President Obama will call for a three-year freeze in spending on many domestic programs, and for increases no greater than inflation after that, an initiative intended to signal his seriousness about cutting the budget deficit, administration officials said Monday.

The officials said the proposal would be a major component both of Mr. Obama’s State of the Union address on Wednesday and of the budget he will send to Congress on Monday for the fiscal year that begins in October.

The freeze would cover the agencies and programs for which Congress allocates specific budgets each year, including air traffic control, farm subsidies, education, nutrition and national parks.

But it would exempt security-related budgets for the Pentagon, foreign aid, the Veterans Administration and homeland security, as well as the entitlement programs that make up the biggest and fastest-growing part of the federal budget: Medicare, Medicaid and Social Security.

The payoff in budget savings would be small relative to the deficit: The estimated $250 billion in savings over 10 years would be less than 3 percent of the roughly $9 trillion in additional deficits the government is expected to accumulate over that time.

The initiative holds political risks as well as potential benefits. Because Mr. Obama plans to exempt military spending while leaving many popular domestic programs vulnerable, his move is certain to further anger liberals in his party and senior Democrats in Congress, who are already upset by the possible collapse of health care legislation and the troop buildup in Afghanistan, among other things.

Fiscally conservative Democrats in the House and Senate have urged Mr. Obama to support a freeze, and it would suggest to voters, Wall Street and other nations that the president is willing to make tough decisions at a time when the deficit and the national debt, in the view of many economists, have reached levels that undermine the nation’s long-term prosperity. Perceptions that government spending is out of control have contributed to Mr. Obama’s loss of support among independent voters, and concern about the government’s fiscal health could put upward pressure on the interest rates the United States has to pay to borrow money from investors and nations, especially China, that have been financing Washington’s budget deficit.


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Posted by on January 26, 2010. Filed under Commentary. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.
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  1. Holte Ender

    January 26, 2010 at 10:32 am

    When it comes to taking on debt, as an individual or as a nation, it boils down to what you can afford in payments. If the national debt starts to eat deep into the budget we have a problem. I can’t believe that this will happen. Nobody likes paying higher taxes, but something has to be done in that area. If taxes are raised, money should be flooded into Main Street and not Wall Street, small businesses are the backbone of any Democracy and its economy. The US has led the world for decades in innovation, entrepreneurship, research and development, look at the list of Nobel Prize winners in the sciences over the past 60 years, mostly American universities and R&D institutions. We should make every effort to innovate our way out of this man made mess.

  2. Vigilante

    January 26, 2010 at 11:10 am

    Holte, you are spot-on, on this. This latest development is a Game-Changer for me.

  3. lazersedge

    January 26, 2010 at 11:16 am

    This is in large part due to the Massachusetts debacle that has suddenly has everyone miscounting. The Democrats should now be called the Demo scardi-cats. As much as I like the President he still doesn’t get it. He needs to lay it on the line once and for all and play hard ball with the Senate. It doesn’t matter what he does or says the Republicans will oppose him as will some of the Blue Dog Dems as long as he lets them slide. President Obama has attempted to let the process work like the civics books say it is supposed to work and party of no have shoved the books right back down his throat. It is now time to lay out things the way he intends accomplish them, tell the Dems to get in line, tell the Republicans obstruction tactics will be met anti obstructionist (backroom) tactics, and get on with the business of running this country. I am tired of the bullshit.

  4. MadMike

    January 26, 2010 at 12:33 pm

    I am also tired of the bullshit Lazer. I suspect the president could use a lesson in street fighting tactics.

  5. MadMike

    January 26, 2010 at 12:34 pm

    Holte I think we need to be raising taxes, now lowering them. The ONLY reason that is not happening is political.

    Vigil: Thanks for the link.

  6. Lee

    January 26, 2010 at 12:56 pm

    Quite a change a year makes.

    Obama becomes McCain?

    • Vigilante

      January 27, 2010 at 12:34 am

      STFU, Lee. Until you apologize for eight (8!) years of Bush.

  7. MadMike

    January 26, 2010 at 2:17 pm

    There’s plenty of time. There are always disappointments during the first year. Presidents learn that it is much harder to keep promises than it is to make them.

  8. Four Dinners

    January 26, 2010 at 5:06 pm

    In the nicest possible way I couldn’t be arsed reading anything to do with politicians.

    might as well eat shit

  9. MadMike

    January 26, 2010 at 5:46 pm

    LOL 4D!

  10. Hill

    January 26, 2010 at 6:46 pm

    See comment at other site…

    • Vigilante

      January 27, 2010 at 12:36 am

      Yes, Mike. Shut down that old, Ugly-Ass site. That is so OVER. This is where you want traffic! Up-Town is where it’s at.

  11. Beekeepers Apprentice

    January 26, 2010 at 7:00 pm

    This is exactly the silly nonsense McCain started pushing in September 2008 when it became obvious that a financial and economic meltdown of Krakatoan proportions was blowing. To say I’m disappointed at the developments during the past week would be an understatement to the extreme. I am PISSED. Seriously, WTF?? The dems had the entire country in their hands to make substantive improvements on everything from the basic economy to healthcare, and they FRITTERED it away, acting like they are still victim to George Bush’s whims. I am just dis…gusted.

  12. osori

    January 26, 2010 at 8:02 pm

    We need to stop reacting to whatever the Republicans say.They keep whining about deficits as if they weren’t complicit in everything Bush did.our economy is in deep trouble.are they too ignorant to see that, does their ideology prevent them from understanding?

    If the govt doesn’t spend to spur demand, who will ?

    The private sector is deeply mired in debt.We have a net dollar outflow cause of the trade imbalance, so the foreign sector is no help. Where the hell is spending going to come from if not the govt? If we try to balance the public budget we’ll have freaking souplines. Doesn’t anyone understand this?

  13. lazersedge

    January 26, 2010 at 10:54 pm

    My point exactly Oso. It is time for the Prez to show that he has a pair and show some leadership. This is not the time for a shrinking violet. It is a time for for very strong definitive action. We need government involvement now more than ever. The private sector is not creating jobs because people are not spending because many do not have jobs. Fear is dragging everyone down and the Republicans are loving it. Government needs to start creating jobs to start spending and move the economy otherwise we will be stuck here for years.

    • Vigilante

      January 27, 2010 at 12:40 am

      Ledge, maybe those who are reluctant to criticize #44 (still) ought to occupy themselves thinking about who Obama should gather around him to give him the kind of advice he needs that he’s not getting (maybe). I, personally, don’t have the foggiest idea. But I think that would make a potentially explosive subject. Could also be helpful.

  14. osori

    January 26, 2010 at 11:31 pm

    absolutely.You know I always read righties say the Founding Fathers wanted small govt.IMO they legislated a govt big enough to fit their needs. They had no central bank.no railroads.No electricity. No Iphones 🙂

    I believe there were 3 or 4 million people covered by the constitution.Now we got 300 million. I’m no expert and don’t feel like doing the legwork to research it but I would suggest if you factor in demographics and technological/agricultural/whatever the hell else progress there may not have been much proportional change.