Tuesday, January 26, 2010

Obama takes up his tiny hatchet

President Obama is going to propose a spending freeze on discretionary, non-security spending. Remember back in the debates when John McCain suggested such a plan? As Allahpundit reminds us, Obama's response was that would be taking a hatchet when a scalpel was needed.

What happened to all that Keynesian thinking that what was needed to stimulate the economy was huge federal spending? Are we throwing that idea out the window?

Even more important, it is not the discretionary spending that is going to present us with our main problems; it is the mandatory spending. USA Today provides this handy table to remind us of the verities of our budget.
Unfortunately, our politicians aren't going to touch cutting mandatory spending. In fact, the Democrats were actually trying to add more mandatory spending in their health proposals. Despite all their fine language on bending the cost curve, it was going to bend in the absolutely wrong direction. And George W. Bush ran into a buzz saw when he tried to reform Social Security.

The upward trend on all our mandatory spending as it moves to take over our budget is truly frightening.

Allahpundit links to Alex Conant who points out that Obama's idea isn't at all new.
This isn’t news. In the budget proposal that President Obama submitted to Congress last year, his budget office already projected actual cuts and freezes in “non-defense” discretionary spending for the next three years. That’s in part because of the huge increase in that area of spending that the President requested (and received) for the current fiscal year. To be specific: FY2009 (President Bush’s last budget) had $589 billion in non-defense discretionary spending. That number jumped to $687 billion in FY2010 (Obama’s first budget), and then drops to $641 billion in FY2011, $622 billion in FY2012 and $625 billion in FY2013. So for the White House to now boast that it will freeze non-defense discretionary spending is hardly news. If anything, it’s backtracking on its earlier plans to actually cut that area of spending.
This proposal is only geared towards a mere 17% of the budget. And besides security and Veterans' benefits, they're also exempting education spending and some other favored spending.
The administration officials said the cap won't be imposed across the board. Some areas would see cuts while others, including education and investments related to job creation, would realize increases.

Among the areas that may be potentially subject to cuts: the departments of Housing and Urban Development, Justice, Energy, Transportation, Agriculture, and Health and Human Services.
Here's a prediction. By the time this proposal has moved through Congress, we're going to find out that all sorts of favored programs will be termed "related to job creation" and will become part of the exempted areas. What emerges will be even more minuscule than anticipated.