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From the diaries. Susan.

There are no words to describe how disastrous this news is from TPM:

President Obama will propose freezing non-security discretionary government spending for the next three years, a sweeping plan to attempt deficit reduction that will save taxpayers $250 billion over 10 years.

When the administration releases its budget next week, the discretionary spending for government agencies from Health and Human Services to the Department of Treasury will be frozen at its 2010 level in fiscal years 2011, 2012 and 2013.

A senior administration official detailed the move, speaking on a condition of anonymity because Obama will announce his decision during his State of the Union address Wednesday night....

Exempted from the freeze would be Pentagon funding, and the budgets for Veterans Affairs and Homeland Security.

This is a massive mistake. No matter what you think of Obama's performance on the health care bill, or any other issue in 2009, if he sticks to his guns on this, the recession will get much worse, and Democrats will likely lose both Congress and the White House in 2012.

Why do I say this? Because there is no fucking way that this country will experience economic recovery without greater federal spending. Instead of the sensible PAYGO rules that Pelosi brought into force in 2007, which produce responsible spending by identifying new revenues, Obama is panicking and giving into the Larry Summers/Robert Rubin neoliberal argument that somehow, a lack of government spending will produce economic growth. Instead of embracing Keynes, he is embracing Hoover.

Realize this almost certainly means no second stimulus - unless Obama plans to define "frozen at 2010 level" as ongoing stimulus. Even if that's not the case, population growth and inflation necessitate ongoing spending increases over the years. So if a hard 2010 number is kept, that means that in 2011, 2012, and 2013 there will need to be cuts to programs and services in order to maintain the freeze.

That will be the equivalent of FDR's boneheaded move in 1937 to pull back on government spending. The result was a major recession that caused conservatives to win a lot of seats in the 1938 election and brought the New Deal to an end.

Yet FDR had already won his second term. Obama, on the other hand, is embracing a policy that has been proven to fail even before the midterm elections.

If he thinks this is even a realistic or economically feasible policy, he is out of his mind. If he thinks this will save his and Democrats' political bacon, he is very badly mistaken. Only greater government spending - MUCH greater spending - will pull us out of recession, create jobs, and produce lasting recovery.

Without greater spending, Obama is implying he is willing to live with high unemployment for the remainder of his first term. If one wanted to deal with the deficit, he could follow Bill Clinton's model of producing economic growth that would close the deficit in future years.

The reviews will likely come in soon from the progressive economist world. They're not likely to be very good. Congressional Democrats are being asked to cut their own throats here. They should say "oh hell no" to this nonsense, and choose progressive economic policy AND keeping their seats over following Obama over the cliff.

Update [2010-1-25 21:11:27 by eugene]:: Marc Ambinder fleshes this out:

The administration insist that important programs will be kept alive and functioning, and that funding for, say, education initiatives will rise, while funding for other programs will decline -- and that the president's priorities will be well-funded.  The freeze is irrelevant to health care because medicare, medicaid and taxes are all mandatory. So too are many of the programs for the neediest, such as unemployment insurance and Pell Grants.  And many of the other programs were plussed up recently so the White House is freezing them at a very high level.

This doesn't negate the basic Hooverism of freezing spending in the middle of a severe recession. But it does mean that the details of this matter a great deal. From my perspective, those details won't make this into a good or acceptable policy. But it will make the difference for families, the unemployed, and others who need the public services that this might hit. Progressives need to prepare for this battle and ensure that Hooverism doesn't prevail.

Originally posted to Daily Kos on Mon Jan 25, 2010 at 05:44 PM PST.

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