Obama eyes domestic spending freeze

[steven johnson]

Source: Associated Press

The Obama administration has alerted domestic agencies to plan for a freeze or even a 5 percent cut in their budgets, part of an election-year push to rein in record deficits that threaten the economy and Democrats' political prospects next fall.

China, the largest foreign holder of U.S. Treasury securities, has expressed concern about the size of U.S. deficits. U.S. policymakers worry that alarm over deficits could push foreigners into cutting back on their purchases of Treasury debt. President Barack Obama will visit China as part of his current tour of Asia.

White House budget director Peter Orszag said Friday that it is imperative to start curbing the flow of red ink in coming years so as not to erode the fledgling economic recovery and raise interest rates. But he called it a balancing act and said acting too fast could undercut the recovery.

Orszag wouldn't comment on the specifics of the upcoming budget, which will be unveiled in February, right after Obama's State on the Union address in which the initiative is sure to be a major focus.


Read more: http://www.google.com/hostednews/ap/article/ALeqM5g2RBEQAPpNMNour8nrK0y8IEYmeQD9BURIEO0

[ChairmanAgnostic]

1. M I L I T A R Y . . . F R E E Z E

would serve us, and the world, far better.

[villager]

3. I'm sure it's just a freeze on all that wasteful feeding and sheltering of people, instead

n/t

[phantom power]

6. IOKIODI

It's OK If Obama Does It.

Or, so I am frequently told.

[Louisiana1976]

12. +1

[Myrina]

14. AMEN!!

:kick:

[CreekDog]

19. What $600 billion on the military, leaps and bounds more than anyone else

but we are going to solve the budget problem by cutting back on poor kids' lunches?

i hope not.

:wtf:

[Lorien]

24. +100! nt

[ShortnFiery]

26. +1 Also TAX the Hell out of the Filthy Rich! eom

[Mari333]

35. +10000000000000000

[harun]

40. +1000000

[closeupready]

87. +1

Not going to happen, of course.

[leveymg]

2. He'd better not raise troop levels in Afghanistan, then.

If there must be cuts, start where the budget has gone up the most since 2001. That is most certainly not domestic programs.

[Massacure]

4. Better yet, make the Pentagon pay for the troop increase out of their own budget

The idea of supplemental war spending bills is stupid. Make the Pentagon spend their budget money on real work instead of developing stupid toys.

[leveymg]

5. Bake sales and charity. They'll get by.

Guess they can't buy new snow tires this year for USS George H.W. Bush.

[MercutioATC]

7. Maybe the new ATC contract won't be so bad after all...

We just went through a three-year pay freeze. Our brand new contract gives us just 3%/year.


Based on traditional government raises, it looked weak...but it might let us hold ground.

[DJ13]

8. Will Geithner have to stop giving welfare to the banks?

........didnt think so.

Politicians of both party's always get tight fisted if it looks like there will be a need to actually spend money on the general populace.

Maybe the answer is for all of us to incorporate and become banks.

[Garam_Masala]

11. That won't work...only big banks get bailouts

those who are "too big to fail"...gimme a break!

[Greyhound]

39. Of course, we're already on the hook for as much as they want up to $15T.

The perversity is simply mind-boggling.

[Journeyman]

9. And the Republicans, who called for a spending freeze early this year. . .

how will they play this in the mid-term elections? And honestly, how will this impact Democratic electoral prospects next fall?

Or might this just be our Chinese overlords pulling our strings again?

"Dance, silly democracy, dance to the tune of them to whom you've sold your children's futures. Dance!"

[Hamlette]

10. I don't remember prior freezes when the media said it was due to politics

I hate AP

He's not doing it because its right, he's doing it to help dems.

ass holes.

[humbled_opinion]

13. WOW !!

These cuts must be focused on the DOD. He better be careful...Depending on where those cuts are placed its gonna be aweful hard to swallow and many Democrats will become disaffected in an election year...

Republicans will all come after social programs and the fight will be on .....

