How Obama's 2015 Budget Proposal Will Affect Commodities

By Commodity HQ  MAR 06, 2014 12:05 PM

A closer look at the budget breakdown reveals several key factors commodity traders and investors should be aware of -- particularly for the energy and agriculture industries.

 


Earlier this week, President Obama unveiled his budget proposal for the year beginning October 1. The proposed 2015 budget totals $3.9 trillion, including certain tax increases, as well as budget cuts and increases across nearly all departments. A closer look at the breakdown of Obama's budget reveals several key factors commodity traders and investors should be aware of -- particularly for the energy and agriculture industries.

In the President's message, Obama stated "We also know that one of the biggest factors in bringing more jobs back is our commitment to American energy… The Budget advances this strategy by ensuring the safe and responsible production of natural gas and cleaner electricity generation from fossil fuels." In regard to agriculture, however, the President's outlined budget is significantly smaller than last year.

Energy Spending to Increase 2.6%

The proposed budget will provide $27.9 billion in discretionary funds for the Department of Energy, marking a 2.6% increase from last year. The funds are aimed to "position the United States to compete as a world leader in clean energy and advanced manufacturing. Some of the budget highlights include:

The budget also outlined subsidy reforms:

Outside the Department of Energy, Obama's budget also outlined a 3.7% reduction in funding for the Environment Protection Agency. The agency's proposed budget will total $7.9 billion; the spending plan focuses on reducing carbon output from vehicles and power plants.


Agriculture Spending to Shrink 7.9%

Obama's proposed budget provides $23.7 billion in discretionary resources for the Department of Agriculture -- a 7.9% decrease from last year. The spending plan includes increased investments in rural communities, renewable energy, and agricultural research. The budget includes:

The proposed agriculture reforms include:

Together with the other changes proposed in Obama's budget, the President expects his blueprint to steer the country to shrink the deficit to 1.6% of the economy by 2024.

Editor's note: This article by Daniela Pylypczak was originally published on Commodity HQ.

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