five” systems, building on the early childhood investments in the
American Recovery and Reinvestment Act of 2009.

•

Strengthens and reforms public schools to meet the needs of all students, by helping States to
develop high quality, rigorous standards and assessments, vigorously supporting and rewarding
effective teaching, and investing in and widely disseminating effective approaches to improving
student achievement to help all students make progress toward high standards.

•

Expands opportunities for students to go to college and graduate by expanding student aid,
shifting resources from banks and middlemen toward students, creating new incentives for
colleges to focus on student completion, and expanding access to low-cost Federal student
loans.

Expands Access to high-Quality Early
Childhood Education. Decades of rigorous
research demonstrates that high-quality early
childhood education programs help children
succeed in school and throughout their lives�
Building on strong investments in the recovery Act, the President’s Budget also includes
new initiatives aimed at ensuring that early
childhood programs yield strong results for children� The Budget invests additional resources
to encourage State and local investment in
early childhood education; support coordination among local, State, and Federal partners
and a seamless delivery of services; and provide
better information to parents about program
options and quality�
Supports high Standards and Rigorous
Assessments Aligned with the demands of
the Global Economy. Students must achieve
to high standards in order to be successful in
the global economy� Assessments must accu-

rately measure students’ knowledge and skills,
including critical thinking skills� Building on
the recovery Act, the new Administration will
help States increase the rigor of their standards
so they prepare students for success in college
and a career� resources will also be available
to improve the quality of assessments, including assessments for students with disabilities
and English language learners� Such reforms
will lay the groundwork for reauthorizing the
Elementary and Secondary Education Act�
Prepares and Rewards Effective Teachers and Principals. The Budget builds on
the investments funded under the recovery
Act designed to significantly upgrade the skills
and effectiveness of the education workforce�
The Administration will invest in efforts to
strengthen and increase transparency around
results for teacher and principal preparation
programs, including programs in schools of
education, alternative certification programs,

59

60

A NEW ErA OF rESPONSIBILITy

Department of Education
Discretionary budget authority in billions of dollars

60

Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $81.1 billion.

50
43.8

45.0

46.2

46.7

43.5

2006

2007

2008

2009

2010

40
30
20
10
0

Note: The discretionary budget authority amounts are adjusted for comparability to account for increases in
advance appropriations in prior years, and to exclude discretionary funding for Pell Grants in
accordance with the Budget’s policy to make the program mandatory. The Recovery Act total includes
$53.6 billion for State Stabilization Grants and excludes $15.6 billion for Pell Grants.

and teacher and principal residency programs�
The Budget supports additional investments
in State and local efforts, developed in consultation with teachers and other stakeholders, to
implement systems that reward strong teacher
performance and help less effective teachers
improve or, if they do not improve, exit the classroom� resources are also included to develop
better systems and strategies for recruiting,
evaluating, and supporting teachers and other
educators to provide a better supply and distribution of well-prepared and effective education
workforce�
Supports innovative and Effective Strategies to improve Achievement. Through the
Innovation Fund, the Administration will invest
in school systems and non-profit organizations
with demonstrated track records of success in
raising student achievement to expand their
work or implement new innovative approaches�
The President’s Budget also provides funds to
support Promise Neighborhoods, a new effort to
test innovative strategies to improve academic
achievement and life outcomes in high-poverty
areas� The program will be modeled after the
Harlem Children’s Zone, which aims to improve
college-going rates by combining a rigorous
K-12 education with a full network of support-

ive services—from early childhood education to
after-school activities to college counseling—in
an entire neighborhood from birth to college�
funds Education Research to Ensure
that Teachers and School Leaders have
the Tools and information They Need to
Prepare Students for the Global Economy.
The Budget includes funds to carefully study,
improve, and scale up promising educational
innovations that focus on improving student
learning and achievement� The additional funds
will also be used to rigorously evaluate Federal
education programs so that Federal investments
are preparing students for success in college and
the workforce�
Promotes Successful Models for Turning
Around Low-Achieving Schools. The Budget
builds on the recovery Act’s focus on strategic
investments in scaling up educational practices that show results and cultivating promising
new practices� The President’s Budget commits
resources to turn around high-need, low-performing schools with strong supports, not just
sanctions� The Administration’s new strategy
will support State efforts to diagnose and address the root causes of schools’ low performance�
In addition, the Budget increases funding for the

DEPArTMENT OF EDUCATION
Charter School program to support the expansion of successful charter school models, while
increasing State oversight to monitor and shut
down low-performing charter schools�
Expands Pell Grants and Puts the
Program on Sure footing. Because the Administration is committed to making college
affordable for all Americans, the 2010 Budget builds on the recovery Act by supporting a
$5,550 Pell Grant maximum award in the 20102011 school year� But it is not enough just to
make Pell Grants more generous and to put on
a short-term patch� Fourteen times since 1973,
the maximum Pell Grant has failed to increase
even in nominal dollars� To make sure that we
have a highly-educated workforce and that the
opportunity to go to college is not determined by
how much money you have, we need to put the
Pell Grant program on sure footing� The Administration will index Pell grants to the Consumer
Price Index plus 1 percent in order to address
inflation�
In addition, the Administration
proposes to make the Pell Grant program mandatory to ensure a regular stream of funding and
eliminate the practice of “backfilling” billions of
dollars in Pell shortfalls each year� Finally, while
expanding student aid, the Administration will
also simplify the student aid application process�
Stabilizes the Student Loan Program
for Students and Saves Billions of dollars for Taxpayers. right now, the subsidies
in the Government-guaranteed student loan

61

program are set by the Congress through the
political process� That program has not only
needlessly cost taxpayers billions of dollars, but
has also subjected students to uncertainty because of turmoil in the financial markets� The
President’s Budget asks the Congress to end the
entitlements for financial institutions that lend
to students� The Administration will instead
take advantage of low-cost and stable sources of
capital so students are ensured access to loans,
while providing high-quality services for students by using competitive, private providers
to service loans� The approach in the Budget,
originating all new loans in the direct lending
program, saves more than $4 billion a year that
is reinvested in aid to students� The Budget also
makes campus-based, low-interest loans more
widely available through a new modernized Perkins Loan program, overhauling the inefficient
and inequitable current Perkins program�
focuses on College Completion. It is not
enough for the Nation to enroll more students in
college; we also need to graduate more students
from college� A few States and institutions have
begun to experiment with these approaches, but
there is much more they can do� The Budget includes a new five-year, $2�5 billion Access and
Completion Incentive Fund to support innovative State efforts to help low-income students
succeed and complete their college education�
The program will include a rigorous evaluation
component to ensure that we learn from what
works�

dEPARTMENT Of ENERGy
Funding Highlights:
•

Begins to build a new economy that is powered by clean and secure energy through funding
provided in the 2010 Budget and the $39 billion provided for energy programs in the American
Recovery and Reinvestment Act of 2009.

•

Provides significant increases in funding for basic research and world-leading scientific user
facilities to support transformational discoveries and accelerate solutions to our Nation’s most
pressing problems – including the development of clean energy.

•

Supports economic investment and positions the United States as the world leader in climate
change technology.

•

Accelerates the transition to a low-carbon economy through increased support of the development
and deployment of clean energy technologies such as solar, biomass, geothermal, wind, and
low-carbon emission coal power.

•

Builds on the $11 billion provided in the Recovery Act for smart grid technologies, transmission
system expansion and upgrades, and other investments to modernize and enhance the electric
transmission infrastructure to improve energy efficiency and reliability.

•

Supports and encourages the early commercial deployment of innovative, clean energy
technologies through loan guarantees.

•

Reduces security risks through the detection, elimination, and securing of nuclear material
and radiological sources worldwide while maintaining the safety, security, and reliability of the
nuclear weapons stockpile.

•

Continues the Nation’s efforts to reduce environmental risks and safely manage nuclear
materials.

invests in the Sciences. As part of the
President’s plan to double Federal investment in
the basic sciences, the 2010 Budget, along with
the $1�6 billion provided in the recovery Act for
the Department of Energy’s basic science programs, provides substantially increased support
for the Office of Science� The Budget increases
funding for improving our understanding of climate science and continues the United States’

commitment to international science and energy
experiments� The Budget also expands graduate
fellowship programs that will train students in
critical energy-related fields�
Encourages the Early Commercial use of
New, innovative Energy Technologies that
Will Reduce Greenhouse Gas Emissions.
The Budget supports loan guarantees for inno-

63

64

A NEW ErA OF rESPONSIBILITy

Department of Energy
Discretionary budget authority in billions of dollars

40
35

Actuals, including emergencies
Projections

33.9

30

In addition, the Recovery Act
includes $38.7 billion.

25

23.6

23.7

24.1

2006

2007

2008

26.3

20
15
10
5
0

2009

2010

Note: Included in 2009 is emergency funding for Advanced Technology Vehicles Manufacturing Loan Program,
$7.5 billion, and $250 million for Weatherization.

vative energy technologies including renewable
energy projects, transmission projects, and carbon sequestration projects that avoid, reduce, or
sequester air pollutants and greenhouse gases
while simultaneously creating green jobs and
contributing to long-term economic growth and
international competitiveness�
Advances the development of Low-Carbon Coal Technologies. The Budget supports
Carbon Capture and Storage technology, and
along with the $3�4 billion provided in the recovery Act for low-carbon emission coal power and
industrial projects, these funds will help allow
the use of our extensive domestic coal resource
while reducing the impacts on climate change�
invests in Smart, Energy Efficient, Reliable Electricity delivery infrastructures.
The Budget provides support for the Office of Electricity Delivery and Energy reliability as part of
the President’s investment plan to modernize the
Nation’s electric grid� It includes: energy storage;
cyber-security and investments in research, the
development and demonstration of smart grid
technologies that will accelerate the transformation of the Nation’s energy transmission and
distribution system; enhancement of security and

reliability of energy infrastructure; and facilitating recovery from disruptions to the energy supply�
invests in Clean Energy Technologies to
Reduce dependence on foreign Oil and Accelerate the Transition to a Low-Carbon
Economy. The Budget provides support for
accelerating research, development, demonstration, deployment, and commercialization of
clean energy technologies, including biofuels,
renewable energy, and energy efficiency projects� These investments will reduce dependence
on foreign oil and create long-term, sustainable
economic growth in the green industries of the
future�
Reduces Proliferation Risks and Ensures
the Safety, Security, and Reliability of the
Nuclear Weapons Stockpile Without Nuclear Testing. The Budget supports increased
efforts to secure and dispose of nuclear material
and invests in innovative science and technology to detect and deter nuclear smuggling and
the development of weapons of mass destruction
programs� Development work on the reliable replacement Warhead will cease, while continued
work to improve the nuclear stockpile’s safety,
security, and reliability is enhanced with more
expansive life extension programs�

DEPArTMENT OF ENErGy
focuses on the Cleanup and Management
of Radioactive Waste and Nuclear Materials.
The Budget focuses on improved performance and
accountability for the environmental legacy of the
Nation’s nuclear weapons program by addressing
health and safety risks across the country� The

65

yucca Mountain program will be scaled back to
those costs necessary to answer inquiries from
the Nuclear regulatory Commission, while the
Administration devises a new strategy toward
nuclear waste disposal�

dEPARTMENT Of hEALTh ANd huMAN SERviCES
Funding Highlights:
•

Accelerates the adoption of health information technology and utilization of electronic health
records.

•

Expands research comparing the effectiveness of medical treatments to give patients and
physicians better information on what works best.

•

Invests over $6 billion for cancer research at the National Institutes of Health as part of the
Administration’s multi-year commitment to double cancer research funding.

•

Strengthens the Indian health system with sustained investments in health care services for
American Indians and Alaska Natives to address persistent health disparities and foster healthy
Indian communities.

•

Invests $330 million to increase the number of doctors, nurses, and dentists practicing in areas
of the country experiencing shortages of health professionals.

•

Supports families by providing additional funding for affordable, high-quality child care,
expanding Early Head Start and Head Start, and creating the Nurse Home Visitation program
to support first-time mothers.

•

Strengthens the Medicare program by encouraging high quality and efficient care, and improving
program integrity.

•

Invests over $1 billion for Food and Drug Administration food safety efforts to increase and
improve inspections, domestic surveillance, laboratory capacity and domestic response to
prevent and control foodborne illness.

The Department of Health and Human Services (HHS) is the Federal Government’s principal
agency for protecting the health of all Americans
and for providing essential human services� This
Budget provides $76�8 billion in support of HHS’
mission�
Makes a down Payment on health Care
Reform. The Budget establishes a reserve fund
of more than $630 billion over 10 years to finance
fundamental reform of our health care system

that will bring down costs and expand coverage�
The reserve is funded half by new revenue and
half by savings proposals that promote efficiency and accountability, align incentives toward
quality, and encourage shared responsibility� In
addition, the Budget calls for an effort beyond
this down payment, to put the Nation on a path
to health insurance coverage for all Americans�
However, additional funding will be needed� This
effort must be open, and must consider all kinds
of approaches as part of this process� Some major

67

68

A NEW ErA OF rESPONSIBILITy

Department of Health and Human Services
Discretionary budget authority in billions of dollars

100
90
80

Actuals, including emergencies
Projections

73.1

70

69.1

70.5

2007

2008

In addition, the Recovery Act
includes $22.4 billion.

78.4

76.8

2009

2010

60
50
40
30
20
10
0

2006

Note: Amounts appropriated to the Social Security Administration (SSA) from the Hospital Insurance and
Supplementary Medical Insurance accounts are included in the corresponding table in the SSA chapter.

strides have already been made in the American
recovery and reinvestment Act of 2009, including $19 billion for health information technology,
$1 billion for comparative effectiveness research,
and subsidies for the newly unemployed to maintain their health insurance� These initiatives
put the Nation on the path toward fundamental
health reform�
Begin the doubling of funding for Cancer Research. The Budget includes over $6
billion within the National Institutes of Health
(NIH) to support cancer research� This funding is
central to the President’s sustained, multi-year
plan to double cancer research� These resources
will be committed strategically to have the greatest impact on developing innovative diagnostics,
treatments, and cures for cancer� This initiative
will build upon the unprecedented $10 billion
provided in the recovery Act, which will support
new NIH research in 2009 and 2010�
Accelerates the Adoption of health information Technology (iT). Building on the
historic $19 billion investment in the recovery
Act, the Administration will continue efforts
to further the adoption and implementation of
health IT—an essential tool to modernize the
health care system� The recovery Act offers physi-

cians and hospitals participating in the Medicare
program temporary incentive payments starting in 2011 for using a certified electronic health
record (EHr), followed by financial penalties
starting in 2015 for failure to use such a system�
It also offers incentive payments to Medicaid
providers, including physicians and children’s
hospitals, to assist with the purchase, implementation, and use of certified EHr technology� These
incentives, coupled with other activities authorized in the recovery Act, are expected to result
in a dramatic increase in the percentage of health
care providers using health IT within five years�
Computerizing health records—while protecting
the privacy and security of personal health information—is expected to facilitate improvements
in the quality of health care, prevention of unnecessary health care spending, and a reduction in
medical errors�
Lowers drug Costs and improves food
and Medical Product Safety. The Budget supports the Food and Drug Administration’s (FDA’s)
new efforts to allow Americans to buy safe and
effective drugs from other countries and to establish a new regulatory pathway to approve generic
biologics� The Budget also includes a substantial
increase to strengthen FDA’s efforts to make food
and medical products safer�

DEPArTMENT OF HEALTH AND HUMAN SErVICES
Strengthens Program integrity. reducing fraud, waste, and abuse is an important part
of restraining spending growth and providing
quality health care service delivery to beneficiaries� The Budget proposes to dedicate additional
resources that will initially be targeted to improving oversight and program integrity activities for
the Medicare Prescription Drug Program (Part
D), Medicare Advantage, and the Medicaid Program� These resources will enable the Centers
for Medicare and Medicaid Services to more
rapidly respond to emerging program integrity
vulnerabilities, identify excessive payments, and
establish new processes for correcting problems�
As a result, the Administration will be better
able to minimize inappropriate payments, close
loopholes, and provide greater value for program
expenditures to beneficiaries and taxpayers�
improves Medicare’s Sustainability. The
Administration is committed to strengthening
Medicare’s long-term sustainability so that beneficiaries can continue to rely on this critical
program� The Budget strengthens the Medicare
program by encouraging high quality and efficient
care, and reducing excessive Medicare payments�
Expands the Medicare and Medicaid
Research Agenda. The Budget includes new
funding to broaden the Medicare and Medicaid
research agenda� The expanded agenda will take
advantage of the robust data available for these
programs� New Medicare and Medicaid demonstration and pilot projects will evaluate payment
reforms, ways to provide higher quality care at
lower costs, improve beneficiary education and
understanding of benefits offered, and better
align provider payments with costs�
Provides health Care Coverage to
Low-income individuals. Medicaid is a meanstested health care entitlement program financed
by States and the Federal Government� On average, the Federal Government pays 57 percent of
Medicaid costs� The recovery Act protects health
care coverage for millions of Americans during
the recession by temporarily increasing Federal
Medicaid funding to help States facing budget
shortfalls maintain their current programs�

69

In addition, the Children’s Health Insurance
Program reauthorization Act of 2009, signed by
the President on February 4, 2009, extends the
program through 2013 by providing an additional
$44 billion in allotments above baseline funding
levels of $25 billion� This funding provides access
to nearly four million newly insured children by
2013�
Enhances hiv/AidS Prevention and
Treatment. The Budget increases resources to
detect, prevent, and treat HIV/AIDS domestically, especially in underserved populations�
Strengthens the health Professions Workforce. The Budget invests $330 million to address
the shortage of health care providers in certain
areas� The Budget expands loan repayment programs for physicians, nurses, and dentists who
agree to practice in medically underserved areas�
This funding will enhance the capacity of nursing
schools to increase the number of nurses� It will
also allow States to increase access to oral health
care through dental workforce development
grants� The Budget’s new resources will sustain
the expansion of the health care workforce funded in the recovery Act�
Expands Access to health Care for American indians and Alaska Natives (Ai/ANs).
The Budget includes over $4 billion for the Indian
Health Service (IHS) to support and expand the
provision of health care services and public health
programs for AI/ANs� Investments in the Indian
health system will focus on improving the health
outcomes of AI/ANs and promoting healthy Indian communities� The President’s Budget builds
upon resources provided in the recovery Act for
IHS�
Supports Americans with Autism Spectrum disorders (ASd). The President is
committed to expanding support for individuals,
families, and communities affected by ASD� The
Budget includes $211 million in HHS for research
into the causes of and treatments for ASD, screenings, public awareness, and support services�

70

improves Rural health. The Budget includes $73 million to improve both access to and
quality of health care in rural areas� This funding
will strengthen regional and local partnerships
among rural health care providers, expand community-based prevention interventions, and
promote the modernization of the health care infrastructure in rural areas�
Compares the Effectiveness of Treatments. Building on the unprecedented $1�1
billion included in the recovery Act for comparative effectiveness research, the Administration
will continue efforts to produce state-of-the-science information on what medical treatments
work best for a given condition� When coupled
with electronic health records, these findings can
form the basis for clinical decision support tools—
distilling all available evidence on the outcomes
of different treatment options into user-friendly
pop-up alerts for physicians at the point of care�
These findings can thereby enhance medical decision-making by patients and their physicians�
Makes a down Payment on the President’s
“Zero to five” Plan. The recovery Act makes
a down payment on the President’s comprehensive Zero to Five plan, providing $1�1 billion to
double the number of children served by Early
Head Start over two years, an additional $1 billion to expand and improve Head Start, and an
additional $2 billion in funding for the Child Care
and Development Block Grant� The Budget sustains critical support for young children and their
families by building on these investments�
The Budget also creates the Nurse Home
Visitation program, which will provide funds to
States to provide home visits by trained nurses
to first-time low-income mothers and mothers-tobe� The program has been rigorously evaluated
over time and proven to have long-term effects
including substantial reductions in child abuse
and neglect, preterm births, and arrests for both
parents and adolescents who participated in the

A NEW ErA OF rESPONSIBILITy
program as children, putting estimates of its
return-on-investment between 3 to 6 dollars per
dollar invested� This Budget builds the foundation for a program that could ultimately serve all
eligible mothers who seek services�
Provides Energy Assistance to Low-income families. The Budget provides $3�2 billion
for the Low-Income Home Energy Assistance Program (LIHEAP) to help low-income families with
their home heating and cooling expenses� That
is the highest level of LIHEAP funding for any
year except for the most recent, when the Nation
was threatened with an unprecedented increase
in energy costs� In addition, the Administration
proposes creating a new trigger mechanism to
provide automatic increases in energy assistance
whenever there is a spike in energy costs� The
normal appropriations process cannot always respond to the volatile energy market on a timely
basis; the trigger will ensure a prompt and potentially significant increase in funds in response to
a rapid future rise in costs�
Prevents Teen Pregnancy. The Budget supports State, community-based, and faith-based
efforts to reduce teen pregnancy using evidencebased models� The program will fund models that
stress the importance of abstinence while providing medically-accurate and age-appropriate
information to youth who have already become
sexually active�
Provides Support for Other Presidential
initiatives. The Budget includes funding to reduce domestic violence and enhance emergency
care systems� It also expands the treatment capacity of drug courts including services to protect
methamphetamine’s youngest victims� Substance
addiction is a preventable and treatable chronic
condition and this initiative helps address the
most urgent needs� The Budget also provides resources to reduce health disparities, which the
President has identified as an important goal of
his Administration�

dEPARTMENT Of hOMELANd SECuRiTy
Funding Highlights:
•

Safeguards the Nation’s transportation systems through additional resources to bolster critical
transportation sectors and by leveraging a user fee to minimize overall costs.

