How Obama Can Avoid Becoming A Deficit Peacock

Last week, the Center for American Progress’ Michael Linden penned a piece explaining how to spot a deficit peacock, which is a faux deficit hawk who is more interested in scoring political points and ceaselessly harping about the deficit than actually making any of the necessary choices to bring the country’s long term budget under control.

In the piece, Linden wrote that those who “say that the solution is to simply freeze discretionary spending are just peddling fiscal snake oil,” as “a spending freeze would accomplish extremely little in the way of measurable deficit reduction”:

Freezing discretionary spending, the spending that Congress reappropriates every year, at current levels will similarly yield only very small budgetary savings. The federal government spent a bit more than $625 billion on non-defense discretionary programs in 2009. The Congressional Budget Office projects that, in five years, the federal government will spend about $660 billion on the same programs. Freezing non-defense discretionary spending at current levels would therefore only produce a total savings of $35 billion in 2015. That year, the budget deficit is expected to be around $760 billion. Saving $35 billion would solve less than 5 percent of the problem.

Well, as of last night, President Obama plans to implement a spending freeze of sorts, which would cap “non-security” discretionary spending in 2012 and 2013 at the 2011 level. The Washington Post’s Ezra Klein, Huffington Post’s Sam Stein, and TPM’s Brian Beutler all noted the proximity of Linden’s paper and Obama’s pronouncement. Linden provided this statement to The Wonk Room:

If this freeze on “non-security” discretionary spending ends up being the sum total of the President’s plans for long-term deficit reduction, then it falls far short. Non-defense discretionary spending is not the source of the problem and it won’t be a major part of the solution. But if this policy comes as part of a larger deficit-reduction effort that includes reducing tax expenditures, getting to a more sustainable national security budget, enacting health reform, and finding ways to increase overall revenues, then it could be useful as one small piece of a much larger puzzle. The math is clear, however. We simply can’t get from here to balance just on the back of domestic discretionary programs.

It really can’t be emphasized enough how little can be accomplished in terms of deficit reduction by looking only at discretionary spending. Exempting entitlements and defense spending, which is what the President’s freeze does, “the rest of the budget needs to be cut by 51 percent to have a balanced budget in 2014, or by 27 percent to get [the deficit] to 2 percent of GDP.” If Obama is really serious about deficit reduction — and wants to avoid joining Sen. Judd Gregg (R-NH), Sen. Evan Bayh (D-IN), former congressman Harold Ford Jr., and a host of others in the peacock caucus — he needs to push for health care reform, allow the Bush tax cuts on the wealthy to expire, and put cuts in defense spending on the table. There’s simply no other way to do it.


Jared Bernstein, Vice President Biden’s Chief Economist, responded to some of the criticism aimed at the administration by saying that the administration will be “making sure that the freeze either holds steady or increases those parts of the discretionary budget that support jobs and income security for folks who need them, while whacking the wasteful subsidies that support lobbyists and special interests.” That sounds nice, but Bernstein noticeably did not point to defense spending or the undeniable need for more revenue.