President Obama Proposes Deficit Reduction Plan

In response to the so-called Ryan Plan unveiled on April 5, President Barack Obama on April 13, in a major policy address, proposed a 12-year budget defecit reduction plan that would total approximately $4 trillion with a mix of spending cuts and tax increases. The 44-minute speech at George Washington University on April 13, 2011 sharply contrasted with the one proposed by Rep. Paul Ryan.

Another Shutdown Averted by Passing Fiscal 2011 Budget

The intense negotiation went into wire and eventually averted the shutdown hours before the deadline: 11:59PM April 9, 2011. The White House, House and Senate agreed to cut $38 billion during the rest of the Fiscal 2011.

This is how $38 billion is targeted from the remaining six months of the Fiscal 2011:

* Agriculture: $3 billion ($23 billion in Fiscal 2010 to $20 billion Fiscal 2011)--Money for food inspection cut slightly; money for food program for poor women and children cut 7%, or by $504 million.

* Commerce, Justice, Science: $11 billion ($64 billion in Fiscal 2010 to $53 billion in Fiscal 2011)

* Energy and Water: $ 2 billion ($34 billion in Fiscal 2010 to $32 billion in Fiscal 2011)--spending on energy efficiency cut by $438 million

* Financial Services: $2 billion ($24 billion in Fiscal 2010 to $22 billion in Fiscal 2011)

* Homeland Security: $1 billion ($43 billion to $42 billion)--$786 million cut in grants to local responders.

* Interior: $2 billion ($32 billion to $30 billion)

* Labor, Education, Human Services: $5 billion ($163 to $158 billion)--$600 million was cut from Community Health Care Center program, $390 million cut from low-income energy grant

* Military Construction, Veteran Affairs: $4 billion ($77 billion in Fiscal 2010 to $73 billion in Fiscal 2011)

* Foreign Operation: $1 billion ($49 billion to $48 billion)

* Transpotation, Housing: $12 billion ($68 billion in Fiscal 2010 to $56 billion in Fiscal 2011)--Community Development grants cut over 20%, or by a billion; also cut high-speed rail money

Congress approved the measure on April 14, and sent it to President Barack Obama for his signature. House voted 260 to 167, with 59 Republicans dissenting over the degree of cuts in spending, and Senate voted 81 to 19. As part of approving the budget measure, House had to take up two separate measures--one on cutting funding to Planned Parenthood and another one overturning the Health Care Reform act passed last year--and voted for them by 241-185 and 240-185, respectively. However, both of them had failed in Senate floor.

Repeal of Health Care Overhaul Provision

Congress on April 5, 2011 sent President Barack Obama one provision of last year's Health Reform measure with bi-partisan support. The provision is the unintended consequence of the overhaul measure. The provision required small businesses to file tax forms for every vendor selling them more than $600 in goods each year, starting in 2012. The filing requirement is projected to raise $25 billion over the next decade. The existing rule is for small businesses to file 1099 forms when they purchase more than $600 in services each year. The health care overhaul aims at expanding the reach to goods effective 2012. The bill has been approved by the House (314-112) in early March and Senate (87-12) on April 5. Under the bill, the lost revenue of $25 billion would be made up of by changing another part of health care reform measure by requiring more families to repay tax credits designed to help them cover insurance premiums, if their incomes increase beyond certain levels.

Source: The Dallas Morning News (April 6, 2011 edition)