[Congressional Record (Bound Edition), Volume 157 (2011), Part 2]
[Senate]
[Pages 1648-1650]
[From the U.S. Government Publishing Office, www.gpo.gov]




   BUDGET OF THE UNITED STATES GOVERNMENT FOR FISCAL YEAR 2012--PM 5

  The PRESIDING OFFICER laid before the Senate the following message 
from the President of the United States, together with an accompanying 
report; which was referred jointly, pursuant to the order of January 
30, 1975 as modified by the order of April 11, 1986; to the Committees 
on Appropriations; and the Budget:

To the Congress of the United States:
  America is emerging from the worst recession in generations. In 2010, 
an economy that had been shrinking began to grow again. After nearly 2 
years of job losses, America's businesses added more than one million 
jobs. Our capital and credit markets are functioning and strong. 
Manufacturing is coming back. And after teetering on the brink of 
liquidation just 2 years ago, America's auto industry is posting 
healthy gains and returning money to the taxpayers who helped it 
through a period of turmoil. The determination and resilience of the 
American people and the tough choices we made over the past 2 years 
helped to pull our economy back from the brink of a second Great 
Depression.
  Two years after those dark days, the stock market is booming. 
Corporations are posting record profits. Momentum is building. Yet, in 
America, we have always had a broader measure of economic health. We 
believe in a country where everyone who is willing to work for it has 
the opportunity to get ahead; where the small businessperson with a 
dream or entrepreneur with a great new idea has their best chance to 
make them a reality; where any child can go as far as their talent and 
tenacity will take them. That is the genius of America. That spirit is 
what has built the greatest prosperity the world has ever known.
  So even as recovery begins to take hold, we have more work to do to 
live up to our promise by repairing the damage this brutal recession 
has inflicted on our people, generating millions of new jobs, and 
seizing the economic opportunities of this competitive, new century.
  These must be the priorities as we put together our Budget for the 
coming year. The fiscal realities we face require hard choices. A 
decade of deficits, compounded by the effects of the recession and the 
steps we had to take to break it, as well as the chronic failure to 
confront difficult decisions, has put us on an unsustainable course. 
That's why my Budget lays out a path for how we can pay down these 
debts and free the American economy from their burden.
  But in an increasingly competitive world in which jobs and businesses 
are mobile, we also have a responsibility to invest in those things 
that are absolutely critical to preparing our people and our Nation for 
the economic competition of our time.
  We do this by investing in and reforming education and job training 
so that all Americans have the skills necessary to compete in the 
global economy. We do this by encouraging American innovation and 
investing in research and development--especially in the job-creating 
industries of tomorrow such as clean energy. We do this by rebuilding 
America's infrastructure so that U.S. companies can ship their products 
and ideas from every corner in America to anywhere in the world. And 
finally, we do this by coming together as Americans, not Democrats or 
Republicans, to make the tough choices that get America's fiscal house 
in order, investing in what works, cutting what doesn't, and changing 
the way business is done in Washington.
  Growing the economy and spurring job creation by America's 
businesses, large and small, is my top priority. That's why, over the 
course of the last year, I pushed for additional measures to jump-start 
our economic recovery: tax credits for businesses that hire unemployed 
workers; assistance to States to prevent the layoffs of teachers; and 
tax cuts and expanded access to credit for small businesses. At the end 
of the year, I signed into law a measure that provided tax cuts for 159 
million workers saving the typical worker $1,000 per year. And the same 
law extended important tax credits to help families make ends meet and 
afford to send their kids to college. This bipartisan tax cut plan also 
gave businesses two powerful incentives to invest and create jobs: 100 
percent expensing on the purchase of equipment and an extension of the 
research and experimentation tax credit.
  Moreover, my Administration has moved aggressively to open markets 
abroad and boost exports of American made goods and services, signing a 
new trade agreement with South Korea, the twelfth-largest economy in 
the world. And last month, I laid out a balanced approach to regulation 
that is pragmatic, driven by data, and that will protect the health and 
well-being of the American people and help lay the groundwork for 
economic growth and job creation.
