The Discretionary Spending Freeze And What It Means For You

By Justin Gardner | Related entries in Barack, Economy, Fiscal Responsibility, Money, Obama

First, the relevant facts about the budget that’s set to be released on Feb 1…

About $447 billion will be devoted to funding the government — the parts that aren’t mandated by law (the entitlements) or aren’t related to defense, intelligence, veterans or national security issues. Obama will promise to veto any budget that exceeds that threshold, NOT adjusted for inflation, over the next three years. $250 billion would be saved over the baseline.

So now…what does it mean?

Well, it’s not an overall freeze and nobody from the White House ever said it was. But the media has been reporting it is as such, and, well…yeah.

The truth is that some spending will go up, like money for health care, clean energy and education. Other spending will be go down.

More on that from TPM:

The cuts would target “duplicative,” “ineffective” and “inefficient” spending withing government, the official said on a conference call with reporters.

“This is not a blunt, across-the-board freeze,” the official said, adding that some agencies will see spending increases while some will see spending cuts as the total remains constant.

Naturally, the knee jerk blogosphere is crying foul and Krugman is up in arms

And it’s a betrayal of everything Obama’s supporters thought they were working for. Just like that, Obama has embraced and validated the Republican world-view — and more specifically, he has embraced the policy ideas of the man he defeated in 2008. A correspondent writes, “I feel like an idiot for supporting this guy.”

I’m sorry…where exactly is he embracing the policies of McCain? Because his officials decided to use the word freeze to accurately talk about the spending that won’t go up?

Jeezus…I really hate my party sometimes.

But, to the point of the post…what does mean for you? It’s not complicated. More or your tax dollars will be spent on things that directly effect the economy and less will be spent on things that don’t. So, eventually, some of it might find its way back to your pocket because the economy picks up sooner rather than later.

More as it develops…


This entry was posted on Wednesday, January 27th, 2010 and is filed under Barack, Economy, Fiscal Responsibility, Money, Obama. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

16 Responses to “The Discretionary Spending Freeze And What It Means For You”

  1. mw Says:

    I feel your pain.

  2. TerenceC Says:

    Until I have a better idea of the actual cuts it’s difficult to comment. There is certainly plenty of fat/waste in the budget – there should be cuts. Unfortunately, any reduction in federal pending that does not target wasteful and fraudulent spending by the Pentagon falls short of true reduction. Why was the Pentagons budget declared off limits? Is the confidence so high that every dollar spent by the Pentagon is necessary and not wasteful? Or is it a question of avoiding a complete investigation of the “Pentagon” in the public eye because they are afraid of what will be found? How much longer do we have to go on as a nation spending in the neighborhood of 50% of the worlds military expenditures – without a full accounting for the true costs of such programs. Where is the responsible cost benefit analysis that Congress should be undertaking with regards to our defense spending? Active duty personnel should be taken care of (very well taken care of) – but do we really need 11 battle groups in the US Navy? Where is the societal benefit in that?

  3. Trescml Says:

    It will be interesting to see if Congress actually goes along with this. My guess is no since a zero sum gain causes there to be Congressional districts that will get less money. The deficit needs to be addressed and this is a start, but in the end you are going to have to looks at changes in entitlement programs, homeland security, and defense spending to make a real impact. As a society we are going to have to make some tough choices to balance real security needs and a aging population which going to take a larger piece of the budget.

    I’m hoping that the political climate changes to allow for such an adult discussion, but I have my doubts that is possible in the next couple of years.

  4. Simon Says:

    Justin:

    where exactly is he embracing the policies of McCain?

    McCain proposed this very policy during the campaign; Obama rejected it. You can certainly take the position that Obama was wrong to reject it then, or that he is being pragmatic by embracing it now without regard for its validity then, but it’s not really possible to claim this isn’t an about face.

  5. Chris Says:

    Wow thank you Simon, I knew I’d finally agree with you on something :P

    “any reduction in federal pending that does not target wasteful and fraudulent spending by the Pentagon falls short of true reduction.”

    EXACTLY. This “spending freeze” is just political garbage. It won’t make a lick of difference to the economy, and will probably just tick off progressives that see more funding for community efforts get cut. Yes there is a lot of wasteful spending that can be cut, but targeting the smallest corner of it is just waving hands for political gain, except it won’t be a gain for Obama.

  6. Simon Says:

    Chris, delighted to be in the same spot, although it should perhaps be noted that we’re facing in different directions thence. ;) In my view, McCain was wrong then only by degree; Obama was simply more wrong. We need drastic spending cuts; standing pat just doesn’t do enough, although I it’s better than spending increases.

    While I think the policy itself would be a modest improvement if actually done, I must confess to being utterly flummoxed by the politics of this move by the administration. The President’s opponents don’t believe that he’s for real spending restraint, and his supporters don’t believe in spending restraint, period. Not for the first time, President Obama seems to be uniting the parties against himself.

  7. wj Says:

    Well, at least he refrained from the idiocy of “across the board” cuts. Every time I hear an office-holder use that phrase, I translate it as “I’m not willing to make a decision about priorities, even though that is my job. So I’m going to act like every single thing this level of government does is exactly equal in importance.”

    I admit, I’m not sure whether I am more infuriated by the cowardice or stupidity of that kind of comment. And, as I said, at least Obama refrained from that.

  8. kranky kritter Says:

    off-topic thought:

    When I used to post and comment over at centerfield, we had a tradition of having an open thread on fridays, so regulars could say what was on their mind, bring up interesting stuff they had run across, and socialize.

    It was pretty popular. How about bringing that tradition to donklephant? Anyone else interested?

