Last night, Rachel Maddow interviewed Jared Bernstein, Chief Economist and Economic Policy Adviser to Vice President Biden, on the Obama Administration's proposed spending freeze starting in 2011.
Bernstein minimized the breadth of the freeze, saying that while it would apply to domestic discretionary spending, it wouldn't be an across the board freeze. Bernstein said that the freeze would only apply to the total amount of spending, allowing some programs to grow while others are cut. Bernstein also said the freeze wouldn't apply to the stimulus or any potential future stimulus bills.
Based on what Bernstein said about the freeze proposal, it appears the destructive policy impact of the plan may not be as great as many, including yours truly, initially feared. Seven-eighths of Federal spending won't be impacted by the freeze, and within the one-eighth that will be impacted by the freeze, only the total level of spending will be frozen. Individual programs can grow as long as that growth is offset by cuts in other programs. Moreover, the freeze won't apply to the stimulus plan and if a second stimulus is required, it would be considered outside the freeze.
So the good news is that it doesn't sound like the proposal will really be a calamitous disaster for the economy. The bad news is that not being a calamitous disaster is probably the best thing you can say about this. And for this economy to recover, we need more than not a disaster.
In a way, Bernstein's argument is that the freeze isn't really that much of a freeze. But if that's the case, why do it all? It runs the risk of looking like a political gimmick, and even if it is a narrowly crafted as Bernstein argues, isn't it hard to square the spending freeze proposal with the need to pass the health care bill? And isn't the administration making it harder than ever to request the kind of funding that we'll need to invest in rebuilding our energy economy? Perhaps more than anything else, this is intended to be a signal that with the stimulus under its belt and health care almost on its way, the administration is done thinking big.
If that's the case, it's a shame. Because we need big thinking right now. Marching towards austerity won't get us where we need to go.
