The President's Budget Fiscal Year 2009: Impact on the States

The administration released its fiscal year 2009 $3 trillion budget request on Monday, February 5. An overview of the budget proposal along with state-level breakdowns on selected programs are available.

Budget Cuts Continue in 2009

Domestic programs intended for needy communities and families suffer the biggest cuts under the President's proposed budget for fiscal year 2009, including Low-income Home Energy
Assistance, Community Development Block Grants, Housing Vouchers, and Child Care Assistance. Discretionary Grants to state and local governments would also be cut by 10 percent.

War Spending Continues to Increase

Meanwhile, the President's fiscal year 2009 budget proposes an additional $70 billion in war-related spending, on top of the $102.4 billion the Administration continues to pursue for fiscal year 2008. The amount requested for fiscal year 2009 is merely a placeholder for the first few months of next fiscal year, vastly underestimating what would be required to continue the war in Iraq at the current level of involvement. The administration plans to seek additional funding for fiscal year 2009 in the Spring. The Iraq war has thus far cost $522 billion.

In addition to proposed war funding, the non-war military budget will increase by nearly 5% over that of fiscal year 2008 under this proposal, reaching $541 billion in fiscal year 2009. This includes funding for nuclear weapons under the Department of Energy budget.

Tax Cuts for Wealthy Made Permanent

The budget request makes permanent the tax cuts of 2001 and 2003, the benefits of which will accrue to the wealthy. According to the Center on Budget and Policy Priorities, the wealthiest 1 percent would receive 31 percent of the windfall over the next 10 years, the top 20 percent would receive 74 percent, and those in the lowest 60 percent of households would receive only 12 percent.

Large Deficits Continue

The combination of increases in military spending and tax cuts will contribute to deficits of $407 billion in 2009, and $410 billion in fiscal year 2008.

State-Level Tables

The tables below show the real cuts to each state for selected programs. The consumer price index (urban) as published in U.S. Budget of the Government, Analytical Perspectives, FY2009, Table 12-1, has been used to adjust the 2008 amount for inflation so that the dollar amounts are in 2009 dollars.