ECONOMY Obama's Spending Freeze In tonight's State of the Union address, President Obama will propose freezing "non-security" discretionary spending at the fiscal year 2011 level for fiscal years 2012 and 2013. The freeze is designed to save $250 billion over 10 years, and will "exempt security-related budgets for the Pentagon, foreign aid, the Veterans Administration and homeland security, as well as the entitlement programs": Medicare, Medicaid, and Social Security. Of course, Obama's proposal immediately evoked comparisons to Sen. John McCain's (R-AZ) call for a spending freeze during the 2008 presidential campaign, a proposal that Obama repeatedly condemned as an "example of unfair burden sharing," and "using a hatchet where you need a scalpel." But the White House responded to the criticism by saying that the freeze differs from McCain's across-the-board cut and will operate as more of a cap, with some programs receiving less funding while successful programs and administration priorities will receive more. "It's not a freeze on every agency or every program," said Rob Nabors, deputy White House budget director. "We're not giving up the priorities."
SMALL PIECE OF A LARGER PUZZLE: Last year, Office of Management and Budget Director Peter Orszag asked each executive department to submit three budget proposals, including one with a discretionary spending freeze and another with a five percent reduction, which was the beginning of a discussion about implementing a spending cap. "It's a start and it's only one component of what we're going to be putting forward," Orszag said. "We can't afford to continue to spend money on things that don't work well or don't reflect our priorities." Both the administration and Congress have renewed focus on the budget deficit recently, and while it makes sense to cut wasteful and inefficient programs, as the Center for American Progress' Michael Linden pointed out, if the freeze "ends up being the sum total of the President's plans for long-term deficit reduction, then it falls far short." In fact, freezing non-defense discretionary spending would produce savings of just $35 billion by 2015, which is less than five percent of that year's budget deficit. Any serious deficit reduction strategy not only has to include spending, but also has to include increased revenue, such as allowing the Bush tax cuts for the wealthy to expire and raising money from the financial services industry. "If this policy comes as part of a larger deficit-reduction effort that includes reducing tax expenditures, getting to a more sustainable national security budget, enacting health reform, and finding ways to increase overall revenues, then it could be useful as one small piece of a much larger puzzle," Linden added.
NO ROOM TO MANEUVER: Funding for the American Recovery and Reinvestment Act (ARRA) and any additional funds that "support jobs and income security" will not be cut under the administration's proposal, and Obama will reportedly push for new job creation measures during tonight's address. Still, as MSNBC's Rachel Maddow said, "If there needs to be some other major job creation effort, not the targeted problems that we're talking about, there's no room for that." Nobel Prize-winning economist Paul Krugman wrote that the freeze is "bad economics, depressing demand when the economy is still suffering from mass unemployment," while former Labor Secretary Robert Reich said that it "will make it impossible for [Obama] to do much of anything for the middle class that's important." In a recent USA Today survey, two-thirds of economists said that the government should do more to spur job growth, and Senate Democrats, who are working on an $80 billion jobs bill, are also not sold on the concept of a freeze. Sen. Sherrod Brown (D-OH) "said he was concerned that the freeze would hit needed funding for infrastructure 'or cut spending on human needs.'" Senate Majority Leader Harry Reid (D-NV) said that we "have to make sure there is money for education," as well as police, firefighting, and other services.
BUYING THE RIGHT-WING FRAME: Krugman also pointed out that by approving a spending freeze, "Obama is clearly, conspicuously endorsing his opponents' world-view -- which will buy him precisely nothing in return." And in fact, not only does Obama's proposal endorse the right-wing frame that discretionary spending cuts can make a significant dent in the deficit, but it also buys into the notion that defense spending should be sustained, no matter the country's budgetary difficulties. "You ought to include some defense spending too," said Sen. Tom Harkin (D-IA). "Lord knows there's billions of waste in defense spending." CAP Senior Fellow Lawrence Korb, who has co-authored a proposed sustainable unified national security budget, identified nine defense programs and weapons platforms "that can be eliminated or scaled back without jeopardizing our national defense strategy or capabilities" and at the same time maintaining funding for troops in battle. Obama's spending freeze also removed focus from the deficit reducing effects of health care reform, which would slow the fastest growing part of the deficit. Some estimates show that health care reform can reduce the deficit by more than $400 billion over 10 years. As University of Oregon economist Mark Thoma wrote, "the long-term budget problem is due to primarily one thing, rising health care costs. Everything else is dwarfed by that problem. If we solve the health care cost problem, the rest is easy. If we don't solve it the rest won't matter." Though many Republicans in Congress immediately opposed the plan, the right wing claimed the freeze as a victory, with the National Review's Jim Geraghty writing, "if the arguments in the coming years are between spending freezes and spending cuts, then we've already won." The Weekly Standard's Bill Kristol added that Republicans should embrace the freeze because it will "move the debate" to "who will restrain big government."