•

Enhances cybersecurity and technology research and development by supporting partnerships
with government, industry, and academia to strengthen the Nation’s cyber infrastructure and
increase research and development in key homeland security technologies.

•

Strengthens border security and immigration services.

•

Supports State homeland security activities by increasing funding provided to States and
localities to protect Americans from terrorist attacks and natural disasters, through effective
emergency response plans, and improved information sharing and analysis.

Safeguards our Nation’s Transportation
Systems. The Budget funds key investments
to reinforce public transportation, enhance
maritime transportation, and accelerate airline
security� Funding of $50 million will provide
15 new Visual Intermodal Protection response
teams at the Transportation Security Administration to increase additional random force
protection capability by deploying to transit
hubs unannounced� Another $25 million in new
resources will support integrated planning at
the Department of Homeland Security and the
Department of Transportation to inform development and modernization of intermodal freight
infrastructure linking coastal and inland ports
to highway and rail networks� Additional funding supports critical investments to strengthen
the security of U�S� airports and adds 55 Bomb
Appraisal Officers who specialize in explosives
and improvised explosive device recognition and
response� The Budget also includes $64 million
to modernize the infrastructure used to vet travelers and workers� These funds will strengthen

screening in order to reduce the risk of potential terrorism or other unlawful activities that
threaten the Nation’s transportation system�
To minimize overall costs to taxpayers, the
Budget proposes to increase the existing Aviation Passenger Security Fee beginning in 2012�
Increasing this fee will offset costs associated
with Transportation Security Administration
screening of aviation passengers as the current
fee only captures 36 percent of the cost of aviation security� By increasing the fee, offsetting
collections from all aviation security fees would
cover a majority of the estimated costs of passenger and baggage screening�
Enhances Cybersecurity and Technology Research and development. Funding
of $355 million is targeted to make private and
public sector cyber infrastructure more resilient and secure� These funds will support the
base operations of the National Cyber Security
Division, as well as initiatives under the Com-

71

72

A NEW ErA OF rESPONSIBILITy

Department of Homeland Security
Discretionary budget authority in billions of dollars

60

Actuals/Enacted, including emergencies/supplementals
Proposed
In addition, the Recovery Act
includes $2.8 billion.

50.0

50

30

40.1

39.4

40

42.7

30.7

20
10
0

2006

2007

2008

2009

2010

Note: 2006 excludes a -$15.8 billion supplemental rescission. 2008 includes $15.1 million in emergency and
supplemental funds appropriated under Public Laws 110-116, 110-161, 110-252, and 110-329.
2009 excludes the one-time advance appropriation for Bioshield funding, $2.175 billion and includes a
$112 million transfer from DOD to Coast Guard.

prehensive National Cybersecurity Initiative
to protect our information networks� Funding of $36 million will support ongoing projects
to improve surveillance technologies to detect
enhanced, emerging and advanced biological
threats� Efforts to develop next-generation BioWatch sensors will continue in order to detect
bio-attacks at the earliest possible instant� The
Budget also supports the termination of outdated
systems such as the terrestrial-based, long-range
radionavigation (LOrAN-C) operated by the U�S�
Coast Guard resulting in an offset of $36 million
in 2010 and $190 million over five years�
Strengthens Border Security and immigration Services. The Budget funds $45 million
for the expansion of an exit pilot at key land ports
of entry and other border security priorities�
Funding of $368 million within existing Customs
and Border Protection funds support 20,000 Border Patrol agents protecting nearly 6,000 miles of
U�S� borders� The Budget provides over $1�4 billion for Immigration and Customs Enforcement
programs to ensure that illegal aliens who commit
crimes are expeditiously identified and removed
from the United States� Funding of $110 million
is provided to continue expansion of E-Verify, an

electronic employment eligibility verification system� E-Verify helps U�S� employers comply with
immigration law and ensures that U�S� jobs are
available to U�S� citizens and those authorized to
work in the United States� The Budget also supports strengthening the delivery of immigration
services by streamlining and modernizing immigration application processes�
Supports State homeland Security Activities. Making the Federal Government a better
partner to States and localities on key homeland
security initiatives is an Administration priority�
Additional funding is provided to improve coordination between all levels of government, support
our first responders, and create more effective
emergency response plans� risk-based exercise
assistance grants will assist State, local, and tribal partners in offsetting costs of critical homeland
security activities and will expand their Medical
Surge Capacity with the stockpiling and storing
of essential supplies� Funding of $260 million
within the existing Homeland Security Grant
program will fortify the Nation’s intelligence
system by improving information sharing and
analysis by adding thousands more State and local level intelligence analysts�

dEPARTMENT Of hOuSiNG ANd
uRBAN dEvELOPMENT
Funding Highlights:
•

Provides full funding for the Community Development Block Grant program at $4.5 billion. In
addition, the Budget reforms the program’s formula to better target economically distressed
communities. The program will also stimulate innovations in metropolitan sustainability,
university partnerships, and rural housing and economic development.

•

Provides $1 billion to capitalize and launch an Affordable Housing Trust Fund that will develop,
rehabilitate, and preserve affordable housing targeted to very-low income households. The
Fund will help to prevent homelessness and strengthen families.

•

Increases funding for the Housing Choice Voucher program, which likewise makes housing
affordable to very low-income households. The Department of Housing and Urban Development
will also introduce legislative reforms to address the program’s costly inefficiencies.

•

Enables the Department to preserve approximately 1.3 million affordable rental units through
increased funding for the Department’s assisted multifamily properties.

•

Combats mortgage fraud and predatory loans. The Budget funds enhanced enforcement of fair
housing, mortgage disclosure, and settlement requirements.

•

Creates a new Energy Innovation Fund to catalyze private sector investment in the energy
efficiency of the Nation’s housing stock.

•

Creates a new Choice Neighborhoods Initiative to make a range of transformative investments
in high-poverty neighborhoods where public and assisted housing is concentrated.

•

Eliminates funding for ineffective and duplicative programs, including the Section 108 Community
Development Loan Guarantees program and the American Dream Downpayment Initiative.

The Department of Housing and Urban Development (HUD) is committed to fulfilling its mission of increasing homeownership, supporting
innovative and sustainable community development, and increasing access to affordable housing free from discrimination� The President’s
Budget restores and increases funding for many

HUD programs to achieve these important goals
while reforming or eliminating duplicative and
inefficient programs�
Provides full funding for the Community development Block Grant (CdBG) Program. The President is fulfilling his pledge to

73

74

A NEW ErA OF rESPONSIBILITy

Department of Housing and
Urban Development
Discretionary budget authority in billions of dollars, including emergency spending

70

Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $13.6 billion.

60
50

51.1

47.5

47.1

40

40.1

37.0

30
20
10
0

2006

2007

2008

2009

2010

Note: Supplemental funding designated as emergency for disaster and/or housing crisis-related activities
is included in the totals -- $17.1 billion for 2006, $7 million for 2007, and $9.5 billion for 2008.

fully fund CDBG� The Budget provides $4�5 billion for 2010 to ensure that communities continue
to invest in and expand economic opportunities
for low-income families� In addition to the significant funding increase, the Budget will modernize
the program through statutory reforms� Through
a more effective formula, appropriate incentives
and accountability measures, and a new Sustainable Communities Initiative, the Administration
will revamp the CDBG program to better target
funds to distressed communities and promote
sustainable and economically viable communities�

increases funding for the housing Choice
voucher Program. A robust Housing Choice
Voucher program will help more than two million
extremely low- to low-income families with rental
assistance to live in decent housing in neighborhoods of their choice� To address the program’s
costly inefficiencies, the Administration will introduce legislative reforms to help fully utilize
available funding, alleviate the administrative
burdens on the Public Housing Authorities, and
establish a funding mechanism that is transparent and predictable in order to serve more needy
families�

Provides funding for an Affordable housing Trust fund for the first Time. The Housing Trust Fund was originally authorized in the
Housing and Economic recovery Act of 2008, with
a dedicated funding stream from assessments on
Fannie Mae and Freddie Mac� However, given
their financial difficulties, the Federal Housing
Finance Agency has indefinitely suspended these
assessments� The Budget restores funding for
the Housing Trust Fund by requesting $1 billion
to finance the development, rehabilitation, and
preservation of affordable housing for very low
income residents�

increases funding for the Project-Based
Rental Assistance Program. The ProjectBased rental Assistance program will preserve
approximately 1�3 million affordable rental units
through increased funding for contracts with
owners of multifamily properties� This critical
investment will assist low- and very low-income
households in obtaining decent, safe and sanitary
housing in private accommodations�
Combats Mortgage fraud and Precautionary Practices. The Budget provides funds
for HUD to combat mortgage fraud and predatory
practices and includes increased funding for fair
housing enforcement� These resources will allow

DEPArTMENT OF HOUSING AND UrBAN DEVELOPMENT

75

HUD to increase enforcement of mortgage and
home purchase settlement requirements� This
involves proper disclosure of mortgage terms and
permissible business practices and charges� Enhanced enforcement will create an environment
in which home-buyers will be served with mortgage terms that are more easily understood and
reliably honored by lenders�

Creates a New Choice Neighborhoods initiative. The Budget includes funds for HUD to
support a range of transformative interventions
in neighborhoods of concentrated poverty� This
new initiative would challenge public, private
and nonprofit partners to identify neighborhood
interventions that would have the largest return
on Federal investments�

Creates a New Energy innovation fund.
The Budget includes funds for HUD to drive
the creation of an energy-efficient housing market—including “retrofitting” of older, inefficient
housing—and catalyze private sector lending for
this purpose in the residential sector� Partnering with the Department of Energy on this initiative, HUD will contribute to the Administration’s
broader effort to combat global warming, jumpstart the creation of a green economy, and reduce
utility bills�

Eliminates funding for ineffective and
duplicative Programs. The President’s Budget proposes to eliminate funding for two HUD
programs totaling $16 million� The Section 108
Community Development Loan Guarantees Program and the American Dream Downpayment
Initiative are duplicative of larger programs that
achieve similar results� By eliminating separate
funding for these programs, HUD will streamline
its resources and focus its efforts on programs
that are more successful� Section 108 Community Development activities will continue to be
eligible under CDBG�

dEPARTMENT Of ThE iNTERiOR
Funding Highlights:
•

Protects national parks with $100 million in additional funds to operate and maintain park
facilities and resources and $25 million to leverage private donations for park projects.

•

Conserves new Federal and State lands and protects endangered species with appropriations
of about $420 million from the Land and Water Conservation Fund, with annual increases to
reach full funding of $900 million by 2014.

•

Assists State and Federal land management agencies with over $130 million in additional funding
to monitor, adaptively manage and assess the impacts of climate change on the Nation’s lands,
fish and wildlife.

•

Creates educational and job opportunities for young people through expanded environmental
education activities and new programs to encourage them to hunt and fish responsibly.

•

Strengthens Native American communities through an increase of over $100 million for
enhanced law enforcement and education.

•

Anticipates future costs for catastrophic wildfires with a new contingent funding reserve of $75
million for the Department of the Interior.

•

Invests over $50 million to promote renewable energy projects on Federal lands and waters.

•

Encourages responsible development of oil and gas resources and closes loopholes that have
given oil companies excessive royalty relief for offshore leases.

The President’s 2010 Budget includes $12 billion for the Department of the Interior (DOI) to
undertake initiatives to protect and preserve
America’s national parks and public lands, conserve wetlands and wildlife habitat, strengthen
Native American communities, enhance outdoor
opportunities for young people, and promote energy security with a focus on clean renewable
sources and strategies to address climate change�
Protects National Parks. The President is
committed to preserving the Nation’s national
parks, with a $100 million increase in park oper-

ations (plus inflation) to protect the investments
made through the American recovery and reinvestment Act of 2009, and maintain facilities
and natural resources� An additional $25 million
will provide matching funds to leverage private
donations in preparation for the 100th anniversary of the National Park Service�
Conserves New Lands. While Americans
can take great pride in our existing national
parks and other public lands, there are many
landscapes and ecosystems that do not have
adequate protection� One way to protect these

77

78

A NEW ErA OF rESPONSIBILITy

Department of the Interior
Discretionary budget authority in billions of dollars

16
14
12

In addition, the Recovery Act
includes $3.0 billion.

Actuals, including emergencies
Projections

11.2

11.0

2006

2007

11.7

11.3

12.0

10
8
6
4
2
0

landscapes is to increase funding through the
Land and Water Conservation Fund (LWCF) to
acquire and conserve new parks and public lands,
with a focus on ecosystems that do not yet have
the protection they deserve� The Budget increases LWCF funding for DOI by over $80 million,
bringing the total request for the Departments
of Agriculture and the Interior to approximately
$420 million in 2010� This will put the Administration on track to fully fund LWCF programs at
$900 million by 2014�
Assesses and Responds to the impact of Climate Change on Wildlife. Climate change poses
a threat to America’s fish and wildlife, as natural
habitats are modified more rapidly than plants
and animals can adjust� Scientific analyses are
needed to understand the breadth of these changes� Federal land management agencies, States,
and Tribes all need to update land management
and species recovery plans to reflect the impacts
of climate change on wildlife� They also need to
monitor how wildlife is adapting and accelerate
projects, such as protecting migration corridors, to
help wildlife adjust� The Budget includes increases of more than $130 million, of which $40 million
is shared with the States for wildlife adaptation�
Additionally, the Budget increases funds by $10
million for North American Wetlands Conserva-

2008

2009

2010

tion Act (NAWCA) activities to acquire, restore, or
protect wetlands used by migratory waterfowl and
other birds� This is the first step in fully funding
NAWCA at $75 million by 2012�
Encourages youth Education and involvement. The President is keenly aware of the
important role that hunters and anglers play in
the conservation of the Nation’s wildlife and natural habitats� The Administration seeks to forge
a broad coalition to address great conservation
challenges, and America’s hunters and anglers
play an important part� To help preserve the national traditions of hunting and fishing shared by
families across the country, the Budget provides
funding to help States establish creative programs and strategies to encourage young people
and minority populations to responsibly hunt and
fish� The Budget also expands opportunities for
youth education including internships to instill
environmental awareness� These programs will
receive increases of over $50 million�
Strengthens Native American Communities. The Administration supports the principle
of tribal self-determination and will work to improve tribal law enforcement and education� The
Budget includes over $100 million in increased
funding to the Bureau of Indian Affairs for law

DEPArTMENT OF THE INTErIOr
enforcement and education� Additional funding is
also available through the Departments of Justice and Education� These funds will strengthen
tribal courts, detention centers, and police programs to help Native Americans protect their
communities� The Budget also increases funding
for tribal colleges and scholarships and provides
funding earlier in the academic year, giving the
colleges greater financial security�
Establishes a dedicated fund to fight
Wildfires. The Budget establishes a dedicated
fund for catastrophic wildfires and fully funds the
10-year average suppression costs, coupled with
program reforms that ensure fire management
resources are focused where they will do the most
good� This $75 million discretionary contingent
reserve provides funding that is only available
for fighting catastrophic wildfires after the appropriated 10-year average is exhausted� This
funding and the associated reforms provided in
the Budget will improve wildfire operations and
promote safe, cost-effective and accountable results from investments made in managing fire on
landscapes�
invests in a Clean Energy future. DOI will
play a central role in achieving the President’s
vision for a clean energy future — advancing our
national security, environmental security, and
economic opportunity� The Department will help
lead the way when it comes to enhancing the Nation’s domestic energy supply and moving toward
a clean energy economy� Our public lands, and the
offshore resources that we control already provide
close to one-third of our entire domestic supply of
oil and gas resources� The Budget includes over
$50 million in increases to conduct the environmental evaluations and technical studies needed
to spur development of renewable energy projects, assess available alternative resources, and
mitigate the impacts of development�
Ensures Responsible Production of Energy on federal Lands. DOI will take steps to
ensure that oil and gas companies diligently develop their oil and gas leases or risk losing them
(“use or lose”)� One step is to charge a new fee on
non-producing leases in the Gulf of Mexico� This

79

provides an added incentive for oil companies to
either start producing or relinquish the leases so
that others may bid on them�
Provides a Better Return to Taxpayers from Mineral development. The public
receives over $12 billion annually from fees, royalties, and other Federal payments related to oil,
gas, coal, and other mineral development� yet,
that return could be improved by closing loopholes, charging appropriate fees, and reforming
how royalties are set� The Budget proposes a
number of actions to ensure that Federal taxpayers receive their fair share, such as:
• Using a new excise tax on offshore oil and
gas production in the Gulf of Mexico to close
loopholes that have given oil companies
excessive royalty relief� This new tax will
begin in 2011, after the economy has had time
to recover�
• Terminating payments to coal-producing
States that no longer need funds to clean up
abandoned coal mines�
• Charging user fees to oil companies for
processing oil and gas drilling permits on
Federal lands�
• Increasing the return from oil and gas
production on Federal lands through
administrative actions, such as reforming
royalties and adjusting rates�
Conserves Western Water. The Bureau of
reclamation and the Bureau of Indian Affairs
support the development, management and restoration of water and related natural resources in
17 Western States and tribal lands while balancing competing uses of water� Consistent with this
objective, the Budget provides funding in 2010 for
a western water conservation initiative, which
includes the Bureau of reclamation’s water reuse and recycling (Title XVI) program� The goal
of this effort is to assist local communities’ availability of water by encouraging voluntary water
banks, wastewater treatment, and other marketbased conservation measures�

dEPARTMENT Of JuSTiCE
Funding Highlights:
•

Provides significant increases to address the National Security and Intelligence challenges
confronting the FBI and other Department of Justice components.

•

Begins funding 50,000 additional police officers through the Community Oriented Policing
Services program.

•

Provides funding to combat financial fraud and protect the public interest.

•

Reinvigorates Federal Civil Rights Enforcement.

•

Provides the enforcement, confinement and prosecutorial resources necessary to help ensure
the Nation’s borders are secure.

•

Addresses Federal detention and incarceration programs and ensures that returning Federal
prisoners have the support needed to successfully reintegrate into communities.

