Obama deficit control plan draws fire

President Obama's plan to announce a spending freeze for some domestic programs during his State of the Union address tomorrow is drawing fire from pro-labor and progressive activists and economists.

The president is expected to call upon Congress to keep overall spending at $447 billion a year for agencies other than those charged with national security and mandatory-spending programs such as Social Security and Medicare.

The freeze would take effect with the 2011 fiscal year starting Oct. 1, and wouldn't affect the $787 billion economic stimulus plan already being implemented, administration officials say. It also wouldn't include a $154 billion jobs plan pending before Congress.

"The long-term budget problem," said Mark Thoma, writing in the "Economist View," is "due to primarily one thing, rising health care costs. Everything else is dwarfed by that problem. If we solve the health care cost problem, the rest is easy. Instead we get cheap political tricks that are likely to backfire."

Concern about how a freeze would effect needed job creation is also evident.

"A spending freeze will make it even harder to get jobs back because government is the last spender around," declared former Secretary of Labor Robert Reich. "Consumers have pulled back, investors won't do much until they know consumers are out there, and exports are miniscule."

The Huffington Post responded by flagging a 2008 campaign video of Obama criticizing McCain's support at that time for a spending freeze. In the video Obama said "an across-the-board spending freeze is a hatchet when what we need is a scalpel."

"This is not a blunt, across-the-board freeze," the White House said in a rebuttal. "Some agencies will go up, others will go down; but in aggregate for those non-security agencies the total will remain intact."

White House economist Jared Bernstein defended the plan on MSNBC's Rachel Maddow Show last night. "There's also a bunch of emergency spending that's outside of this freeze. The Recovery Act will continue to create employment. New jobs initiatives that the president will be outlining in the State of the Union will also be accommodated under this program."

Remaining skeptical, Maddow shot back: "Not only are you not talking about a second stimulus, you're talking about trying to cut $250 billion out of the budget. I have to tell you it sounds completely, completely insane."

Some say the military budget would be a better place to look for areas in which wasteful spending can be eliminated and are looking forward to what the president has to say in the area of foreign policy tomorrow night.

Some see the freeze proposal as a political gambit that results in insignificant cuts but gives the president a talking point and a toe hold with which to co-opt his moderate antagonists. "But how does the president move from this to an important policy goal?," asks "The Economist," in an editorial. "What room does this leave him to deal with either the jobless recovery of the long-term budget deficit?"

The Republican leadership, of course, shows little inclination to change course as a result of moves by the administration to appease congressional moderates. "Given Washington Democrats' unprecedented spending binge, this is like announcing you're going on a diet after winning a pie-eating contest," said House Minority Leader John Boehner."

Ezra Klein, the pro-labor Washington Post columnist, fears that there are dangers inherent in any type of "freeze" on domestic spending.

"The way this works is simple," Klein said. "The administration will target worthless programs, like agricultural subsidies, in order to preserve good programs. But the reason worthless programs live in budget after budget is they have powerful backers. Now you've removed some of the cuts, but you still want to hit the overall target. So the cuts get reapportioned to hit programs that lack powerful constituencies. Many of those programs help the poor."

The administration has also announced, in a separate move to allay the concerns of the "budget hawks," that it is supporting formation of a deficit commission proposed by Sens. Kent Conrad, D-ND, and Judd Gregg, R-NH.

The Senate is expected today to reject the measure which aims to create a commission that would draft deficit-cutting steps that Congress would have to vote on.

Both the administration and centrist Democrats are expected then to go for creation of the commission by executive order, a move the president might announce during his speech on Wednesday.

 

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  • The dangers inherent in any freeze on domestic spending right now is obvious, it provides a window of opportunity for the Republicans.
    Is this a policy change or a political ploy aimed at the "budget hawks"? No matter how one explains it (ploy or policy), it stands in stark contradiction to job creation, health care and other reforms which require domestic spending.
    We are all looking forward to seeing how these obvious contradictions will be addressed in the President's speech tonight.

    Posted by Frank Chapman, 01/27/2010 8:09am (5 years ago)

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