The Freeze

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]


“If It Ain’t Broke, Fix It Till It Is”

My father–a career-long civil servant–used to joke that the federal government’s motto should be “if it ain’t broke, fix it till it is.”

That may not be the government’s motto, but it’s certainly the GOP credo.

We know that President Obama’s economic policies are working–the stimulus stimulated, the recession ended, the employment situation is improving.

And yet, conservatives want to end those successful policies–they want to cut off the unspent stimulus money instead of letting it go toward creating new jobs, they want to end deficit spending even though growing the economy is a far more pressing concern than the debt.

If we listen to conservatives our economy will collapse once again and all the hard-fought gains our economy recently made will be lost.

As Paul Krugman writes:

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BREAKING: Investigator: ACORN Broke No Laws

Some not-so-surprising news this morning:

An internal investigation of the community-organizing group ACORN found no pattern of intentional, illegal conduct by ACORN staffers on undercover videos shot by conservative critics of the group.


The videos of ACORN staffers offering advice to a woman and a man posing as a prostitute and her boyfriend triggered a firestorm of criticism this fall, with some ACORN employees appearing willing to support illegal schemes involving tax advice, misuse of public funds and illegal trafficking in children.

The videos “feed the impression that ACORN believes it is above the law,” stated the Harshbarger report, intended as an independent examination of the issues.

We did not find a pattern of intentional, illegal conduct by ACORN staff involved; in fact, no action, illegal or otherwise, was ever taken by any ACORN employee on behalf of the videographers,” Harshbarger said in a statement. “Instead, the videos represent the byproduct of ACORN’s longstanding management weaknesses, including a lack of training, a lack of procedures and a lack of on-site supervision.”

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Should Conservatives Hate Reagan?

All of the right-wing attacks on President Obama’s spending make me wonder–why don’t conservatives hate Ronald Reagan?

Reagan’s recession lasted 16 months (July 1981 until November 1982); our most recent recession lasted 21 months (December 2007 until September 2009).

During Reagan’s recession, unemployment peaked at 10.8%; during the recent recession unemployment peaked at 10.2% (but since unemployment is a lagging indicator it’s still expected to rise).

During Reagan’s recession, unemployment rose 3.6%; during the recent recession, unemployment rose 5.3%.

And Reagan’s recession did not come with a massive financial meltdown that necessitated a huge bailout in order to stave off total financial collapse.

So, by most worthwhile measures, our recent recession was both worse and longer than the Reagan recession.

With that in mind, remember that conservatives are attacking the Obama administration’s spending (even though a major cause of our deficits, the $700 bn bank bailout, was enacted under Bush) and are criticizing President Obama for allegedly doubling the debt.

But, over the course of his Presidency, Ronald Reagan tripled the debt:

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BREAKING: Senate Health Care Bill Revealed

Tonight, the Senate Democratic leadership revealed their version of the health care reform bill.

The Congressional Budget Office has already scored the legislation. Their findings:

  • It will cost $849 bn over the first decade.
  • It will reduce the deficit by $127 bn in the first decade and by $650 bn in the following decade.

Here are more details about the bill:

  • It contains the public option with a state-by-state opt-out provision.
  • It establishes health insurance exchanges.
  • It rejects the anti-choice Stupak amendment by stipulating that at least one plan in the health insurance exchange must offer abortion coverage and one plan must not.
  • It authorizes the HHS Secretary to audit those plans to ensure federal funds are not being used for abortion.
  • It taxes ‘Cadillac’ insurance plans but gives exceptions to high cost-of-living states and to workers in high-risk jobs, such as coal miners.
  • It will cover 94% of Americans, including 31 million of the currently-uninsured.
  • It achieves nearly $1 trillion in cost savings within the health care system.

It’s not a perfect piece of legislation, but considering the circumstances Harry Reid pretty much hit one out of the park here.

I expect the bill to do well–it contains significant health care reform but grants enough concessions to win over conservatives like Ben Nelson and Mary Landrieu. And the fact that it reduces the deficit significantly over the next 20 years should win over the newly-minted deficit hawks like Joe Lieberman (who only seem to care about the debt when a Democrat is in office).

Reid is to file for cloture tomorrow, meaning that this bill could be brought up to a vote as early as Saturday.

Recession Ends; President Obama To Thank (UPDATED)

The Republican recession–the longest and worst economic downturn since the Great Depression–is officially over:

The U.S. economy expanded in the third quarter after shrinking for four consecutive quarters, marking an apparent end to the worst recession since World War II. But the recovery is expected to be slow and painful, as companies shed jobs and credit remains tight.

Gross domestic product expanded at a 3.5% seasonally adjusted annual rate in the quarter ended in September, a rise that leaned heavily on government spending. Some of the largest components of growth came from spending on cars and house building — two areas propped up by federal programs.

But wait, there’s more:

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