[ShortnFiery]

27. There's more to moral leadership than "will I get re-elected" eom

[amandabeech]

36. No kidding. This is not leadership.

If people are hungry and homeless, jobless and hopeless while the military fights in Iraq, Afghanistan and Pakistan, I simply will not be able to support him or any other Dem who goes along. Supporting such a program would be immoral in my view.

[humbled_opinion]

45. Thank you...

For so succintly claifying the intention of my post, I don't know how poster shortnfiery could not grasp the concept. There is nothing moral in cutting social programs to fund Imperialist war, in fact it is antithetical.

[amandabeech]

46. You're welcome.

Actually, I think that shortnfiery got it.

You just liked my way of putting it.

My jr. and sr. high school English teachers thank you for the complement you pay to their teaching skills.:hi:

[Mithreal]

29. Republicans? The White House plans entitlement cuts.

[ShortnFiery]

71. I was in concurrence with you.

:shrug: You're preaching to the choir. :hi:

[madrchsod]

15. so the teabagggers did win....

[notesdev]

18. more like the FX market is winning

if things continue in this direction we could be looking at $8/gal gas by next summer - and remember that $4/gal gas was the trigger that set off the last round of financial chaos.

[MetaTrope]

16. Two words: "Homeland" "Security"

Bush's Gigantic Gestapo Crony Giveaway, duplicating functions already performed by half a dozen other agencies, and apparently home to highly-placed pedophiles and would-be mercenaries. Cleaning house might as well start there.

[jpak]

17. Cuts would undermine the stimulatory effect of federal spending - bad move at this time

FDR did the same thing and the economy went back into depression/recession.

Freeze yes

Cut no

[DuaneBidoux]

20. A spending freeze would be an ABSOLUTE DISASTER for the economy now.

The government has been one of the few segments pulling the economy along to avoid depression.

[BREMPRO]

53. i'm worried about this too- need to heed the lessons of the great depression

where federal spending was cut and worsened the depression, but we do need to consider the problem of long term deficits. We are out of the recession according to the numbers, so this might be the right time to begin to reign in spending, but it's a difficult balance and i hope it's not a political decision forced by pressure from the right, but one that is sensible for the long term health of the economy.

[treestar]

72. A freeze in the government's budget is not an overall spending freeze

This is aimed only at the government agencies.

[hollowdweller]

21. 25 cent per gallon gas tax to fund the wars.

Since there is no draft the public has no stake in wars. If wars had to be funded by taxes maybe the public would take a greater interest in whether we go to war or not.

Why must every social program go thru a budget test but no matter how stupid the military spending it's never questioned??

[Strelnikov_]

23. Fuck that

Anywhere from $5 to $13/gal are figures from studies I have read regarding the military cost to the US in 'protecting' the 'Energy Crescent'.

$5/gal. min.

Fully agree with your tax angle. Was thinking of the same thing the other day.

[Odin2005]

22. CUT THE DEFENSE BUDGET!!!

[cutlassmama]

25. +1

[SammyWinstonJack]

58. +10,000

:thumbsup:

[FatDave]

28. Oh, for fuck's sake.

Let 'em bully you to the right, Barrack. There's a winning fucking strategy.

[Deja Q]

60. Unless he's bought and sold like the rest of them.

((It's still too early to tell.))

But speculation on every single thing... that's not getting this country any better either.

[laconicsax]

30. If I had wanted a president who would institute a spending freeze, I would have voted for McCain,

[yurbud]

31. How about a freeze on handouts to WALL STREET? Get our money back and sell the execs organs!

[unhappycamper]

32. The military budget was $302 billion in 2000.

The occupation budget for this year so far is $164 billion dollars. This is a d'oh moment.

[depakid]

33. More from the Chicago school of fail

I guess that's to be expected when you hire proven failures to advise you and run economic policy.

[amandabeech]

37. But since the GDP went up recently, he probably doesn't think that the policy failed.

I'm sure he expects that the unemployment rate will be down to 6-7% by November 2010, even though his team told him that unemployment would be 8% tops here.

Obama's choice of economic advisers at the beginning of his run turned me off to his primary campaign because I thought that the economy was likely to become an issue before the general election or during his first term.

