ECONOMY

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26 February 2009
Obama Submits U.S. Budget Proposal for Fiscal Year 2010

 • Remarks by the President on the Fiscal Year 2010 Budget
 • Fiscal 2010 Budget Seeks More Spending for Diplomacy, Assistance
 • The full text of the proposed budget for fiscal year 2010 (PDF, 2 MB) is available on the Government Printing Office Web site.

Washington — “A budget is more than simply numbers on a page,” President Obama said as his administration submitted a summary of his proposed federal budget for fiscal year 2010 to Congress February 26.

“It is a measure of how well we are living up to our obligations to ourselves and one another. It is a test for our commitment to making America what it was always meant to be: a place where all things are possible for all people.”

The president is required by law to send a budget request to Congress each February. This document typically comprises thousands of pages that offer detailed information on proposed spending — funding increases or cuts for each federal agency. However, the Obama administration, citing the president’s short time in office, said it submitted a 146-page summary and will follow up with a more detailed document in April.

Obama’s first budget proposal, which calls for outlays of nearly $3.55 trillion, focuses on “investments that will make America stronger, more competitive and more prosperous in the 21st century.” These investments would include supporting new energy sources, improving America’s education system and reforming U.S. health care.

The president’s budget projects a 2009 deficit of $1.75 trillion — the highest level expressed as a percentage of gross domestic product (GDP) in decades. The president has said he will seek to reduce the deficit by the end of his presidency by eliminating wasteful programs, overpayments and tax loopholes.

Obama said the $3.55 trillion budget proposal for 2010 will be noticeably larger than the budget request for 2009 because the Obama administration has included the costs of the wars in Iraq and Afghanistan. During the Bush administration, these expenses were set forth in a separate supplemental request.

“In keeping with my commitment to make our government more open and transparent, this budget is an honest accounting of where we are and where we intend to go,” the president said. “We need to be honest with ourselves about what costs are being racked up because that's how we'll come to grips with the hard choices that lie ahead.”

Total annual spending by the U.S. federal government in recent years has hovered around 16 percent of the nation’s GDP. Total government spending including state and local governments accounts for about 28 percent of GDP in the United States, a level that is one of the lowest among industrialized nations. In many countries in Western Europe, government spending accounts for half the national GDP.

The annual federal budget proposal is a valuable financial tool, but it is also a powerful way for the president to communicate to Congress and to the citizens the priorities of his administration.

This process is mirrored at the state level, as governors present budget proposals that highlight their priorities to state legislatures for consideration. In state governments, the entire funding process sometimes is concluded within weeks. At the federal level, the process stretches out over many months.

FIRST STEP IN A LONG PROCESS

The submission of the president’s budget is the starting point for setting federal spending priorities for the fiscal year that begins October 1. Because the Constitution reserves the authority to raise and spend money for the federal government to Congress, the president’s budget is simply a recommendation. The actual spending amounts, or appropriations, will be hammered out over several months in a series of actions in Congress and negotiations between Congress and the White House.

The president’s budget process was established in 1921 to increase coordination within the federal government and restrain spending. Previously, individual government agencies petitioned Congress for funds directly. The shift to a consolidated funding request increased the president’s influence over the budget.

The White House prepares the annual budget request after consultation with all federal government entities, soliciting information from the various departments and independent agencies to create a request that will support government functions effectively and help implement the president’s policies, both domestic and international.

The Office of Management and Budget, an agency within the executive branch, is in charge of compiling and analyzing budget data for the White House. It generates the actual budget document (traditionally issued as a multivolume set of large, softcover books) and serves as an advocate for the president’s spending policies.

Following the president’s submission, Congress gets to work on drafting a dozen separate appropriation bills to fund various categories of spending, such as agriculture, defense or natural resources. These bills include provisions to fund federal government activities and also allocate money to run programs at the state and local level. Appropriation bills can spark fierce debates between Democrats and Republicans, and between senators and representatives. The spending measures promoted by a member of Congress generally are based on regional, demographic or economic factors in his or her home state.

Additional information on the president’s proposed budget for fiscal year 2010 is available on the White House Web site.

The full text of the proposed budget for fiscal year 2010 (PDF, 2 MB) is available on the Government Printing Office Web site.

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