The political media is awash in news that President Obama will propose a freeze in non-defense, non-security discretionary spending over the next three years.  This will reduce the spending baseline by $250 billion over the next decade. 

A few thoughts:

1. Welcome to the fiscal responsibility party, Mr. President.  After a year of trillion-dollar bailouts, trillion-dollar stimulus bills, and trillion-dollar healthcare plans, it's nice to see at least a rhetorical nod toward sanity coming out of the White House.
    
2. One little problem: CBO was actually projecting a decline in non-defense discretionary spending over the next few years (from $682 billion in FY 2010 gradually down to $640 billion in 2014).  It's right there in Table 3-1 of the CBO report.  The reason is all the "temporary" spending programs that were enacted the first year of the Obama Administration.  This is like the weatherman taking credit for a sunny day--it was happening anyway.  In fact, freezing this spending is actually a hike in projected spending over the next several years.
    
3. The spending "restraint" is a drop in the bucket.  Let's take the White House claim on its face--that this measure will reduce total spending over the next decade by $250 billion.  CBO says that under current services, the federal government will be spending $42.9 trillion.  So even if this "freeze" is followed through on by the Congressional appropriators, the Obama-Pelosi-Reid regime will still be spending 99.42% as much as they were planning to, anyway.  Big deal.  It's like if you were planning on spending $100 on groceries this week, and instead spent only $99.42.
    
4. It's awfully heroic to say that you're not going to increase spending after it just went up by 17.4 percent.  That's right: non-defense discretionary spending grew by 17.4 percent in Obama's first year.  Even if it stays at that level for the next three years, that would still be an average annual increase of 5.5 percent.  That's faster than the economy is expected to grow, and faster than wages are expected to grow.

So what's a better idea?

The freeze is not a bad concept: it just comes a year too late.  It's as if someone stumbled out of an all-you-can-eat buffet in a food coma and vowed to eat no more than that every day for the next three years.

What we need to do is back out that huge spending of 2009.  Going into 2009, non-defense discretionary spending was $581 billion.  The 2010 level (approved last year) of $681 billion should be pared back to this still-massive 2009 level.  That would require finding $101 billion in cuts in FY 2010 spending bills (something Dr. Coburn should be able to do easily), and then keeping domestic spending at $581 billion.  Oh, and it should be that way for the entire budget window.

By having a "real freeze" of $581 billion, federal spending will be almost $1 trillion less than CBO projects, which is still 97.7 percent of the spending which was going to happen anyway.  Nonetheless, this would be a real step toward progress.

Posted by Ryan Ellis on Tuesday, January 26, 2010 2:40 PM EST

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