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Deep cuts, chance of gains for state in Obama budget

Programs for poor would take big hit Targeted spending could add jobs

By Donovan Slack and Stephen Smith
Globe Staff / February 15, 2011

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WASHINGTON — The $3.7 trillion budget that President Obama unveiled yesterday would deliver pain to many struggling residents of Massachusetts — from inner-city youths to the elderly — while doling out money for clean energy research and road construction that could create jobs in the state.

Obama’s budget lays the groundwork for a political battle with the GOP-controlled House, which is urging much deeper cuts to fight the nation’s deficit more aggressively. Obama’s proposal also quickly drew criticism yesterday from the other side of the political spectrum, as some Massachusetts Democrats and social-service advocates decried the cuts as excessively harsh.

The cuts would have a far-reaching impact. The budget calls for reducing federal subsidies for airline hubs like Logan International Airport, for instance, while threatening small community programs at museums like the Peabody Essex on the North Shore. Children’s Hospital Boston would lose millions it gets now to help train new pediatricians.

In Boston, social programs would be severely affected, local officials and advocates said. Fourteen food pantries would get less financial help; so would 6,000 city residents who get vouchers for day care. Fuel assistance for 27,000 Bostonians, including many elderly and disabled, would be reduced.

Cuts would be made in programs that prevent children from getting asthma and lead poisoning in their homes. Pell Grants for students attending college in the summer would be eliminated.

With his budget, Obama is seeking to reduce the federal deficit by $400 billion over 10 years with deep cuts in certain areas even as he proposes to stimulate job growth with greater spending in others, an initiative he calls “winning the future.’’

He would inject tens of billions of dollars into a New Deal-style effort to put people to work building highways and rail lines. He seeks, with new enticements for investment and research, to fuel a fresh spurt in alternative energy production and technology. Such spending has the potential to help retain or create new jobs in Massachusetts.

At the same time, however, the Massachusetts biotechnology industry denounced a planned reduction from 12 years to seven in their market exclusivity for new drugs. The move would save money for Medicare by introducing generic competition faster, but it would hurt the bottom line of biopharmaceutical companies that employ tens of thousands of people in the state.

“The president talked eloquently in his State of the Union address about the need for innovation,’’ said Robert K. Coughlin, president and chief executive of the Massachusetts Biotechnology Council.

“This change in the budget would actually hinder innovation and position employees in foreign countries to manufacture generics.’’

Governor Deval Patrick, a close ally of Obama’s, defended the broad outlines.

“He’s making tough decisions, just like we are,’’ Patrick told reporters at the State House.

But Representative Edward Markey, the Democrat from Malden, said 50 percent, across-the-board cuts to community service block grants — which cities and towns use to help disadvantaged citizens — are too deep.

“These programs aren’t just lines in a budget — they’re lifelines for our most vulnerable, and they must be preserved,’’ Markey said. “We must not balance the budget on the backs of disadvantaged citizens in our communities.’’

Senator Scott Brown, the only Republican member of the state’s congressional delegation, agreed with critics who said heating-oil assistance should not be cut.

But he joined other congressional GOP members in criticizing the budget overall as doing too little to control the deficit. Even while cutting the projected growth in the deficit by $400 billion, Obama’s approach would still result in an increase in the overall federal debt from $14.2 trillion now to nearly $21 trillion by 2016.

“His budget does not put us on solid fiscal ground. Instead, this budget contains mixed-up priorities,’’ Brown said.

The president wants to increase the budgets of the departments of Education and Transportation. His plan includes spending $556 billion over six years on construction of highways, transit, and high-speed rail. States would have to compete for the money.

The biggest reductions are in the Department of Housing and Urban Development, which is slated to take a 15.5 percent cut in its budget under Obama’s proposal, and the Department of Labor, which would face a 27.2 percent decrease.

The president would cut in half an $825 million program that provides job training to low-income seniors.

Nearly $320 million to help train pediatricians and pediatric specialists at children’s hospitals would be eliminated. Children’s Hospital Boston stands to lose $21 million.

“We are already so short-handed that, clearly, this would be a real disaster for the youth of the country,’’ said Dr. James Mandell, chief executive officer of Children’s Hospital Boston.

General academic medical centers like Massachusetts General Hospital get extra money from Medicare to train residents. But Medicare, geared to seniors, does not reimburse children’s hospitals.

“It would be incredibly short-sighted to say we are not going to invest in pediatric programs just because this is done through a separate mechanism of funding,’’ Mandell said.

Also facing cuts are two signature programs of the Boston Public Health Commission. The city agency has been a pioneer in dispatching health workers to older homes in Dorchester, Roxbury, and other neighborhoods, and working with residents to eliminate the environmental triggers that inflame asthma. That campaign, known as Healthy Homes, aims to spare asthmatic children from trips to the hospital, where treatment can cost thousands of dollars.

The Obama proposal slashes by half — from $66 million to $33 million nationally — the amount spent as part of the Healthy Homes program. It’s unclear how much money Boston could lose.

The administration’s budget plan would also cut funding for an initiative that endeavors to bridge health inequities among racial and ethnic groups.

Barbara Ferrer, executive director of the city health agency, said Boston could forfeit more than $1 million in aid that is part of the Racial and Ethnic Approaches to Community Health program.

“I’m hoping that as a country, as we make tough decisions, we don’t make tough decision on the backs of those who can least afford to have services curtailed or who already bear an inequitable burden of disease and death,’’ Ferrer said. “I’m just hoping there’s some fairness about how we think about the need to balance the budget.’’

Mayor Thomas M. Menino said he has directed his staff to prepare a detailed analysis of the president’s budget by early next week to gauge the precise local impact, but some potential fallout is immediately obvious, including from a proposed $2.5 billion reduction in fuel assistance, which helps 27,000 families and seniors in the city heat their homes.

Another significant hit would be the 12- to 15-percent cut in public housing operating subsidies, which would affect roughly 10 percent of residents in Boston Housing Authority developments.

The president’s proposal to cut all $9 million in assistance to a group of whaling and Native American museums would reduce the budget for the Peabody Essex Museum in Salem by $1.5 million, forcing the museum to stop or pare back its paid internship program for underserved youth, teacher training, educational programming, and exhibitions of Native American art.

“There would be a lot of audiences that we would not be able to deliver our content to,’’ said the museum’s marketing director, Jay Finney.

Some industries in Massachusetts stand to gain from the president’s proposal, though. Peter Rothstein, president of the New England Clean Energy Council, an organization that represents the interests of 200 regional clean energy companies, said he was encouraged by a $550 million allocation to benefit a federal grant program for emerging technologies, such as biofuel, energy storage, and wind power.

Since the program’s inception in 2009, Massachusetts universities and companies have received $23.6 million, about 13 percent of the program’s overall funding so far.

“Massachusetts has a lot of innovation going on in its universities and early-stage companies,’’ Rothstein said, “and these all need to have the kind of innovation and funding support that seem to be recognized in this budget.’’

Michael Levenson, Andrew Ryan, Theo Emery, Meg Woolhouse, Hiawatha Bray, and Rob Weisman of the Globe staff contributed to this report. Material from the Associated Press was used. Donovan Slack can be reached at dslack@globe.com.

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