The budget is far more than Obama had hoped to spend when elected, only modestly less than during Bush's last years. War spending surges in 2011 budget

President Barack Obama’s new budget, to be released Monday, forecasts two consecutive years of near $160 billion in war funding, far more than he hoped when elected and only modestly less than the last years of the Bush Administration.

In 2011 alone, the revised numbers are triple what the president included in his spending plan a year ago. And the strain shows itself in new deficit projections, already hobbled by lagging revenues due to the weak economy.


The administration appears to be projecting a deficit of near $1.6 trillion for the current year and $1.3 trillion in 2011. That is even more pessimistic than Congressional Budget Office estimates last week, and it’s only in 2012 that the projections drop to the range of $800 billion to $700 billion.

By the end of the decade, the gap again widens, and as a percentage of GDP, the average appears above the 3% target viewed as sustainable.

Obama has responded with a three-year domestic spending freeze impacting about $447 billion in annual appropriations. This leaves him less money to sustain the very rapid growth seen last year in clean water programs or the Great Lakes restoration initiative. The Environmental Protection Agency budget would be cut modestly, and to stretch his dollars, Obama wants to dramatically ramp up the Energy Department’s credit budget, a low-cost way to extend tens of billions in loan guarantees to the nuclear power industry.

But on balance, the president’s plan seems less restrictive in many areas than lawmakers had anticipated. With the Senate having just passed a $1.9 trillion debt ceiling increase last week, fiscal moderates in his own party may insist on even tighter limits.

Obama’s 2010 starting point for the freeze has a built-in cushion since billions in Census spending won’t have to be repeated in 2011. He appears to count expanded Pell Grant funding for low-income college students as a mandatory cost outside the Education Department’s discretionary budget. And both Veterans Affairs and Homeland Security, two of the fastest areas of recent spending, are exempted from the freeze.

The VA is slated to get significant new money to speed the processing of claims, and billions more will be requested this year to resolve old disputes related to soldiers and airmen exposed to Agent Orange in the Vietnam War.

In the case of education, a top priority for the president, the department’s appropriations would grow by about $3.5 billion to $49.7 billion, a 7.5% increase. But when Pell Grants are counted, the total increase is closer to $11.4 billion or 16% above current spending.

Other departments, like Health and Human Services and Labor, receive smaller increases, more in the range of inflation or less. But within these totals, the National Institutes of Health would grow by about $1 billion or 3%. Community health centers and Head Start are also promised increases, and a teen pregnancy program would be expanded from $100 million to almost $180 million.

Mindful of the strain on state and local law enforcement budgets, substantial increased funding is provided for the hiring of police officers under the COP’s program within the Justice Department.

The budget’s increased war funding is not entirely surprising given Obama’s decision to add more U.S. forces in Afghanistan. And his early estimates for 2011 in last year’s budget were always suspect and more of a “plug” than real.

Nonetheless, seeing everything in a single budget brings the war costs more into focus. Democrats are increasingly agitated by the pace of withdrawal from Iraq, and the combined costs of the two wars is striking –especially when measured against the much more hopeful rhetoric of Obama’s campaign.

The president’s 2010 defense budget a year ago requested $130 billion for operations in Afghanistan and Iraq and just $50 billion in 2011. The new budget ramps up 2010 spending to $163 billion and for 2011 requests $159 billion in overseas contingency funds for the military.

This reverses the drop in war-related spending seen in fiscal 2009, which ended last Sept 30th and was a transition year of sorts between the two administrations. When compared to the peak war spending of the Bush years, Obama is only about 10% below Bush’s annual average of $176 billion in fiscal years 2007 and 2008—the time of the Iraq war surge.

Core defense spending is also feeling the strain and the president’s $549 billion request reflects less than 2% real growth over inflation. At a time when the administration is emphasizing jobs creation, this sets up what could be bitter election-year fights with fellow Democrats over plans to halt airplane and truck production important to employment California and the Midwest.

For example, Defense Secretary Robert Gates is expected to redouble his campaign against the C-17 transport plane this year, much as he successfully went after F-22 production last year. And while the Pentagon is making a huge commitment to the F-35 joint strike fighter, production will slip a year to allow more testing and Gates wants to rollback efforts in Congress to develop an alternate engine for the fighter.

The 2011 budget debate won’t hit full stride until this spring, but Democrats may move earlier than usual on a supplemental spending bill for the current fiscal year.

The Defense Department is seeking $33 billion in additional war-related funding on top of which the State Department will also be receiving additional funds for its beefed up operations in Afghanistan. Rep. John Murtha (D-Pa.), chairman of the House defense appropriations panel, wants to include any requests related to Haiti in the same package, and the VA appears to be pursuing its own 2010 supplemental request in the new budget related to Agent Orange claims.