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The unfrozen spending freeze
I've spent most of the day trying to figure out what the Obama administration means by calling for a spending freeze that isn't a spending freeze. Is that like showing up for a pond hockey game in skates, only to find out you'll be swimming for the puck instead?
Read more about the plan here, but this is the gist: The president will propose a three-year freeze on domestic discretionary spending. The freeze would begin this October, affecting agencies such as Commerce, Interior, Justice, Labor and the EPA.
The military and Homeland Security budgets would go untouched and so would non-discretionary spending like Medicare and Social Security. However, in last year's budget, those items accounted for about 85% of the spending, so the freeze would only affect 12-15% of the budget.
Still, every quarter of a trillion counts when the deficit is $1.3 trillion, right?
Except that it's not a freeze. According to administration economist Jared Bernstein, some programs will be cut or reduced while others will be increased. The net result of that is supposed to be $250 billion in savings by 2020. Nothing is being frozen in this freeze.
But that's not the most ridiculous part. Bernstein says the only spending that will be cut is wasteful spending. I swear it. Watch the video below. He says Good Spending -- the kind that benefits the middle class and creates jobs -- will be increased. He says it over and over. Bad Spending -- the kind that only benefits politicians and the rich -- will be cut.
Oh, how I do love fairy tales!
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The reaction from Obama's supporters has been brutal so far. At Salon, Joan Walsh writes:
Bernstein said it would let Obama cut "wasteful spending" and thwart the lobbyists who defend every imaginable government program. Really? If everyone knows the freeze isn't real, and it's just about proving your program is important to the recovery or health care or some other protected priority, it will be a lobbyists' free for all anyway.
This charade is almost worse than if Obama was dead serious about an across the board freeze.
(Obama's) three-year freeze on a large portion of discretionary spending will make it impossible for him to do much of anything for the middle class that's important. Chalk up another win for Wall Street, another loss for Main.
I waited all morning for this headline from the king of all Keynesian economists, Paul Krugman... Obama Liquidates Himself:
It's bad economics, depressing demand when the economy is still suffering from mass unemployment...
It's bad long-run fiscal policy, shifting attention away from the essential need to reform health care and focusing on small change instead...
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."
The only conclusion I can come up with is this: Obama's panicking. This is a pure panic move, something focus tested within the bowels of the West Wing, a policy that he and his handlers think will shore up the president's economic bona fides while appealing to the middle. For a smooth operator like Obama, it is a perplexing -- perhaps even troubling -- play.
I'll wait to hear how President Obama explains his proposal in the State of the Union address tomorrow night, but Bernstein did the president no favors with his description.
Krugman and Reich both want the president to reverse direction and call for a second stimulus. I find that idea difficult to support, but equally as difficult to swallow is the notion that the president can get Congress to cut a little here and a little there (while only cutting the Bad Spending), and that this plan would make a dent in the budget deficit.
I have a better chance of playing for the US hockey team in Vancouver next month.
Your thoughts?
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I think this is a financial tipping point. Everything in this term and maybe next will be decided upon based on affordability rather than function. Entitlement program cutbacks and tax increases will be the next big deal.
It appears that Americans are separating into two parties that are not very aligned with Dem or Repub. One party wants entitlement programs without any concern on how to pay for it. The other party wants fiscal responsibility in the government. It appears that the fiscal party will win only because the poor finances.
The budget, the national debt, and the budget deficit have all grown at an alarming rate "to stave off collapse" with no plan or foresight to reverse spending. Increasing spending by 10% just to cut it back 2% doesn't make much of a difference. So, while others fling generalizations are like "Neocon" and "stupidity", I think looking at the problem through financial means is best.
There will be no deficit reduction. We are headed into the stratosphere of TRILLION dollar deficits with no return to planet Earth. This will continue for maybe another 1-5 years before we have a currency collapse. We have have long since passed the point of no return and it is fantasy to pretend otherwise. Find a safe place to shield yourself from the coming economic earthquake.
<i>republicans will do anything and everything they can to ship-wreck Obama’s first term</i><br>
The President's at the helm and his opponents are in the drink, what could they do to wreck him? Spit water at the hull?<p>
<i>I suspect it’s part of a larger plan...</I>
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one can only hope<br>
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<i>Economists across the board agree...</i><br>
that would be a first<p>
<i>The world’s hardest job is to be President... I find it very hard to believe that anyone else would be doing any better to deal with the problems that we face.</i><p>
A President has a simple duty:
<b>"I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States." </b><p>
If at the end of one or two terms, President Obama can honestly tell himself he as preserved, protected and defended the Constitution of the United States to the best of his ability, he will have been successful. It's not his job to solve all of our problems. He can't, because nobody can. If he tries with good intentions he will fail. If he exploits or allows others to exploit the situtation, he will fail misrably. He can start to succeed by keeping his word and by removing the insulting duplicity from his language.
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Ecclesiastes 7:14<br>
In the day of prosperity be joyful, but in the day of adversity consider: God also hath set the one over against the other, to the end that man should find nothing after him.
Doesn't come as a suprise since Obama administration has achieved zilch since taking the office. But hey he has given a lot of great speeches and also won a noble peace prize. Did the noble price help the american public in anyways????Hmmmm....Oh yes it did change Americas impression overseas.
How can we ever cut government spending if we leave the military budget exempt? We are spending every year around 600-700 billion.
It increases every year and it is bloated beyond belief. The GAO has given up on auditing it. President O is in favor of increasing it so the Democrat party goes along. In the end this country has no debate on what we get from a budget of this size.
For the wants of the kingdom the battles did cost.<br>
For the want of the battles the riders did cost.<br>
For the want of the riders the horses did cost.<br>
For the want of the horses the shoes did cost.<br>
For the want of the shoes the nails did cost.<br>
From a legion of costs the kingdom was lost<br>
Have we too many horseshoe nails?
The world's hardest job is to be President. The easiest is to be arm-chair president. Obviously he's disappointed that the health care measure may not go through. Of course it was doomed to fail from the beginning since the republicans will do anything and everything they can to ship-wreck Obama's first term so maybe Sarah Palin can run for office next time around. I agree that this is an attempt to pander to moderates. It's a minor proposal. So what if it's not worthy of another Nobel prize, there are bigger things on the horizon, and I suspect it's part of a larger plan by the Obama team to start changing the course of our nation's tendancy to spend way too much for everything. If he made a more broad-based move to pull back spending, a real spending freeze, people would complain that he was stifling the economic rebound. If he does nothing, then people say he's doing nothing about our wasteful spending. Reigning in the big banks, environmental/energy policy, some sort of deal on health care. I don't agree that the Obama administration has done nothing as some neocons suggest (one posted something above). Economists across the board agree that this administration staved off total collapse of our financial system, the beginnings of which was set in motion by other people. He's also worked hard to engage other nations, both friends and foes, after eight years of arrogance and stupidity by the Bush Administration. The truth is, there are no easy answers, and I find it very hard to believe that anyone else would be doing any better to deal with the problems that we face.
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