The President has the right idea with his proposal to freeze spending.* Unfortunately, after driving spending to a record $3.7 trillionnearly 26% of GDPlast year with the accompanying $1.4 trillion deficit, the proposal*is at best a bit….underwhelming.
According to the administration, only $447 billion in spending would be subject to the freeze with a total of $15 billion to be*saved.* *So this freeze would reduce the deficit by 1.1 percent or less than half a percent off of last year’s spending.**Details have yet to be announced, but those that have trickled out do make one wonder what spending forecasts the White House budgeters are reading.
The good:
Spending is out of control.* Under Obama, federal*spending increased in every categoryin many cases massive increases driving spending to its highest point since WWII. Spending needs to be frozen*andreduced.**Reallyreduced.* If the President is serious about restoring confidence in his ability to control the excesses of Washington, he must go much further.
The bad:
First – this freeze would only apply to a sliver of total federal spending.* The administration has conjured up a new definition of spending called “non-security”, which would only affect about one-eighth of the budget.
Second – as reported – the cap would not be imposed across the board. Some areas would see increases like “investments related to jobs creation” while others like The Department of Justicea core*constitutional function of governmentcould see a cut. Budgets are about setting priorities and*the President should be making such trade-offs across the entire federal budget.* He and every president before him have done just that. But calling it a freeze?* Puleeze.
Third – the major drivers of spending are completely off the table. Spending on*Social Security, Medicare, and Medicaid is about to explode as baby boomers swarm into retirement. It is impossible to be serious about bringing the budget under control or*restoring confidence in his ability to control the excesses of Washington without taking action to limit spending on these programs.
Fourth*- what additional spending would be outside the “freeze” and considered “security”? Emergency spending?**Members of Congress are highly*skilled at*turning an emergency*spending bill into a Christmas tree full of unrelated and outrageous spending. *A new stimulus bill all dressed up as a jobs bill? Capping repayments (e.g. free) of*college loans?**New subsidies for child care?
Fifth – what level of spending would this*”freeze” apply to? If it applies to last year’s supercharged spending on stimulus steroids baseline, it’s no freeze at all, but a locking in of spending that was supposed to be temporary.* Alternatively, it would be very easy to undo any of the savings. For instance, one small jobs stimulus bill could wipe out all savings.
The simple fact is this: no matter how they spin it, the President must hold spending level with last yearminus all the temporary stimulus, TARP and other bailout spendingotherwise this freeze is a fakeroo.