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On December 9, House Republicans did what they’d done multiple times throughout 2009. They released an open letter to President Barack Obama, laying out their ideas for a “No-Cost Jobs Plan.” It included, among ideas like scaled-back energy regulation and a temporary tax break for corporations repatriating foreign profits, a proposal for a “spending freeze.”
President Barack Obama (WDCpix)
“A freeze in domestic discretionary spending,” they argued, “would immediately save $53 billion and more importantly demonstrate an immediate commitment to fiscal restraint.”
Over the next month, the “No-Cost Jobs Plan” remained a useful talking point for Republicans rebutting attacks on their “no” votes, a hook for op-eds, and not much else. But in early January, White House Budget Director Peter Orszag fueled speculation that the White House might want freezes in discretionary spending in the 2011 budget. On Monday night the White House leaked the news that President Obama would propose a three-year freeze on such spending, which makes up roughly one-sixth of the budget. In his State of the Union speech, the president confirmed it.
“Starting in 2011, we are prepared to freeze government spending for three years,” Obama said. “Like any cash-strapped family, we will work within a budget to invest in what we need and sacrifice what we don’t. And if I have to enforce this discipline by veto, I will.”
This sudden and hardly expected shift–using the language of personal responsibly that Republicans have used since before Obama took office–has startled members of both parties and economists both critical and supportive of White House policy. And while they’re using the opportunity to needle Democrats on a policy that’s seen as unlikely to shrink the deficit, conservatives see Obama’s decision as a partial declaration of surrender.
“I never met a spending freeze I didn’t like,” said U.S. Rep. Mike Pence, R-Ind., the chairman of the Republican conference. He pointed to the December 9 letter and gave his party full credit for appearing to change the president’s mind on spending. “I’d welcome a sincere attempt at a spending freeze.”
U.S. Sen. Chuck Grassley said he approved of the spending freeze but believes it can’t stand alone. It must be coupled, Grassley said, with “cutting things or just turning back the TARP money, as an example. That’s $200 billion right there.”
Grassley pushed the idea of a spending freeze last March as a method to stop the president’s “socialist” agenda.
U.S. Rep. Tom Latham, R-Ames, said he, too, supports the idea of a spending freeze but remains skeptical it will actually happen under the watch of “a president who spent more taxpayer dollars in his first year than any other president in history.”
As a short-term attempt to co-opt Republican rhetoric, the “spending freeze” promise is a success. The first poll on the idea, conducted by Rasmussen Reports, found a 56-24 percent majority in favor of a freeze, with a slim 48 percent plurality of voters predicting it would have at least “a little” impact on cutting the deficit. It followed multiple polls that have found the public skeptical that government spending can pull the economy out of the recession. That, according to some critics, explains why the White House would grab onto a Republican concept unlikely to have a major effect on the economy.
“It has to be evaluated on political terms,” said Bruce Bartlett, a conservative economist who has clashed with fellow travelers over his opposition to spending cuts in a bad economy. “What’s he trying to accomplish politically by saying this? He’s trying to give the appearance of moving to the middle. As policy, it’s too puny to have an effect even if it’s implemented.”
Bartlett argued that liberal economists’ concerns about the impact of any kind of spending freeze were “overwrought, because nothing will come of this. But Obama’s sending mixed signals to everybody–his own supporters as well–as to what exactly his economic philosophy is.”
Deficit hawks have taken the same approach to the “freeze” concept as Republicans. At best, it points to the right policy but doesn’t get there fast enough. At worst, it’s a distraction from more deeply-needed cuts.
“We wouldn’t oppose this,” said Josh Gordon, director of policy at the budget watchdog group The Concord Coalition. “It’s an acknowledgment that the deficit is a problem. You have to start somewhere. My concern is that too much political capital could be wasted on small items, and not enough could be spent on long-term challenges, like entitlement and defense spending.”
“Voters aren’t stupid,” said Alex Conant, a Republican strategist. (Conant’s client Tim Pawlenty called the “freeze” concept “kind of like somebody eating three Big Macs and then deciding they’re going to control their weight by ordering a Diet Coke.”) “The spending issue is not going anywhere, with or without this spending freeze. It only pertains to a small part of the budget, not even the fastest-growing part of the budget.”
Conant doubted that Obama had taken a Republican issue off the table for 2010, despite the instant polls. “Republicans do deserve credit for having the president acknowledge a problem,” he said. Other Republican strategists agreed that the “freeze” wouldn’t shift public opinion on which party can grapple with the deficit; one suggested that Obama’s embrace of the frame might make it easier for Republicans to run on government-cutting while dodging the tricky questions of entitlement or defense spending cuts.
“Ninety-five percent of Republican candidates, officials, staffers and advisers do not give a rat’s ass about fiscal restraint or government size,” one strategist told TWI. “At the end of the day, 95 percent of them believe people want to hear about fiscal restraint, but ultimately want government to give them stuff. This is how we default to talking about tax cuts, not spending, because everyone is afraid that if you criticize a spending item, you’ll offend someone. Well, you will. But when you bankrupt the whole country, which Obama’s proposal is not going to stop, you offend millions.”
Pence and other Republicans suggested that the “freeze” concept would come up again in a Friday meeting between the president and their party’s conference in Baltimore. Whatever the long-term political effect–whether or not a “freeze” happens–Obama critics are pleased that a year of arguments for more government spending are being swept aside.
“What he’s doing is actually pretty much what Bush didn’t have the guts to do in eight years,” said Veronique De Rugy, a libertarian economist at the Mercatus Center who has criticized the Keynesian spending policies of the Obama administration. “It’s nothing. But it’s more than Bush did.”
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