Podesta Group

On Monday, the Obama administration sent its FY 2013 budget request to Congress. Historically, the president’s budget request has been considered the starting point for the annual budget negotiation process. In that respect, this year’s budget is little different from past requests. It is a presidential wish-list, reflecting the administrations’ policy priorities and the funding levels various agencies and departments believe are needed to support their goals for the year — a wish-list that gives organizations whose agendas are affected by these priorities an honest look at what they may need in a smart government relations strategy.

Yet, a few key distinctions set this year’s budget apart from previous requests. For one, this is the first such request to have been crafted since passage of the Budget Control Act of 2011. That bill requires $1.2 trillion in discretionary spending cuts over the next ten years and sets a $1.047 trillion spending cap for the upcoming fiscal year.

Majority Leader Harry Reid (D-NV) already declared that the Senate will not consider a budget resolution this year and the Budget Control Act’s $1.047 trillion spending target is in place; congressional appropriators don’t need to wait for a formal budget resolution to begin their work. Instead, they can get to work right away: divvying up the $1.047 trillion among the various appropriations subcommittees - in accordance with the Budget Control Act's firewall between security and non-security programs - and debating the merits of specific administration funding requests while the ink on the president’s budget isn’t yet dry.

This year’s request is also distinguished from previous iterations by the timing of its release, just as the presidential election cycle is starting to heat up. The president’s State of the Union Address offered a glimpse at some of the central elements of his re-election platform. This year’s budget request, inherently a political instrument, builds on some of the proposals President Obama outlined in his speech — proposals that he plans to run on this November.

Taking a closer look at the energy and environment sector specifically, a quick glance at the numbers for US Environmental Protection Agency’s (EPA) FY 2013 budget might leave the impression that the Obama administration is making an effort to be responsive to industry criticism of certain environmental regulations. Overall, the agency’s $8.34 billion request for appropriations is down $629 million from last year’s request and $105 million from actual FY 2012 enacted levels. However, an examination of where the administration suggests that these cuts be made reveals that most of EPA’s core regulatory programs are funded at or above previous levels.

Primarily, state and local grant programs, along with the state revolving funds for clean water and drinking water, are the accounts that have been slashed to achieve a lower overall funding level for the agency. The combined $359 million in cuts to the state revolving funds alone disguises a $139 million, or five percent, increase to EPA’s Environmental Programs and Management account, from which most of EPA’s regulatory and enforcement activities are funded.

Air quality programs under this heading, which include a number of the agency’s more controversial regulations, receive a $27 million, or 9.5 percent, funding increase compared to last year’s enacted levels, with the Stationary Source Regulation program alone receiving a $6.8 million, or 20 percent, bump. The Congressional Justification accompanying EPA’s budget also includes policy language supportive of numerous priorities in this area, such as greenhouse gas emissions reporting and mitigation requirements, criteria for air pollutant standards and hazardous air pollutant regulation.

Support for these air programs is not articulated as clearly in the president’s budget document. Perhaps this reflects a conscious decision on the part of the administration to support the continuation of EPA’s regulatory agenda without highlighting it as a central policy issue in the administration’s overall budget. This should serve as a glaring example for industry of why when attempting to advance a Washington agenda, organizations must not underestimate the fine print.

When read in the context of both the budget battle that is set to consume Congress’s attention for the next two months and the president’s continuing re-election efforts, the budget seems a bit more illuminating than at first glance. Although, like previous requests, this year’s budget is more than just a line-by-line financial accounting of the administration’s proposals. The president’s opponents have been trying to make federal spending and budget deficits a central campaign issue, placing greater-than-usual importance on the concept of the budget as a federal ledger.

However, how the budget allocates funds, what it says and what it doesn’t say about specific agency programs, provides real insight into the dynamic between electoral politics and executive branch policy priorities in the lead-up to the election. Though much of what it calls for may not be implemented between now and November, some of it may be, and even what isn’t still has serious implications for organizations in the energy and environment space and beyond, as an indication of where generally the policy winds might be blowing.