US Congress Details Cuts In 2011 Budget Deal As Votes Nears
April 12 2011 - 6:33AM
Dow Jones News
A deal to keep the U.S. government funded for the remainder of
fiscal 2011 contains large budget cuts for high-speed rail projects
and the Environmental Protection Agency and leaves almost no
program immune from the largest spending reductions in the
country's history.
The details of a plan to reduce spending by almost $39 billion
from previous levels were posted Tuesday, just days before the U.S.
House of Representatives and the U.S. Senate take up the measure.
Congress must act in order to keep the government running beyond
Thursday, when the latest interim spending measure expires. The
fiscal year 2011 ends Sept. 30.
"My committee went line-by-line through agency budgets this
weekend to negotiate and craft deep but responsible reductions in
virtually all areas of government," said House Appropriations
Committee Chairman Hal Rogers (R, Ky.) in a statement. "Our bill
targets wasteful and duplicative spending, makes strides to rein in
out-of-control federal bureaucracies, and will help bring our
nation one step closer to eliminating our job-crushing level of
debt."
The main exception was the Defense Department, which wound up
with a $5 billion increase from previous levels, leaving it with
$513 billion. But defense contractors will still suffer. Some $354
million in funding for an alternative engine for the F-35 Joint
Strike Fighter was cut. That engine was being developed in an area
that abuts House Speaker John Boehner's (R, Ohio) district. Another
$325 million was cut for production of and modifications to Boeing
Co.'s (BA) C-17 military transport plane.
The budget for the Obama administration's EPA will be cut by
$1.6 billion. Funding for high-speed rail projects will be reduced
by $2.9 billion, wiping out funding for all such new projects and
taking back money that remained unspent.
An Energy Department program to provide loan guarantees for
renewable and alternative energy projects was spared. That means
the Obama administration will be able to honor commitments such as
a $967 million loan guarantee for a 290-megawatt Arizona solar
power plant. First Solar Inc. (FSLR) is developing the solar farm
and has agreed to sell it to NRG Energy Inc. (NRG). The deal would
have been scuttled without the loan guarantee.
Still, the budget deal eliminates funding for a White House
position advising U.S. President Barack Obama on climate change,
reflecting Republican displeasure for the administration's efforts
to regulate greenhouse gases. The deal also cuts funding for the
Energy Department's energy efficiency and renewable energy program
by $438 million.
Financial regulators, facing requirements under the 2010
Dodd-Frank law to step up oversight, will not have as much money as
they want. The Securities and Exchange Commission's budget will
total almost $1.2 billion. The agency has said it needs $1.4
billion in fiscal 2012. Even so, the fiscal 2011 spending levels
avoid rolling back the agency's budget to 2008 levels -- or about
$906 million -- a level that the SEC chairman had said could force
the agency to let go 1,000 people from its staff.
More than $1 billion would be cut from programs to prevent
sexually transmitted diseases, AIDS, and viral hepatitis. The
budget deal would also eliminate a provision of last year's
health-care law enabling low-income workers to opt out of
employer-offered health insurance and shop for more affordable
coverage on insurance exchanges to be created in 2014.
Contributions to the United Nations would decline by $377
million from current levels. Some $433 million would be cut from
the agriculture credit insurance fund.
Congressional negotiators decided against overriding an Obama
administration effort to tighten federal financing for for-profit
education companies such as Strayer Education Inc. (STRA) and ITT
Educational Services Inc. (ESI). The Obama administration has been
trying to make sure that students who take out loans are able to
get the jobs for which they train.
-Siobhan Hughes; Dow Jones Newswires; (202) 862-6654;
siobhan.hughes@dowjones.com
(Janet Hook, Corey Boles, Cassandra Sweet and Jessica Holzer
contributed to this report.)
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