If things are not a lot better economically, he may not be able to turn out his base in 2010. Counting on independents to turn out en masse to replace them in an off year election is, IMHO, a risky proposition. It is even more risky, since the 2010 election at the state level will determine the legislatures that will redistrict after the 2010 census. It is not a time for risks.

[depakid]

47. The failure to keep the federal revenue sharing provisions in the stimulus

has put a lot of state legislatures and governorships at risk, that's for sure.

[amandabeech]

49. It's more than that.

You have lived or lived here for a long time. State legislative and governorship races are not always about state issues, particularly in a time of general difficulty like we are now having. The losing side always paints them as such, but I'm not nearly as convinced as many.

What we saw a couple of weeks ago was a very poor turnout among young and minority voters who came out for Obama. Republicans, who are older and whiter, vote much more regularly. We simply have to get our folks out to vote and that's going to take Obama going out there and asking them to get off the sofa and vote.

It's been my impression that a considerable amount of the stimulus money has gone to state and local governments, particularly to the schools. Revenue sharing hasn't been around since the late '80s. Block grants, their replacement, haven't been very generous for the past few years as money has been shoveled into Iraq and Afghanistan, not into our potholes. Apparently you see things differently.

[depakid]

51. They chopped over $40 billion out- causing states to raise substantially raise taxes-

and cut services. Never a popular thing- but this was THE worst time to do it, politically and economically.

Krugman and others were just shook their heads at the stupidity of that at the time- and they've been proven right:

According to the CBO’s estimates, we’re facing an output shortfall of almost 14% of GDP over the next two years, or around $2 trillion. Others, such as Goldman Sachs, are even more pessimistic. So the original $800 billion plan was too small, especially because a substantial share consisted of tax cuts that probably would have added little to demand. The plan should have been at least 50% larger.

Now the centrists have shaved off $86 billion in spending — much of it among the most effective and most needed parts of the plan. In particular, aid to state governments, which are in desperate straits, is both fast — because it prevents spending cuts rather than having to start up new projects — and effective, because it would in fact be spent; plus state and local governments are cutting back on essentials, so the social value of this spending would be high. But in the name of mighty centrism, $40 billion of that aid has been cut out.

http://krugman.blogs.nytimes.com/2009/02/07/what-the-centrists-have-wrought/

[amandabeech]

52. Thanks for posting that blog. I had forgotten about it.

However, I maintain my point on turnout.

Do you still live here or did you leave? Your cv says "Oregon, NSW."

[fascisthunter]

83. but it isn't a "failure"... they are succeeding

in furthering the demise of the "Commons", something our ForeFathers left us to guard.

[Mari333]

34. cut the defense dept spending by 2/3 , Obama.. slash the Pentagon

stop sending millions to mercenaries


boy, he is really going to make it difficult for dems to win in 2010 if he pulls this shit.

oh, but wall street will eat well.

[cory777]

38. let's increase funding baby bombing, though

real smart!!!

[Mari333]

41. you dont think we have bombed enough babies in Iraq and Afghanistan?

I guess not. perhaps you should enlist.

[saorsa]

42. sarcasm missed?

I think # 38 was being sarcastic, yes?

[Mari333]

43. no I think its a troll with vague references to the stupak bill

[cory777]

44. yes, that was meant to be sarcastic

[dixiegrrrrl]

48. Then why did he approve a pay raise for all Federal Employees

for next year.?

Yes, tis true....google it.

[JonQ]

50. So now they've started to notice that deficits matter?

Where was this notion a trillion dollars ago?

[BREMPRO]

54. i'm still astonished that many here don't understand the basic economics of the need for federal

spending to fend of an economic meltdown and depression. Read a little history of the great depression. The fast massive federal spending and resulting deficits are what kept us from falling into another one and pulled us out of the deepest recession since the depression of the thirties. Now may be the time to begin to reign in spending- but it may be too soon. tough call.

[JonQ]

55. So far most of the stimulus hasn't been spent

what has has been spent poorly and cuts/moves to increase efficiency along with higher taxes to offset the spending have not materialized.

FDR didn't merely start throwing money around willy nilly, he had a plan.

