For Regulatory Agencies, Intrigue in an Otherwise Bleak Budget

President Barack Obama's proposed budgetary spending freeze would have varying impacts on the regulatory agencies responsible for protecting public health and welfare. Oversight of industry and solving new and neglected problems may dwindle as environmental and consumer safety regulators are forced to operate in a constrained fiscal environment.

On Feb. 1, the White House Office of Management and Budget (OMB) released Obama's proposed budget for FY 2011, which begins Oct. 1, 2010. The budget calls for an overall spending freeze for all discretionary non-defense and non-security programs. The president said he will continue to propose the freeze through FY 2013.

Obama's proposed budget cuts funding for programs at the U.S. Environmental Protection Agency (EPA) and the U.S. Fish and Wildlife Service (FWS). It gives only modest increases to consumer programs at the Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA), as well as the Consumer Product Safety Commission (CPSC) – the regulator of consumer products including everything from toys to toasters.

However, because Obama has proposed an overall cap, as opposed to a line-item-by-line-item freeze, the administration can shift funds to reflect its priorities. Other regulatory agencies fare relatively well under the FY 2011 budget, including those at the Department of Labor.

In a statement, OMB Watch criticized the overarching message Obama is sending by limiting non-defense discretionary spending, which represents just over ten percent of the overall federal budget: "His three-year freeze on non-security discretionary spending to reduce the deficit and debt is like attempting to empty the ocean with a teaspoon. It misses the major structural problems: entitlement spending and health care, in particular, as well as growing tax expenditures."

For years, regulatory agencies have suffered without adequate funding and staff. As a result, agencies have been unable to respond promptly to public needs, unable to enforce regulations already on the books, and unable to balance the views and needs of both the public and industry. The consequences have been clear: toys coated in lead paint, food contaminated with E. coli and salmonella bacteria, greenhouse gases pumped into the atmosphere, and banks violating customer rights while jeopardizing global financial stability. Most recently, with questions about the safety of some Toyota cars, there has been speculation about government’s regulatory capacity.

The resource constraints appear more pointed when compared to the size of the regulated communities. Agencies like the FDA and USDA must keep tabs on a food supply that is not only growing in size but coming from an increasing number of foreign nations. Worker protection agencies are responsible for the regulatory needs of an evolving workforce.

Regulatory agencies are among the numerous interests jockeying for position in a vast federal budget, which under Obama's FY 2011 proposal would top $3.6 trillion; their share of the overall budget is minor by federal standards. Of the major regulatory agencies, EPA's budget is the largest at approximately $10 billion – less than three-tenths of one percent of all federal spending.

The EPA's budget illustrates the complications of the federal budgeting process and presidential priorities. The budget proposal cuts EPA's overall budget $278 million, or 2.8 percent, in FY 2011 after a monumental $2.7 billion increase in FY 2010. But while the overall budget declines, funding for clean air and climate change programs – high priorities for the Obama administration – increases dramatically at both the federal and state levels. Funding for climate change research is also on the rise at other agencies.

Funding at the Occupational Safety and Health Administration (OSHA) may also mirror the president's priorities. The budget for OSHA's rulemaking division rises to $24 million from $20 million while cutting $3 million, or about 4 percent, from compliance assistance programs.

Despite the increase, OSHA's overall staffing level is expected to drop in FY 2011 – from 2,419 to 2,368 full-time employees. Obama's budget states, "The 2011 Budget builds on the 2010 Budget policy of returning worker protection programs to the 2001 staffing levels, after years of decline." (Budget information for other Labor Department agencies is available in the chart below.)

The toll of Obama's discretionary spending freeze on regulatory budgets may once again fall heavily on the CPSC. The agency has had significant spending boosts after years of cuts, but the agency is shortchanged in Obama's budget proposals. In both FY 2010 and FY 2011, Obama proposed minimal increases for the long under-funded agency, including a paltry $400,000 increase for FY 2011.

