Thursday, April 14, 2011

In Budget’s Fine Print, Real and Illusory Cuts


WASHINGTON — Few financial problems have generated more public attention in the last few years than mortgage fraud, one of the triggers for the nation’s housing collapse. But even government officials seeking to combat a front-burner issue like that one are feeling the sting of the budget deal struck last Friday to avert a federal shutdown.

With the line-by-line details of the deal finally made public, budget documents show that a $20 million program at the Department of Housing and Urban Development meant to root out mortgage fraud is being reduced to zero.

That was just one of hundreds of budget reductions to emerge Wednesday, as agencies and groups relying on federal money scoured the fine print of the 459-page budget to determine which cuts would hurt the most — and which ones were more illusory than real.

A variety of organizations — including local police agencies and community service groups providing federally financed job training or housing assistance — found that the budget deal reached in Washington would cut deeply into their own budgets.

But other reductions appeared less than meets the eye, even as the White House and Congressional leaders have emphasized the austerity they say the budget reflects.

For instance, the “reductions” included $630 million for unspent earmarks sponsored by individual lawmakers in past budgets. But in reality, little if any of that money was likely to be spent, analysts said. Much of it involved earmarks that have been included in past budgets without the money ever being spent — sometimes because the recipients did not want to move ahead with the projects.

The Commerce Department, meanwhile, is “losing” $6.2 billion that was included in the last budget for its once-a-decade census — money that would not have been spent anyway this budget cycle because the census has already been completed.

“In some cases you have real cuts, like the budget of the Army Corps of Engineers, which will have less money to work with,” said Steve Ellis, vice president of Taxpayers for Common Sense, a Washington watchdog group that advocates for greater fiscal restraint.

“But in other cases,” Mr. Ellis said, “you have cuts that aren’t really cuts.”

At the housing department, officials said they considered it a real cut to lose $20 million for their mortgage fraud program, which was started just last year to help detect abusive lending practices.

“It’s a painful cut,” said Jerry Brown, a spokesman for the housing department. While mortgage fraud will continue to be a top priority for the department, “we’re just going to have to find other ways of doing it,” he said.

Kathleen Day, a spokeswoman for the Center for Responsible Lending, a nonprofit Washington group that works on mortgage issues, said such a cut appears shortsighted and reckless given the damage done by fraudulent mortgages and the potential losses to taxpayers.

“You might save $20 million in the short run,” Ms. Day said, “but you lose a lot more in the long run.”

State and local police will be losing more than $900 million this year — a 25 percent reduction — in Justice Department money used to hire hundreds of local police officers, pay for new technology and provide other services. The cuts come at a time when many departments are already facing state budget crunches.

“This will make an already-difficult situation much worse for state and local law enforcement,” said Gene Voegtlin, director of state programs for the International Association of Chiefs of Police, which is based outside Washington. “People will have to find a new way to police their communities.”

Even weather forecasters stand to take a big hit, with the budget deal slashing money that the Obama administration had initially sought for a satellite-building program considered vital to forecasting.

Jane Lubchenco, head of the National Oceanic and Atmospheric Administration, warned in a Senate hearing on Wednesday that the cutbacks would likely lead to a serious gap in satellite data starting in 2016, undermining National Weather Service forecasts. Research by her agency suggests that without coverage from the new satellites that were to be built with the money, the weather service might fumble forecasts of future storms. Dr. Lubchenco also warned that search-and-rescue missions relying on those satellites could be undermined.

The reduction in satellite coverage, said Daniel Sobien, head of the union that represents government weather forecasters, represents “a big risk.”

Justin Gillis contributed reporting from New York.

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