The President’s Budget for the Department of
Justice (DOJ) is $26�5 billion� The Budget addresses the key priorities of the President and
the Attorney General, including those for National Security and crime fighting programs in
the FBI and other DOJ components, to include
resources for combating financial fraud and protecting the public interest� The Budget funds the
Community Oriented Policing Services (COPS)
hiring program, ensures that prison and detention programs are adequately funded, to include
prisoner reentry programs, reinvigorates Federal civil rights enforcement, and increases border
security�
Counters the Threat of Terrorism and
Strengthens National Security. The Budget
provides $8 billion for the FBI, including $425
million in enhancements, and $88 million for the
National Security Division to address the President’s highest priority to protect the American

people from terrorist acts� Funding supports
the detection and disruption of terrorists, counterintelligence, cyber security, and other threats
against our National Security�
Provides funding to Begin to Put 50,000
More Cops on the Beat. Expanding COPS
Hiring Grants, the Budget includes funding to
begin hiring 50,000 additional police officers�
Supporting the hiring of police nationwide will
help States and communities prevent the growth
of crime during the economic downturn�
Combats financial fraud. The Budget
provides resources for additional FBI agents
to investigate mortgage fraud and white collar
crime and for additional Federal prosecutors, civil litigators and bankruptcy attorneys to protect
investors, the market, the Federal Government’s
investment of resources in the financial crisis,
and the American public�

81

82

A NEW ErA OF rESPONSIBILITy

Department of Justice
Discretionary budget authority in billions of dollars

35

Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $4.0 billion.

30
25.5

25
21.4

23.0

23.6

2007

2008

26.5

20
15
10
5
0

2006

2009

2010

Note: Agency totals do not include enacted or proposed rescissions from the Asset Forfeiture
or Crime Victims Funds.

Reinvigorates federal Civil Rights Enforcement. The Budget includes $145 million
for the Civil rights Division to strengthen civil
rights enforcement against racial, ethnic, sexual
preference, religious and gender discrimination�
Strengthens immigration Enforcement
and Border Security. The Budget includes additional funding for a comprehensive approach
to enforcement along the Nation’s borders that
combines law enforcement and prosecutorial component efforts to investigate, arrest, detain, and
prosecute illegal immigrants and other criminals�
The initiative also enhances the Department’s
ability to track fugitives from justice and combat
gunrunners and illegal drug traffickers�

Supports federal detention and incarceration Programs. The Budget provides $6
billion for the Bureau of Prisons and $1�4 billion
for the Office of the Detention Trustee to ensure that sentenced criminals and detainees are
housed in facilities that are safe, humane, costefficient, and appropriately secure�
Expands Prisoner Reentry Programs. The
Budget includes $109 million for prisoner reentry
programs, including an additional $75 million for
the Office of Justice Programs to expand grant
programs authorized by the Second Chance Act
that provide counseling, job training, drug treatment, and other transitional assistance to former
prisoners�

dEPARTMENT Of LABOR
Funding Highlights:
•

Builds on Unemployment Insurance modernization in the American Recovery and Reinvestment
Act to make the program a more effective social safety net and economic stabilizer.

•

Provides strong support for Federal workforce training programs, and increases their focus on
green technologies training.

•

Strengthens enforcement of labor standards, including workplace safety and benefit security,
reversing years of erosion in funding for labor law enforcement agencies.

•

Establishes automatic workplace pensions.

Reforms the unemployment insurance
System. The Administration seeks to fundamentally reform the Nation’s unemployment
insurance (UI) system to better address the challenges and realities of the 21st Century workforce�
Building on modernization reforms included in
the American recovery and reinvestment Act of
2009, the 2010 Budget will focus on making the
UI program more accessible to unemployed workers, especially in recessions, and ensuring the
financial integrity of the system so that employers’ taxes are well used� It will:
• improve ui as an automatic stabilizer.
The 2010 Budget will propose changes to
make the UI program a more responsive
and effective social safety net and economic
stabilizer� While the regular State-funded
UI program responds readily to rising
unemployment, the same cannot be said
of the permanent Extended Benefits (EB)
program, which provides additional weeks
of benefits when unemployment in a State

83

is high and rising� The Budget will propose
legislation to make the EB program more
responsive to changing economic conditions�
These changes will make benefits available
more quickly to long-term unemployed
workers and avoid the delays associated
with enactment of legislation to create
special, temporary extended unemployment
programs�
• improve ui financial integrity. Despite
the efforts of States to reduce improper
benefit payments, over $3�9 billion in UI
benefits were erroneously paid in 2008� The
Administration will tackle this problem by
increasing funding for program integrity
and proposing legislative changes that
would reduce UI improper payments by $3�9
billion and employer tax evasion by almost
$300 million over 10 years� The proposal
would, among other things, collect benefit
overpayments through garnishment of
Federal income tax refunds and boost States’

84

A NEW ErA OF rESPONSIBILITy

Department of Labor
Discretionary budget authority in billions of dollars

18
16

Actuals, including emergencies
Projections

14
12

In addition, the Recovery Act
includes $4.8 billion.

12.7
11.5

11.7

11.8

2006

2007

2008

13.3

10
8
6
4
2
0

resources to go after benefit overpayments
and UI tax evasion by allowing them to use a
portion of recovered funds on fraud and error
reduction�
Trains and Prepares the Nation’s Workforce for Jobs in Emerging industries. The
President’s Budget provides strong support for
Federal workforce training programs to help
Americans prepare for, find, and retain stable,
high-paying jobs� Building on the significant
support in the recovery Act for training in “green
jobs,” the Administration will direct existing programs to find ways to prepare workers for jobs
associated with products and services that use
renewable energy resources, reduce pollution,
and conserve natural resources� The President’s
Budget will support new transitional jobs and
career pathway programs, testing innovative approaches to helping low-income Americans grab
hold of and climb the career ladder� It will add to
the recovery Act investments in youthBuild, expanding opportunities for disadvantaged young
people to complete their high school education,
learn valuable skills, and build affordable housing in their communities� The Budget provides
additional resources to support job training for
ex-offenders returning to their communities� The
Budget also honors the commitment to return-

2009

2010

ing servicemembers by supporting training and
placement services to ease their transition to civilian employment�
Restores Labor Standards. For the past
eight years, the Department’s labor law enforcement agencies have struggled with growing
workloads and shrinking staff� The President’s
Budget seeks to reverse this trend, restoring the
Department’s ability to meets its responsibilities to working Americans under the more than
180 worker protection laws it enforces� The Budget will: increase funding for the Occupational
Safety and Health Administration, enabling it
to vigorously enforce workplace safety laws and
whistleblower protections, and ensure the safety
and health of American workers; increase enforcement resources for the Wage and Hour Division
to ensure that workers are paid the wages that
are due them; and boost funding for the Office of
Federal Contract Compliance Programs, which
is charged with pursuing equal employment opportunity and a fair and diverse Federal contract
workforce�
Establishes Automatic Workplace Pensions and Makes the Saver’s Credit
Refundable. Currently, 75 million working
Americans—roughly half the workforce—lack

DEPArTMENT OF LABOr
employer-based retirement plans� The President’s
2010 Budget lays the groundwork for future establishment of a system of automatic workplace
pensions, to operate along side Social Security,
that is expected to dramatically increase both the
number of Americans who save for retirement
and the overall amount of personal savings for
individuals� Under this proposal, employees will
be automatically enrolled in workplace pension
plans� Employers who do not currently offer a
retirement plan will be required to enroll their
employees in a direct-deposit IrA account that
is compatible with existing direct-deposit payroll
systems� Employees may opt-out if they choose�

85

Experts estimate that this program will increase
the savings participation rate for low and middleincome workers from its current 15 percent level
to around 80 percent�
In addition, the Budget proposes to expand
retirement savings incentives for working families by modifying the existing Saver’s Credit to
provide a 50-percent match on the first $1,000
of retirement savings for families that earn less
than $65,000� The credit would be fully refundable to ensure that savings incentives are fair to
all workers�

dEPARTMENT Of STATE ANd
OThER iNTERNATiONAL PROGRAMS
Funding Highlights:
•

Reflects the Administration’s commitment to strengthen diplomatic and assistance tools to
address current and future challenges that impact the security of the United States.

•

Puts the United States on a path to double U.S. foreign assistance. This funding will help the
world’s weakest states reduce poverty, combat global health threats, develop markets, govern
peacefully, and expand democracy worldwide.

•

Supports the worldwide operations of the Department of State and U.S. Agency for International
Development, provides new resources to hire additional Foreign Service officers, and builds
civilian capacity to meet the challenges of today’s world.

•

Increases non-military aid to Afghanistan and Pakistan to revitalize economic development and
confront the resurgence of the Taliban. Realigns U.S. assistance to Iraq to help responsibly end
the war and enable Iraqis to assume more control of their country.

•

Provides additional funding for key programs that advance U.S. foreign policy goals, including
significantly increasing funding for energy initiatives, programs addressing global climate
change, agriculture investments, and the Peace Corps.

•

Provides full funding of all 2010 scheduled payments to the Multilateral Development Banks and
a portion of the outstanding arrears to reinforce the U.S. commitment to play a leadership role
in these institutions. Increases the U.S. quota subscription to the International Monetary Fund
as part of the 2008 agreement on the Fund’s reform, which will promote a strong international
economy and maintain the U.S. voting share at the International Monetary Fund.

•

Meets U.S. financial commitments to the United Nations and other international organizations
that support a wide range of U.S. national security, foreign policy, and economic goals.

•

Supports United Nations peacekeeping activities that help restore and maintain peace around
the world.

•

Responds to global security threats by increasing counterterrorism and law enforcement aid
to critical partner nations including those in the Western Hemisphere, as well as increasing
funding for nonproliferation activities to secure nuclear material at vulnerable sites.

•

Ensures that the United States continues to be the world’s leader in providing food aid and lifesustaining support for refugees and other conflict and disaster victims.

•

Improves fiscal discipline and transparency by shifting funding for recurring programs, previously
funded in supplemental appropriations, into the 2010 Budget.

87

88

A NEW ErA OF rESPONSIBILITy

Department of State and
Other International Programs
Discretionary budget authority in billions of dollars

60

Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $0.6 billion.

51.7
50

47.2
40.9

40
34.3

37.0

30
20
10
0

2006

2007

2008

2009

2010

Note: Excludes food aid and the Office of the U.S. Trade Representative.

Puts the united States on a Path to double foreign Assistance. By increasing foreign
assistance, the United States will reach out to the
global community and renew its role as a leader
in global development and diplomacy� Through
increased foreign assistance funding, the United
States will embark on several new initiatives
that will give children in the poorest countries
access to education ensuring they can participate
in the global marketplace; foster global food security through sustainable agriculture; expand
goodwill and inspire service by increasing the
size of the Peace Corps; and stabilize post-conflict
states, creating room for them to plant the seeds
of democracy�
increases funding for Global health Programs. The Administration will continue to
build on its commitment to save lives through increasing investments in global health programs,
including areas such as maternal and child
health, family planning and other core health
programs, while also emphasizing a commitment
to HIV/AIDS, malaria, and tuberculosis through
successful programs, such as the President’s
Emergency Plan for AIDS relief and the Malaria
Initiative� Together with our multilateral partners, the United States will continue to provide

global leadership to improve the health status of
the world’s poorest populations�
Reinvigorates Counter-Proliferation, AntiTerrorism, and Transnational Crime-fighting
Efforts. The Budget will fund reinvigorated efforts
to counter proliferation, terrorism, and transnational crime� By fostering opportunity and security
worldwide, this initiative will make the American
people safer at home� This Budget includes firstyear funding for a multi-year counterterrorism and
law enforcement assistance program that strengthens the capabilities of our international partners in
the Western Hemisphere and other critical regions
around the world� The Budget also provides additional nonproliferation and counter-proliferation
funding that will be used to help secure nuclear
materials and promote safe civilian uses of nuclear
energy�
Expands diplomatic and development
Operations. This initiative will strengthen the
U�S� Government’s diplomatic and development
operations to support our national security� The
2010 Budget includes funding for the first year
of a multi-year effort to significantly increase the
size of the Foreign Service at both the Department
of State and the U�S� Agency for International Development (USAID)� An increased cadre of State

DEPArTMENT OF STATE AND OTHEr INTErNATIONAL PrOGrAMS
and USAID Foreign Service officers will help
advance our critical foreign policy goals and
deliver on our expanding U�S� foreign assistance
commitments�
Refocuses Resources to Priorities in
Afghanistan, Pakistan, and iraq. The 2010
Budget refocuses U�S� resources toward addressing the resurgence of al Qaeda and the
Taliban in Afghanistan and Pakistan� The
Budget increases non-military assistance to
both countries, providing additional funding
for governance, reconstruction, counter-narcotics, and other development activities that will
help counter extremists� The Budget expands
the number of civilian personnel in Afghanistan and Pakistan in an effort to stabilize
these countries, build government capacity,
and successfully manage expanded assistance

89

programs� The Budget strengthens our assistance to Iraqis who have been displaced from
their homes because of the war� The Budget also
realigns our assistance efforts in Iraq to ensure
that Iraqis can assume more responsibility for
their own political and economic future�
imposes Transparency on the Budget.
The Budget reduces reliance on emergency
supplemental appropriations by increasing
key accounts and programs for which funding is predictable and recurring� For example,
the Budget includes increased funding for
humanitarian assistance accounts and U�N�
Peacekeeping Missions that reflect ongoing
costs� While emergency supplementals may
be required in the future, they should focus on
truly unanticipated events and not be used to
fund regular programs�

IT

E

D

ST

ER

UN

IC A

DEPAR
TM

TRAN
SP
ION
TAT
OR

T OF
EN

M
A T ES O F A

dEPARTMENT Of TRANSPORTATiON
Funding Highlights:
•

Commits to better target surface transportation spending and explores options to make the
Nation’s communities more livable and less congested, such as through road pricing.

•

Increases funding for public transit to support commuters, improve air quality, and reduce
greenhouse gases.

•

Supports development of high speed rail networks across the country to link regional population
centers.

•

Supports the Next Generation Air Transportation System to modernize the air traffic control
system.

Commits to developing Sustainable Solutions for Surface Transportation Programs
and to improving Program Performance.
Surface transportation programs are at a crossroads� The current framework for financing and
allocating surface transportation investments is
not financially sustainable; nor does it effectively
allocate resources to meet our critical national
needs� The Administration intends to work with
the Congress to reform surface transportation
programs both to put the system on a sustainable financing path and to make investments in
a more sustainable future, enhancing transit options and making our economy more productive
and our communities more livable� Further, the
Nation’s surface transportation system must generate the best investments to reduce congestion
and improve safety� To do so, the Administration
will emphasize the use of economic analysis and
performance measurement in transportation
planning� This will ensure that taxpayer dollars
are better targeted and spent�

initiates a New federal Commitment to
high Speed Rail. To provide Americans a 21st
Century transportation system, the Administration proposes a five-year $5 billion high-speed
rail State grant program� Building on the $8 billion down payment in the American recovery
and reinvestment Act of 2009, the President’s
proposal marks a new Federal commitment to
give the traveling public a practical and environmentally sustainable alternative to flying or
driving� Directed by the States, this investment
will lead to the creation of several high-speed
rail corridors across the country linking regional
population centers�
Modernizes the Air Traffic Control System. The Budget provides approximately $800
million for the Next Generation Air Transportation System, a long-term effort to improve the
efficiency, safety, and capacity of the air traffic
control system� The 2010 Budget supports moving from a ground-based radar surveillance

91

92

A NEW ErA OF rESPONSIBILITy

Department of Transportation
Discretionary budgetary resources in billions of dollars

90
80
70

In addition, the Recovery Act
includes $48.1 billion.

Actuals, including emergencies
Projections

65.3

66.8

2006

2007

70.6

70.5

72.5

2008

2009

2010

60
50
40
30
20
10
0

Note: In 2010, and outyear estimates, surface transportation programs grow by baseline
inflation factors. See above for a more detailed explanation of the administration’s
position regarding surface transportation reauthorization.

system to a more accurate satellite-based surveillance system; development of more efficient
routes through the airspace; and improvements
in aviation weather information�
improves Rural Access to the Aviation
System. The Administration is committed to
maintaining small communities’ access to the
National Airspace System� The Budget provides
a $55 million increase over the 2009 level to
the Department of Transportation (DOT) to fulfill current program requirements as demand
for subsidized commercial air service increases�
However, the program that delivers this subsidy
is not efficiently designed� Through the budget
process, the Administration intends to work with
the Congress to develop a more sustainable program model that will fulfill its commitment while
enhancing convenience for travelers and improving cost effectiveness�
Makes Budgetary Treatment of Transportation Programs More Transparent. Budget

authority for highway, transit, highway safety,
and airport improvement programs usually has
been defined as mandatory contract authority
provided in authorizing legislation� However, the
levels of contract authority have been, for the
most part, controlled by obligation limitations in
appropriations acts� Outlays from the obligation
limitations have always been scored as discretionary� To more transparently display program
resources, the Administration proposes changing
the budgetary treatment of transportation programs to show both budget authority and outlays
as discretionary� For 2009, the discretionary budget authority top line would be increased by approximately $53 billion, increasing DOT budget
authority total from $17 billion under the typical presentation to $70 billion� Similar budget
authority adjustments would be made for each
outyear� The change would not affect outlays or
the deficit or surplus—just more transparently
convey to the taxpayer the real costs of supporting the transportation infrastructure our Nation
needs�

dEPARTMENT Of ThE TREASuRy
Funding Highlights:
•

Supports the Administration’s new Financial Stability Plan, as well as financial regulatory reform
efforts and the effective, transparent governance of the Troubled Assets Relief Program and its
successors.

•

Expands funding for effective Internal Revenue Service (IRS) enforcement and invests in
high return-on-investment activities that generate improved compliance and fairness in the
application of tax laws.

•

Improves the responsiveness and efficiency of taxpayer services to improve the accuracy of
taxpayer filing and the quality of taxpayers’ experience when they interact with the IRS.

•

Expands job-creating investments and access to credit in disadvantaged communities by
doubling funding for the Community Development Financial Institutions Fund.

The Department of the Treasury promotes
the economic prosperity and financial security
of the United States� Treasury operates 13 bureaus with a vast array of activities that are
critical to the core functions of government,
including collecting revenue and disbursing
payments, managing Federal finances, and
protecting the financial system from threats�
Treasury also plays a key role in modernizing
the American financial regulatory system and
ensuring effective, transparent administration
of programs designed to revive and strengthen
the economy�
Supports the New financial Stability Plan and the Administration of the
Troubled Assets Relief Program (TARP).
The Budget supports the Administration’s
new Financial Stability Plan as well as the
management of the TArP, emphasizing effective, transparent, and accountable program
management�

In addition, as discussed in the main text of
this document, the President’s Budget includes
a $250 billion contingent reserve for further
efforts to stabilize the financial system� (The
reserve, which reflects a net cost to the Government, would support $750 billion in asset
purchases�) The existence of this reserve in the
Budget does not represent a specific request�
rather as events warrant, the Administration
will work with the Congress to determine the
appropriate size and shape of such efforts, and
as more information becomes available the
Administration will define an estimate of potential costs�
Collects Taxes Owed here and Abroad.
The scope, complexity, and sheer magnitude
of the international financial system pose significant enforcement challenges for the IrS
in carrying out its tax administration responsibilities� The 2010 Budget includes funding
for a robust portfolio of IrS international tax

93

94

A NEW ErA OF rESPONSIBILITy

Department of the Treasury
Discretionary budget authority in billions of dollars

18
16

Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $0.3 billion.

