Last night, the Obama administration announced that they’re going to freeze non-security discretionary spending between 2011 and 2013:
On a conference call last night, the administration announced that its upcoming budget would freeze non-security discretionary spending between 2011 and 2013. That’s like freezing non-defense discretionary spending, but it also exempts the Department of Homeland Security and the Veteran’s Administration from the cuts. Education, Health and Human Services, the Environmental Protection Agency, and pretty much everything else that’s not Medicare, Medicaid, or Social Security can be knifed.
The devil is in the details here–I can’t really form a strong opinion on the freeze until I know which programs are going to end up under the knife.
My biggest concern is that, if the government can’t spend then they can’t create jobs. Unless December was an aberration and January is a banner month for job growth, we’re going to need to pass a jobs bill in order to bring down unemployment.
Thus, with the freeze in place we run the risk of a double-dip recession–if we need to spend money to keep the economy growing, but can’t because of the freeze, the recession is going to worsen again. If that happens, Obama will be blamed and he will deserve it.
From a political perspective, I can’t really see what the administration gains from this. Conservatives aren’t going to rally around Obama because of this–in fact, they’re already mocking him.
Independents may care about getting the deficit under control, but they probably care more about jobs and unemployment. So, if the freeze causes the recession to worsen again, Obama will end up bleeding even more support.
This strikes me as a gimmicky gamble with a high risk of failure. And, as Brad DeLong points out, Obama didn’t even get anything in exchange for the freeze:
As another deficit-hawk points out: it would be one thing to offer a short-term discretionary spending freeze (or long-run entitlement caps) in return for fifteen Republican senators signing on to revenue enhancement triggers. It’s quite another to negotiate against yourself and in addition attack employment in the short term.
[All emphasis mine]