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Four Ways Obama’s Budget Impacts Oklahoma’s Economy

  • Joe Wertz

EWEL SAMAD / AFP/Getty Images

President Barack Obama’s $3.8 trillion budget, which calls for tax hikes on the affluent and spending to boost economic growth, has set the stage for an election-year showdown with Republicans.

It’s a political exercise, and Congress — in typical fashion — will likely ignore much of the president’s proposal. But the president’s budget reflects his policy priorities, which have renewed prescience in an election-year.

Obama’s budget would impact Oklahoma’s economy in four big ways.


1. Aerospace

Obama requested no future funding for an aircraft modernization contract, which employs Boeing engineers transferring to Oklahoma City, The Oklahoman‘s Chris Casteel reports. The contract will receive $208 million this fiscal year.

h7536n / Flickr

2. Agriculture

Obama wants to cut subsidies for the agriculture industry by about $32 billion over the next decade. The plan includes eliminating $5 billion a year in direct payments to farmers, which Reuters reports are distributed “regardless of need.”

Oklahoma farmers — mostly wheat farmers — receive about $81 million a year in direct subsides, according to The Oklahoman.

Obama has proposed similar cuts in every annual budget for the last several years, as did his predecessor, George W. Bush, the Associated Press reports. Congress has blocked such moves, but the “mood has shifted” in D.C., according to the AP.

“…even farm-state lawmakers say that direct payments should be cut.”

Obama’s budget also cuts crop insurance, which has drawn the ire of Oklahoma U.S. Rep. Frank Lucas, R-Cheyenne, who chairs the House Agriculture Committee.

From The Oklahoman:

“President Obama’s proposal to cut crop insurance threatens the integrity of the program itself. And, he ignores other areas for savings such as streamlining or eliminating duplicative programs in conservation, or closing loopholes in nutrition spending,” Lucas said.

Megabeth / Flickr

3. Energy

Obama’s plan would repeal tax breaks popular with independent oil and natural gas producers, which include a domestic manufacturing credit and deductions for certain drilling expenses. Eliminating such credits would save about $40 billion through 2021, according to Obama’s budget request.

Not surprisingly, the energy industry criticizes such efforts, while clean-energy proponents said the moves would help make solar power and electric vehicles more competitive.

The impact isn’t clear, writes the Wall Street Journal’s Keith Johnson. The effect, he writes, might depend on the size of the oil and gas company:

“… Executives at big oil companies, including Exxon, have said that the tax benefits aren’t decisive in investment decisions, especially when oil prices are around $100 a barrel. But for some smaller oil and gas producers, some of the tax benefits play a larger role, because those producers have less capital in a capital-intensive industry.”

Rep. John Sullivan, R-Tulsa, criticized Obama’s plan, which he said doesn’t parallel statements the president made in the State of the Union Address.

“President Obama called for increased production of domestic oil and gas — and now he presents a budget that makes his own goal impossible to achieve by targeting domestic oil and gas producers with punitive tax increases,” Sullivan told The Oklahoman.

Staff Sgt Lakisha A. Croley / U.S. Air Force

4. Military

Obama’s budget calls for Congress to approve two new Base Realignment and Closure — or BRAC — rounds.

Oklahoma has five military installations and has never had a base shuttered from a BRAC round. Sen. Jim Inhofe, R-Tulsa, told the Enid News & Eagle he opposes the president’s plan:

“However, should we lose that fight, I am ready to stand with our communities to highlight Oklahoma’s strengths that have benefited all our military installations in past BRAC rounds,” he told the paper.

In FY 2010, there were more than 69,000 military, federal civilian and contractors employed at installations in Oklahoma, Department of Commerce data show.

Some good news for Oklahoma’s military: Federal civilian workers would get a 0.5 percent raise, while Obama’s budget would give active-duty military personnel a 1.7 percent raise.

The good times might not last, reports Army Times:

Parity with the private sector would continue in 2014. However, in 2015, the Pentagon plan would have military pay raises dip slightly below private-sector wage growth for the first time since the late 1990s.