14
12

11.4

11.5

2006

2007

12.2

12.7

13.3

10
8
6
4
2
0

compliance initiatives, and sustains and improves IrS efforts to narrow the annual tax gap
of over $300 billion�
Enhances iRS Services to Taxpayers.
The Administration will pursue plans to improve the quality of taxpayers’ experience when
they interact with the IrS� This strategy includes improving relationships with critical
third-party stakeholders, such as tax preparers,
volunteers and practitioners, as well as enhancing electronic filing capabilities� The end goal
envisions an IrS that correctly answers a tax-

2008

2009

2010

payer’s question the first time asked, through
the most efficient and taxpayer-friendly means�
Expands Lending in disadvantaged
Communities. The Budget expands lending in underserved neighborhoods by doubling
funding for the Community Development Financial Institutions (CDFI) Fund� Through
merit-based grant programs, the CDFI Fund
helps locally based financial institutions offer
small business, consumer and home loans in
communities and populations that lack access
to affordable credit�

dEPARTMENT Of vETERANS AffAiRS
Funding Highlights:
•

Increases funding for the Department of Veterans Affairs by $25 billion above baseline over the
next five years.

•

Dramatically increases funding for veterans health care.

•

Expands eligibility for veterans health care to over 500,000 veterans by 2013.

•

Enhances outreach and services related to mental health care and cognitive injuries, including
post-traumatic stress disorder and traumatic brain injury, with a focus on access for veterans in
rural areas.

•

Invests in better technology to deliver services and benefits to veterans with the quality and
efficiency they deserve.

•

Provides greater benefits to veterans who are medically retired from service.

•

Combats homelessness by safeguarding vulnerable veterans.

•

Facilitates timely implementation of the comprehensive education benefits that veterans earn
through their dedicated military service.

increases funding for the department
of veterans Affairs (vA) by $25 Billion
Above Baseline Over the Next five years.
The President’s Budget takes the first step toward increasing funding for VA by $25 billion
over the next five years in order to honor our
Nation’s veterans and expand the services they
receive�
dramatically increases funding for vA
health Care. This increase will provide adequate
resources to give 5�5 million veteran patients
timely and high quality care� This funding also
enables VA to create Centers of Excellence and
provides additional veteran-oriented specialty
care in areas including prosthetics, vision and
spinal cord injury, aging, and women’s health�

Restores health Care Eligibility for
Modest-income veterans. For the first time
since January 2003, the President’s Budget
expands eligibility for VA health care to nondisabled veterans earning modest incomes�
This expansion will bring over 500,000 eligible veterans into the VA health care system
by 2013 while maintaining high quality and
timely care for the lower-income and disabled
veterans who currently rely on VA medical
care�
Enhances Outreach and Services Related
to Mental health Care and Cognitive
injuries with a focus on Access for veterans
in Rural Areas. Conditions such as post-traumatic stress disorder and traumatic brain injury

95

96

A NEW ErA OF rESPONSIBILITy

Department of Veterans Affairs
Discretionary budget authority in billions of dollars

70

Actuals/Enacted, including emergencies
Proposed

60

55.9

In addition, the Recovery Act
includes $1.4 billion.

50
40

50.4
46.1

40.4
36.1

30
20
10
0

2006

2007

2008

2009

2010

Note: All totals include resources from medical care collections.

present challenges in caring for veterans of current conflicts� The President’s Budget expands the
mental health screening and treatment services
offered by VA and focuses on reaching veterans
in rural areas� VA will increase the number of Vet
Centers and mobile health clinics to expand access to mental health screening and treatment
in rural areas� In addition, new funding will help
veterans and their families stay informed of these
resources and encourage them to pursue needed
care�
invests in Better Technology to deliver
Services and Benefits to veterans with the
Quality and Efficiency They deserve. To
transform VA into a 21st Century organization,
the President’s Budget invests in information
technology that directly benefits veterans in the
areas of both health care and benefits� Through
improved electronic medical records, VA will
more efficiently retrieve active duty health records from the Department of Defense and
enable all VA care sites to access the records of
veterans needing care� VA will also invest in the
development of rules-based electronic processes
to increase accuracy, consistency, and timeliness
in veterans’ receipt of benefits�

Provides Greater Benefits for veterans
Who Are Medically Retired from Service.
For the first time, highly disabled veterans who
are medically retired from service will be eligible
for concurrent receipt of disability benefits from
VA in addition to Department of Defense retirement benefits�
Combats homelessness by Safeguarding
vulnerable veterans. The President’s Budget
expands VA’s current services to homeless veterans through a collaborative pilot program with
non-profit organizations� This pilot will help
maintain stable housing for veterans who are at
risk of falling into homelessness while helping
VA to continue providing them with supportive
services�
facilitates Timely implementation of
the Comprehensive Education Benefits
veterans Earn Through Their dedicated
Service. The Budget provides the resources
for effective implementation of the post-9/11 GI
Bill—providing unprecedented levels of educational support to the men and women who have
served our country through active military duty�

CORPS Of ENGiNEERS—CiviL WORKS
Funding Highlights:
•

Focuses construction funds on those investments that provide the best return from a national
perspective in achieving economic, environmental and public safety objectives.

•

Supports the safe and reliable operation and maintenance of key existing water resources
infrastructure.

•

Improves Corps project planning and program performance.

•

Advances aquatic ecosystem restoration efforts, including restoration of Florida’s Everglades
and Louisiana’s coastal wetlands.

The Budget proposes $5�1 billion in discretionary budget authority in 2010 for the Army
Corps of Engineers civil works (Corps) program�
The Budget will be transparent and based on
performance information for projects and activities� The funding for the Corps in the 2010
Budget, together with the $4�6 billion provided
for Corps programs in the American recovery
and reinvestment Act of 2009, will significantly
improve and strengthen the Nation’s water resources infrastructure�
focuses Construction on high-Return
investments. The construction program supports high-return investments in the three
main mission areas of the Corps: 1) facilitating
commercial navigation; 2) reducing the risk of
damage from floods and storms; and 3) restoring significant aquatic ecosystems� To assure
that investments in these missions provide the
Nation with both high economic and environmental benefits, the Budget supports activities
that complement multiple-project purposes and

integrate environmental principles into traditional infrastructure efforts�
The Budget also will propose to phase out
the current excise tax on diesel fuel for the
inland waterways and replace it with a lock
usage fee, designed to improve economic efficiency and preserve the landmark cost-sharing
reform established by the Congress in 1986,
while supporting investments in construction,
expansion, replacement, and rehabilitation
work�
Maintains Key infrastructure. The
Budget will emphasize funding to support
maintenance and safe and reliable operation of
those facilities that are of central importance to
the Nation, and will address deferred maintenance to maintain or improve the performance
of aging Corps infrastructure� The Corps will
continue to develop and implement an objective
risk-based decision-making system for allocating resources to these activities�

97

98

A NEW ErA OF rESPONSIBILITy

Corps of Engineers -- Civil Works
Discretionary budget authority in billions of dollars

16
14
12

Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $4.6 billion.

11.9
11.1

10

9.0

8

7.0

6

5.1

4
2
0

2006

2007

2008

2009

2010

Note: Supplemental funding designated as emergency is included in the totals -- $6.6 billion for 2006,
$1.6 billion for 2007, $3.4 billion for 2008, and $5.8 billion for 2009.

honors the President’s Commitments to
the Gulf Coast. The Budget will fund continued work to restore coastal Louisiana wetlands,
including a study to identify the best ways to restore wetlands affected by the Mississippi river
Gulf Outlet, and the science needed to support
these efforts� The Budget will also fund continued
work on planning sustainable methods to reduce
the risk of damage from hurricane storm surges
to Gulf coastal areas�
improves Program Performance. The
Corps will focus efforts on developing new strat-

egies, along with other Federal agencies and
non-Federal project partners, to better manage,
protect, and restore the Nation’s water and related land resources, including floodplain and
flood-prone coastal areas� The Corps will also
pursue management reforms that improve project cost and schedule performance to ensure the
greatest value from invested resources, while
strengthening the accountability and transparency of the way in which taxpayer dollars are
being spent�

ENviRONMENTAL PROTECTiON AGENCy
Funding Highlights:
•

Provides $10.5 billion in total for the Environmental Protection Agency, a 34-percent increase
over the 2009 likely enacted level.

•

Provides $3.9 billion for the Clean Water and Drinking Water State Revolving Funds, an
unprecedented Federal commitment to water infrastructure investment in the United States.

•

Provides $475 million for a new Environmental Protection Agency-led, interagency Great Lakes
restoration initiative, which will target the most significant problems in the region, including
invasive aquatic species, non-point source pollution, and contaminated sediment.

•

Funds the Agency’s operating budget, which comprises its core regulatory, research, and
enforcement activities, at $3.9 billion, the highest level ever.

•

Provides over $1.1 billion in grants for States and Tribes to administer environmental programs.

The Environmental Protection Agency
(EPA) is responsible for the abatement and
control of pollution, which involves the proper
integration of research, monitoring, standard
setting, and enforcement� The 2010 Budget requests a substantial increase over the budget
requests of the last eight years—$10�5 billion,
a 34-percent increase over the 2009 likely enacted budget� This includes $3�9 billion for
EPA’s operating budget, which is the heart of
EPA’s environmental protection function and
includes funds for research, regulation, and
enforcement� EPA’s budget also provides State
program implementation grants, capitalization
grants to State revolving funds to help municipalities pay for the cost of pollution controls,
and the clean up of contaminated sites�
invests in Clean Water. The 2010 Budget requests $3�9 billion for the Clean Water
State revolving Fund and the Drinking Water State revolving Fund (SrFs)� With this

historic increase, the program will fund over
1,000 Clean Water and nearly 700 Drinking
Water projects annually in the Nation’s States,
Tribes, and territories, based on average project costs� The SrF programs provide grants
to States to capitalize their own revolving
funds, which finance wastewater and drinking water treatment systems� The SrFs use
the Federal capitalization, State matches (20
percent), State leveraging, interest, and loan
repayments to make low-interest loans to communities� Because repayments and interest
are recycled back into the program, SrFs generate funding for loans (revolve) even without
Federal capitalization� EPA estimates that for
every Federal dollar invested, at least two dollars in financing is provided to municipalities�
In conjunction with the dramatic increase in
Federal funding for local water infrastructure
needs, the Administration will pursue program
reforms that will put resources for these ongoing needs on a firmer foundation� EPA will

99

100

A NEW ErA OF rESPONSIBILITy

Environmental Protection Agency
Discretionary budget authority in billions of dollars

12

10

8

Actuals, including emergencies
Projections
In addition, the Recovery Act
includes $7.2 billion.

7.6

7.7

7.5

2006

2007

2008

10.5

7.8

6

4

2

0

work with State and local partners to develop
a sustainability policy including management
and pricing for future infrastructure funded
through SrFs to encourage conservation and to
provide adequate long-term funding for future
capital needs� The 2010 Budget also proposes to
work with State and local governments to address Federal drinking water policy in order to
provide equitable consideration of small system
customers�
Accelerates the Restoration of the Great
Lakes. The 2010 Budget includes a new $475
million inter-agency initiative to address regional issues that affect the Great Lakes, such
as invasive species, non-point source pollution,
and contaminated sediment� This initiative
will use outcome-oriented performance goals
and measures to target the most significant
problems and track progress in addressing
them� EPA and its Federal partners will coordinate State, tribal, local, and industry actions
to protect, maintain, and restore the chemical,
biological, and physical integrity of the Great
Lakes�
Begins a Comprehensive Approach to
Transform Our Energy Supply and Slow
Global Warming. The Administration is de-

2009

2010

veloping a comprehensive energy and climate
change plan to invest in clean energy, end our
addiction to oil, address the global climate crisis, and create new American jobs that cannot
be outsourced� After enactment of the Budget,
the Administration will work expeditiously
with key stakeholders and Congress to develop
an economy-wide emissions reduction program
to reduce greenhouse gas emissions approximately 14 percent below 2005 levels by 2020,
and approximately 83 percent below 2005 levels by 2050� This program will be implemented
through a cap-and-trade system, a policy approach that dramatically reduced acid rain at
much lower costs than the traditional Government regulations and mandates of the past�
Through a 100 percent auction to ensure that
the biggest polluters do not enjoy windfall profits, this program will fund vital investments in
a clean energy future totaling $150 billion over
10 years, starting in fiscal year 2012� The balance of the auction revenues will be returned to
the people, especially vulnerable families, communities, and businesses to help the transition
to a clean energy economy� The Budget includes a $19 million increase for EPA work on a
Greenhouse Gas (GHG) emission inventory and
to work with affected industry sectors to report
high-quality GHG emission data� This will also

ENVIrONMENTAL PrOTECTION AGENCy
allow for work on the necessary steps toward
implementing a comprehensive climate bill�
Secures the Nation’s Water Supply. The
2010 Budget provides $24 million to fully fund
all five Water Security Initiative (WSI) pilot
cooperative agreements and Water Alliance for
Threat reduction activities begun in response
to the Bioterrorism Act of 2002� EPA launched
its WSI in 2006 to demonstrate, test, and evaluate a design for a contamination warning
system at drinking water utilities� Following

101

completion of these pilots, EPA will issue guidance and promote adoption of effective drinking
water contamination warning systems�
Strengthens Superfund. The 2010 Budget
proposes to reinstate excise taxes that expired
in 1995 and will collect over $1 billion to clean
up the Nation’s most toxic, contaminated sites
within the Superfund program� The reinstated
taxes will not begin until 2011 after the economy recovers�

NATiONAL AERONAuTiCS ANd
SPACE AdMiNiSTRATiON
Funding Highlights:
•

Provides $18.7 billion for the National Aeronautics and Space Administration. Combined with
the $1 billion provided to the agency in the American Recovery and Reinvestment Act of 2009,
this represents a total increase of more than $2.4 billion over the 2008 level.

•

Funds a program of space-based research that supports the Administration’s commitment to
deploy a global climate change research and monitoring system.

•

Funds a robust program of space exploration involving humans and robots. The National
Aeronautics and Space Administration will return humans to the Moon while also supporting a
vigorous program of robotic exploration of the solar system and universe.

•

Funds the safe flight of the Space Shuttle through the vehicle’s retirement at the end of 2010.
An additional flight will be conducted if it can be completed safely before the end of 2010.

•

Funds the development of new space flight systems for carrying American crews and supplies
to space.

•

Funds continued use of the International Space Station to support the agency and other Federal,
commercial, and academic research and technology testing needs.

•

Funds aeronautics research to address aviation safety, air traffic control, noise and emissions
reduction, and fuel efficiency.

Advances
Global
Climate
Change
Research and Monitoring. The National Aeronautics and Space Administration’s (NASA’s)
investment in Earth science research satellites,
airborne sensors, computer models, and analysis
has revolutionized scientific knowledge and prediction of climate change and its effects� Using
the National research Council’s recommended
priorities for space-based Earth science research
as its guide, NASA will develop new space-based
research sensors in support of the Administration’s goal to deploy a global climate research
and monitoring system� NASA will work to
deploy these new sensors expeditiously while co-

ordinating with other Federal agencies to ensure
continuity of measurements that have long-term
research and applications benefits�
funds a Robust Program of Space Exploration involving humans and Robots.
NASA’s astronauts and robotic spacecraft have
been exploring our solar system and the universe for more than 50 years� The Agency will
create a new chapter of this legacy as it works to
return Americans to the Moon by 2020 as part
of a robust human and robotic space exploration
program� NASA also will send a broad suite of
robotic missions to destinations throughout the

103

104

A NEW ErA OF rESPONSIBILITy

National Aeronautics and
Space Administration
Discretionary budget authority in billions of dollars

25

Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $1.0 billion.

20
16.7

16.3

2006

2007

17.2

17.8

2008

2009

18.7

15

10

5

0

solar system and develop a bold new set of astronomical observatories to probe the mysteries of
the universe, increasing investment in research,
data analysis, and technology development in
support of these goals�
Completes the international Space Station and Advances the development of New
Space Transportation Systems. NASA will fly
the Space Shuttle to complete the International Space Station and then retire the Shuttle in
2010; an additional flight may be conducted if it
can safely and affordably be flown by the end of
2010� Funds freed from the Shuttle’s retirement
will enable the Agency to support development
of systems to deliver people and cargo to the International Space Station and the Moon� As part
of this effort, NASA will stimulate private-sector
development and demonstration of vehicles that
may support the Agency’s human crew and cargo
space flight requirements�
Continues Support of the international
Space Station. NASA will continue to assem-

2010

ble and utilize the International Space Station,
the permanently crewed facility orbiting Earth
that enables the Agency to develop, test, and
validate critical space exploration technologies
and processes� NASA also will continue to coordinate with international partners to make this
platform available for other government entities,
commercial industry, and academic institutions
to conduct research�
Renews NASA’s Commitment to Aeronautics Research. A strong national program
of aeronautics research and technology contributes to the economic well-being and quality of
life of American citizens� NASA will renew its
commitment to cutting-edge, fundamental research in traditional and emerging disciplines
to help transform the Nation’s air transportation system and to support future aircraft�
NASA research will increase airspace capacity and mobility, enhance aviation safety, and
improve aircraft performance while reducing
noise, emissions, and fuel consumption�

NATiONAL SCiENCE fOuNdATiON
Funding Highlights:
•

Provides $7 billion for the National Science Foundation, a 16-percent increase over the 2008
level, as part of the President’s Plan for Science and Innovation.

•

Increases support for graduate research fellowships and for early-career researchers.

•

Increases support for the education of technicians in the high-technology fields that drive the
Nation’s economy.

•

Encourages more novel high-risk, high-reward research proposals.

•

Increases support for critical research priorities in global climate change.

invests in the Sciences. Investments in
science and technology foster economic growth,
create millions of high-tech, high-wage jobs that
allow American workers to lead the global economy, improve the quality of life for all Americans,
and strengthen our national security� For these
reasons, the Budget doubles funding for basic research over 10 years, beginning with $3 billion
for the National Science Foundation (NSF) in the
American recovery and reinvestment Act of 2009
and a 2010 Budget that increases NSF funding by
$950 million over 2008�
Supports Researchers at the Beginning
of Their Careers. Ensuring America’s economic competitiveness requires that we develop the
future scientific and technical workforce for our
universities, national labs, and companies� To help
accomplish these goals, the Budget provides substantial increases for NSF’s prestigious Graduate
research Fellowship and Faculty Early Career Development programs�

Strengthens the Education of Technicians
in high-Technology fields. The Budget increases support for the Advanced Technological
Education program, which focuses on two-year colleges and supports partnerships between academic
institutions and employers to promote improvement in the education of science and engineering
technicians�
Encourages Promising high-Risk Research.
The Budget increases support for
promising, but exploratory and high-risk research
proposals that could fundamentally alter our
understanding of nature, revolutionize fields of science, and lead to radically new technologies�
Makes Climate Change Research and Education a Priority. The Budget supports research
to improve our ability to predict future environmental conditions and to develop strategies for
responding to global environmental change� The
Budget establishes a climate change education
program to help develop the next generation of environmentally engaged scientists and engineers�

105

106

A NEW ErA OF rESPONSIBILITy

National Science Foundation
Discretionary budget authority in billions of dollars

10
Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $3.0 billion.

8

6

5.6

5.9

6.1

2007

2008

6.9

7.0

2009

2010

4

2

0

2006

SMALL BuSiNESS AdMiNiSTRATiON
Funding Highlights:
•

Provides $28 billion in loan guarantees to expand credit availability for small businesses.

•

Supports disaster recovery for homeowners, renters, and businesses.

•

Sustains funding for technical assistance programs.

•

Improves targeting of Federal contracting opportunities for small business.

