President Releases FY 2010 Budget Blueprint

Yesterday, President Obama announced a FY 2010 budget proposal that outlines his priorities over the next 10 years. Building on spending provided under the American Recovery and Reinvestment Act (ARRA), the plan would invest in health care reform, energy and climate policy, education and infrastructure and curtailing federal budget deficits. The budget calls for creating a $634 billion "reserve fund" over 10 years for health care reform. Under the plan, $316 billion of the cost would be covered by savings from Medicare and Medicaid, such as reducing Medicare overpayments, prescription drug prices and hospital re-admissions. Spending also would be reduced
by eliminating low-performing programs.

The budget would impose pay-as-you-go restrictions on all non-emergency spending and tax changes. It would limit itemized deductions for top tax-bracket individuals and improve tax collections. In addition, it would raise the tax rate on upper-income individuals by allowing some current tax policies to expire.

With regard to energy, the budget assumes passage of a cap-and-trade system, which would generate $645.7 billion over 10 years. The proposal would dedicate $120 billion of that to renewable energy programs, with the rest used to make permanent the "Make Work Pay" tax provision in ARRA, at a cost of $536.8 billion. Extending the tax reduction for most working families is expected to help offset increased energy costs resulting from the cap and trade program.

The budget also would expand the earned income tax credit at a cost of $32.9 billion. In addition, the plan includes a $250 billion placeholder for further efforts to address the banking crisis. The funding would support $750 billion in asset purchases, according to the administration. The budget anticipates the deficit will increase to more than $1.4 trillion in FY 2010 but decline to half that levelby 2013.

The budget included no programmatic detail; such detail will be released in late April.

House Passes Omnibus 2009 Appropriations

Yesterday, the House of Representatives passed H.R. 1005, an omnibus appropriations bill designed to complete the appropriations process for FY 2009, which began October 1, 2008. The bill finalizes appropriations for nine appropriations bills that were funded under a continuing resolution that expires March 6. Senate leaders intend to complete work on the omnibus bill by March 6.

FFIS will analyze the bill's impact on states upon its completion.

President to Release FY 2010 Budget Blueprint

President Obama will release his FY 2010 budget blueprint today that includes $634 billion over the next 10 years for health care reform. The plan also sets aside up to $250 billion that may be added to the existing bank bailout. The president has indicated he plans to reduce the budget deficit by half by 2012. A summary of the plan will be released today, with details to come in April.

FFIS will report on the impact of the president's FY 2010 proposals once there is enough detail on which to base an analysis.

President Signs SCHIP Reauthorization

Yesterday, President Obama signed the reauthorization of the State Children's Health Insurance Program (SCHIP). H.R. 2, the Children's Health Insurance Reauthorization Program of 2009, or CHIPRA, passed the House earlier in the day. The Senate passed the measure January 29. The law provides an additional $32.8 billion over four-and-a-half years and is expected to provide health insurance for 4.1 million additional children in families that earn less than 300% of the federal poverty level. The new spending is offset by a 62-cent increase in the federal tobacco tax.

Senate Continues Work on Stimulus

The Senate continues to consider amendments to the stimulus package as it awaits a bipartisan plan from Senators Nelson and Collins. While no details are available, the two senators are reportedly organizing moderate members in their parties to reduce spending in the bill and focus existing programs on creating jobs. A successful amendment from yesterday would shift $2 billion from the HOME program into investments in low-income housing tax credit projects.

Digital Television Delay Passes

Yesterday, the House passed S. 352, to delay the digital television (DTV) transition from February 17 until June 12, 2009. The bill, which passed the Senate on January 29, would give TV stations the flexibilityto end their analog signals before June with the approval of the Federal Communications Commission. The president is expected to sign the bill.