Tuesday’s Headline: Obama to Propose Freeze on Federal Spending

BY Jason M. Breslow  January 26, 2010 at 8:51 AM EDT

Bowing to voter angst about the nation’s $1.4 trillion budget deficit, President Barack Obama will propose in his State of the Union address Wednesday a near across-the-board freeze on federal spending.

The freeze would take effect in October and apply to all federal spending unrelated to the military, veterans, homeland security and international affairs. Also excluded would be entitlement programs such as Medicare, Medicaid and Social Security.

All in all, the three-year plan would limit the remainder of all federal spending to about $447 billion per year, or roughly 17 percent of the budget deficit. The freeze would save taxpayers about $250 billion over the next decade, a sum equal to slightly less than 3 percent of the approximately $9 trillion in additional deficits the government is expected to accrue over that time.

The spending freeze carries political risks for the president. In addition to limiting him on a range of domestic initiatives, including education and the environment, the plan is also likely to anger liberals upset by the flagging prospects for health care reform. At the same time, however, the plan could signal to voters, as well as foreign nations that finance the U.S. debt, namely China, that the president is serious about cost-control.

“You can’t afford to do everything that you might have always wanted to do. That’s the decision-making process that the president and the economic team went through,” a senior White House aid told the Washington Post. “We’re not here to tell you that we’ve solved the deficit. But you have to take steps to control spending.”

Republicans remain unconvinced, though. “Given Washington Democrats’ unprecedented spending binge, this is like announcing you’re going on a diet after winning a pie-eating contest,” Michael Steel, a spokesman for the House Republican leader John Boehner of Ohio, told reporters. “Will the budget still double the debt over five years and triple it over 10? That’s the bottom line,” he said.

Also skeptical is Nate Silver of FiveThirtyEight. “I’ll let the economists talk about the wisdom of curtailing government spending in the middle of a massive consumption deficit, but what concerns me more is the politics,” he writes. “Specifically, the sort of cognitive dissonance that is going to be created in the mind of the average voter when the White House is promising to freeze spending on the one hand … and on the other, trying to defend its stimulus and its health care reform package, trying to excuse the bailout package as a necessary evil, and perhaps trying to champion new programs.”

Marc Ambinder of the Atlantic says the freeze could work politically. “The big if,” he says, “IF the president really fights for this…fights against his own party, and does so with conviction — if Democrats decide to embrace this (which is doubtful), then it could help both his party and himself.”

Separately on Tuesday, the Congressional Budget Office is scheduled to release new deficit estimates, followed by a Senate vote on whether to create a bipartisan task force charged with recommending steps to slim the federal debt.