White House on 2012 Budget: Wait, Let Us Explain ...

President Barack Obama unveiled his budget request for the 2012 fiscal year on Monday, a thick document upwards of 2,000 pages that's had people grumbling well before its official release. The White House says the proposal would shave $1.1 trillion off the federal deficit over 10 years — but the spending cuts needed to achieve that end are tough.

Advocates for poor Americans are disappointed by the budget’s cuts to programs like the Low Income Home Energy Assistance Program, and reductions in Pell Grants for low-income students, particularly when the president just extended tax cuts for the wealthiest Americans.


In a series of news briefings and conference calls, members of the administration have countered that hard cuts had to be made, and that in context maybe they're not so bad. Here's how senior advisor Valerie Jarrett, Office of Management and Budget director Jacob Lew, and Council of Economic Advisors member Cecilia Rouse make their case for three budget requests that have people giving the president the side-eye.

1. Pell Grants for Lower-Income College Students: CUT BY $100 BILLION 

Cecelia Rouse explained that the savings used from cutting back on Pell Grants will be used to keep the maximum financial aid award at $5,550. The offset was necessary, she said, given the sharp influx of students applying for Pell Grants during the recession. The cuts were made to the parts of the program that were the least effective.


“We looked for two programs which we think don’t have the same bang for the buck. The first one was the second Pell, which is used over the summer. We don’t think it’s actually helping students accelerate their degree. We think it’s instead going to students who could otherwise still afford to go to college in the summer.

“The second place where we felt our dollars weren’t being used as wisely is the in-school interest subsidies for graduate students. Graduate students who have taken out loans currently do not pay interest while they’re still in school, and yet again we don’t have evidence where that really makes a difference for completion. It will add a very small amount to the overall loan burden for these students, and yet it's very expensive. Instead the president said it’s really important that we get those lower-income students who otherwise wouldn’t go to college — get them into college, help them get their degree, and look for places where we thought we were subsidizing students which weren’t as effective.”

2. Community Development Block Grants: CUT BY $300 MILLION

Valerie Jarrett emphasized President Obama’s personal attachment to cities, as a former community organizer, before saying that the proposed cuts could have been far worse.


"Initially there were thoughts about doing dramatic cuts in CDBG – I had heard up to 25 percent. The president insisted on a very minor cut of seven and a half percent. We know that [communities] will feel that seven and a half percent, particularly in these dire times, but it was unacceptable for the president to do the draconian cuts in CDBG that had been contemplated. We don’t know what the Republicans will do in response, but we are going to fight hard to make sure that you have every CDBG dollar that we can possibly give."

3. Low Income Home Energy Assistance Program (LIHEAP): CUT BY $2.5 BILLION

Jacob Lew said that the cuts were made due to a significant drop in energy prices – and that the administration will revisit the decision in case those prices change again.


“If you go back to 2008, [LIHEAP] was funded at roughly $2.5 billion. We had a huge spike in energy prices, and the program doubled to $5 billion. We’re now at a price level that's close to where we were before that increase. Looking at our fiscal challenges, we can’t just straight-line the program at $5 billion, so we have gone back to the level it was at when prices were roughly the same.

“It’s a program that's done an enormous amount of good for an enormous number of people. It was never meant to be an entitlement program; it was meant to be a grant program that the states administered. Its funding level has fluctuated based on needs.  Balancing our fiscal challenges and the funding change from 2008 to now, we made the tough decision. And we will keep our on eye on where prices go, and what the need in the future is.”

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