Tuesday, January 26, 2010

Obama's Budget Freeze Symbolism

Jakie Calmes notes that Obama's budget freeze is mostly political symbolism. See, "Obama Seeks Freeze on Many Domestic Programs."

Also, until I have a chance to read over the whole proposal, see the Wall Street Journal, "Budget Freeze Is Proposed: White House Plan Applies to Only 17% of Spending; Small Impact on Deficit":

President Barack Obama intends to propose a three-year freeze in spending that accounts for one-sixth of the federal budget—a move meant to quell rising concern over the deficit but whose practical impact will be muted.

To attack the $1.4 trillion deficit, the White House will propose limits on discretionary spending unrelated to the military, veterans, homeland security and international affairs, according to senior administration officials. Also untouched are big entitlement programs such as Social Security and Medicare.

The freeze would affect $447 billion in spending, or 17% of the total federal budget, and would likely be overtaken by growth in the untouched areas of discretionary spending. It's designed to save $250 billion over the coming decade, compared with what would have been spent had this area been allowed to rise along with inflation.

The administration officials said the cap won't be imposed across the board. Some areas would see cuts while others, including education and investments related to job creation, would realize increases.

Among the areas that may be potentially subject to cuts: the departments of Housing and Urban Development, Justice, Energy, Transportation, Agriculture, and Health and Human Services.

"We're not here to tell you we've solved the deficit, but you have to take steps to put spending under control," a senior administration official said.

The spending freeze, which is expected to be included in Wednesday's State of the Union address and the president's Feb. 1 budget proposal, is one of a series of small-scale initiatives the White House is unrolling as the president adjusts to a more hostile political terrain in his second year. On Monday, the president unveiled a set of proposals aimed at making child care, college and elder care more affordable.

"Given Washington Democrats' unprecedented spending binge, this is like announcing you're going on a diet after winning a pie-eating contest," said Michael Steel, spokesman for House Minority Leader John A. Boehner (R., Ohio). "Will the budget still double the debt over five years and triple it over 10? That's the bottom line."

Responding to criticism, administration officials acknowledged the freeze is directed at only a small part of overall spending, but that fiscal discipline has to start somewhere. President Obama had requested a 7.3% increase last year in the areas he now seeks to freeze. White House officials said they had achieved 60% of the $11.5 billion in cuts outlined in the budget for the current fiscal year.

Mr. Obama will also propose the creation of a deficit commission to look for potential solutions for the medium- and long-term deficit—a move to garner bipartisan support for what may be unpopular tax increases and spending cuts. A bipartisan group of senators has been trying to get such a commission passed into law in a way that would give teeth to its recommendations. The recommendations of any presidential panel would require congressional approval.

I can't take this talk seriously until I see some serious discussion of downsizing federal entitlements. Mostly, this is politics. More later ...

Hat Tip: Memeorandum.


Timeshare Jake said...

Obama's pseudo hand is out to the tea party movement