[BREMPRO]

62. I'm referring to both the bailouts and the stimulus

which has helped us avert a depression. Even Paul Krugman agrees with this.

According to Recovery.gov that tracks stimulus spending and results, 640,000 Jobs have been saved or created with about 20% of the stimulus spent. OF COURSE it could have been spent better, but there is still no doubt that we've gone beyond a crisis that could have brought down the ENTIRE world economy.

[mopinko]

73. don't confuse them with the facts.

a lot of people here can barely grasp the concept of negative numbers. they can't imagine the larger economy, they just bitch about their own job losses, or their friends. to them, the larger economy consists of the evil rich.
talk about the 'i got mine, fuck everyone else' mentality. alive and well here.

[JonQ]

75. That comment would be warranted

if there were any evidence the stimulus bill as it passed was the best way to go about fixing the larger economy.

You can't simply sign progressively larger checks to lobbyists and special interests and then act offended when people expect you to defend that tactic.

[No Elephants]

78. Try posting on the topic of the thread, instead of posting solely to insult your fellow DUers.

[JonQ]

74. Thank god for that stimulus

or else we'd be in real trouble.



Hey I didn't pile up all my money today and burn it, I guess I saved/created thousands of dollars!

[No Elephants]

79. There is no way of knowing what would have happened without the bailout and the stimulus, though.

That is too bad, but it is true. We may have been in much worse shape, or in much better shape, though I personally very much doubt the latter.

[JonQ]

85. Point is the administration predicted a certain set of results

given their proposed solution. And by their own numbers the stimulus has made things worse. The other option is that their initial estimates were way off.

Neither of those inspires confidence.

And I really dislike the "yeah you can't show things are getting better, but just think how much worse it would be if we hadn't done X" defense. Just think, if we hadn't invaded iraq the terrorists may have detonated over 20 nuclear weapons in the US by now. Can't prove it, but there is no way of disproving it either. So the invasion saved or created millions of american lives potentially.

[fascisthunter]

82. incredible

[No Elephants]

77. Oh, the government claims that 640,000 jobs have been created or saved? Well, then, it MUST be true

because government never fudges things to make itself appear better than it is or makes any mistakes.

:sarcasm:

BTW, that website shows jobs created or saved in a number of Congressional districts that don't even exist.

http://abcnews.go.com/Politics/jobs-saved-created-congressional-districts-exist/story?id=9097853


Edited to add: Just noticed this thread, also relevant: http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x4148437

[JonQ]

86. The stimulus is now saving/creating

new congressional districts! This is incredible. No other president has been able to generate so many new districts in so short a period of time.

[Psephos]

57. Germany and France: no stimulus, less unemployment, and faster recovery

Both countries decided it was foolish to borrow and spend massively to get out of the problem that borrowing and spending got them into. Makes sense, no?

The results say it does make sense.

[BREMPRO]

61. their economies are a fraction of the US economy and didn't have

50 trillion dollars of credit default swaps and derivative, Wall Street banks meltdown, AIG black hole, and sub-prime mortgage mess dragging them down. The economies of the world are also so intertwined, once we did the bailout and stimulus, France and Germany benefited from it and were able to ride the wave and not do any stimulus. Also, China had a much large per capita stimulus than we did and is recovering faster than all other countries. Makes you wonder if the Capitalist/Communists have an advantage over messy democracy.

[Psephos]

63. I would say you can't have it both ways.

If the comparison is not valid vis. Germany and France, then it is not valid vis. China. Or, if the economies of the world are so intertwined that benefits flow internationally, why does that not hold true for the relationship between China and the US?

You do make some good points. :) They would be more persuasive if they were logically consistent. However, given that the smartest economists don't seem to be more in agreement than you and me, I think we're holding our own here. ;)

Bottom line: I look at the massive nonstimulus spending in the stimulus bill, and waste as far as the eye can see, and notice that here in the US, no one can point with certainty to any clear results from the largest spending bill in the history of all governments from the beginning of time. It's all spin. Meanwhile, we'll be paying $20 billion (or more, depending on what happens to interest rates) in interest on that whopper each and every year forever.

What else could have been done with that money?

