The White House on February 26 unveiled a $3.55-trillion budget outline for fiscal year 2010 that would boost funding for water infrastructure and transportation programs while aiming to cut the federal deficit in half by 2013.

White House officials say the outline provides a broad framework for fiscal policy over the next 10 years. A more detailed budget proposal will be released in April.  But the proposal is only the first step in a long legislative process. Months of hearings by appropriations and tax-writing committees will take place, followed by committee and floor votes. Final numbers for 2010 spending won’t emerge until late summer, at the earliest.

Nevertheless, the outline does begin to flesh out the Obama administration’s spending priorities. Under the plan, the Environmental Protection Agency would receive a large increase. The $10.5 billion proposed is the largest budget request in the agency’s 39-year history and an increase of $3 billion over 2008 funding levels. The Clean Water and Drinking Water State Revolving Funds would receive $3.9 billion to support approximately 1,000 clean water and 700 drinking water projects. The budget also calls for reinstating excise taxes that expired in 1995 to collect more than $1 billion to clean up Superfund sites.

For the Department of Transportation, the administration proposed $72.5 billion, a $2-billion increase over 2009 levels. The budget provides few details about how the funds would be spent, but does indicate that the administration will work with Congress to reform the mechanisms for financing surface transportation programs.  That issue will be a central issue in the reauthorization of SAFETEA-LU, which expires on September 30.

The DOT budget proposal also includes a five-year, $5-billion high-speed rail state grant program to add to the $8 billion for high-speed rail provided in American Recovery and Reinvestment Act. The Next Generation Air Transportation system, a long-running program to modernize the air traffic control program, would receive approximately $800 million.

The budget requests $26.3 billion for the Department of Energy, a slight reduction from 2009 levels but an increase over the $24.1 billion enacted in 2008. Funding priorities would include aid for renewable energy projects, smart grid transmission projects, and further development of carbon capture and storage technology.

Peter Orszag, director of the Office of Management and Budget, says that some of the reduction in the federal deficit would be achieved by allowing tax breaks for individuals and families earning more than $250,000 a year to expire in 2011. Additional offsets could be gained by making government “more efficient” by focusing on “programs that work” and ending support for programs that don’t, Orszag says.

Reaction to the budget proposal was mixed. Bruce Josten, U.S. Chamber of Commerce executive vice president for government affairs, said, “While we have not seen all the details, the president’s disappointing budget proposal appears to move in exactly the wrong direction. More taxes, heavy-handed regulations and command-and-control government will not hasten recovery.”

But Senate Finance Committee Chairman Max Baucus (D-Montana) called the budget outline a “strong proposal that focuses on urgent priorities.” But Baucus also said he had concerns about some of the tax offsets in the proposal.

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