via: chron.com
WASHINGTON — The Obama administration is unveiling a $3.83 trillion federal budget today that contains a double dose of bad news for the Houston area: cancellation of NASA’s Constellation mission to the moon and an end to tax breaks for energy exploration.
Ending the Constellation program is one of hundreds of spending reductions proposed by the White House to reverse the highest government deficits in U.S. history. The elimination of tax incentives widely used by oil, gas and coal companies — and new fees on energy producers — would reduce the deficit by an estimated $40 billion over 10 years.
The proposed budget, to be released today by White House budget director Peter Orszag, hopes to reduce the flow of red ink from 5 percent of the U.S. economy this year to 3 percent by 2015.
“During these tough economic times, American families are forced to make tough choices about what they can spend money on and what they need to cut from their household budgets,” said White House communications director Dan Pfeiffer. “Through the course of the budget process, we did the same thing.”
The Obama budget isn’t all bad news for the Houston area. Despite the overall freeze in non-security spending, the administration plans to increase research spending by 6 percent, which is likely to benefit the area’s medical research facilities.
And the White House is proposing $6 billion in increased spending on clean-energy research, an emerging industry where Texas is a national leader.
Even the NASA news is a mixed bag. While the White House wants to eliminate the Constellation program, it is asking for an overall increase in the NASA budget, including long-term research aimed at preparing an eventual mission to Mars.
Lawmakers from Texas, Florida and Alabama — three states with tens of thousands of jobs tied to manned spaceflight — are vowing to protect Constellation, which was proposed by former President George W. Bush but never fully funded.
Sen. Kay Bailey Hutchison, R-Texas, said she is “very concerned” about possible cuts in NASA’s human spaceflight programs and pledged to work with lawmakers to develop a “congressional response to the president’s budget after it is submitted to Congress.”
For Houston’s energy sector, it’s the second time President Obama has tried to reduce their tax breaks. He included a similar package in his budget request to Congress last year, but lawmakers largely ignored the proposal.
For Houston’s energy sector, it’s the second time President Obama has tried to reduce their tax breaks. He included a similar package in his budget request to Congress last year, but lawmakers largely ignored the proposal.
Gearing up for a fight
In his State of the Union speech last week, Obama declared that “tax cuts for oil companies” were too costly during “a time of record deficits.”
But the energy industry says it will once again try to kill the proposal, arguing that the net effect of Obama’s plan would be to drive oil and gas production overseas and give foreign companies an advantage in the U.S. market. Barry Russell, president of the Independent Petroleum Association of America, called the taxes “punitive.”
The tax hikes “would reduce investment in new U.S. production by 20 to 40 percent,” he said. “And it could drive down U.S. oil production by 20 percent and natural gas production by 12 percent, potentially killing thousands of jobs.”
“If the president is sincere in his efforts to encourage responsible American energy production” and promote job growth, Russell said, “these damaging tax hikes must be taken off the table.”
Administration officials defend their choices, saying they are trying to restrain overall spending and reduce the long-term federal deficit while simultaneously preventing the economy from sinking into a double-dip recession.
Among the reductions contained in the budget: consolidating 38 federal education programs into 11, eliminating the Brownfields Economic Development Initiative and the Advanced Earned Income Tax Credit and cutting the National Park Service’s “America’s Treasures” grant program.
“These choices are never easy,” said Pfeiffer, “but the president never expected that governing during tough economic times with rising deficits would be easy.”