  These steps will help the economy this year. But it is also essential 
that we take stock and look to the future--to what kind of America we 
want to see emerge from this crisis and take shape for the generations 
of Americans to come. This Budget lays out our roadmap not just for how 
we should invest in our economy next year, but how we should start 
preparing our Nation to grow, create good jobs, and compete in the 
world economy in the years ahead.
  At its heart is a recognition that we live in a world fundamentally 
different than the one of previous generations. Revolutions in 
communication and technology have made businesses mobile and commerce 
global. Today, a company can set up shop, hire workers, and sell their 
products wherever there is an Internet connection. It is a 
transformation that has touched off a fierce competition among nations 
for the jobs and industries of the future.
  The winners of this competition will be the countries that have the 
most skilled and educated workers; a serious commitment to research and 
technology; and access to quality infrastructure like roads and 
airports, high-speed rail, and high-speed Internet. These are the seeds 
of economic growth in the 21st century. Where they are planted, the 
most jobs and businesses will take root.
  In the last century, America's economic leadership in the world went 
unchallenged. Now, it is up to us to make sure that we maintain that 
leadership in this century. At this moment, the most important contest 
we face as a Nation is not between Democrats and Republicans or 
liberals and conservatives. It's between America and our economic 
competitors around the world.
  There is no doubt in my mind that we can win this competition. The 
United States is home to the world's best universities and research 
facilities, the most brilliant scientists, the brightest minds, and 
some of the hardest-working, most entrepreneurial people on Earth. But 
our leadership is not guaranteed unless we redouble our efforts in the 
race for the future.
  In a generation, we've fallen from first place to ninth place in the 
proportion of our young people with college degrees. We lag behind 
other nations in the quality of our math and science education. The 
roads and bridges that connect the corners of our country and made our 
economy grow by leaps and bounds after World War II are aging and in 
need of repair. Our rail and air traffic systems are in need of 
modernization, and our mobile networks and high-speed Internet access 
have not kept pace with some of our rivals, putting America's 
businesses and our people at a competitive disadvantage.
  In 1957, when the Soviet Union beat us into space by launching a 
satellite called Sputnik, it was a wake-up call that caused the United 
States to boost our investment in innovation and education--
particularly in math and science. As a result, we not only surpassed 
the Soviets, we developed new American technologies, industries, and 
jobs. Fifty years later, our generation's Sputnik moment has arrived. 
Our challenge is not building a new satellite, but to rebuild our 
economy. If the recession has taught us anything, it is

[[Page 1649]]

that we cannot go back to an economy driven by too much spending, too 
much borrowing, and the paper profits of financial speculation. We must 
rebuild on a new, stronger foundation for economic growth. We need to 
do what America has always been known for: building, innovating, and 
educating. We don't want to be a nation that simply buys and consumes 
products from other countries. We want to create and sell products all 
over the world that are stamped with three simple words: ``Made in 
America.''
  My Budget makes investments that can help America win this 
competition and transform our economy, and it does so fully aware of 
the very difficult fiscal situation we face. When I took the oath of 
office 2 years ago, my Administration was left an annual deficit of 
$1.3 trillion, or 9.2 percent of GDP, and a projected 10-year deficit 
of more than $8 trillion. These deficits were the result of a previous 
8 years of not paying for programs--notably, two large tax cuts and a 
new Medicare prescription drug benefit--as well as the financial crisis 
and recession that exacerbated our fiscal situation as revenue 
decreased and automatic Government outlays increased to counter the 
recession and cushion its impact.
