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MEMBER DIARY

A Look at Obama’s Budget Priorities

From the diaries.

When President Obama released his fiscal year 2013 budget, he revealed a great deal about his priorities for the remainder of this term and the possibility of his next. First in his State of the Union address and then for the past month on the campaign trail, he has repeated the message that it is crucial to promote all types of energy. This message is not reflected in his budget.

Consider the White House’s push to repeal certain tax provisions — credits available to all industries —for just oil and natural gas firms, while seeking subsidy extensions and new tax credits to “green energy” favorites. Selectively levying $46 billion in new taxes on oil and natural gas companies and subsidizing “renewable” companies in hopes of huge job growth and technological change goes against the very nature of the market. But it is the Obama approach. He wants vindictive tax hikes on the oil and natural gas industry and massive subsidies and non-recourse loans for his favorites; this president is trying to rig the base of the U.S. economy. That policy imposes heavy costs and economic suffering on all Americans.

Oddly, his budget also attacks economically-deprived families suffering even before they try to deal with the costs of heating and cooling their homes. These are the families for whom the Federal Low Income Home Energy Assistance Program (LIHEAP) was created. According to the White House, LIHEAP aims to help “struggling families make ends meet by offsetting some of their home heating and cooling costs”. Last year alone, the program subsidized energy bills for nine million households. The 2013 budget proposes cutting assistance to LIHEAP by $470 million, keeping its funding at a paltry $3 billion.

If this administration believes the Al Gore timetable for global warming, perhaps it is right in making this budget cut; otherwise it does seem inconsistent to strike a blow to those who already struggle to make ends meet, and who spend a disproportionate portion of their income on energy.

President Obama also proposes bumping renewable spending up by $500 million at the Energy Department, from $1.8 billion in 2012 to $2.3 billion for 2013. However, this is significantly lower than his initial plans; the budget explains that DOE “does not request new loan authority or credit subsidy… [their] focus will be on effectively deploying its remaining $170 million in credit subsidy and $34 billion in loan authority…” Oh, well; that explains it.

Cuts to defense spending in the budget “release” a significant amount of funding back into the budget, as well. The president proposes to drop abroad military spending from $115 billion to $88.5 billion. These are not the costs of the war; that was always paid “off-budget” with “supplemental money” voted by the Congress. These are cuts in Defense Department spending, troop reductions, and base closures. The defense budget will also include $1 billion in energy conservation measures and $150 million for renewable-energy projects at military bases.

While I support portions of the budget going to, for example, approaches to improve “fracking” techniques and regulation, or development of clean energy technology, it is crucial to not create roadblocks for the oil and natural gas industry. Our national demand for energy will continue to increase. It is essential for President Obama to consider – as he has promised and reneged upon – all types of energy when reflecting on his budget proposal for 2013.

Dr. Jack Rafuse, a former energy advisor to President Nixon, is principal of the Rafuse Organization, an energy, trade, and national security consultancy.

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