•

Modernizes core Agency information systems, streamlines loan processes, and enhances
human capital resources.

helps Small Businesses Weather the
Credit Crisis. The Budget supports: $17�5
billion in guarantees under the Section 7(a)
Guaranteed Loan program, an important source
of credit for small businesses; $7�5 billion in
guaranteed debentures in the Section 504
Guaranteed Loan Program, providing Certified
Development Companies financing to support
commercial real estate development; $3 billion
in authority for the Small Business Investment
Company debenture program; and $25 million
in Microloan volume, allowing intermediaries to
provide small loans and technical assistance to
entrepreneurs and other start-up businesses� In
addition, the Administration’s Small Business
and Community Bank Lending Initiative will
expand small business credit availability and
affordability by unfreezing the secondary
markets for small business loans—as part of
the larger plan to revive the flow of credit in the
Nation’s economy�
Strengthens Tools to Make Government
More Effective as a Partner for America’s
Small Businesses. SBA will leverage existing
networks to reinvigorate small business lending

by deploying capital through guaranteed
loans and investment products� This includes
technological improvements to SBA’s core
operations, as outlined below, so that SBA
becomes more transparent, accountable and in
touch with entrepreneurs and other partners on
“Main Street�”
These activities will build on the substantial
funding for small business credit programs
recently provided by the American recovery
and reinvestment Act� The recovery Act
provides SBA authority to increase guarantee
percentages on new 7(a) loans to 90 percent, to
help encourage lenders to make these loans� The
recovery Act also provides funding to enable
SBA to temporarily lower fees on both 7(a) and
504 loans, expand funding for the Microloan
program, and increase the size of bonds available
under SBA’s surety bond program� In addition,
the recovery Act includes a variety of other
provisions intended to promote credit availability
to small businesses�
Prepares for disaster Assistance. The
Budget supports $1�1 billion in direct disaster

107

108

A NEW ErA OF rESPONSIBILITy

Small Business Administration
Discretionary budget authority in billions of dollars

2.5
2.2
2.0

Actuals, including emergencies
Projections
In addition, the Recovery Act
includes $0.7 billion.

1.6
1.5

1.0
0.6

0.7

0.7

2009

2010

0.5

0

2006

2007

2008

Note: 2006 and 2008 include $1.7 billion and $1.1 billion, respectively, in emergency supplemental
appropriations for the Disaster Loan program.

loans, the normalized 10-year average� In addition,
$101 million in new budget authority for disaster
lending administrative expenses is provided; and
disaster loan subsidy funding is available through
estimated unobligated balances� Furthermore, in
2010 the Agency will implement a pilot program
to test the Guaranteed Disaster Loan programs
outlined in Public Law 110–234, the Food,
Conservation, and Energy Act of 2008�
improves Technical and Contracting
Assistance Capabilities to Advise Small
Businesses. The Budget supports resources
for non-credit technical assistance programs,
providing entrepreneurs access to counseling and
business development expertise� This includes
improvements to existing programs such as

Small Business Development Centers, Women’s
Business Centers, SCOrE, and microloan
technical assistance, as well as incorporating
new strategies� The Budget also supports small
business access to Federal prime and subcontracting opportunities, improvements to
small business procurement data, and continued
reviews of small business size standards�
Modernizes the Agency for Better
Performance. The Budget provides increased
funding for core Agency systems and human
capital improvements� This includes continued
procurement of a more effective loan accounting
system, and a focus on streamlining and
automating lender and contracting systems�

SOCiAL SECuRiTy AdMiNiSTRATiON
Funding Highlights:
•

Provides $11.6 billion for the Social Security Administration, a 10-percent increase targeted at
completing crucial workloads and providing the American public with better service.

•

Enables processing of a rising number of retirement and disability claims.

•

Provides funding for increasing program integrity efforts to ensure payments are made to the
right person and in the correct amount.

•

Modernizes rules for evaluating disability.

•

Looks forward to working in a bipartisan way to preserve Social Security for future generations.

Protects Social Security. The President
recognizes that Social Security is indispensable
to workers, the disabled, seniors, and survivors
and is probably the most important and most
successful program that our country has ever
established� Social Security can pay full benefits until 2041� The President is committed
to ensuring that Social Security is solvent and
viable for the American people, now and in the
future� He is strongly opposed to privatizing
Social Security and looks forward to working
in a bipartisan way to preserve it for future
generations�

billion for SSA, an increase of $1�1 billion, or
10 percent, above the 2009 likely enacted level
of $10�5 billion� This amount includes resources to ensure increased staffing in 2010 and
will allow SSA to increase the level of work
processed in key service delivery areas to the
American public, such as processing initial retirement and disability claims, and disability
appeals� In addition, this amount includes resources to enable SSA to more effectively and
efficiently verify hundreds of millions of Social
Security Numbers and issue about 18 million
Social Security cards�

Provides a 10 Percent funding increase
to Target Crucial Workloads and Process
a Rising Number of Claims for disability
and Retirement Benefits. The Social Security Administration (SSA) is responsible for
paying benefits to more than 55 million people
each month� Each year, SSA processes more
than 4�2 million retirement, survivor, and
Medicare claims; 2�6 million disability claims;
and over 300,000 Supplemental Security Income (SSI) claims� The Budget proposes $11�6

Significantly increases Program integrity Efforts. The President’s 2010 Budget
provides $759 million for SSA program integrity that will reverse a decline in these
activities� SSA’s program integrity efforts will
be part of a strong framework for making sure
Government is spending tax dollars efficiently
and that benefits are paid only to those beneficiaries who are eligible and are paid in the
correct amounts� Continuing Disability reviews ensure that Disability Insurance and

109

110

A NEW ErA OF rESPONSIBILITy

Social Security Administration
Discretionary budget authority in billions of dollars

16
14

Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $1.1 billion.

12
10

11.6
9.2

9.4

2006

2007

9.9

10.5

8
6
4
2
0

2008

2009

2010

Note: Amounts include funding from the Medicare trust funds for administrative expenses incurred by SSA.

SSI recipients continue to meet the medical
criteria� SSI redeterminations ensure that SSI
recipients continue to meet the non-medical
factors of eligibility�
Restructures the federal Wage Reporting Process. The President’s 2010 Budget
proposes to restructure the Federal wage reporting process to increase the frequency with
which wages are reported to SSA� Currently,

wages are reported to the Federal Government
once a year� Increasing the timeliness of wage
reporting would enhance tax administration, improve program integrity for a range
of programs, and facilitate implementation of
automatic workplace pensions� The Administration will work with the States so that the
overall reporting burden on employers is not
increased�

CORPORATiON fOR NATiONAL
ANd COMMuNiTy SERviCE
Funding Highlights:
•

Makes a substantial investment in national service, setting the program on a path for expansion
to 250,000 slots.

•

Creates a new Social Innovation Fund to invest in and scale up innovative non-profits and
solutions to address the Nation’s most pressing social problems.

•

Engages more retiring Americans in service, harnessing their skills and knowledge.

•

Expands service-learning in the Nation’s schools, helping students become contributing citizens
and community members through service.

The Corporation for National and Community Service (CNCS) provides opportunities for
Americans to serve their community and country while meeting the Nation’s greatest national
challenges� Through CNCS programs, Americans of all ages can help strengthen our country
in different ways, from tutoring at-risk youth to
responding to natural disasters to building the
capacity of community organizations� The President’s Budget proposes $1�13 billion for CNCS,
an increase of $261 million from the 2009 likely
enacted level, to give more Americans the opportunity to serve and to build the capacity of the
nonprofit sector to find innovative solutions to
social problems�
Expands National Service. The President’s Budget makes a substantial investment
in National Service, giving more individuals the
opportunity to make an intensive commitment
to giving back to their communities� The Budget would set AmeriCorps on a path to expand
from its current 75,000 funded slots to 250,000,

and would ensure the availability of service opportunities to achieve demonstrable results� The
Budget would also increase the amount of the Eli
Segal Education Award, which has not been adjusted since the program’s inception in 1993�
Creates a New Social innovation fund.
Innovators often come up with great ideas for
addressing critical national challenges, but too
often lack the capital to develop, evaluate, and
scale up successful ideas� The Budget would create a new social innovation fund, charged with
testing promising new approaches to major challenges, leveraging private and foundation capital
to meet these needs, and scaling up researchproven programs�
Engages Retiring Americans in Service.
Older Americans have a wide range of skills and
knowledge to contribute to the Nation’s communities� New efforts are needed to tap the idealism
and experience of this “Baby Boomer” generation
– the largest and healthiest generation to enter

111

112

A NEW ErA OF rESPONSIBILITy

Corporation for National and
Community Service
Discretionary budget authority in billions of dollars

1.4
1.2
1.0

Actuals, including emergencies
Projections

In addition, the Recovery Act
includes $0.2 billion.

1.1
0.9

0.9

0.9

0.9

2006

2007

2008

2009

0.8
0.6
0.4
0.2
0

retirement in history� The President’s Budget
would expand and improve Senior Corps programs, which connect individuals over the age of
55 to local volunteer opportunities, allowing more
retirees to help meet the needs and challenges in
their communities�
Expands Service-Learning in the Nation’s
Schools. Service learning is an approach that
connects classroom lessons with meaningful
community service opportunities� The Budget includes additional resources for Learn and Serve
America, which supports programs in schools,

2010

higher education institutions and communitybased organizations that engage students, their
teachers, and others in service-learning�
Strengthens the Management Capacity of
the Corporation. The Budget provides needed
resources to strengthen the capacity of CNCS to
manage its programs, measure performance, and
conduct rigorous evaluations of the impact of
CNCS programs� Coupled with a strong Administration commitment to management reform,
the Budget will ensure that CNCS can support
both growth and excellence in service�

SuMMARy TABLES

113

5,803
5,297

Debt held by the public ��������������������������

Debt net of financial assets �������������������

17�7%
21�0%
3�2%
40�8%
37�2%

receipts ��������������������������������������������������

Outlays ���������������������������������������������������

Deficit ����������������������������������������������

Debt held by the public ��������������������������

Debt net of financial assets �������������������

Budget Totals as a Percent of GdP:

6,943

8,364

1,752

3,938

2,186

2009

912

3,625

2,713

2011

581

3,662

3,081

2012

533

3,856

3,323

2013

570

4,069

3,500

2014

583

4,258

3,675

2015

637

4,493

3,856

2016

636

4,678

4,042

2017

634

4,868

4,234

2018

712

5,158

4,446

2019

8,072

8,960

9,541 10,073 10,642 11,224 11,860 12,495 13,129 13,840

9,509 10,436 10,985 11,505 12,070 12,659 13,297 13,932 14,557 15,370

1,171

3,552

2,381

2010

48�8%

58�7%

12�3%

27�7%

15�4%

54�8%

64�6%

8�0%

24�1%

16�2%

57�8%

67�3%

5�9%

23�4%

17�5%

57�9%

66�7%

3�5%

22�2%

18�7%

57�6%

65�8%

3�0%

22�0%

19�0%

57�9%

65�6%

3�1%

22�1%

19�0%

58�4%

65�9%

3�0%

22�2%

19�1%

59�1%

66�3%

3�2%

22�4%

19�2%

59�6%

66�5%

3�0%

22�3%

19�3%

60�0%

66�5%

2�9%

22�2%

19�3%

60�5%

67�2%

3�1%

22�6%

19�5%

14,222 14,240 14,729 15,500 16,470 17,498 18,386 19,205 20,060 20,952 21,884 22,858

459

Deficit ����������������������������������������������

Gross domestic product (GDP) ������������������

2,524
2,983

receipts ��������������������������������������������������

Outlays ���������������������������������������������������

Budget Totals in Billions of dollars:

2008

Table S–1. Budget Totals

(In billions of dollars and as a percent of GDP)

4�7%

22�8%

18�1%

3,767

18,764

14,997

3�9%

22�6%

18�7%

6,969

42,219

35,250

2010-2014 2010-2019

Totals

114

A NEW ErA OF rESPONSIBILITy

2010

2011

������

Net total with additional savings and cost of health
care benefits �������������������������������������������������������������

243.0

Percent of GDP �������������������������������������������������������������������

12�3%

������
19�3
–16�6
5�1

������
90�3
–28�0
0�7

–63�7

–15�0

������

–30.8

–18.0

4�6%

757.5

������
96�3
–37�1
–2�1

–64�1

–15�0

������

–33.5

–24.5

4�2%

734.0

2013

������
102�3
–42�9
–2�5

–64�7

–15�0

������

–35.5

–34.3

4�3%

791.0

2014

������
108�3
–43�7
1�4

–65�3

–15�0

������

–37.3

–40.0

4�2%

811.0

2015

������
113�2
–44�5
4�7

–66�0

–15�0

������

–39.3

–47.1

4�4%

877.6

2016

������
116�9
–45�3
7�1

–66�7

–15�0

������

–41.4

–49.5

4�3%

892.6

2017

������
120�4
–46�3
9�9

–67�3

–15�0

������

–43.4

–44.8

4�1%

������
124�2
–48�0
11�3

–68�0

–15�0

������

–45.6

–50.8

4�4%

29�2

3�7

39�5

1�7

45�7

1�5

52�4

1�8

54�8

0�8

55�8

0�7

56�7

0�7

58�7

0�6

–28.5
–4�4

–49.0
–5�5

–58.2
–12�8

–67.3
–21�6

–74.6
–30�6

–80.6
–40�0

–86.6
–49�9

–92.3
–60�7

–98.6
–71�9

–88.4 –121.6 –130.5 –132.4 –123.2 –120.1 –119.7 –119.3 –119.6

–96�2 –106�0 –108�5 –109�6 –108�9 –112�5 –116�6 –120�9 –124�2

16�2

6�1

8�0%

5�9%

911.9

3�5%

581.3

3�0%

532.6

3�1%

569.7

3�0%

582.6

3�2%

636.9

3�0%

636.4

2�9%

634.0

Totals

3�1%

712.0

4�7%

3,767.0

–726.6

–204.0
–57�9

–464.7

–455�2

150�4

18�8

–624�3

������
357�3
–125�7
–3�6

–192�5

–45�0

������

–110.8

–83.7

5�6%

4,493.6

3�9%

6,968.9

–2,014.3

–636.7
–311�0

–1,066.5

–1,038�3

428�7

23�4

–1,490�4

������
940�2
–353�5
30�7

–525�7

–120�0

������

–317.8

–316.0

4�9%

8,983.2

2019 2010–2014 2010–2019

906.3 1,002.1

2018

–6.5 –121.3 –176.2 –201.4 –221.2 –228.3 –240.7 –256.2 –272.3 –290.1

–1.1
–13�7

8.2

–34�8

19�8

5�7

Resulting deficits in 2010 Budget .................................... 1,752.1 1,171.4

Total reduction in projected deficits ........................

Debt service ����������������������������������������������������������������������������

0.2
–8�4

251.2

Subtotal, policy proposals ...........................................

upper-income tax provisions dedicated to deficit
reduction ...........................................................................

3�8
–27�4

������

Subtotal, appropriated programs �������������������������������

–31�2

Cost of overseas contingency operations ���������������������������

Department of Defense (051) excluding overseas
contingency operations ��������������������������������������������������

Other appropriated programs �������������������������������������������

������
49�0
–1�0
–5�0

250�0
28�5
–0�0
0�2

������

������

������

–11.1

–5.1

6�7%

2012

–60�3 –118�6 –138�9 –149�7 –156�9 –163�1 –168�1 –173�1 –178�3 –183�5

������

������

������

������

......

–1.8

8�0%

Dedicated to Making Work Pay ����������������������������������
Placeholder for potential additional financial stabilization
efforts ����������������������������������������������������������������������������������
Tax cuts for families and businesses 4 �����������������������������������
Other revenue changes and loophole closers ������������������������
Proposed changes in mandatory programs and user fees ����
Proposed changes in appropriated (“discretionary”)
programs:

Dedicated to climate policy (clean energy
technologies) ������������������������������������������������������������
������

......

Limit the rate at which itemized reductions reduce
tax liability to 28 percent 2 .......................................

Climate revenues: 3

......

10�6%

Health savings 2 ...........................................................

Health reform:

reserve funds:

Percent of GDP �������������������������������������������������������������������

Projected deficits in the baseline projection of
current policy 1 ................................................................. 1,509.1 1,178.0 1,033.1

2009

(Deficit increases (+) or decreases (–) in billions of dollars)

Table S–2. Effect of Budget Proposals on Projected deficits

SUMMAry TABLES
115

������
7�1

Other appropriated programs �������������������������������������������

2011

2012

2013

2014

2015

2016

2017

2018

31�3

10�3
29�5

6�9
47�5

3�1
49�7

������
53�9

������
53�3

������
54�2

������
53�6

������
53�6

������

55�6

������

212�0

20�3

–684�6

482�2

20�3

–1,568�4

2019 2010–2014 2010–2019

–64�6 –148�3 –152�6 –157�2 –161�9 –166�7 –171�6 –176�6 –181�8 –187�1

2010

Totals

Total, appropriated funding (budget authority) ��������
–43�2 –23�0 –111�9 –102�0 –107�4 –107�9 –113�3 –117�4 –123�0 –128�2 –131�6
–452�3
–1,065�9
1
See Tables S–3 and S–5 for information on the baseline projection of current policy�
2
Non–additive�
3
Shown here are those proceeds from auctioning emission allowances that are reserved for clean energy technology initiatives and to compensate families through the
Making Work Pay tax cut� These proceeds are included in the grand totals as receipts, though they could alternatively be considered offsets to outlays� All additional net
proceeds will be used to further compensate the public�
4
Includes refundable tax credits�

–50�3

Funding for overseas contingency operations ������������������

Department of Defense (051) excluding overseas
contingency operations ��������������������������������������������������

Memorandum, proposed changes in appropriated
(“discretionary”) budget authority:

2009

(Deficit increases (+) or decreases (–) in billions of dollars)

Table S–2. Effect of Budget Proposals on Projected deficits—Continued

116

A NEW ErA OF rESPONSIBILITy

201
������
411

Medicaid ������������������������������������������������������������������������������

Troubled Asset relief Program (TArP) ����������������������������

Other mandatory programs �����������������������������������������������

1,146
304

Individual income taxes ������������������������������������������������������������

Corporation income taxes ���������������������������������������������������������

28
34
17

Customs duties ��������������������������������������������������������������������������

Deposits of earnings, Federal reserve System ������������������������

Other miscellaneous receipts ���������������������������������������������������

673

247

259

425

662

575

������

290

453

695

540

������

274

498

721

4

148
11

178
16

287

621

757

2013

622

773

2014

630

792

2015

642

811

2016

656

831

2017

671

851

2018

437

������

280

501

749

446

������

299

556

790

479

������

322

605

839

479

������

347

651

891

686

872

495

������

375

499

������

404

756

508

������

435

781

537

������

468

872

948 1,008 1,072 1,141
724

18

383
20

447
23

495

25

539

26

579

27

614

29

651

16

28

24

26

71

9

44

191

654

180

16

22

24

20

78

9

52

196

682

249

16

29

29

23

83

8

58

210

719

292

17

36

33

25

87

9

65

222

756

348

17

39

37

27

88

9

67

235

803

387

17

42

40

27

90

9

66

247

842

391

17

43

43

29

91

9

61

258

879

423

18

45

46

31

92

9

57

272

925

442

30

694

486

511

18

47

47

33

93

9

62

283

18

48

49

36

94

9

58

295

18

50

50

38

95

9

62

308

962 1,004 1,048

461

–138

–135

–154

642 1,647 1,313 1,187

On-budget deficit �����������������������������������������������������������������������

–183

459 1,509 1,178 1,033

–174

931

757

–194

928

734

811

878

893

906 1,002
–200

–198

–203

–194

–188

–178

991 1,009 1,080 1,087 1,094 1,180

791

Totals

–857

5,350

4,494

14,656

84

168

164

121

427

43

307

1,110

3,801

1,667

6,763

19,149

88

1,790

10,349

2,477

������

1,466

2,613

3,794

6,922

3,199

3,723

–1,818

10,801

8,983

34,213

172

402

399

288

893

86

607

2,525

8,620

3,990

16,232

43,196

226

4,866

23,741

4,994

������

3,495

6,397

8,854

14,364

6,483

7,881

2019 2010–2014 2010–2019

972 1,081 1,218 1,378 1,493 1,595 1,690 1,786 1,888 1,995 2,109

deficit ......................................................................................