  We took many steps to re-establish fiscal responsibility, from 
instituting a statutory pay-as-you-go rule for spending to going line 
by line through the budget looking for outdated, ineffective, or 
duplicative programs to cut or reform. And, most importantly, we 
enacted the Affordable Care Act. Along with giving Americans more 
affordable choices and freedom from insurance company abuses, reform of 
our health care system will, according to the latest analysis by the 
non-partisan Congressional Budget Office, reduce our budget deficits by 
more than $200 billion in its first decade and more than $1 trillion 
over the second.
  Now that the threat of a depression has passed, and economic growth 
is beginning to take hold, taking further steps toward reducing our 
long-term deficit has to be a priority, and it is in this Budget. The 
reason is simple: in the long run, we will not be able to compete with 
countries like China if we keep borrowing more and more from countries 
like China. That's why in this Budget, I put forward a number of steps 
to put us on a fiscally sustainable path.
  First, I am proposing a 5-year freeze on all discretionary spending 
outside of security. This is not an across-the-board cut, but rather an 
overall freeze with investments in areas critical for long-term 
economic growth and job creation. A commonsense approach where we cut 
what doesn't work and invest in those things that make America stronger 
and our people more prosperous. Over a decade, this freeze will save 
more than $400 billion, cut non-security funding to the lowest share of 
the economy since at least 1962, and put the discretionary budget on a 
sustainable trajectory.
  Making these spending cuts will require tough choices and sacrifices. 
One of them is the 2-year freeze on Federal civilian worker salaries. 
This is in no way a reflection on the dedicated service of Federal 
workers, but rather a necessary belt-tightening measure during these 
difficult times when so many private sector workers are facing similar 
cuts. This Budget also includes many terminations and reductions to 
programs across the entire Federal Government. These cuts include many 
programs whose mission I care deeply about, but meeting our fiscal 
targets while investing in our future demands no less. All told, we 
have put forward more than 200 terminations and reductions for over $30 
billion in savings.
  Even in areas outside the freeze, we are looking for ways to save 
money and cut unnecessary costs. At the Department of Defense, for 
instance, we are reducing its funding by $78 billion over the next 5 
years on a course for zero real growth in funding. To do this, 
Secretary Gates is pursuing a package of terminations, consolidations, 
and efficiencies that include, for example, the elimination of the 
Marine Corps Expeditionary Fighting Vehicle; the consolidation of four 
Air Force air operations centers into two; and reducing the number of 
Generals and Admirals by more than 100. And throughout the entire 
Government, we are continuing our efforts to make Government programs 
and services work better and cost less: using competition and high 
standards to get the most from the grants we award, getting rid of 
excess Federal real estate, and saving billions of dollars by cutting 
overhead and administrative costs.
  Second, I continue to oppose the permanent extension of the 2001 and 
2003 tax cuts for families making more than $250,000 a year and a more 
generous estate tax benefiting only the very largest estates. While I 
had to accept these measures for 2 more years as a part of a compromise 
that prevented a large tax increase on middle-class families and 
secured crucial job-creating support for our economy, these policies 
were unfair and unaffordable when enacted and remain so today. I will 
push for their expiration in 2012. Moreover, for too long we have 
tolerated a tax system that's a complex, inefficient, and loophole-
riddled mess. For instance, year after year we go deeper into deficit 
and debt to pay to prevent the Alternative Minimum Tax (AMT) from 
hurting many middle-class families. As a start, my Budget proposes a 3-
year fix to the AMT that is paid for by an across-the-board 30 percent 
reduction in itemized deductions for high-income taxpayers. My 
Administration will work with the Congress on a long-term offset for 
these costs.
  Third, to address looming, long-term challenges to our fiscal health, 
the Budget addresses future liabilities in the unemployment insurance 
system; the Pension Benefit Guaranty Corporation, which protects the 
pensions of workers whose companies have failed; and the Federal 
Housing Administration, which plays a critical role in affordable 
housing. It also is committed to implementing the Affordable Care Act 
swiftly and efficiently since rising health care costs are the single 
biggest driver of our long-term fiscal problems. Finally, as a down 
payment toward a permanent fix, the Budget proposes additional reforms 
to our health care system that would be sufficient to pay for 2 years 
of fixing the Medicare's sustainable growth rate, thus preventing a 
large cut in Medicare reimbursements for doctors that would jeopardize 
care for older Americans.
