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Obama To Propose Discretionary Spending Freeze

Matthew Yglesias reports that the Obama Administration is proposing a Discretionary Spending Freeze from 2011-2013.

On an exciting phone call with progressive internet writers earlier this evening, a senior administration official outlined the Obama administration’s plan to call for a freeze in non-security discretionary spending spending starting with the Fiscal Year 2011 budget. Described as an effort to balance concern with a “massive GDP gap” in the short run and “very substantial budget deficits out over time,” the plan calls for the FY 2011 budget to be higher than the FY 2010 budget, but then for non-security discretionary spending to be held constant in FY 2012 and FY 2013. (Let me note right here that all of the reporters on the call, myself included, screwed up and forgot to seek clarification as to whether this is a nominal freeze or a real dollar freeze).

The freeze would not apply to the Department of Defense, the Department of Veterans Affairs, the Department of Homeland Security, or to the foreign operations budget of the State Department. The official emphasized that the freeze is not the only element of the administration’s plans for deficit reduction, just the only element he was prepared to discuss on this particular call. “This is only one component of an overall budget,” he said, “you’ll see other components on Monday.”

So is this an across-the-board freeze like we’ve heard Republicans call for? No, it’s “not a blunt across the board freeze.” Rather, some agencies will see their budgets go up and others will go down, producing an overall freeze effect. The senior official sought to portray this as not just a question of spending less money, but of getting our money’s worth—cutting (unspecified) ineffective programs and spending more on programs that work.

Presumably, we’ll get more detail about this during the State of the Union and the inevitable spin afterwards. I’m not opposed to a discretionary spending freeze in the slightest, but from a fiscal perspective, leaving out “the Department of Defense, the Department of Veterans Affairs, the Department of Homeland Security, or to the foreign operations budget of the State Department” leaves out pretty much most of the Federal budget from the freeze. Not to mention debt service, which can’t be frozen either. My back of the envelope calculation is that this will end up freezing about 25-30% of the discretionary budget.

Better than nothing, I suppose. Hopefully, the target of the most cuts in the rejiggering of the budget is corporate and farm subsidies. But I wouldn’t hold my breath on that.

It’s also worth mentioning that during all three Presidential debates, Obama was fervently opposed to this type of spending freeze. Any takers on a bet that this becomes more of the focus of the media discussion than the actual budget proposals?

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About Alex Knapp
Alex Knapp writes about pretty much everything under the sun, including politics, art, religion, philosophy, sports, music, culture, and science.

Comments

  1. JKB says:

    Amateur hour…. This is a tiny portion of government expenditures. But it will also mean a furlough since fuel, supplies, etc., will still rise in cost. But they just expanded the GS ranks like a helium ballon. What will they claim when even government jobs are in decline?

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  2. Call me a cynic, but this is just a ploy to rationalize this year’s spending increases heading into the election. The spending freeze won’t last a second past Election Day.

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  3. Read again. During the debates, Obama was opposed to a blanket freeze, but argued that he would be okay with a targeted, limited freeze.

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  4. Better than nothing, I suppose. Hopefully, the target of the most cuts in the rejiggering of the budget is corporate and farm subsidies. But I wouldn’t hold my breath on that.

    It is probably some kind of mental test, to see if you can even think about taking somebody at face value. If we can’t, if you automatically jump to disbelief .. well, we know where we are coming from.

    Trying the face-value test for this, it certainly makes sense. No one in their right mind would do a counter-cyclical stimulus and then think it could keep going forever. That would obviously break the bank. So, you’ve got to roll off of it. You’ve got to have an exit plan.

    None of that is new thinking. Exit plans have been discussed since day-one of this stimulus cycle. You simply can’t think of stimulus without thinking of exit, and debt reduction.

    So it is is strange to me (though not really surprising) that the primary reaction to this would be to pretend we don’t know all this. I mean, who is wearing bias on their sleeve here?

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  5. An interesting line from Tyler Cowen:

    If you are surprised by this Obama announcement, that is indirect evidence that some of your other policy preferences are incorrect.

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  6. yetanotherjohn says:

    I believe this amounts to $15 billion cut in 2012 vs Obamas current budget, so less than 1%.
    The sad part is I suspect that Obama really sees this as major spending control.
    Given the ‘evil’ that is Bush, I wonder why he didn’t offer to freeze to 2008 level or even to 2000 level. Since all our current woes are due to Bush, why would Obama not seek to undo the ‘harm’ or at least not make worse?

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  7. Dave Schuler says:

    It would be nice if this measure were an effective means of balancing the budget but, as others above have suggested, it isn’t. We could have an overall spending freeze of the sort suggested forever and we’d be in much the same fix we are now.

    If we’re looking for grand solutions to our spending problem there is exactly one that presents itself: we’ve got to reduce the cost of healthcare. That would go a long way to solving our federal budget problem and it would go even farther towards solving the budgetary problems of state and local governments.

    Here in Cook County, for example, there are reasonable even acceptable ways of coping with the county budget if only healthcare costs could be contained. As long as they can’t be, there is literally nothing we can do to bring the county’s budget into balance.

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  8. john personna says:

    Riiiight. So Obama talking about a discretionary freeze is not a bad thing, or a thing to be opposed. It is possibly an insufficient thing. In that case you don’t want to criticize the moved. You want to accept it and move on:

    “yes, good but not enough”

    Recognizing of course the political and economic realities that we neither can nor should reverse from stimulus to austerity quickly. The optimum would be a glide path.

    (I hope you understand it would take real austerity to balance the budget with the current tax structure.)

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  9. Zelsdorf Ragshaft III says:

    Dave, the costs of health care can be brough to zero very quickly. Stop having government pay for it. You cannot buy a car without money. To get a hair cut, you must pay a barber. If you want your broken arm set, you must pay the doctor. After a little pain, it will all settle out.

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  10. [...] the comments) Dave Schuler have already outlined the most obvious centrist qualms about President Obama’s discretionary spending freeze proposal: That, by omitting Defense, DHS, and Veterans Affairs, it leaves most of the money on the [...]

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  11. Dave Schuler says:

    I don’t know whether the sort of freeze on discretionary spending that President Obama is talking about is a good thing or not and neither does anyone else. We have no details and whether it’s good or bad depends on the details.

    However, if you’re setting out on a trip from New York to Cleveland and the driver points the car towards Miami, it’s reasonable to note that you probably can’t get to Cleveland by driving that way. It says nothing whatever about whether Miami is a reasonable destination on its own, merely that it wasn’t the destination you were setting out for.

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  12. john personna says:

    I have to chuckle. I wonder if conservatives ever said:

    I don’t know whether the sort of freeze on discretionary spending that President Bush is talking about is a good thing or not and neither does anyone else. We have no details and whether it’s good or bad depends on the details.

    Imagine distrusting spending freezes! Have you turned Dem on us?

    Now I’m laughing out loud.

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  13. john personna says:

    I mean geez:

    The official emphasized that the freeze is not the only element of the administration’s plans for deficit reduction, just the only element he was prepared to discuss on this particular call. “This is only one component of an overall budget,” he said, “you’ll see other components on Monday.”

    Try not to wear it on your sleeve there Dave. We might get the idea that deficit reduction is a bad thing … when Obama tries it.

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  14. Dave Schuler says:

    Have you turned Dem on us

    I am a Democrat. I’ve never been anything else. I’m not a progressive nor am I particularly partisan.

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  15. john personna says:

    I am a Democrat.

    OK, maybe you come across as a Democrat like I come across as a Republican.

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