Tuesday, January 26, 2010

President Obama proposes spending freeze

I saw this story last night after I was finished tweaking the new blog template. Now it is time to comment on it. From the New York Times:

WASHINGTON — President Obama will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that, an initiative intended to signal his seriousness about cutting the budget deficit, administration officials said Monday.

The officials said the proposal would be a major component both of Mr. Obama’s State of the Union address on Wednesday and of the budget he will send to Congress on Monday for the fiscal year that begins in October.

The freeze would cover the agencies and programs for which Congress allocates specific budgets each year, including air traffic control, farm subsidies, education, nutrition and national parks.

But it would 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.

The payoff in budget savings would be small relative to the deficit: The estimated $250 billion in savings over 10 years would be less than 3 percent of the roughly $9 trillion in additional deficits the government is expected to accumulate over that time.

First, I don't know any details on this spending freeze, except that it is going to be a small savings cut from your basic budget programs. The cuts are not going to take place in defense or the entitlement programs of Medicare, Medicaid, and Social Security. And the entitlement programs are certainly some of the fastest growing parts of the federal budget, now sitting at around $3.5 trillion.

So what the heck is this spending freeze? I'm starting to think that this spending freeze is nothing more than a political gimmick, possibly raised by the Obama administration to reassure Americans who are worried about increased deficits. I found this interesting NY Times tidbit of information:

“A lot of our caucus won’t like it but I don’t think we have any choice,” said an adviser to Congressional Democratic leaders, who would only speak on condition of anonymity about internal party deliberations. “After Massachusetts and all the polls about independents’ abandoning us for being fiscally irresponsible, we can’t afford to be spending more than Obama.”

Ever since President Obama started asking Congress for money to fund his economic stimulus program and continue bailing out the banks, the congressional Republicans have suddenly discovered the evils of deficit spending and our huge debt--which is rather hypocritically ironic, considering how those same congressional Republicans were so eerily silent while Republican President George W. Bush was charging up the nation's credit card like a drunken sailor (Not that the Democrats were any better). I think the GOP's bashing of the Obama administration's "fiscal irresponsibility" is probably promoting enough fear in Americans on the budget mess. Toss in the Massachusetts election results, and the Democrats may be worrying that they're pushing too much big government programs and too much deficit spending on an American electorate that is worried where the country is heading. Hence, President Obama's new spending freeze.

We'll learn more details on this freeze during President Obama's State of the Union speech tomorrow.

No comments: