Officials: Obama will propose three-year spending freeze

McClatchy NewspapersJanuary 25, 2010 

WASHINGTON — Looking to signal at least one step toward reining in huge federal budget deficits, President Barack Obama will propose a three-year freeze in non-security discretionary spending, senior administration officials said Monday.

His budget proposal, to be unveiled in part with Wednesday's State of the Union speech and in detail next week, will urge Congress to keep overall spending at $447 billion a year for agencies other than those charged with national security and mandatory-spending programs such as Social Security and Medicare.

The freeze would take effect with the 2011 fiscal year starting Oct. 1, and wouldn't affect the $787 billion economic stimulus plan already being implemented, the officials said.

It also wouldn't affect a $154 billion jobs plan pending before Congress and backed by Obama, the officials said. One aide said that plan would be exempt because it would take effect this year, before the freeze.

Administration officials, who spoke on the condition of anonymity to not upstage the president, said that the three-year freeze would save $250 billion over a decade — if it's approved by an election-year Congress.

After three years, the total spent would be the lowest as a percentage of the total economy in 50 years. Spending on those agencies has increased by an average of 5 percent a year since 1993, the officials said.

Still, officials acknowledged that the savings wouldn't come close to eliminating the deficit and balancing the budget. "We're not here to tell you we've solved the deficit," one official said.

Republicans criticized the proposed freeze as window dressing.

"It highlights just how big of a hole the stimulus bill created," said Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell of Kentucky. "It takes a three-year spending freeze to save about $250 billion — or one third of the deficit created by the stimulus alone, not counting interest, which averages $100 million every day."

Annual deficits as of last year are forecast to total $7.1 trillion over the next 10 years, according to the Congressional Budget Office, adding to a total federal debt expected to reach $13.6 trillion by 2019.

The part of the budget that would be frozen represents an eighth of the total annual budget, spent on such operations as the Departments of Commerce, Education, Interior and Justice and agencies such as the Environmental Protection Agency.

They represent one-third of the annual discretionary spending that Congress approves every year. The rest of the annual discretionary spending would be exempt from the freeze, including the Departments of Defense and Homeland Security as well the Veterans Administration and international operations.

Also exempt: entitlements such as Medicare and Social Security that are on auto-pilot and don't require annual approval by Congress. They're also the largest cause of long-term deficits.

Obama this week endorsed proposals in Congress for a deficit commission that would recommend spending cuts or tax increases to bring down long term deficits, and whose recommendations Congress would have to vote on by year's end, up or down. The Senate is to vote Tuesday on the commission proposal.

While the freeze would shave only a sliver from the total deficits over the next 10 years, officials called it an important first step, one they said they hope will lead to others. "At some point, you do have to draw a line, and say we need to re-orient what we're doing," one top official said. "This is more about being penny wise."

The freeze would be measured overall and would not be applied across the board. Obama will propose increased spending for some agencies, cuts for others, and eliminating some, officials said.

"This is not a blunt instrument," one official said. "Some agencies will be up, some agencies will be down. . . .What we want to do is get as much as we can from taxpayer money. What that means is re-orienting towards the programs that are working and where the needs are and moving away from things that are redundant, duplicative and inefficient."

Getting Congress to go along in an election year will be a challenge, the Obama officials said. "Do I think this is going to win kudos on Capitol Hill? No," said second official said.

Still, he noted that Obama managed to convince Congress to stop spending on the F-22 fighter jet, something Congress had insisted on in the past despite requests by the Pentagon to stop it.

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