Off-budget surplus (-) ����������������������������������������������������������������

624

739

2012

2,524 2,215 2,428 2,685 2,975 3,202 3,366 3,543 3,722 3,903 4,091 4,298

29

Estate and gift taxes �����������������������������������������������������������������

Total receipts ����������������������������������������������������������������������

9
67

40

Unemployment insurance ��������������������������������������������������

Other retirement ����������������������������������������������������������������

194

Medicare payroll taxes ������������������������������������������������������

Excise taxes �������������������������������������������������������������������������������

658

Social Security payroll taxes ��������������������������������������������

Social insurance and retirement receipts:

656

727

2011

2,983 3,724 3,606 3,718 3,732 3,936 4,157 4,354 4,599 4,795 4,998 5,300

������

Disaster costs2 ���������������������������������������������������������������������������

Total outlays �����������������������������������������������������������������������

253

Net interest �������������������������������������������������������������������������������

Receipts:

675

728

2010

1,610 2,266 2,014 2,033 1,967 2,091 2,244 2,369 2,541 2,668 2,796 3,018

386

Medicare �����������������������������������������������������������������������������

Subtotal, mandatory programs ������������������������������������

612

Social Security ��������������������������������������������������������������������

Mandatory programs:

609

697

2009

1,120 1,307 1,403 1,383 1,363 1,378 1,395 1,422 1,453 1,487 1,522 1,558

528

Other appropriated programs ��������������������������������������������

Subtotal, appropriated programs ���������������������������������

593

Department of Defense (051) including cost of overseas
contingency operations ��������������������������������������������������

Appropriated (“discretionary”) programs:

Outlays:

2008

(In billions of dollars)

Table S–3. Baseline Projection of Current Policy by Category1

SUMMAry TABLES
117

2

1

554

826

712

2009

568

718

2010

579

733

2011

592

750

2012

606

768

2013

620

786

2014

634

805

2015

649

825

2016

664

845

2017

680

865

2018

Totals

696

887

14,271

6,288

7,983

See Table S-5 for information on adjustments to the Budget Enforcement Act (BEA) baseline�
These amounts represent the statistical probability of a major disaster requiring federal assistance for relief and reconstruction� Such assistance might be provided in the
form of discretionary or mandatory outlays or tax relief� These amounts are included as outlays for convenience�

6,721

2,965

3,756

2019 2010–2014 2010–2019

1,219 1,538 1,286 1,312 1,342 1,374 1,406 1,440 1,474 1,509 1,545 1,583

Other appropriated programs ��������������������������������������������

Total, appropriated funding �����������������������������������������

666

Department of Defense (051) including funding for
overseas contingency operations �����������������������������������

Memorandum, funding (budget authority) for appropriated
programs:

2008

(In billions of dollars)

Table S–3. Baseline Projection of Current Policy by Category1—Continued

118

A NEW ErA OF rESPONSIBILITy

1,120

Other appropriated programs ����������������������

Subtotal, appropriated programs �����������

139

������
������
411
1,610
253
������
2,983

Troubled Asset relief Program (TArP) ������

Placeholder for potential additional
financial stabilization efforts ��������������������

Other mandatory programs �������������������������

Subtotal, mandatory programs ��������������

Net interest ���������������������������������������������������������

Disaster costs 1 �����������������������������������������������������

Total outlays �������������������������������������������������

304

17
2,524
459

Other miscellaneous receipts �����������������������������

Total receipts ������������������������������������������������

deficit .....................................................................

28

29
28

Estate and gift taxes �������������������������������������������

Customs duties ����������������������������������������������������
34

67

Excise taxes ���������������������������������������������������������

������

9

Other retirement ������������������������������������������

Deposits of earnings, Federal reserve System ����

40

Climate revenues ������������������������������������������������

24

194

Medicare payroll taxes ��������������������������������

Unemployment insurance ����������������������������

1,752

2,186

16

������

26

71

9

44

191

658

654

165

958

3,938

4

673

250

247

259

Social Security payroll taxes �����������������������

Social insurance and retirement receipts:

1,146

Individual income taxes ��������������������������������������

Corporation income taxes �����������������������������������

Receipts:

2,516

201

Medicaid ��������������������������������������������������������

425

612
386

Social Security ����������������������������������������������

662

1,279

613

666

2009

Medicare �������������������������������������������������������

Mandatory programs:

593
528

Department of Defense (051) including cost
of overseas contingency operations ���������

Appropriated (“discretionary”) programs:

Outlays:

2008

1,171

2,381

16

������

22

23

20

77

9

53

196

682

222

1,061

3,552

11

164

2,009

571

������

������

290

453

695

1,368

695

673

2010

912

2,713

16

������

29

28

23

75

8

58

210

719

302

1,243

3,623

16

283

2,040

549

������

������

274

498

719

1,286

672

614

2011

581

3,081

533

3,323

17

79
17

39
79

37

27

79

9

67

235

804

414

1,516

3,856

20

434

2,132

491

������

������

299

555

787

1,269

661

609

2013

36

33

25

78

9

65

222

756

369

1,393

3,662

18

378

2,009

482

������

������

280

500

747

1,257

653

604

2012

(In billions of dollars)

570

3,500

18

80

42

40

27

80

9

66

247

843

423

1,625

4,069

23

474

2,287

527

������

������

322

603

835

1,286

668

618

2014

583

3,675

17

80

43

43

29

81

9

60

258

879

455

1,719

4,258

25

509

2,412

527

������

������

347

650

887

1,313

682

631

2015

637

3,856

17

81

45

46

31

82

9

57

272

926

474

1,817

4,493

26

539

2,587

545

������

������

374

723

944

1,341

697

644

2016

Table S–4. Proposed Budget by Category

638

4,042

17

82

47

47

33

83

9

62

283

963

494

1,923

4,678

27

564

2,717

552

������

������

403

756

1,006

1,370

711

659

2017

634

4,234

17

82

48

49

36

83

9

57

295

1,005

518

2,033

4,868

29

590

2,848

562

������

������

435

781

1,070

1,401

727

674

2018

712

4,446

18

83

50

50

38

84

9

62

308

1,049

544

2,152

5,158

30

622

3,073

594

������

������

468

872

1,139

1,434

745

689

2019

3,767

14,997

85

237

168

163

121

390

43

309

1,111

3,804

1,730

6,837

18,764

88

1,732

10,477

2,620

������

������

1,464

2,608

3,784

6,467

3,349

3,118

6,969

35,250

172

646

402

397

288

804

86

606

2,527

8,627

4,215

16,480

42,219

226

4,555

24,113

5,400

������

������

3,492

6,391

8,831

13,325

6,911

6,414

2010–2014 2010–2019

Totals

SUMMAry TABLES
119

1

Other appropriated programs ����������������������

833

662

–138

1,890

2009

599

664

–140

1,312

2010

609

592

–161

1,073

2011

640

601

–180

762

2012

656

611

–202

734

2013

674

625

–208

777

2014

688

639

–206

789

2015

703

653

–211

848

2016

718

668

–203

840

2017

734

684

–197

831

2018

752

699

–187

899

2019

3,176

3,092

–891

4,658

6,770

6,435

–1,896

8,865

2010–2014 2010–2019

Totals

Total, appropriated funding �������������������
1,219 1,495 1,263 1,200 1,240 1,267 1,298 1,326 1,357 1,386 1,417 1,451
6,268
13,205
These amounts represent the statistical probability of a major disaster requiring federal assistance for relief and reconstruction� Such assistance might be provided in the
form of discretionary or mandatory outlays or tax relief� These amounts are included as outlays for convenience�

666
554

Department of Defense (051) including
funding for overseas contingency
operations �������������������������������������������������

Memorandum, funding (budget authority) for
appropriated programs:

642
–183

On-budget deficit �������������������������������������������������

Off-budget surplus (–) �����������������������������������������

2008

(In billions of dollars)

Table S–4. Proposed Budget by Category—Continued

120

A NEW ErA OF rESPONSIBILITy

2009

0�2

������

Subtotal ��������������������������������������������������������������������������

118�1
–2�2
4�7
–2�5
3�6
81�0

������
������
������
������
������
������

Insert statistical probability of future major disaster costs 2 ����

Subtotal ��������������������������������������������������������������������������

������
296�7
0�6
297�3

������
������
������
������

Add Pell Grants to mandatory category �����������������������������

Subtotal ��������������������������������������������������������������������������

Total program adjustments �������������������������������������������������

Debt service on adjustments ����������������������������������������������

Total adjustments ����������������������������������������������������������

527�2

6�3

521�0

������

23�5

–23�5

123�7

10�9

7�1
–7�7

–3�1

177�4

–60�8

363�7

10�4

353�3

33�6

–2�1

0�9

13�8

6�2

14�7

650.7

2010

574�0

34�1

539�9

������

19�5

–19�5

132�6

15�9

8�2
–12�7

–3�8

189�6

–64�7

158�4

24�6

133�8

248�9

–2�4

1�3

24�4

154�0

71�6

459.2

2011

757.5

563�2

67�5

495�8

������

17�8

–17�8

136�7

18�3

8�7
–16�3

–4�0

196�8

–66�8

62�5

23�9

38�7

296�5

–2�4

1�5

29�4

234�1

34�0

194.3

2012

734.0

633�0

96�4

536�6

������

18�1

–18�1

142�2

20�5

9�0
–17�4

–4�1

202�8

–68�6

54�6

24�6

30�0

339�8

–2�5

1�5

37�2

264�3

39�2

101.1

2013

791.0

707�3

124�8

582�5

������

18�4

–18�4

147�7

22�6

9�4
–17�8

–4�3

207�8

–70�0

52�9

25�3

27�7

381�8

–2�6

1�6

42�3

294�4

46�1

83.7

2014

811.0

757�8

155�8

602�1

������

18�7

–18�7

153�2

24�8

9�6
–18�2

–4�4

212�6

–71�2

37�3

25�9

11�4

411�6

–2�9

1�7

43�3

315�2

54�3

53.1

2015

877.6

806�3

189�5

616�8

������

19�1

–19�1

158�0

26�2

9�8
–18�6

–4�5

217�5

–72�5

26�0

26�5

–0�5

432�8

–3�2

1�9

41�1

330�0

63�1

71.3

2016

892.6

862�5

224�3

638�3

������

19�4

–19�4

162�6

27�5

10�0
–19�0

–4�6

222�6

–73�8

25�4

27�1

–1�7

450�3

–3�5

2�0

34�5

344�7

72�6

30.1

2017

906.3 1,002.1

*

4,493.6

329�0
3,004�7

2,675�7

������

97�4

–97�4

682�8

88�2

42�4
–71�8

–19�4

974�3

–330�8

692�2

108�7

583�5

1,300�7

–12�0

6�9

147�1

953�1

205�6

1,488.9

303�2

704�6

������

20�1

–20�1

172�3

30�1

10�4
–19�9

–4�8

232�9

–76�5

27�3

28�4

–1�1

505�0

–4�3

2�3

32�9

377�8

96�3

–5.7

8,983.2

7,368�8

1,463�9

5,905�0

������

194�5

–194�5

1,496�3

225�5

92�5
–167�0

–42�4

2,087�6

–700�0

834�7

244�2

590�5

3,573�9

–29�8

16�9

329�6

2,681�3

575�9

1,614.4

2019 2010–2014 2010–2019

Totals

929�7 1,007�8

262�2

667�5

������

19�8

–19�8

167�4

28�8

10�2
–19�4

–4�7

227�7

–75�1

26�6

27�7

–1�1

473�5

–3�9

2�2

30�8

360�5

83�9

–23.4

2018

$50 million or less�
1
In continuing the 2001 and 2003 tax cuts, the estate tax is maintained at its 2009 parameters�
2
These amounts represent the statistical probability of a major disaster requiring federal assistance for relief and reconstruction�
3
The amount of the reclassification equals the existing and projected amounts of Pell as increased on a one-time basis by the recovery Act�

458.6 1,509.1 1,178.0 1,033.1

18�8

14�7

Baseline projection of current policy deficit ...............

–18�8

–14�7

remove Pell Grants from appropriated category ���������������

Adjustment to Pell Status, for comparability: 3

–40�6

215�5

������

Subtotal ��������������������������������������������������������������������������

������

13�3

Adjustments to reflect costs of overseas contingency
operations and disasters:
remove part-year overseas contingency operations
funding (as enacted for 2009) ������������������������������������������
Insert full-year overseas contingency operations funding
(as enacted for 2008) ��������������������������������������������������������
remove part-year international funding (as enacted for
2009) ���������������������������������������������������������������������������������
Insert international emergency funding (as enacted for
2008) ��������������������������������������������������������������������������������
remove non-recurring emergency funding ������������������������

202�3

������
������

American recovery and reinvestment Act �����������������������

2009 full-year appropriations ���������������������������������������������

Adjustments to reflect legislation this session:

������

������

������

������
*

0�2

������

������

������

������

Continue Transitional Medical Assistance and Qualified
Individuals programs ��������������������������������������������������������
Correct baseline growth rates for pay and social
insurance administrative expenses �������������������������������

Continue the 2001 and 2003 tax cuts 1 ��������������������������������
Account for additional expected Medicare physician
payments �������������������������������������������������������������������������

Adjustments to reflect current policies:
Index to inflation the 2009 parameters of the AMT as enacted
in the American recovery and reinvestment Act ����������������

BEA baseline deficit/surplus (–) ....................................... 458.6 1,211.7

2008

(In billions of dollars)

Table S–5. Bridge from Budget Enforcement Act Baseline to Baseline Projection of Current Policy

SUMMAry TABLES
121

������

Total, tax cuts for families and individuals �����

������

3,111

������

������
–23
������
������
������

Tax carried interest as ordinary income ���������������

Codify “Economic Substance Doctrine” �����������������

repeal LIFO �����������������������������������������������������������

Implement international enforcement, reform
deferral, and other tax reform policies ��������������

require information reporting for rental
payments ������������������������������������������������������������

������

reinstate Superfund Taxes ������������������������������������

������
������
������

repeal expensing of intangible drilling costs ��

repeal deduction for tertiary injectants ����������

������

repeal enhanced oil recovery credit 4 ���������������

repeal marginal well tax credit 4 ���������������������

������

Levy excise tax on Gulf of Mexico oil and gas
(limits excess royalty relief) �������������������������

Eliminate oil and gas company preferences:

2013

2014

932

257

������

19

6,770

3,018

8,714

4,013

7,487

4,707

8,616

3,961

8,144

5,926

8,609

3,961

5,486

������
6,142

������
6,785

������
7,384

297

7,225

5,088

2,011

7,599

607

3,541

7,980

8,260

578

623

6,865 10,341

–240

–346

–438

������ –2,992 –6,748 –8,080

–140

2016

2017

2018

2019

7,722

8,786

4,090

8,371

8,902

4,176

8,916

9,020

4,268

9,406

9,119

4,364

8,530

1,026

9,103

1,345

8,869

9,190

9,527

9,873

–900

883

612

604

688

–656

–743

–834

–930
–8,431 –8,590 –8,545 –8,630 –9,036

–552

–2,803 –2,204 –1,725 –1,351 –1,060

–1,970 –2,040 –2,113 –2,203 –2,300

798

13,353 15,725 17,838 19,602 21,330

8,559

2,076
9,680 10,281

1,695

–3,900 –2,700 –1,800 –1,300

7,960

734

94,146 96,635 98,432 100,157 102,163

9,237 10,036 10,312 10,646 11,295

6,909

8,703

4,006

65,291 66,001 66,671 67,307 67,979

2015

������

������

������

������

������

–319

–5

–347

������

������

–582

–339

–9

–595

������

������

–623

–357

–9

–526

������

������

–542

–374

–8

–395

������

������

–526

–390

–7

–269

������

������

–537

–408

–6

–226

������

������

–510

–426

–6

–237

������

������

–632

–445

–6

–266

������

������

–649

–465

–6

–488

������

������

–682

–486

������ –10,000 –15,000 –20,000 –25,000 –26,000 –27,000 –28,000 –29,000 –30,000

������

–70

������ –2,742 –4,347 –4,168 –3,494

������ –1,213 –1,667 –1,803 –1,896

668 10,183

������

Continue remaining expiring provisions
through calendar year 2010 2 ..............................

������
27,800 38,811

Other revenue changes and loophole closers:

2012

������ 12,225 86,197 88,890 91,301

������

������

������

������

Total, tax cuts for businesses ���������������������������

Modify Federal Aviation Administration
financing 3 ������������������������������������������������������������

2011

������ 11,017 63,682 64,119 64,661

2010

27,800 35,700 –10,700 –10,200 –7,900 –5,600

Make research and experimentation tax credit
permanent ����������������������������������������������������������

Expand net operating loss carryback ��������������������

������

Eliminate capital gains taxation on small
businesses �����������������������������������������������������������

Tax cuts for businesses:

������
������

Provide American Opportunity Tax Credit 2 ���������

������

Expand refundability of the Child Tax Credit 2 ����

Expand saver’s credit and automatic enrollment
in IrAs and 401(k)s 2 ������������������������������������������

������
������

Expand Earned Income Tax Credit 2 ���������������������

2009

Provide Making Work Pay Tax Credit 2 �����������������

Tax cuts for families and individuals:

Tax Provisions:

1

(Deficit increases (+) or decreases (–) in millions of dollars)

Table S–6. Mandatory and Receipt Proposals

–31

–1,863

������

������

–2,273

–1,779

–70,000

–17,820

–1,234

–14,751

–6,579

17,079

61,569

31,064

1,300

28,908

297

278,613

23,333

13,908

25,939

11,954

203,479

–62

–3,349

������

������

–5,283

–4,009

–210,000

–61,052

–4,949

–23,894

–17,205

20,664

149,417

77,082

–9,300

74,462

7,173

770,146

74,859

55,232

70,469

32,858

536,728

2010–2014 2010–2019

Totals

122

A NEW ErA OF rESPONSIBILITy

������
������

������
������
������

Subtotal, eliminate oil and gas company
preferences �����������������������������������������

–752

–154
–925

–240
–960

–233

–163

8

–10

–16

–6

2017

–6

2018

–6

2019

–140

–91

–56

–47

–20

–23

–24

–23

–23

–3,533 –3,521 –3,707 –3,819 –4,165

–996 –1,033 –1,065 –1,091 –1,113

–187

������
������
......

Dedicated to climate policy (clean energy
technologies) ��������������������������������������������������������������

Dedicated to Making Work Pay ������������������������������������

Total, climate revenues 5 .........................................

������

......

������

...... –78,682 –79,119 –79,661 –80,291 –81,001 –81,671 –82,307 –82,979

������ –63,682 –64,119 –64,661 –65,291 –66,001 –66,671 –67,307 –67,979

������ –15,000 –15,000 –15,000 –15,000 –15,000 –15,000 –15,000 –15,000

1,091 –7,912 –10,015 –11,776 –15,058 –18,295 –22,419

–237,462

–192,462

–45,000

27,599

–203,999

182 –1,102 –28,461 –49,012 –58,153 –67,271 –74,595 –80,559 –86,638 –92,333 –98,600
28,627 46,915 –25,784 13,289

–29,959

–60,210

–113,830

–125,663

–769

–12,731

–2,953

–668

–4,924

–19

–645,711

–525,711

–120,000

–49,964

–636,724

–118,116

–179,848

–338,760

–353,467

–882

–31,476

–8,251

–1,189

–13,293

–49

2010–2014 2010–2019

Totals

182 –1,102 –5,416 –3,656 –7,550 –12,235 –15,322 –16,607 –17,663 –18,625 –19,940

������ –7,227 –15,752 –17,848 –19,383 –20,844 –22,364 –23,955 –25,491 –26,984

������ –15,818 –29,604 –32,755 –35,653 –38,429 –41,588 –45,020 –48,217 –51,676

–977 –16,647 –28,044 –37,089 –42,906 –43,717 –44,460 –45,302 –46,325 –48,000

������

Climate Revenues:

–316

–41

–6

2016

–1,531 –1,600 –1,670 –1,745 –1,823

–6

2015

–23

������

Total, tax provisions ................................................

