House Democrats are rejecting an idea floated by the Obama administration to freeze or cut discretionary spending in 2011.
Key members of the House Appropriations and Budget committees told The Hill this month they would not go along with alternative spending plans being requested by White House Budget Director Peter Orszag, which are part of the administration’s plan to reduce the deficit.
Orszag last year instructed every executive department to prepare three budget requests: one that matches the 2011 spending levels set by the president in his initial budget proposal from early last year; another that would freeze discretionary spending; and a third that reduces spending by 5 percent.
But the Democrats warn that cutting or freezing spending at this point might further damage the economy. The White House should focus instead on spending government dollars to help the economy recover and bring the unemployment rate down from 10 percent, they said.
Those Democrats are correct in their warning. I’m not going to argue that there aren’t inefficient or wasteful government programs out there, or even that Congress won’t comply with eliminating some of them – Obama actually successfully got about $6.9 billion of his cuts through last year. And in fact, Senate Democrats are talking about new budget rules which would constrain automatic tax or benefit extensions. But a freeze in non-discretionary spending isn’t happening.
Nor should it. The total level of spending in a time of recession needs to go up, to fill in demand. That is the standard economic thinking which brought us the stimulus package and will bring us a new jobs package, although it’s unclear how that kind of off-budget expense fits into this directive.
So in this sense, we can look at the Obama announcement on Wednesday as a press release, a way to “signal seriousness”, as the New York Times puts it, to position the President as a deficit-cutter and members of Congress as the profligate spenders. Why you would want to triangulate against your own Congress when they’re on the ballot in November and facing difficulties is, well, completely beyond me. Especially when the projected savings from this maneuver, $250 billion over 10 years, represents 2-3% of the overall deficit projections.
If you actually want to be “serious” about cutting the deficit, you can start by extricating America from endless wars and military buildups. Despite that, I do think we should take seriously the fact that the President really believes in fiscal austerity. Every item on which Obama truly took a stand during the health care debate concerned the impact on the deficit – the excise tax, the Medicare commission, deficit neurality, “bending the cost curve,” etc. And then there’s the idea of a “grand bargain” floated in the NYT article, premising that budget-cutting over a small area now will lead to bigger social safety net sacred cows being slashed later.
But one administration official said that limiting the much smaller discretionary domestic budget would have symbolic value. That spending includes lawmakers’ earmarks for parochial projects, and only when the public believes such perceived waste is being wrung out will they be willing to consider reductions in popular entitlement programs, the official said.
“By helping to create a new atmosphere of fiscal discipline, it can actually also feed into debates over other components of the budget,” the official said, briefing reporters on the condition of anonymity.
The videos on the right are with Vice President Biden’s economist Jared Bernstein. I just read his book “All Together Now,” where he argued for major investments in safety net programs, education spending and Medicare for all. He worked at the Economic Policy Institute before that. He’s not some arch-conservative. But he’s forced defending a terrible, irresponsible policy. Because the President is taking the mid-1990s road to personal popularity. I saw a great joke on Twitter: “Clinton wasn’t the first black President, but Barack Obama is the first black President Bill Clinton.”
UPDATE: Marc Ambinder adds to the suggestion that this is all flourish and not really anything like McCain’s across-the-board freeze. It wouldn’t even preclude a second stimulus, according to him.
UPDATE II: What all these economists said.