Obama Partial Discretionary Spending Freeze : A Small First Step

President Obama will propose freezing "non-security" discretionary spending for the next three years (FY2011-13) when he unveils his new budget next week. It's a start. A small one, but a start. The president is using his bully pulpit to push for restrained spending. According to numerous leaks, the Obama plan will cap that spending at its current level of $447 billion, saving $15 billion next year and $250 billion over ten years. It's difficult to interpret how meaningful those numbers are until we can actually see the budget. Administration officials simply say that the freeze does not include military, veterans’ affairs, homeland security and some international programs.

There will be lots of arguments that discretionary spending is not the part of the budget that is growing the fastest--that entitlement spending far outpaces the size of the discretionary budget. But as we show in this report, between 1999 and 2008, discretionary spending grew an average of 7.5 percent annually. As the budget process unfolds, there will a huge amount of pressure to simply disregard the president's plan and increase domestic spending. That is why any plan would be much better paired with statutory spending caps, such as what a bipartisan group of senators, led by Sen. Jeff Sessions (R-Ala.) is introducing as part of the debt limit debate and by a promise by the President to veto any spending bill that exceeds his limits. The risk here is that this and other deficit reduction measures will just be used as political talking points but that the President won't push Congress to follow through in a tough election year. Obama and Congress need to put teeth in any deficit reduction plan.

Policymakers will have to adopt much broader plans, savings much more money to bring the debt to a reasonable level. We estimate that working off of a current policy baseline, policy savings of somewhere $4.5 and $5 trillion over the next decade would be needed to bring the debt to a reasonable level.  But at least the President is moving in the right direction.

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