–6

2014

–588

reinstate the personal exemption phaseout
and limitation on itemized deductions for
those taxpayers earning over $250,000
(married) and $200,000 (single) �������������������

Impose 20 percent rate on capital gains and
dividends for those taxpayers earning over
$250,000 (married) and $200,000 (single) ���
Total, upper-income tax provisions
dedicated to deficit reduction ������������������

–6

2013

������

reinstate the 36 percent and 39�6 percent
rates for those taxpayers earning over
$250,000 (married) and $200,000 (single) ���

upper-income tax provisions dedicated to
deficit reduction:

–5

2012

–757 –1,311 –1,392 –1,464

–2

2011

������ –2,050 –3,449 –3,640 –3,592

������

������

Eliminate Advanced Earned Income Tax
Credit 2 �����������������������������������������������������������
Total, other revenue changes and loophole
closers �������������������������������������������������������

������

������

2010

repeal passive loss exception for working
interests in oil and natural gas
properties �������������������������������������������������
repeal manufacturing tax deduction for oil
and natural gas companies ���������������������
Increase geological and geophysical
amortization period for independent
producers to seven years �������������������������
repeal percentage depletion for oil and
natural gas �����������������������������������������������

2009

(Deficit increases (+) or decreases (–) in millions of dollars)

Table S–6. Mandatory and Receipt Proposals—Continued

SUMMAry TABLES
123

������
������

reform Market Access Program �����������������������������������

Total, Agriculture ���������������������������������������������������

������
������
������

Military retirement Fund offsetting receipts
(non-PAyGO) ������������������������������������������������������

Total, Defense ���������������������������������������������������������

2014

521

–402

402

521

–925

–40

1,000

–56

–9

–595

574

–415

415

574

–928

–40

1,000

–57

–7

–599

������
������
������
������

Create nurse home visitation program ������������������������

Create a LIHEAP trigger ���������������������������������������������

Total, HHS ��������������������������������������������������������������

������

Extend TANF supplemental grants �����������������������������

Health and Human Services (HHS):

repeal ultra-deepwater oil and gas research and
development program �����������������������������������������������

Energy:

Total, Education �����������������������������������������������������

416

329

������

87

–20

–4,884

100

946

414

319

213

–40

–22

500

–570

1,118

437

319

362

–50

4,106

500

–467

500

–692

1,297

450

319

528

–50

1,479

450

319

710

–50

7,048 10,241

500

–564

������

–868

Create a new College Access and Completion Fund ���

9,728 11,298 14,150

419

–389

389

419

–158

–40

1,000

–56

–10

–427

������ –4,123 –6,577 –5,655 –4,186 –3,717

6,625

2013

–625 –1,225 –1,225

2012

������

7

318

–376

376

318

–25

–34

1,000

–58

–24

–429

–480

2011

Modernize Perkins loans �����������������������������������������������

������

194

–361

361

194

651

–4

850

–52

–58

������

–85

2010

Eliminate entitlements for financial intermediaries
under the Family Federal Education Loan Program ���

Make Pell Grant funding mandatory and increase
and index maximum awards �����������������������������������

Education:

������

Effect on military retirement ���������������������������������

Accrual payments to the Military retirement
Fund (non-PAyGO) ��������������������������������������������

Implement concurrent receipt policy:

Defense:

������
������

Eliminate Cotton Storage payments ����������������������������

reauthorize Child Nutrition ����������������������������������������

������
������

reform payments to high-income farmers ������������������

������

reduce Crop Insurance premiums/underwriting gains
and increase fees ������������������������������������������������������

reduce direct payments to farms with sales above
$500,000 ��������������������������������������������������������������������

Agriculture:

Mandatory initiatives and Savings: 6

2009

2016

2017

2018

2019

640

–444

444

640

–947

–40

1,000

–58

–4

–620

673

–459

459

673

–953

–40

1,000

–58

–3

–627

710

–475

475

710

–961

–40

1,000

–59

–3

–634

749

–491

491

749

–969

–40

1,000

–59

–3

–642

1,673

450

319

904

–30

8,126

400

–686

1,881

450

319

1,112

–10

8,580

������

–677

������

–659

������

–633

2,101

450

319

1,332

������

2,333

450

319

1,564

������

2,522

450

319

1,753

������

9,567 10,580 11,909

������

–674

–4,033 –4,392 –4,640 –4,958 –5,262

12,445 13,649 14,881 16,197 17,804

607

–429

429

607

–937

–40

1,000

–57

–5

–610

–1,225 –1,225 –1,225 –1,225 –1,225

2015

(Deficit increases (+) or decreases (–) in millions of dollars)

Table S–6. Mandatory and Receipt Proposals—Continued

5,256

2,080

1,276

1,900

–210

16,489

2,100

–3,161

–24,258

41,808

2,026

–1,943

1,943

2,026

–1,385

–158

4,850

–279

–108

–2,050

–3,640

15,766

4,330

2,871

8,565

–250

65,251

2,500

–6,490

–47,543

116,784

5,405

–4,241

4,241

5,405

–6,152

–358

9,850

–570

–126

–5,184

–9,765

2010–2014 2010–2019

Totals

124

A NEW ErA OF rESPONSIBILITy

225
225

Expand HOPE for Homeowners program �������������������

Total, Housing and Urban Development ���������������

������

Total, Interior ���������������������������������������������������������

������
������
������

Implement Unemployment Insurance integrity
legislation 7 �����������������������������������������������������������������

Total, Labor �������������������������������������������������������������

42

Total, Treasury ������������������������������������������������������� 250,000

������

������

Effect on Veterans disability payments �����������������

Use discretionary funds for contract examinations for
disability compensation eligibility (not subject to
PAyGO) ����������������������������������������������������������������������

Implement concurrent receipt policy:

Veterans Affairs:

–19

������

Make technical correction to JOBS Act (receipt
effect) 7 ������������������������������������������������������������������������

–49

revise Terrorism risk Insurance program 7 ����������������

–141

47

110

������
������

Levy payments to federal contractors with delinquent
tax debt (receipt effect) 7 �������������������������������������������

������

������

������

������

������

–323

–23

7

–43

–142

–122

1,395

1,375

20

2010

Create placeholder for potential additional financial
stabilization effort ����������������������������������������������������� 250,000

Treasury:

������

reform Trade Adjustment Assistance ��������������������������

Change Extended Unemployment Insurance benefits
trigger ������������������������������������������������������������������������

Labor:

������
������

������

reserve funds for insular affairs assistance ����������������

������

repeal Energy Policy Act fee prohibition and
mandatory permit funds ������������������������������������

recover Pick-Sloan project cost ������������������������������������

������

Fee on nonproducing leases (“use or lose”) �����������

Abandoned Mine Lands (AML) Payments to
Certified States ���������������������������������������������������

Increase return from minerals on Federal lands:

Interior:

������

Housing and Urban Development:
Provide funding for the Affordable Housing Trust
Fund ���������������������������������������������������������������������������

2009

–148

49

33

–28

134

–73

������

8,297

–519

8,700

116

–333

–23

6

–32

–164

–121

1,040

900

140

2011

–155

51

302

–29

408

–77

������

2,287

–573

2,500

360

–372

–23

6

–32

–208

–115

250

������

250

2012

–31

–920

–84

������

756

–394

600

550

–366

–23

5

–32

–206

–109

240

������

240

2014

–163

53

–171

54

–278 –1,035

–30

–168

–80

������

688

–384

600

472

–366

–23

5

–32

–210

–107

250

������

250

2013

–180

54

–429

–32

–309

–88

������

1,651

–233

1,300

584

–253

–23

4

–32

–90

–112

100

������

100

2015

(Deficit increases (+) or decreases (–) in millions of dollars)

–189

54

–318

–33

–193

–92

������

2,066

–238

1,700

604

–232

–23

4

–9

–90

–114

������

������

������

2016

–198

53

–229

–34

–99

–96

������

2,088

–241

1,700

629

–238

–23

4

–9

–94

–116

������

������

������

2017

–208

53

–153

–35

–18

–100

������

3,043

594

1,800

649

–305

–23

4

–9

–158

–119

������

������

������

2018

Table S–6. Mandatory and Receipt Proposals—Continued

–219

52

–140

–36

1

–105

������

2,748

–30

2,100

678

–311

–23

4

–9

–161

–121

������

������

������

2019

–778

254

–936

–137

–436

–363

������

12,029

–1,869

12,400

1,498

–1,761

–115

28

–171

–928

–574

3,175

2,275

900

–1,772

520

–2,205

–307

–1,054

–844

������

23,625

–2,017

21,000

4,642

–3,100

–230

45

–239

–1,520

–1,156

3,275

2,275

1,000

2010–2014 2010–2019

Totals

SUMMAry TABLES
125

������

������

Food Safety and Inspection Service (FSIS)
performance fee ���������������������������������������������������������

������

–830

–25

–25

������

–104

2012

–166

–870

–200

������

–200

–110

2013

–362

–913

–200

������

–200

–117

2014

–472

–449

–418

–648

–853

–790

–778

������

������

–550

–47

–116

–4

–30

–31

2,190

–782

������

������

–550

–49

–115

–5

–31

–32

5,433

–783

������

������

–550

–49

–115

–5

–32

–32

–785

������

������

–550

–51

–114

–5

–33

–32

������

–550

–51

–112

–5

–34

–33

7,854 10,712 12,116

������

–2,025

–255

–687

–20

–131

–149

–378

–29,230

–528

–213,508

–545

������

������

–550

–47

–129

–4

–29

–31

–512

–6,553 –4,373 –3,282 –2,620 –2,440

–480

–4,179

–600

–200

–400

–524

–664,927

–7,180

������

������

–4,775

–502

–1,259

–44

–291

–309

37,928

–48,498

–2,859

–9,478

–1,600

–200

–1,400

–1,252

2010–2014 2010–2019

–3,267

–431

������

������

–550

–45

–195

–4

–28

–31

–200

������

–200

–167

2019

–785

–50

Total, user fees ..........................................................

������

������

–425

–55

–107

–4

–27

–30

–200

������

–200

–155

2018

Total, mandatory and receipt proposals and
climate policies ........................................................... 278,802 41,938 –20,639 –64,685 –80,096 –90,025 –88,894 –88,126 –89,658 –90,675 –94,067

������

������

–300

–56

–128

–4

–27

–30

1,356 –1,215 –1,661

–200

������

–200

–145

2017

������

������

������

–200

–52

–128

–4

–20

–27

5,690

–200

������

–200

–135

2016

–959 –1,007 –1,056 –1,110 –1,167

–200

������

–200

–126

2015

Totals

������

������
������

Survey and certification recertification user fee 8 ��������

–50

������

Survey and certification revisit user fee 8 ��������������������

HHS (Centers for Medicare and Medicaid Services):

Spectrum license user fee ���������������������������������������������

FCC:

Pesticide and pre-manufacture notification (PMN)
fees �����������������������������������������������������������������������������

Environmental Protection Agency:

replace the inland waterways fuel tax with a lock
usage fee (receipt effect) �������������������������������������������
������

������

Animal Plant and Health Inspection Service (APHIS)
fees �����������������������������������������������������������������������������

Corps of Engineers:

������

Grain Inspection, Packers, and Stockyards
Administration (GIPSA) fees ������������������������������������

Agriculture:

Enact user fees: 6

������

–814

–75

–75

������

–99

2011

������ –1,072 –3,536 –5,587 –8,054 –10,981

������

–752

–100

–100

������

–94

2010

Total, mandatory initiatives and savings ........... 250,225 –4,547

Implement program integrity allocation adjustments 7 ��

Multi-Agency:

Program integrity: require States and localities
to provide pension information (not subject to
PAyGO) ����������������������������������������������������������������������

Social Security Administration:

realign USPS employee/employer benefit
contributions �������������������������������������������������������������
������

������

Total, FCC ���������������������������������������������������������������

Postal Service:

������
������

Provide permanent auction authority ��������������������������

������

2009

Auction domestic satellite spectrum ����������������������������

Federal Communications Commission (FCC):

Total, Veterans Affairs �������������������������������������������

(Deficit increases (+) or decreases (–) in millions of dollars)

Table S–6. Mandatory and Receipt Proposals—Continued

126

A NEW ErA OF rESPONSIBILITy

*

������
������

Total, aligning incentives toward quality ��

Promoting efficiency and accountability:
Establish competitive bidding for Medicare
Advantage �����������������������������������������������������
Promote efficient provision of acute care
through bundled Medicare payments
covering hospital and post-acute settings ���
Address financial conflicts of interest in
physician-owned specialty hospitals ����������
Ensure that Medicare makes appropriate
payments for imaging services through the
use of radiology benefit managers ���������������
Provide private sector enhancements to
ensure Medicare pays accurately ����������������
Promote cost-effective purchase and delivery
of Medicaid prescription drugs by (1)
increasing the Medicaid rebate amounts,
(2) extending to and collecting rebates
on behalf of managed care plans, and (3)
applying rebates to new formulations of
existing drugs �����������������������������������������������
Promote increased generic medication
utilization by establishing a pathway for
FDA approval of generic biologics ���������������
Expand availability of family planning
services under Medicaid ������������������������������
Ensure appropriate Medicaid payments
through use of the National Correct Coding
Initiative (NCCI) edits ���������������������������������
Improve Medicare home health payments to
align with costs ���������������������������������������������
reallocate Medicare and Medicaid
Improvement Funds �������������������������������������

*

������

������
*
������
–60

������
������
������
������

*

*

–680
–570

2012

2014

*

*

*

*

–840
–930
–840 –1,160

2013

–110

–10

*

������

–160

–20

*

������

–190

–20

*

–180

–200

–20

*

–770

–10

������

������

–25

5

������

–40

������

������

–45

–5

20

–55

–15

–10

������

������

������

������ –5,810

–550 –2,540 –3,010 –3,350 –3,710

5

������

������

������

������

2016

2017

2018

2019

*

*

*

*

*

*

*

*

–2,560 –2,810 –3,030 –3,240 –3,460

*

*

–1,020 –1,110 –1,200 –1,280 –1,370
–1,540 –1,700 –1,830 –1,960 –2,090

2015

–240

–30

*

–260

–40

*

–280

–40

*

–310

–50

*

–85

–25

–90

–35

–95

–45

–100

–55

–5,940 –6,070 –6,090

–30

������

–4,080 –4,450 –4,780 –5,120 –5,480

–75

–20

–680 –1,550 –1,920 –2,330 –2,770

–2,040 –2,130 –2,260 –2,420 –2,540

–230

–30

*

–1,910 –2,790 –3,750 –4,080 –4,360

������ –11,240 –16,610 –18,980 –21,550 –25,940 –26,140 –25,870 –30,270

–400 –1,250 –1,680 –2,090

*

*

������
–400

2011

������ –1,185 –1,630 –1,690 –1,770 –1,890

������

������

������

������
������

������
������

2010

Aligning incentives toward quality:
Encourage hospitals serving Medicare
beneficiaries to reduce readmission rates ���
Create hospital quality incentive payments ���
Encourage primary care physicians to
administer the flu vaccine to Medicare
beneficiaries ��������������������������������������������������
Enable physicians to form voluntary
groups that coordinate care for Medicare
beneficiaries and to receive performancebased payments for the coordinated care ����

2009

health Reform Reserve fund

(Deficit increases (+) or decreases (–) in millions of dollars)

Table S–6. Mandatory and Receipt Proposals—Continued

–5,810

–13,160

–175

–10

10

–8,165

–720

–70

*

–950

–46,830

–5,420

*

*

–2,450
–2,970

–23,940

–37,070

–620

–190

–9,240

–19,555

–2,040

–260

*

–17,840

–176,600

–20,520

*

*

–8,430
–12,090

2010–2014 2010–2019

Totals

SUMMAry TABLES
127

2011

2012

2013

2014

2015

2016

2017

2018

–400

–590

–680

–770

–870

–990 –1,120 –1,270 –1,440

Net total of health reform .................................

Total, specified savings (–) ..........................
Additional savings not yet determined ...
Benefits not yet determined .......................
......

......

......

......

......

......

......

......

......

......

......

...... –1,800 –16,191 –48,808 –57,974 –69,798 –77,307 –86,379 –90,881 –88,222 –96,399
TBd TBd TBd TBd TBd TBd
TBd TBd TBd TBd TBd
TBd TBd TBd TBd TBd TBd
TBd TBd TBd TBd TBd

������ –11,081 –30,808 –33,464 –35,478 –37,322 –39,269 –41,366 –43,402 –45,564

������

������

...... –1,800 –5,110 –18,000 –24,510 –34,320 –39,985 –47,110 –49,515 –44,820 –50,835

������

Total, Medicare/Medicaid savings (–) ............
a

Estimates exclude effects of Medicare and Medicaid provisions included in the American recovery and reinvestment Act of 2009�
* Savings negligible or undetermined at this time�

a

2019

������ –1,800 –4,310 –16,160 –22,150 –31,460 –36,555 –43,310 –45,365 –40,310 –45,935

2010

Limit the tax rate at which itemized deductions
reduce tax liability �����������������������������������������������

require certain higher-income beneficiaries
enrolled in the Medicare drug benefit to pay
higher premiums, as is currently required
for physician and outpatient services ���������

Encouraging Shared Responsibility:

Total, promoting efficiency and
accountability ������������������������������������������

2009

(Deficit increases (+) or decreases (–) in millions of dollars)

Table S–6. Mandatory and Receipt Proposals—Continued

......

–194,571
TBd
TBd

–110,831

–83,740

–2,440

–75,880

......

–633,759
TBd
TBd

–317,754

–316,005

–8,130

–287,355

2010–2014 2010–2019

Totals

128

A NEW ErA OF rESPONSIBILITy

������
������
������
������
������
������
������

Expand Earned Income Tax Credit ����������������������

Expand refundability of the Child Tax Credit �����

Expand saver’s credit and automatic enrollment
in IrAs and 401(k)s �������������������������������������������

Provide American Opportunity Tax Credit ����������

Continue remaining expiring provisions through
calendar year 2010 ��������������������������������������������

Eliminate Advanced Earned Income Tax Credit �

Total outlay effects of receipt proposals ����������
–526

–588

62

������

������

������

������

������

2010

2012

2013

2014

8

������

2,928

743

8,714

3,935

–10

������

3,256

848

8,616

3,882

–16

������

3,629

866

8,609

3,881

706 38,856 39,021 39,369

–163

21

������

87

������

������

761 22,528 22,429 22,400

2011

2016

2017

2018

2019

–23

������

4,645

940

8,786

4,014

–24

������

4,890

976

8,902

4,097

–23

������

5,018

1,008

9,020

4,188

–23

������

5,310

1,048

9,119

4,283

40,217 41,196 41,815 42,383 43,167

–20

������

4,144

900

8,703

3,929

22,561 22,834 22,974 23,172 23,430

2015

117,426

–769

83

9,813

2,544

25,939

11,698

68,118

326,204

–882

8

3

������
������
������
������
������

revise Terrorism risk Insurance program ����������

Levy payments to federal contractors with
delinquent tax debt �������������������������������������������

Make technical correction to JOBS Act ����������������

Implement program integrity allocation
adjustments – IrS ����������������������������������������������

Total receipt effects of mandatory proposals ��

–28

–73

175

–32
–2

2011

–29

–77

514

–34
6

2012

–30

–80

99

–22
42

2013

–31

–84

–440

–22
25

2014

–248 –1,079 –1,969 –3,855 –6,281

–290 –1,119 –2,348 –3,864 –5,729

–19

–49

110

������
������

2010

Spending of proposed mandatory user fee equals projected collections, for a net zero impact�

������
������

Implement Unemployment Insurance integrity
legislation:
Subject to PAyGO ���������������������������������������
Not subject to PAyGO ��������������������������������

2009

–1,161

–1,460

–32

–88

253

–21
187

2015

–249

–617

–33

–92

325

–19
187

2016

–104

–462

–34

–96

314

–18
192

2017

782

–371

–35

–100

266

–18
1,041

2018

66

–380

–36

–105

174

–19
432

2019

83

33,820

7,416

70,469

32,209

183,089

2010–2014 2010–2019

–13,431

–13,350

–137

–363

458

–110
71

–14,097

–16,640

–307

–844

1,790

–206
2,110

2010–2014 2010–2019

The Budget proposes repealing some aviation excise taxes and replacing these taxes with direct user charges� The cost of repealing the excise taxes is reflected here�
The user charges are considered discretionary and offset discretionary budget authority and outlays�
4
This provision is estimated to have zero receipt effect under the Administration’s current projections for energy prices�
5
Shown here are those proceeds from auctioning emission allowances that are reserved for clean energy technology initiatives and to compensate families through the
Making Work Pay tax cut� These proceeds are included in the grand totals as receipts, though they could alternatively be considered offsets to outlays� All additional
net proceeds will be used to further compensate the public�
6
Outlay effects unless otherwise noted�
7
The estimates for this proposal include effects on receipts� The receipt effects included in the totals above are listed below:

������

Provide Making Work Pay tax credit �������������������

2009

Note: For receipt effects, positive figures indicate lower receipts� For outlay effects, positive figures indicate higher outlays� For net costs, positive figures indicate higher
deficits�
1
receipt effects unless otherwise noted�
2
The estimates for this proposal include effects on outlays� The outlay effects included in the totals above are listed below:

(Deficit increases (+) or decreases (–) in millions of dollars)

Table S–6. Mandatory and Receipt Proposals—Continued

SUMMAry TABLES
129

41�4
80�1
42�2
40�1
11�3
25�5
12�7
36�7
70�5
12�7
47�6

Health and Human Services 2 ������������������������������������������

Homeland Security �����������������������������������������������������������

Housing and Urban Development �����������������������������������

Interior ������������������������������������������������������������������������������

Justice �������������������������������������������������������������������������������

Labor ���������������������������������������������������������������������������������

State and Other International Programs 3 ����������������������

Transportation 4, 5 ��������������������������������������������������������������

Treasury ����������������������������������������������������������������������������

Veterans Affairs 6 ��������������������������������������������������������������

������
19�1
1,061.6

Climate Policy (Clean Energy Technologies) ��������������������������

Other Agencies �������������������������������������������������������������������������

Total, Base discretionary .......................................................

