Republicans propose energy program cuts in 2012 budget outline

Washington (Platts)--5Apr2011/118 pm EDT/1718 GMT

Republicans in the US House of Representatives proposed trimming federal energy programs -- but did not specify where, or by how much specific programs would be cut -- in their budget outline for fiscal 2012.

Representative Paul Ryan, Republican-Wisconsin, unveiled a budget in a news conference Tuesday morning that would cut $179 billion in total federal spending compared with President Barack Obama's 2012 budget, but did not detail where those cuts would come from.

Ryan, who heads the House Budget Committee, did say Republicans plan to encourage more domestic oil and gas production and less spending on some energy research.

"This budget would continue funding essential government missions, including energy security and basic research and development, while paring back spending in areas of duplication or non-core functions, such as applied and commercial research or development projects best left to the private sector," Ryan said in his budget.

The top Democrat on the Budget Committee, Representative Chris Van Hollen of Maryland, said Republicans cut too much spending without eliminating unnecessary tax breaks, including subsidies to the oil and gas industry.

"The question is not whether to reduce the deficit, but how," Van Hollen said. "To govern is to choose, and it is not courageous to protect tax breaks for millionaires, oil companies, and other big money special interests while slashing our investments in education, ending the current health care guarantees for seniors on Medicare, and denying health care coverage to tens of millions of Americans."

The release of the budget is an early step in what is shaping up to be a lengthy back-and-forth between Obama, Senate Democrats and House Republicans over how much the federal government should spend, and where the money will go. After each chamber passes a budget, the House will begin work on the appropriations bills that set out federal spending. The 2012 fiscal year begins October 1.

At the news conference Tuesday, Representative Jason Chaffetz, Republican-Utah, said the shift in priorities would allow markets to choose how US energy development unfolds.

"We can't have government pick winners and losers from Washington DC," Chaffetz said.

Obama has requested a total of $29.5 billion for the Department of Energy for 2012, including $11.8 billion for nuclear weapons and nonproliferation, $6.3 billion for nuclear waste cleanup and $10.2 billion for energy efficiency and renewable energy, nuclear energy and science.

In his budget, Ryan hinted that Republicans plan to propose Environmental Protection Agency cuts, saying the spending plan "scales back spending on government bureaucracies seeking to impose a job-destroying national energy tax."

Meanwhile, Congress is still trying to pass spending bills for the 2011 fiscal year, which ends September 30, and has until Friday to avert a government shutdown. Obama planned to meet with congressional leaders from both parties Tuesday in an attempt to reach a spending compromise, White House Press Secretary Jay Carney said in a briefing with reporters Tuesday morning.

"Before we talk about what might happen if we can't reach an agreement, the President believes that -- and the reason why he called this meeting today is because he believes that an agreement is possible," Carney said.

House Appropriations Committee Chairman Hal Rogers, Republican-Kentucky, just before midnight on Monday proposed a one-week, stopgap spending bill that included $632 million in cuts to energy and water programs among $12 billion in total cuts. Democrats, including House Whip Steny Hoyer, of Maryland, said Tuesday they would not agree on a one-week spending bill.

--Keith Chu, keith_chu@platts.com

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