  In addition, I believe that we need to act now to secure and 
strengthen Social Security for future generations. Social Security is a 
solemn commitment to America's seniors that we must preserve. That is 
why I have laid out my principles for reform and look forward to 
working with the Congress on ensuring Social Security's compact for 
future generations.
  As we move to rein in our deficits, we must do so in a way that does 
not cut back on those investments that have the biggest impact on our 
economic growth because the best antidote to a growing deficit is a 
growing economy. So even as we pursue cuts and savings in the months 
ahead, we must fund those investments that will help America win the 
race for the jobs and industries of the future--investments in 
education, innovation, and infrastructure.
  In an era where most new jobs will require some kind of higher 
education, we have to keep investing in the skills of our workers and 
the education of our children. And that's why we are on our way to 
meeting the goal I set when I took office: by 2020, America will once 
again have the highest proportion of college graduates in the world.
  To get there, we are making college more affordable for millions of 
students, through the extension of the American Opportunity Tax Cut and 
maintaining our historic expansion of the Pell Grant program while 
putting it on firm financial footing. We are taking large steps toward 
my goal of preparing 100,000 science, technology, engineering, and 
mathematics teachers over the next decade. And we are continuing our 
reform of elementary and secondary education--not from the top-down, 
but from the bottom-up. Instead of indiscriminately pouring money into 
a system that doesn't always work, we are challenging schools and 
States to compete in a ``Race to the Top'' to see who can come up with 
reforms that raise standards, recruit and retain good teachers, and 
raise student achievement, especially in math and science.

[[Page 1650]]

We are expanding the ``Race to the Top'' to school districts, and since 
in today's economy learning must last a lifetime, we are extending this 
competitive framework to early childhood education, universities and 
colleges, and job training.
  Once our students graduate with the skills they need for the jobs of 
the future, we also need to make sure those jobs end up in America. In 
today's high-tech, global economy, that means the United States must be 
the best place to do business and the best place to innovate. That will 
take reforming our tax code, and I am calling for immediate action to 
rid the corporate tax code of special interest loopholes and to lower 
the corporate rate to restore competitiveness and encourage job 
creation--while not adding a dime to the deficit.
  And since many companies do not invest in basic research that does 
not have an immediate pay off, we--as a Nation--must devote our 
resources to these fundamental areas of scientific inquiry. In this 
Budget, we are increasing our investment in research and development 
that contributes to fields as varied as biomedicine, cyber-security, 
nano-technology, and advanced manufacturing. We are eliminating 
subsidies to fossil fuels and instead making a significant investment 
in clean energy technology--boosting our investment in this high-growth 
field by a third--because the country that leads in clean energy will 
lead in the global economy. Through a range of programs and tax 
incentives, this Budget supports my goals of the United States becoming 
the first country to have one million electric vehicles on the road by 
2015 and for us to reach a point by 2035 where 80 percent of our 
electricity will come from clean energy sources. We also are working 
toward a 20 percent decrease in energy usage in commercial and 
institutional buildings by 2020, complementing our ongoing efforts to 
improving the efficiency of the residential sector. If this is truly 
our Sputnik moment, we need a commitment to innovation that we have not 
seen since President Kennedy challenged us to go to the moon.
  To flourish in the global economy, we need a world-class 
infrastructure--the roads, rails, runways, and information 
superhighways that are fundamental to commerce. Over the last 2 years, 
our investments in infrastructure projects already have led to hundreds 
of thousands of good private sector jobs and begun upgrading our 
infrastructure across the country. But we still have a long way to go.
