2012 United States federal budget

That April, the Republican-held House of Representatives announced a competing plan, The Path to Prosperity, emboldened by a major victory in the 2010 Congressional elections associated with the Tea Party movement.

The budget plans were both intended to focus on deficit reduction, but differed in their changes to taxation, entitlement programs, defense spending, and research funding.

In February 2010, President Obama formed the bipartisan Bowles–Simpson Commission to recommend steps that could be taken to reduce future budget deficits.

It aimed to reduce annual deficits to more sustainable levels by making selective cuts in spending, while increasing support in specific areas such as education and clean energy to foster long-term economic growth.

The plan did not contain specific proposals to rein in spending on entitlement programs such as Medicare, Medicaid, and Social Security, which were expected to make up much of the increase in the deficit in future years.

The budget represented a shift from the Obama administration's strategy in previous years of using increased government spending, such as the American Recovery and Reinvestment Act of 2009, to combat the late 2000s recession.

[5] On June 23, at a hearing of the Budget Committee, CBO director Douglas Elmendorf was asked what his agency made of the proposals in that presidential address.

[12][13] A controversy arose in July 2011 over the raising of the federal debt limit, which was needed to prevent a default by the United States government.

Republicans in Congress demanded spending cuts in the budgets for 2012 and subsequent years in return for raising the debt limit.

The Democratic plan would immediately raise the debt limit by $2.7 trillion, enough to last beyond the 2012 elections, and would decrease spending by $900 billion over ten years.

After being altered to again require passage of a Balanced Budget Amendment before the second stage of debt limit increases, it passed the House 218–210, with 22 Republicans opposing the bill.

It combined the three appropriations bills for Agriculture, Commerce/Justice/Science (CJS), and Transportation/Housing and Urban Development (THUD), and also contained a continuing resolution providing funding for other departments until December 16, 2011.

One point of contention was that an earlier draft of the bill supported by Republicans contained new restrictions on travel to Cuba, which had been relaxed by the Obama administration in 2009.

[28][32][33] On December 17, 2011, the Senate passed legislation to extend the Social Security payroll tax cut which had been previously enacted during the FY2011 budget negotiations.

Points of contention included a Democratic plan to fund the tax cut with a new surtax on income over $1 million, which was dropped in later stages of negotiation, as well as attempts by Republicans to insert language which would speed the approval of the Keystone XL pipeline, which had recently been delayed by the Obama administration.

However, after criticism from other Republicans that the impasse would harm their prospects in the upcoming 2012 elections, the House leadership on December 23, 2011, announced that it would pass the Senate bill in return for Democrats promptly beginning negotiations on a full-year extension.

The bill, the Middle Class Tax Relief and Job Creation Act of 2011, was passed by the House and signed by the President later that day.

In response to Republican victories in the 2010 Congressional elections , President Barack Obama 's administration aimed to reduce annual deficits to more sustainable levels while increasing support in specific areas to foster long-term economic growth in its FY2012 budget proposal.
Representative Paul Ryan played a prominent role in drafting and promoting the House Republican proposal for FY2012, The Path to Prosperity . The proposal, often called "the Ryan Plan", has been often referenced by candidates during the 2012 presidential election .
Negotiations throughout July 2011 eventually reached a deal to pass the Budget Control Act , which resolved the United States debt-ceiling crisis in return for significant budget cuts over the following ten years. Pictured is a July 13 negotiation session involving President Barack Obama and Congressional leaders Eric Cantor , Nancy Pelosi , John Boehner , Harry Reid , and Mitch McConnell .
The extent of damage caused by Hurricane Irene raised fears that the Federal Emergency Management Agency would run out of funds before the end of FY2011, setting off a debate that threatened to cause a government shutdown in October 2011.
The American Recovery and Reinvestment Act of 2009 had been intended as the first installment of a long-term investment in intercity and high-speed rail , but no funding for new grants was included in the FY2012 budget.
The House version of the budget legislation removed all FY2012 funding for NASA's James Webb Space Telescope , pictured under construction in July 2010. The funding was restored in the enacted version. The telescope is intended to be the successor to the Hubble Space Telescope . [ 39 ]