Here's an idea.

We could have built between 100 and 125 new-generation pebble-bed (i.e., safe, meltdown-proof) nuclear plants and pretty much eliminated all fossil fuel purchases from foreign suppliers. We could have used the pocket change left over to create a safe disposal facility, as well.

This would have given us *complete* energy independence every year starting now, and a decline in C02 emissions below what would have been specified had we signed Kyoto. How many jobs would have been created to build those plants? Enough to whack the unemployment problem back in the hole, too.

But politics is so much more important, you know.

[amandabeech]

64. Since they have much more generous social programs,

a recession means that they automatically spend more.

[Psephos]

67. Their social programs are different, but characterizing them as "much more generous"...

...is a subjective assignment, and depends upon which comparisons one selects.

Given that already-committed future (unfunded) liabilities for just the United States' two "most generous" social programs, SS and MC, are over $50 trillion - which is not much less than the current total wealth of the entire planet, at $65 trillion, I would say the US has a fair claim at the offering the "most generous" social programs.

Meanwhile, it's a truism that any government committed to social expenditure (as are all Western democracies) will see outlays rise in a recession, while tax revenues simultaneously fall. No surprise there.

Earlier I said that if massive borrowing and massive spending got us into a deep hole, it seems clear that ever-higher borrowing and spending are hardly the means to get us out of the hole. It doesn't work for anyone else in trouble. There's nothing special about government, except that it can use Enron-style accounting without consequences right up until the moment when the pooch is finally and royally screwed. In the end, there is no escape from the laws of economics.

Unemployment here in Michigan is 15.7%. US unemployment is 10.2%. The stimulus architects solemnly warned us if we didn't pass the bill, unemployment would go to 8%...but if we did, it would crest somewhere between 7% and 7.5%.

Instead, we got a bill stuffed with political goodies and stupidly slow on distributing what actual stimulus money it contained...and an unemployment nightmare.

The results suck. Sorry, they took their eyes off the ball, and used up all their economic credibility. Don't even get me started on TARP, Geithner, bankster bailouts, Wall St. profits, AIG, GM, the unaccounted for $2 trillion backed by Treasury, the overtime shifts at the mint printing money by the container-load, and all the rest of it. It's a wall-to-wall fail.

Judging on results - which is the only judgment that counts - Germany and France got it right, and we did not.

[amandabeech]

68. We'll have to agree to disagree on the social programs. n/t

[Psephos]

69. That's cool.

I like our occasional discussions. You always bring your "A" game.

[amandabeech]

70. Thanks. Same to you.

On edit: Folks who spend time in A2 ALWAYS bring their A-game, unless they are Rodriguez's football team.

[No Elephants]

80. Possibility: What tthey did made sense for them, but would not also have made sense for us.

In many, many respects, Germany and France are much more comparable to each other than they are to us US.

[No Elephants]

76. What FDR spent on was different from what Obama has been spending on.

It is not only a question of spending or not spending, but also of what you spend on.

[Psephos]

56. Actually, what they've started to notice are the bad polling numbers.

If printing, borrowing, and spending more money polled well, then they'd be trying to increase the deficit.

Sorry to say, but when you listen to the actions, not the words, that's what you hear.

lol And to think I believed the crap about Pay-Go.

[wroberts189]

66. It was there ..Perot made it a big issue.. then Cheney came in and said deficits do not matter. nt

[unkachuck]

59. "[China]...has expressed concern about the size of U.S. deficits."

....and what China wants, China gets! Domestic policy, now made in Beijing.

[yurbud]

65. assuming this story is true, wouldn't it make more sense for Democrats to score some victories

instead essentially agreeing with GOP budget priorities?

When will we be rid of these neoliberal parasites, sucking the blood out of the middle class to feed their trust fund babies?

[fascisthunter]

81. hey, just don't forget to Bail out Wall Street

and make sure they get their hands on the H1N1 vaccine before everyone else.

[timo]

84. better idea

why not cut off all the crappy foreign aid to countries that shit on us?

[beyond cynical]

88. Well, when you go after everybody,

no one can say that you singled them out for unfair treatment.