Obama's proposed budget spending freeze sparks concern, guesswork

By Alec MacGillis and Amy Goldstein
Washington Post Staff Writer
Wednesday, January 27, 2010

Obama's domestic policy agenda, which defined him as a president seeking to restore faith in government, is imperiled by his call for a "freeze" on spending, many advocates said Tuesday, as federal agencies scrambled to determine the proposal's impact.

The freeze would hold steady for the next three years the government's discretionary budget -- the portion of spending that Congress decides every year -- except for spending on the military, homeland security, the State Department and Veterans Affairs.

Although discretionary spending encompasses a wide swath of programs, it amounts to a relatively small proportion of the federal budget, about $450 billion out of $3.5 trillion, with the vast majority of spending devoted to entitlement programs such as Medicare and Social Security and to the military.

Administration officials say it makes sense to rein in spending to signal that they are serious about deficit reduction, and they note that they are still supporting a new jobs bill, a short-term stimulus initiative that would buttress the $787 billion package passed a year ago.

"We're taking common-sense steps that every family and small business takes with their budgets," said Rob Nabors, deputy director of the Office of Management and Budget. "And to make sure that we are spending money wisely, we're going to be ending programs that don't work, we're streamlining those that do, and we're cracking down on special-interest access."

Liberal advocates disagreed. It makes no economic sense, they said, to rein in spending amid a weak recovery. The freeze, they added, could shortchange areas the president has identified as paths for growth, such as energy and infrastructure. And, they argue, it adopts the Republican viewpoint that the deficit is driven by discretionary spending, a mind-set that makes it harder, not easier, to pass a jobs bill.

"It's bad policy and bad politics," said Robert Borosage, co-director of the Campaign for America's Future, a left-leaning advocacy group. "It doesn't make sense in terms of the deficit because it's much too small to make a difference. It simply sugarcoats and teaches the wrong lesson. The president who began with an adult conversation with Americans that health care is the source of the deficit is now having a disingenuous conversation with them."

Budget speculation

Administration officials say the freeze would apply to the total discretionary budget, so that some programs would be allowed to grow while others were cut. Both government officials and outside advocates are trying to divine where the ax will fall hardest in the budget Obama is to release next week.

James R. Horney, director of federal fiscal policy for the left-leaning Center on Budget and Policy Priorities, said a hint of what Obama may cut can be gleaned from his first budget. Although the proposals were rejected by Congress, last year's budget would have curbed Commerce Department subsidies to promote specific industries and to bring products to market, while increasing taxes on profits that corporations earn overseas.

Horney predicted that the administration will widen its efforts to rein in federal help for corporations. Conversely, he said, he will be "very surprised" if the budget does not try to boost programs that serve low- and moderate-income Americans.

Many assistance programs, including Medicare, Medicaid and food stamps, are immune from a freeze because they are entitlements, in which the government must help all who qualify. Still, many social programs are not immune, including most job training sponsored by the Labor Department, the Housing and Urban Development Department's public housing and rent subsidies, and federal grants to states to help provide food for pregnant women, mothers and young children.

Education advocates hope federal aid for schools will be protected, given how much Obama has emphasized the issue.

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