CORPORATE MALFEASANCE -- HALLIBURTON GOES AFTER RAPE SURVIVOR'S PERSONAL INTEGRITY IN SUPREME COURT PETITION: Halliburton/KBR is petitioning the Supreme Court to overturn a lower court's decision that would allow a former employee who was raped on the job to sue the company. In 2005, Jamie Leigh Jones was drugged and gang-raped by her co-workers while working for KBR in Baghdad. She woke up in the barracks, "naked" and "severely beaten"; her "breasts were so badly mauled that she is permanently disfigured." In an apparent attempt to cover up the incident, the company then put her in a shipping container for at least 24 hours without food, water, or a bed, and "warned her that if she left Iraq for medical treatment, she'd be out of a job." Jones tried to sue the company for failing to protect her, but KBR argued that Jones' employment contract warranted her claims being heard only in private arbitration, not in court with a jury. More insultingly, the Justice Department resisted bringing any criminal charges in the matter. But in September of this year, the 5th Circuit Court of Appeals ruled in favor of Jones, saying her allegations have no "'significant relationship' to her employment contract." KBR is now petitioning the Supreme Court to reverse the ruling. As Mother Jones' Stephanie Mencimer reports, the contractor is going after Jones' personal integrity, claiming "that Jones is a relentless self-promoter who has 'sensationalize[d] her allegations against the KBR Defendants in the media, before the courts, and before Congress.'" "KBR also suggests that much of Jones' story is fabricated," Mencimer adds. The latest Department of Defense Appropriations Act, signed into law by President Obama in December, contained an amendment by Sen. Al Franken (D-MN) -- inspired by Jones' story -- that prohibits defense contractors from restricting their employees' abilities to take workplace discrimination, battery, and sexual assault cases to court.
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"Democratic leaders in Congress effectively slammed the brakes" on health care reform yesterday, "saying they no longer felt pressure to move quickly on a health bill after eight months of setting deadlines and missing them." "We're not on health care now," said Senate Majority Leader Harry Reid (D-NV) to reporters. "We've talked a lot about it in the past" and "there is no rush," said Reid. House progressives are pushing Senate Majority Leader Harry Reid (D-NV) to support the passage a public insurance option by reconciliation. "I think [losing] the public option from the Senate bill really hurt the Democrats' prospects in the Senate [race], because they were seen as...caving to insurance companies," Rep. Jared Polis (D-CO) told the Huffington Post. In his State of the Union address tonight, President Obama "will announce an increase of up to $4 billion in federal education spending." The new funding will include an increase of $1.35 billion for the "Race to the Top" grant program and $1 billion targeted at overhauling the No Child Left Behind Act. A new NBC News/Wall Street Journal poll has found that just 28 percent of Americans believe the federal government is "working well" or even works "okay," while 70 percent say it is "unhealthy," "stagnant," or needs reform. Ninety-three percent say there is too much partisan infighting; 84 percent say special interests have too much influence; and 75 percent say Wall Street needs more regulation. In response to protests over CBS's approval of a Focus on the Family ad set to air during the Super Bowl, the network has announced that it is open to accepting other "responsibly produced" advocacy ads. "We have for some time moderated our approach to advocacy submissions after it became apparent that our stance did not reflect public sentiment or industry norms," spokesman Dana McClintock said.
Six Republican senators co-sponsored, and then voted against, a plan endorsed by President Obama that would have formed a task force to tackle the deficit. The plan failed by seven votes. Asked for an explanation, several of the senators said they were concerned the task force would lead to tax increases. Earlier this week, the Army Times reported that veterans who are seeking to inquire about G.I. Bill benefits are having difficulty connecting to a call center. Almost 90 percent of calls to a Muskogee, OK, center "never connected between October and December." At a congressional hearing, Rep. Stephanie Herseth Sandlin (D-SD) said she found this unacceptable. According to senior Obama administration officials, "U.S. military teams and intelligence agencies are deeply involved in secret joint operations with Yemeni troops," who have killed "scores of people," including six top regional al Qaeda affiliate leaders. The clandestine U.S. forces "do not take part in raids in Yemen, but help plan missions, develop tactics and provide weapons and munitions." Special Representative for Afghanistan and Pakistan Richard Holbrooke said today that the U.S. "will support a plan to reintegrate Taliban fighters set to be announced by Afghan President Hamid Karzai." "The overwhelming majority of these people are not ideological supporters of Mullah Omar (the fugitive Taliban leader) and al-Qaida," Holbrooke said. And finally: What color tie will President Obama wear for the State of the Union tonight? (Online) bets are on red. According to the online betting site Paddy Power, odds are good that Obama will say "health care reform," but "life is like a box of chocolates" and "let's get ready to rumble" are long shots.
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"I think most credible economists say [the stimulus is] not working."
-- Gov. Tim Pawlenty (R-MN), 1/26/10, on Fox News
VERSUS
"Unemployment would have hit 10.8% -- higher than December's 10% rate -- without Obama's $787 billion stimulus program, according [a quarterly survey of 50 economists]."
-- USA Today, 1/25/10
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