0�9

8�8

Social Security Administration 2 ��������������������������������������

������

0�7

Small Business Administration ��������������������������������������

National Infrastructure Bank �����������������������������������������

6�9

National Science Foundation �������������������������������������������

Corporation for National and Community Service ���������

0�7
17�8

National Aeronautics and Space Administration �����������

7�8

Environmental Protection Agency �����������������������������������

General Services Administration ������������������������������������

5�3

Corps of Engineers �����������������������������������������������������������

Major Agencies:

1

26�4

513�3

Defense (DOD -- excluding Overseas Contingency
Operations) �������������������������������������������������������������������

Education ������������������������������������������������������������������������

9�3

Commerce �������������������������������������������������������������������������

Energy �������������������������������������������������������������������������������

23�9

267.0

0�2

������

������

0�2

1�1

0�7

3�0

1�0

5�9

7�2

4�6

1�4

0�3

48�1

0�6

4�8

4�0

3�0

13�6

2�8

22�4

38�7

81�1

7�4

7�9

6�9

Recovery Act

Estimate

Agriculture ������������������������������������������������������������������������

departments:

Base discretionary Policy by Agency:

2009-2010

2009

1,132.8

19�8

������

5�0

1�1

9�7

0�7

7�0

18�7

0�6

10�5

5�1

52�5

13�3

72�5

51�7

13�3

23�9

12�0

47�5

42�7

78�7

26�3

46�7

533�7

13�8

26�0

Request

2010

(Budget authority in billions of dollars)

1,150.3

18�8

������

5�0

1�3

10�5

0�8

7�2

18�6

0�7

10�6

5�2

53�7

13�7

64�2

56�0

13�4

27�7

12�3

47�6

42�4

83�7

26�3

53�6

541�8

8�1

27�2

2011

1,190.3

18�6

15�0

5�0

1�7

11�0

0�8

8�5

18�6

0�6

10�7

5�2

55�1

14�1

64�1

60�3

13�5

27�9

12�5

47�5

41�9

85�5

27�2

58�5

550�7

7�9

27�9

2012

1,216.7

18�4

15�0

5�0

2�0

11�6

0�8

9�1

18�6

0�6

10�8

5�3

56�6

14�7

65�2

64�8

13�6

28�0

12�7

47�6

41�4

87�5

27�7

61�6

561�1

8�5

28�4

2013

Outyears

1,248.2

18�4

15�0

5�0

2�4

12�2

1�0

9�7

18�9

0�6

10�9

5�5

58�2

15�3

66�3

69�3

13�7

28�2

13�0

48�2

40�9

90�7

28�3

64�5

574�5

8�7

29�1

2014

5,938.3

93�8

45�0

25�0

8�6

54�9

4�1

41�6

93�4

3�2

53�4

26�3

276�2

71�1

332�2

302�1

67�5

135�7

62�4

238�3

209�3

426�1

135�8

284�9

2,761�8

46�9

138�6

12,625.2

192�3

120�0

25�2

25�9

122�3

9�6

97�9

191�6

6�4

110�8

56�6

588�8

157�8

681�8

687�7

139�8

284�6

131�8

498�8

426�3

908�5

285�9

626�4

5,854�9

94�3

299�0

2010-2019

Totals
2010-2014

Table S–7. funding Levels for Appropriated (“discretionary”) Programs by Agency

130

A NEW ErA OF rESPONSIBILITy

75�5
4�1
7�1

International Supplemental Funding—Enacted 8 �����������������

International Supplemental Funding—Proposed 8 ����������������

0�2
166.2
1,227.7

Veterans Affairs and Other ����������������������������������������������

Total, Overseas Operations, international, and One-time
Costs ........................................................................................

Grand Total, discretionary funding ...................................
267.0

......

������

������

������

������

������

������

������

1,262.8

130.0

������

������

������

������

������

130�0

������

Request

2010

1,200.3

50.0

������

������

������

������

������

50�0

������

2011

1,240.3

50.0

������

������

������

������

������

50�0

������

2012

1,266.7

50.0

������

������

������

������

������

50�0

������

2013

Outyears

1,298.2

50.0

������

������

������

������

������

50�0

������

2014

6,268.3

330.0

������

������

������

������

������

330�0

������

2010-2014

13,205.2

580.0

������

������

������

������

������

580�0

������

2010-2019

Totals

2

1

Adjusted for advance appropriations, 2009 funding is $46�2 billion� All numbers exclude funding for Pell Grants�
Funding from the Hospital Insurance and Supplementary Medical Insurance trust funds for administrative expenses incurred by the Social Security Administration that
support the Medicare program are included in the Health and Human Services total and not in the Social Security Administration total�
3
The Administration requests that Congress enact an increase in the Government’s quota subscription to the International Monetary Fund valued at approximately $8
billion� Because this is an exchange of financial assets, the Administration does not propose to score this transaction as discretionary budget authority or outlays�
4
The Administration proposes that all discretionary budgetary resources for transportation be scored as discretionary budget authority, as is the case for other programs�
5
Starting in 2011, the Budget proposes to replace some aviation excise taxes with direct user charges� The direct user charges are considered to be discretionary and offset
discretionary budget authority and outlays, while the aviation excise taxes are considered to be a receipt� Because of this budgetary treatment, this reform results in
lower discretionary budget authority starting in 2011, which is reflected here� It also reduces aviation excise taxes� This is shown in Table S-6�
6
The Veterans Affairs total is net of medical care collections�
7
The Budget includes placeholder estimates of $50 billion per year for Overseas Contingency Operations in 2011 and beyond� These estimates do not reflect any specific
policy decisions�
8
Enacted and proposed supplementals include emergency food aid funded by the Department of Agriculture�

7�5
5�8

Energy �������������������������������������������������������������������������������

Corps of Engineers �����������������������������������������������������������

One-time Costs: ������������������������������������������������������������������������

65�9

Funding for Overseas Contingency Operations (DOD) Proposed 7 �����������������������������������������������������������������������������

Recovery Act

Estimate

Funding for Overseas Contingency Operations (DOD) Enacted ���������������������������������������������������������������������������������

Other discretionary Costs:

2009-2010

2009

(Budget authority in billions of dollars)

Table S–7. funding Levels for Appropriated (“discretionary”) Programs by Agency—Continued

SUMMAry TABLES
131

2013

2014

2015

2016

2017

2018

2019

1�2
1�3

Congressional Budget Office (January 2009) �����������������������������������������������������

February Blue Chip Consensus ����������������������������������������������������������������������������

2�4
2�2

Congressional Budget Office (January 2009) 1 �����������������������������������������������������

February Blue Chip Consensus ����������������������������������������������������������������������������

4�1
3�8

Congressional Budget Office (January 2009) �����������������������������������������������������

February Blue Chip Consensus ����������������������������������������������������������������������������

5�7
5�8

Congressional Budget Office (January 2009) 1 �����������������������������������������������������

February Blue Chip Consensus ����������������������������������������������������������������������������

1�4

Congressional Budget Office (January 2009)1 �����������������������������������������������

February Blue Chip Consensus ����������������������������������������������������������������������

3�7
3�7

Congressional Budget Office (January 2009)1 �����������������������������������������������

February Blue Chip Consensus ���������������������������������������������������������������������

2�8

3�0

2�8

0�3

0�2

0�2

8�3

8�3

8�1

–0�8

0�1

–0�6

1�0

1�8

1�2

–1�9

–2�2

–1�2

3�6

3�2

4�0

1�1

0�6

1�6

8�7

9�0

7�9

1�8

1�7

1�6

1�3

0�9

1�1

2�1

1�5

3�2

5�1

3�6

4�8

4�2

2�1

3�4

5�8

8�0

7�1

2�4

1�8

1�8

1�9

1�0

1�5

2�9

4�2

4�0

5�2

4�7

5�1

4�3

4�0

3�9

5�5

6�8

6�0

2�5

2�0

2�0

2�2

1�7

1�7

2�9

4�4

4�6

5�3

5�4

5�2

4�4

4�7

4�0

5�3

5�8

5�2

2�4

2�2

2�1

2�2

1�8

1�8

2�8

4�1

4�2

5�2

5�4

5�2

4�4

4�7

4�0

5�2

5�1

5�0

2�5

2�2

2�1

2�2

1�8

1�8

2�7

3�5

2�9

5�2

5�4

5�2

4�4

4�7

4�0

5�1

4�9

5�0

2�4

2�2

2�1

2�1

1�9

1�8

2�7

2�8

2�6

5�2

5�4

5�2

4�4

4�7

4�0

5�1

4�8

5�0

2�3

2�2

2�1

2�1

1�8

1�8

2�7

2�5

2�6

5�2

5�4

5�2

4�4

4�7

4�0

5�1

4�8

5�0

2�3

2�2

2�1

2�1

1�9

1�8

2�7

2�3

2�6

5�2

5�4

5�2

4�4

4�7

4�0

5�1

4�8

5�0

2�3

2�2

2�1

2�1

1�9

1�8

2�7

2�2

2�6

Sources: Administration; CBO, The Budget and Economic Outlook: January 2009; February 2009 Blue Chip Economic Indicators, Aspen Publishers, Inc� (2011-2019 from
October 2008 Blue Chip long run extension)�
1
CBO economic projections do not include the effects of the American recovery and reinvestment Act of 2009�
2
year-over-year percent change�
3
Annual averages, percent�

3�7

2010 Budget ����������������������������������������������������������������������������������������������������

10-year Treasury Notes:

1�4
1�4

2010 Budget ����������������������������������������������������������������������������������������������������

91-day Treasury Bills (discount basis):

interest Rates:3

5�8

2010 Budget �����������������������������������������������������������������������������������������������������������

unemployment Rate:3

3�8

1

2010 Budget �����������������������������������������������������������������������������������������������������������

Consumer Price index (CPi-u): 2

2�2

2010 Budget �����������������������������������������������������������������������������������������������������������

GdP Price index:2

1�3

1

2010 Budget �����������������������������������������������������������������������������������������������������������

Real GdP: 2

5�2

5�4

5�2

4�4

4�7

4�0

5�1

4�8

5�0

2�3

2�2

2�1

2�1

1�9

1�8

2�7

2�2

2�6

14,282 14,176 14,676 15,395 16,184 17,009 17,859 18,734 19,643 20,597 21,598 22,646

2012

February Blue Chip Consensus ����������������������������������������������������������������������������

2011

14,304 14,241 14,591 15,347 16,293 17,280 18,211 19,077 19,909 20,749 21,617 22,500

2010

14,281 14,291 14,902 15,728 16,731 17,739 18,588 19,415 20,279 21,181 22,124 23,108

2009

Congressional Budget Office (January 2009) 1 �����������������������������������������������������

2008

2010 Budget������������������������������������������������������������������������������������������������������������

Nominal GdP:

(Calendar years)

Table S–8. Comparison of Economic Assumptions

132

A NEW ErA OF rESPONSIBILITy

432

������
������

–7

Net purchases of non-Federal securities
by the National railroad retirement
Investment Trust (NrrIT) ������������������������

3
1,039

Change in other factors ���������������������������������������������

Total, change in debt subject to statutory
limitation ���������������������������������������������������������

9,961
–1
9,960

Debt issued by Treasury ��������������������������������������������

Adjustment for discount, premium, and coverage 3 ��

Total, debt subject to statutory limitation 4 �����

debt Subject to Statutory Limitation, End of year:

267

12,680

1

12,679

2,720

2

157

2,562

2,562

768

768

810

309

Change in debt held by Government accounts ���������

–1

810

–1

310

Change in debt held by the public �����������������������������

Changes in debt Subject to Statutory Limitation:

Seigniorage on coins ��������������������������������������������
Total, other transactions affecting
borrowing from the public ��������������������
Total, requirement to borrow from the
public (equals change in debt held
by the public) �����������������������������������

������

–12

–6

202

6

Net change in other financing assets and
liabilities 2 ���������������������������������������������������
Subtotal, changes in financial assets and
liabilities �����������������������������������������������

2

27

482

–302

1,752

Guaranteed loan accounts ������������������������
Troubled Asset relief Program (TArP)
equity purchase accounts ���������������������
Financing accounts for potential additional
financial stabilization efforts �������������������

296

459

2009

Direct loan accounts ���������������������������������

Net disbursements of credit financing
accounts:

Change in Treasury operating cash balance ���

Changes in financial assets and liabilities: 1

Other transactions affecting borrowing from the public:

Unified budget deficit �������������������������������������������������

financing:

Actual
2008

14,054

1

14,053

1,374

1

229

1,144

1,144

–27

–1

–27

������

–1

–59

–16

–8

57

������

1,171

2010

15,250

2

15,248

1,196

1

267

927

927

15

–1

16

������

–1

–60

–8

–3

88

������

912

2011

16,173

3

16,169

923

2

371

549

549

–32

–1

–31

������

–1

–61

–53

4

80

������

581

2012

(In billions of dollars)

17,097

5

17,093

925

2

402

520

520

–12

–1

–12

������

–1

–62

–38

6

83

������

533

2013

18,048

6

18,042

950

1

384

565

565

–5

–1

–4

������

–1

–63

–25

7

78

������

570

2014

Estimate

19,010

7

19,003

963

2

372

589

589

7

–1

7

������

–1

–65

–9

5

77

������

583

2015

Table S–9. federal Government financing and debt

20,004

8

19,996

994

2

354

638

638

2

–1

2

������

–1

–66

–5

3

71

������

637

2016

20,999

9

20,990

995

2

358

634

634

–2

–1

–1

������

–1

–67

–2

1

68

������

636

2017

21,990

9

21,981

991

2

364

625

625

–9

–1

–9

������

–1

–68

–2

–4

67

������

634

2018

23,132

10

23,122

1,142

1

328

813

813

101

–1

102

������

–1

9

4

–6

95

������

712

2019

SUMMAry TABLES
133

25
9,986

Debt issued by other agencies ����������������������������

Total, gross Federal debt �������������������������������

5,803

Debt held by the public �������������������������������������

–46

19

108

432

202

–40

678

70

8,364

8,364

4,340

12,704

25

12,679

2009

–46

18

149

374

186

–48

734

70

9,509

9,509

4,569

14,078

25

14,053

2010

–46

16

173

314

178

–51

822

70

10,436

10,436

4,837

15,272

24

15,248

2011

–46

16

173

253

125

–48

902

70

10,985

10,985

5,208

16,193

24

16,169

2012

–46

15

173

191

87

–42

985

70

11,505

11,505

5,610

17,116

23

17,093

2013

–46

14

173

127

62

–34

1,063

70

12,070

12,070

5,995

18,065

23

18,042

2014

Estimate

–46

13

173

63

53

–29

1,140

70

12,659

12,659

6,367

19,026

22

19,003

2015

–46

11

173

–3

48

–26

1,211

70

13,297

13,297

6,720

20,018

22

19,996

2016

–46

10

173

–70

46

–26

1,279

70

13,932

13,932

7,079

21,011

20

20,990

2017

–46

9

173

–138

44

–30

1,346

70

14,557

14,557

7,443

21,999

18

21,981

2018

–46

7

173

–129

49

–35

1,441

70

15,370

15,370

7,770

23,140

18

23,122

2019

Total, financial assets net of liabilities ���������
505
1,422
1,436
1,476
1,444
1,433
1,428
1,435
1,438
1,436
1,428
1,530
Debt held by the public net of financial
assets �����������������������������������������������������
5,297
6,943
8,072
8,960
9,541
10,073
10,642
11,224
11,860
12,495
13,129
13,840
1
A decrease in assets, such as the Treasury operating cash balance, is a means of financing a deficit and therefore has a negative sign� An increase in liabilities, such as
checks outstanding, is also a means of financing a deficit and therefore also has a negative sign�
2
Besides checks outstanding, includes accrued interest payable on Treasury debt, uninvested deposit fund balances, allocations of special drawing rights, and other liability
accounts; and, as an offset, cash and monetary assets (other than the Treasury operating cash balance), other asset accounts, and profit on sale of gold�
3
Consists mainly of debt issued by the Federal Financing Bank (which is not subject to limit), debt held by the Federal Financing Bank, the unamortized discount (less
premium) on public issues of Treasury notes and bonds (other than zero–coupon bonds), and the unrealized discount on Government account series securities�
4
The statutory debt limit is $12,104 billion, enacted on February 17, 2009�
5
Treasury securities held by the public and zero–coupon bonds held by Government accounts are almost all measured at sales price plus amortized discount or less
amortized premium� Agency debt securities are almost all measured at face value� Treasury securities in the Government account series are otherwise measured at face
value less unrealized discount (if any)�
6
At the end of 2008, the Federal reserve Banks held $491�1 billion of Federal securities and the rest of the public held $5,311�6 billion� Debt held by the Federal reserve
Banks is not estimated for future years�

–46

Other assets net of liabilities ������������������������������

������

Financing accounts for potential additional
financial stabilization efforts ��������������������
2

������

TArP equity purchase accounts �������������������

25

–42

Guaranteed loan accounts �����������������������������

Non-Federal securities held by NrrIT ��������������

196

Direct loan accounts ��������������������������������������

Government Sponsored Enterprise preferred
stock �����������������������������������������������������������������

372

Treasury operating cash balance �����������������������
Credit financing account balances:

Less financial assets net of liabilities:

Debt held by the public ����������������������������������������������

debt held by the Public Net of financial Assets:
5,803

4,183

6

Debt held by Government accounts �������������������

Held by:

9,961

Debt issued by Treasury �������������������������������������

Gross Federal debt: 5

debt Outstanding, End of year:

Actual
2008

(In billions of dollars)

Table S–9. federal Government financing and debt—Continued

134

A NEW ErA OF rESPONSIBILITy

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