After an auspicious start to his administration, Obama's commitment to food safety has also been questioned. His 2009 Food Safety Working Group set forth an ambitious agenda for the administration to follow, and the FY 2010 budget pledged significant funding and staffing increases for FDA's food safety efforts. However, Obama's budget requests have been less attentive toward the needs of the Food Safety and Inspection Service (FSIS) within USDA, the regulator of meat, poultry, and eggs.

FDA's overall budget, which covers non-meat foods, pharmaceuticals, medical devices, and tobacco regulation, receives another increase in FY 2011. Obama's budget raises the agency's budget by about $500 million, including industry-paid licensing and registration fees, also known as user fees. That figure does not include an additional $289 million in new user fees currently under consideration in Congress, most of which would go toward food safety. Obama's budget increases the existing food safety line item to $848 million, from $784 million.

But again in FY 2011, Obama's budget proposes a more modest increase – $18 million, or 1.6 percent – for FSIS. The agency is required by law to inspect and approve all meat, poultry, and egg products destined for human consumption, a resource-intensive task. While food consumption has risen in the U.S., especially poultry consumption, FSIS staffing levels have fallen, from almost 10,000 in the early 1980's to less than 9,200 in 2007. The decline has resulted in high vacancy rates among the inspectorate in FSIS's field offices. In recent years, the situation has improved moderately, and Obama's FY 2011 budget projects more than 9,600 full-time employees.

Because the president proposed a three-year spending freeze, worry over resources for federal agencies is likely to continue. "The president does little to fund fully the vital national programs that help financially stabilize families and protect all Americans from harm caused by contamination of the environment, our food supply, and consumer goods," OMB Watch says.

Congress has begun the months-long process of hearings and votes on individual parts of the budget proposal. Although budget priorities will likely change as this process goes forward, both the administration and Congress have expressed support for rebuilding agencies responsible for consumer products, workplace safety, and addressing some key environmental issues. Balancing that support with calls for curbing spending is always the challenge.

Regulatory Agency Budgets, FY 2009 - FY 2011. (All values in millions)

Agency FY 2009 (enacted) FY 2010 (enacted) Change, 2009-2010 FY 2011 (proposed) Change, 2010-2011
U.S. Environmental Protection Agency (programs)1 $2,575 $3,078 19.5% $2,969 -3.54%
U.S. Fish and Wildlife Service2 $1,474 $1,445 -2.0% $1,418 -1.9%
Food and Drug Administration3 $2,671 $3,233 17.1% $3,743 15.77%
Food Safety and Inspection Service4 $1,107 $1,140 3.0% $1,158 1.6%
Occupational Safety and Health Administration5 $521 $561 7.7% $575 2.5%
Mine Safety and Health Administration6 $348 $359 3.2% $363 1.1%
Employment Standards Administration7 $455 $542 19.1% $613 13.1%
National Highway Traffic Safety Administration8 $127 $140 10.2% $133 -5.0%
Consumer Product Safety Commission9 $108 $122 12.96% $123 0.8%

1Budget authority for Environmental Programs Management account, Environmental Protection Agency.
2Budget authority for Resource Management account, Fish and Wildlife and Parks, Department of the Interior.
3Budget authority for Salaries and Expenses account, Food and Drug Administration, Department of Health and Human Services.
4Budget authority for Food Safety and Inspection Service account, Food Safety and Inspection Service, Department of Agriculture.
5Budget authority for Salaries and Expenses account, Occupational Safety and Health Administration, Department of Labor.
6Budget authority for Salaries and Expenses account, Mine Safety and Health Administration, Department of Labor.
7Budget authority for Salaries and Expenses account, Employment Standards Administration, Department of Labor. In FY 2010, the Employment Standards Administration was dissolved into its four major sub-components: Office of Worker's Compensation Programs; Wage and Hour Division; Office of Federal Contract Compliance Programs; and Office of Labor Management Standards. The figure for FY 2011 is the aggregate of those four agencies.
8Operations and Research account, National Highway Traffic Safety Administration, Department of Transportation.
9Salaries and Expenses account, Consumer Product Safety Commission, Other Independent Agencies.
All data taken from Budget of the U.S. Government: Appendix, FY 2011. Available at

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