WASHINGTON – As part of the Administration’s comprehensive plan to make investments that will foster economic growth and job creation while making the tough choices on things we cannot afford, Secretary Tim Geithner today highlighted parts of the President’s Fiscal Year 2012 Budget intended to continue our country on a path toward economic prosperity.
“The President’s Budget puts in place a strategy that promotes future economic growth by making better investments in education, innovation and improving public infrastructure,” said Secretary Geithner. “Through a responsible, multi-year plan to bring down our long-term deficits, we must go back to living within our means so we have the room to make the critical investments that will foster continued economic growth.”
Treasury’s FY 2012 Budget focuses on continuing our economic recovery with targeted investments in areas intended to spur job creation and economic growth, reform the way the federal government does business, and advance national security and our global economic interests.
Spur Economic Growth and Job Creation
Treasury’s efforts to spur economic growth include targeted investments to help U.S. businesses create jobs, out-innovate and out-compete the rest of the world. To help small businesses, which are key drivers of job growth in our economy, Treasury is implementing two new programs as part of the Small Business Jobs Act of 2010. The Small Business Lending Fund will increase the availability of credit to small businesses by providing capital to community and smaller banks, while the State Small Business Credit Initiative provides $1.5 billion to strengthen state programs that support lending to small businesses and small manufacturers.
Treasury’s Budget also aims to encourage private sector investment in start-ups and small businesses operating in low-income communities through investments in the Community Development Financial Institutions (CDFI) Fund’s core merit-based grant program. However, recognizing that the fiscal reality demands tough choices, Treasury’s FY 2012 Budget proposes to reduce financing for the CDFI Fund’s grant programs overall by close to $20 million.
“The challenge is not just to cut spending and reduce deficits. The challenge is how to do so in a way that's going to be supportive of long-term growth – to make us more competitive, make sure our children get a high quality education, and make sure our companies remain the most innovative and the most competitive in the world,” Secretary Geithner added.
Treasury is making these targeted investments against the backdrop of much greater financial stability for our country due to policies put in place by this Administration and Congress that helped pull the economy back from the brink and established the basis for the ongoing recovery. Due to Treasury’s prudent stewardship of the Troubled Asset Relief Program (TARP), the lifetime cost of the program is now estimated at $48 billion, significantly reduced from the FY 2010 cost projection of $303 billion and much lower than anyone thought possible. When also including AIG common stock held for the benefit of Treasury outside of TARP, that current projected cost drops to $28 billion. TARP has allowed participating institutions to stabilize their balance sheets and avoid further losses, leaving the nation’s financial system in a much stronger position than it was before the crisis.
Treasury is also working aggressively to implement critical reforms under the Wall Street Reform and Consumer Protection Act, providing the strongest consumer protections in a generation and ushering in a new era of oversight of our financial system. The President’s Budget includes the funding necessary to protect consumers from abusive financial practices; bring key agencies to the table to establish new rules of the road under a collaborative, rigorous and transparent process; ensure that the government has the information and analytical tools it needs to respond appropriately to future crises; and establish needed insurance expertise at the Federal level. Treasury has also put forward a path for fundamental reform of the housing finance market that will wind down Fannie Mae and Freddie Mac, fix the fundamental flaws in the mortgage market, and preserve access to affordable housing for people who need it while continuing to support the recovery and the process of repair of the housing market. These reforms are key to restoring the American financial system as an engine for lasting economic growth.
Reform How Government Does Business
While making targeted investments, Treasury’s Budget places a priority on reforming how the government does business by identifying nearly $1 billion in savings, including $336 million in direct cost savings and efficiencies and $630 million in offsets primarily from assets seized as a result of violations of U.S. sanctions. The Department’s Budget includes requests well below the FY 2010 enacted level in five of its bureaus and proposes efficiency savings and program reductions across all Treasury bureaus.
Treasury also identified additional cost savings and efficiencies through a continued increase in paperless transactions that is expected to save $524 million in the first five years, and increased use of e-File, which will save the IRS tens of millions of dollars each year. In order to streamline processes and reduce waste, Treasury plans to consolidate its data centers, moving from 42 data centers in FY 2010 to 29 by FY 2015. Treasury is also working to improve the collection of delinquent tax and non-tax debt by more than $5 billion over the next 10 years. The Bureau of Public Debt will also expand upon and maintain the Administration’s VerifyPayment.gov portal to prevent ineligible recipients from receiving payments from the Federal government.
Because new tax cuts aimed at helping taxpayers and stimulating the economy over the last few years have increased the volume of calls to toll-free service lines at the IRS, Treasury’s Budget request includes increased funding to improve service on IRS toll-free service lines. Treasury’s Budget also requests increased funding for IRS systems modernization and tax enforcement to improve compliance. Every dollar spent on IRS yields more than four dollars in increased revenue from non-compliant taxpayers, and these enforcement investments are expected to produce more than $1.3 billion in additional annual revenue once fully implemented in FY 2014. Additionally, Treasury’s request includes funding for new initiatives critical to full and effective IRS implementation of the Affordable Care Act, which is projected to lower the deficit by more than $200 billion this decade and by more than $1 trillion in the following decade
Advance Our National Security and Global Economic Interests
To advance our national security objectives, Treasury’s Budget sustains the Department’s investment in counter-terrorism and financial crime programs and coordination of financial intelligence government-wide. This includes funding for implementing targeted economic sanctions against foreign threats to the United States; keeping the world’s financial systems accessible to legitimate users while excluding those who wish to exploit the systems for illegal purposes; and stopping the flow of money to terrorist organizations, drug traffickers, money launderers, weapons proliferators, rogue regimes and their support networks.
Treasury’s Budget also includes targeted and highly leveraged investments in multilateral programs that promote national security, foster economic growth and fight global poverty. Funding for these requests will help catalyze growth in developing nations and address causes of global instability and conflict, thereby strengthening opportunities for American economic growth and prosperity.
To view the Budget in Brief, visit link.