Obama Budget Boosts ITA, USTR, Cuts Commerce Spending Overall

Daily News, Inside U.S. Trade
Posted: February 14, 2011

The $3.7-trillion budget unveiled on Feb. 14 by President  Obama shows clearly that trade is an administration priority by boosting funding for the International Trade Administration (ITA) by tens of millions of dollars and increasing funds for the Office of the U.S. Trade Representative by about 5 percent over this year’s level.

USTR is set to receive a $2 million increase when compared to its current 2011 funding level if it were annualized for a total of $51million. The budget would increase $3 million compared to 2010 funding levels.

Last week, U.S. Trade Representative Ron Kirk testified to the House Ways and Means Committee that a lack of resources is hindering his office’s ability to perform basic enforcement-related duties (Inside U.S. Trade, Feb. 11).

For ITA, the fiscal year 2012 proposal would give a boost of $70 million over the 2011 level for a total of $517 million. But the ITA budget will be boosted by another $9.4 million for a total of $526 million through fees that the agency expects to collect from business-specific services of the U.S. and Foreign Commercial Service such as the Gold Key program, according to a Commerce spokesman.

Within ITA, the 2012 budget proposes increases nearly across the board – funding that would back up the president’s National Export Initiative, Acting Commerce Deputy Secretary Rebecca Blank said in a conference call with reporters.

Market Access and Compliance would see a jump to $52 million, up from $47 million in 2011; the Import Administration would get $72 billion, up from $68 million this year; and the U.S. and Foreign Commercial Services would experience an overall boost in funding up to $314 million, up from $260 million this year.

Also within Commerce, the White House budget proposal would increase funding for the Bureau of Industry and Security (BIS) by $11 million over 2011 levels to $111 million total. BIS enforces export controls on dual-use goods and technology.

In contrast, the House Republican Continuing Resolution (CR) to fund the U.S. government for the remainder of the current fiscal year would cut ITA funding by $5.2 million compared to the actual fiscal year 2010 funding level, and would reduce it by $92.7 million from the president’s FY 2011 request. The legislation, H.R. 1, is slated to be considered on the House floor today (Feb. 15).

The boost for trade-related programs in the Obama budget seems to fulfill the expectations laid out last week by Commerce Undersecretary Francisco Sanchez, who heads the ITA. Sanchez said on Feb. 11 that he anticipated the presidential budget to reflect Obama’s drive to double exports by 2014.

But the increases to ITA are more than offset by Commerce’s cutting of $242 million from 2011 levels – cuts that include eliminating foreign commercial posts and trade adjustment assistance (TAA) programs – to reach a pared-down budget of $8.8 billion.

Figures for the current year are an annualized estimate of 2011 federal funding levels established in a short-term CR that expires on March 4. Due to political wrangling over government spending, 2011 appropriations have still not been enacted.

Compared with the enacted budget of 2010, the FY 2012 proposal for Commerce sheds $5.1 billion, mostly by winding down the 2010 Decennial Census.

“The Commerce Department’s $8.8 billion FY 2012 discretionary budget reflects the two paramount priorities outlined by the president: reducing spending and making target investments that will help America win the future,” said Blank.

She outlined a number of “significant”cuts including $20 million achieved by, in part, eliminating Foreign Commercial Services posts – managed by ITA – while focusing on “high-priority markets and industries.”

This could mean, for example, closing offices in low-priority countries to free up funding for an expansion in Beijing as China’s economic power continues to rise, she said. “[T]his is a matter of focusing the resources overseas as effectively as we can.”

The 2012 Commerce budget also eliminates the Economic Development Administration’s ( EDA) TAA for Firms program, saving $15.8 million, according to Blank. The department, in addition, is not requesting money for the TAA for Communities.

“That should not be read as a retreat on this administration’s commitment to help workers, farmers, firms and communities impacted by trade,” the deputy secretary said.

She suggested that some of the funding would be reallocated. “We’re instead ramping up the EDA’s Economic Adjustment Assistance program, which can get money out more quickly and with far lower overheads costs, meaning more help for the communities that need it.”

For the Export-Import Bank, the Obama budget estimates that transactions will generate funds sufficient to back export credit support totaling $32 billion.

Phil Cogan, an Ex-Im spokesman, said this would translate into about $40 billion in export value because borrowers must put some money down themselves for each transaction. He said this would equal about 290,000 American jobs created or sustained, using a bank formula that equates 7,250 jobs to every $1 billion in U.S. exports.

There are no appropriations for the activities of the bank nor its administrative budget, according to Cogan.

The Obama budget proposal would also nearly halve the amount of money for the Small Business Administration (SBA), which, among other things, helps smaller enterprises move into exporting. Total funding for the SBA would be $985 million under the proposal, a reduction of 45 percent from the enacted 2010 budget.

The budget proposal also contains a five-year freeze on all discretionary spending not related to security, saving $400 billion over the next decade.

The Obama budget proposal was immediately criticized by Republicans as not cutting government spending enough. H.R. 1 would cut spending by over $100 billion from the President’s fiscal year 2011 request, according to an announcement posted on the House Appropriations Committee website.

The announcement emphasized the need to complete the legislative work on a continuing resolution by March 4 in order to avoid a government shutdown. The Appropriations Committee will then continue with what the announcement called the regular budget work, which will entail further cuts to discretionary spending.

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