  In this Budget, I am proposing a historic investment in repairing, 
rebuilding, and modernizing our transportation infrastructure. The 
Budget features an immediate, up-front investment of $50 billion to 
both generate jobs now and lay a foundation for future economic growth. 
Looking toward the future, the Budget provides funds to develop and 
dramatically expand access to high-speed rail as well as the creation 
of a National Infrastructure Bank to support projects critical to our 
national competitiveness. While this transportation bill is a major 
investment of funds, it is also a major reform of how transportation 
funds have been invested in the past. We are committing to paying for 
our surface transportation plan and making it subject to the Congress' 
pay-as-you-go law; to consolidating duplicative, earmarked programs; 
and to making tens of billions of dollars of funds subject to a 
competitive ``Race to the Top'' process.
  And looking to what we will need to thrive in the 21st century, I am 
proposing an ambitious effort to speed the development of a cutting-
edge, high-speed wireless data network that will reach across our 
country to 98 percent of Americans and provide for the needs of both 
our citizens and our first responders. We are the Nation that built the 
transcontinental railroad and the first airplanes to take flight. We 
constructed a massive interstate highway system and introduced the 
Internet to the world. America has always been built to compete, and if 
we want to attract the best jobs and businesses to our shores, we have 
to be that Nation again.
  Finally, to make it easier for our businesses and workers to sell 
their products all over the globe, we are working toward our goal of 
doubling U.S. exports by 2014. This will take specific efforts to open 
up markets and promote American goods and services. It also will take 
maintaining American leadership abroad and ensuring our security at 
home. This Budget invests in all elements of our national power--
including our military--to achieve our goals of winding down the war in 
Iraq; defeating al Qaeda in Afghanistan and around the world; reducing 
the threat of nuclear weapons; and preparing our Nation for emerging 
threats. We also invest resources to provide for our men and women in 
uniform and to honor the service of our veterans. And we do this all 
with an eye to cutting waste, finding efficiencies, and focusing 
resources on what is essential to our security.
  Throughout our history, the investments this Budget makes--in 
education, innovation, and infrastructure--have commanded support from 
both Democrats and Republicans. It was Abraham Lincoln who launched the 
transcontinental railroad and opened the National Academy of Sciences; 
Dwight Eisenhower who helped build our highways; and Republican Members 
of Congress who worked with Franklin Roosevelt to pass the GI Bill. In 
our own time, leaders from both sides of the aisle have come together 
to invest in our infrastructure, create incentives for research and 
development, and support education reform such as those my 
Administration has been pursuing. Moreover, when faced with tough, 
fiscal challenges, our country's leaders have come together to find a 
way forward to save Social Security in the 1980s and balance the budget 
in the 1990s.
  There are no inherent ideological differences that should prevent 
Democrats and Republicans from making our economy more competitive with 
the rest of the world. We are all Americans, and we are all in this 
race together. So those of us who work in Washington have a choice to 
make in this coming year: we can focus on what is necessary for each 
party to win the news cycle or the next election, or we can focus on 
what is necessary for America to win the future.
  I believe we must do what this moment demands, and do what we must to 
spur job creation and make the United States competitive in the world 
economy. For as difficult as the times may be, the good news is that we 
know what the future could look like for the United States. We can see 
it in the classrooms that are experimenting with groundbreaking reforms 
and giving children new math and science skills at an early age. We can 
see it in the wind farms and advanced battery factories that are 
opening across America. We can see it in the laboratories and research 
facilities all over this country that are churning out discoveries and 
turning them into new startups and new jobs.
  And when you meet these children and their teachers, these scientists 
and technicians, and these entrepreneurs and their employees, you come 
away knowing that despite all we have been through these past 2 years, 
we will succeed. The idea of America is alive and well. As long as 
there are people willing to dream, willing to work hard, and willing to 
look past the disagreements of the moment to focus on the future we 
share, I have no doubt that this will be remembered as another American 
century.
                                                        Barack Obama.  
The White House, February 14, 2011.

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