  9. kranky kritter Says:

    And a few on-topic thoughts:

    Let’s face it: a partial freeze is no guarantee of lowering bottom line spending. What matters is the bottom line, the total amount of spending. If spending in some areas is frozen while spending grows in other areas, and the bottom line costs increase, then nothing has been achieved.

    And here’s the thing: when it comes to spending, I don’t care about symbolism. The next time I vote, I won’t be moved by a statement that the President instituted a partial freeze. I’ll be moved by data that the bottom line has decreased. Period.

    any reduction in federal pending that does not target wasteful and fraudulent spending by the Pentagon falls short of true reduction.”

    Look everyone, a delicious roasted and well-aged chestnut! LOL. Seriously though, I REALLY don’t want to single out any particular regularly voiced favorite for spending cuts. Instead, I want to bring up a few really relevant dynamics that we should all account for in any serious discussion of controlling spending:

    •folks always want cuts to elements of the government that most irritate them

    •no one is ever willing to see their own favorite oxen knicked, never mind gored

    •everyone likes to bitch about wasteful big government spending. And everyone has their own set of favorite anecdotes. And while it’s important to recognize the truth about government inefficiency, we have to go beyond that to a serious acid test. And that’s this: do we really think that by making government more efficient and eliminating perceived waste, we can really save enough money to balance the budget while paying for social security and medicare and prescription drug coverage and possibly a new healthcare entitlement

    While I agree that targeting waste is crucial and necessary, I don’t think this sort of nibbling will be nearly sufficient to balance the spending side of the scale with the gov’t revenue side of the scale. Not when i contemplate the inalterable demographic forces behind the growth in SS and medicare. More people living longer, the ratio of payers to payees declining steadily and inexorably.

    That means that the real solution to the hardcore body of the problem is the making of difficult and unpleasant choices. And trying to get Americans to buy in to that, without activating their paranoia subroutines about whatever hated groups they think are going to benefit at their expense. That’s a gargantuan task.

  10. Simon Says:

    KK, that tradition still exists—albeit occaisionally in the breach—at SF. It doesn’t always get honored simply because folks don’t always comment on them and it ends up looking a touch forelorn!

    WJ, the fact is, though, that the feds are spending too much “across the board,” and so an “across the board” freeze is defensible to the extent it serves as a cap and to the extent it does not stand alone. Again, we need to cut spending, dramatically. Phase one is to cap off spending; the prioritization should come in phase 2, where amidst the cuts, those programs with a higher priority will be cut less.

  11. Simon Says:

    Of course, any kind of plan that doesn’t involve cutting mandatory spending—dealing seriously with interest on the debt by debt reduction and eliminating federal entitlements—isn’t a serious plan for spending cuts. That is what would make Obamacare so laughable were it not so dangerous. I remain bemused by the weird idea held by the other side that since we’re drowning in entitlement spending, pumping in many more gallons of the stuff is a credible strategy, and outright contemptuous of those who take seriously the defense that this huge new entitlement will in fact save money. That doesn’t even rise to the respectability of voodoo economics—it’s poor arithmetic or wishful thinking. It’s so dumb that even the reliably liberal SNL mocked it.

  12. kranky kritter Says:

    Hey Simon I’ll be sure to surf over to SF friday if they don’t start up an open thread here. I’ve come across some really cool software that allows you to use you ipod to make your aerobic workouts much better. It’s been a revelation. Really want to share the info.

  13. Tully Says:

    “This is not a blunt, across-the-board freeze,” the official said, adding that some agencies will see spending increases while some will see spending cuts as the total remains constant.

    Translation: “We’re going to cut some programs we don’t like and give the money to programs we do like. Actual overall spending will NOT be cut.”

  14. Nick Benjamin Says:

    @Simon
    The politics are simple: it’s painless and it sounds good.

    Painless because government spending is artificially high right now. Stimulus, unemployment, etc. are all supposed to cost less next year; and much less in 2012. Which means he could implement a massive expansion of government in 2012 and still meet his goal of freezing spending.

    I didn’t realize this until like two minutes ago, but the politics are brilliant. It’ll help him with moderates, and undercut GOP claims he’s extremist. It makes the left a bit worried, but soon enough they’ll do the math themselves. They’ll realize they can spend like $500 Billion on their priorities in 2012, still hit the target, and have outflanked the GOP on this issue.

    I hope he’s got a similarly brilliant tactic on health care. Right now pushing the Senate to promise it will take up the sidecar bill would probably work, as it would get the Senate bill passed in the House, and that would be a victory on health care even if the reconciliation side car goes nowhere.

  15. kranky kritter Says:

    The politics will be as brilliant as Americans are inclined to buy into it. If its percieved as business as usual BS, BS that sounds good but won’t deliver substantive changes in spending, it’ll go over like a fart in church.

    If people think “wow, he’s really serious about controlling spending” then it’ll work.

    Let’s see if folks buy it over the next week or not. That’s the he thing right now…do regular folks buy what their political leaders are “selling.” People are ion a grumpy and skeptical mood. So if Obama isn’t as serious about delivering as he is about saying serious-sounding things, it’ll blow up in his face.

    One thing folks won’t buy: another really big budget justified by “well I didn’t actually say I’d reduce spending.”

  16. Mark @ Israel Says:

    Yeah, a “wait and see” attitude might save us from expecting too much from what Obama has laid out. If his concern is to control lavish spending, then that might ring a bell to everyone. I was quite surprised when he proposed to freeze government spending when he criticized Mc Cain before for using a hatcet instead of a scalpel and he would try to justify “well I didn’t actually say I’d reduce spending.” So what is he really trying to say?

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