The Obama administration has announced that in tomorrow’s State of the Union address, President Obama will call for a freeze on non-defense discretionary spending. The freeze — which will keep fiscal year 2012 and 2013 spending at the 2011 level — is designed to save $250 billion over ten years, and will “exempt security-related budgets for the Pentagon, foreign aid, the Veterans Administration and homeland security, as well as the entitlement programs that make up the biggest and fastest-growing part of the federal budget: Medicare, Medicaid and Social Security.”
So it seems that Sen. Evan Bayh’s (D-IN) estimate that “there’s a fighting chance” of Obama proposing a freeze has been proven correct. Of course, during the Presidential campaign, Sen. John McCain (R-AZ) proposed a similar spending freeze, which Obama repeatedly condemned as an “example of unfair burden sharing,” and “using a hatchet where you need a scalpel.” Here’s a compilation placed on YouTube yesterday of Obama scoffing at a spending freeze in all three presidential debates:
The administration’s contention is that, unlike McCain’s proposed freeze, this operates more like a spending cap, with some programs’ funding going up and others down. As Matthew Yglesias put it, Obama is “aiming for what you might call a ‘cut and invest’ strategy — slashing certain programs and boosting others. And I think anyone who looks at it would have to admit that there is, in fact, a lot of discretionary spending on programs of little value.”
But still, many economists have blasted the plan for its potentially anti-stimulative effects and its focus on spending that is not the root cause of the country’s long-term deficits. Nobel Prize winning economist Paul Krugman wrote that the freeze is “appalling on every level…shifting attention away from the essential need to reform health care and focusing on small change instead.” Former Labor Secretary Robert Reich said that the freeze “will make it impossible for [Obama] to do much of anything for the middle class that’s important.” U.C. Berkeley economist Brad DeLong added “this is a perfect example of fundamental unseriousness: rather than make proposals that will actually tackle the long-term deficit…come up with a proposal that does short-term harm to the economy without tackling the deficit in any serious and significant way.”
And at its core, Obama’s decision cedes to the right-wing both the idea that blanket cuts are necessary and the notion that cuts should be focused on domestic programs while defense spending goes untouched. And already, the right-wing is claiming the freeze as a victory, with the National Review’s Jim Geraghty writing, “if the arguments in the coming years are between spending freezes and spending cuts, then we’ve already won.”
Cross-posted on The Wonk Room.
Last night, Rachel Maddow debated White House economic adviser Jared Bernstein about the effect of a spending freeze. “It sounds completely, completely insane” to restrain spending at a time when the nation is still undergoing an economic recovery, Maddow argued. “If there needs to be some other major job creation effort,” this pronouncement makes that impossible, she added. “You haven’t convinced me at all,” Maddow told Bernstein at the conclusion of the segment. Watch it: