Obama budget mostly good news for New England As originally appearing in The Union Leader
By James T. Brett
President Barack Obama recently unveiled an ambitious budget proposal for Fiscal Year 2013. The President’s plan includes $3.8 trillion in proposed spending and $4 trillion in deficit reduction, with the promise that by 2018, the federal deficit will be less than 3% of the GDP.
In reality, the final budget that passes Congress later this year will look quite different from the President’s plan. The proposal, however, offers some valuable insight into the President’s priorities, and the areas where his Administration will be focused should he be reelected. While a number of the spending proposals in the President’s budget are welcome news here in New England, there are also some cuts that will surely be felt in our region.
Let’s start with some good news. Our region’s economy is slowly but surely getting back on track, but we hear time and again that employers are struggling to find the highly skilled workers they need to fill those openings. So the President’s $8 billion that would encourage businesses and community colleges to work together to train 2 million workers for high growth industries will surely be a boon for our region.
Also on the higher education front, the Obama budget offers several measures to make college more affordable, which again will help ensure that we have the trained work force we need here in New England. The President’s budget increases the maximum Pell grant award to $5,635, makes permanent a tax credit for college costs, and sets forth reforms to help address rising educations costs by rewarding states and colleges who keep costs under control with a larger share of Federal aid.
New England has long been a center of innovation, and such sectors as advanced manufacturing hold great potential for job growth. It is encouraging to hear that the President’s proposal includes $140.8 billion total for research and development (R&D), increasing the level of investment in non-defense R&D by 5% from the 2013 level. The proposal also expands and makes permanent the R&D tax credit and includes $2.2 billion specifically for advanced manufacturing R&D, both of which will benefit our region’s economy tremendously.
Another bright spot for New England: the President’s plan would fund a six-year $476 billion surface transportation reauthorization bill. New England is burdened with some of the oldest transportation infrastructure in the country, and this funding would not only provide for much-needed upgrades, but it would also create thousands of jobs. Obama’s proposal also creates a National Infrastructure Bank to fund projects of national importance, a concept championed by several members of the New England delegation.
The New England states are home to a thriving defense industry, as well as a number of bases and military installations that contribute to our economy in a variety of ways. While the President would cut the overall defense budget by some $42 billion, the plan emphasizes developing naval and air capacities to address challenges in the Asia-Pacific region. This would surely benefit many of the defense contractors here in New England who specialize in shipbuilding and aerospace. However, the cuts include decreasing the overall size of the military, raising concerns that we could see another round of Base Realignment and Closing (BRAC) here in New England. The NEC was a leader in advocating for our military bases during the last round of BRAC, and we are prepared to work with partners throughout the region to fight any closings in the coming years.
Another area of President Obama’s budget that is troubling for our region’s healthcare sector is the $9.7 billion in reductions to graduate medical education, which would reduce Medicare payments to teaching hospitals in New England by over $430 million over the next decade. Obama’s proposal also cuts $177 million for physician training at sites such as Children’s Hospital in Boston.
At the end of the day, New England fares reasonably well under the President Obama’s plan. As we continue on the path to economic recovery, it is encouraging to know that the President’s priorities are very much in line with those of our region.
James T. Brett is the President & CEO of The New England Council, a non-partisan alliance of businesses, academic and health institutions, and public and private organizations throughout New England formed to promote economic growth.