Tuesday, January 26, 2010

Spending Freeze

Last night the White House leaked that Obama will announce a government spending freeze. Rachel Maddow had Jared Bernstein (Biden's economic advisor) on and pummeled him about this. We're in a recession, you don't cut spending, that's Hooverism and what got FDR in trouble in 1937. Bernstein commented on some details and made it sound better. He has comments posted today.

Some people today are going off the deep end, like Paul Krugman, Obama Liquidates Himself, but then he heard more and doesn't seem so worried about it. "What I hear from bat-squeaks is that it’s not a big deal on economic substance, and that admin officials hope it will clear the way for some modest job-creation efforts."

Brad DeLong adds to this in
Ezra Klein puts it in some perspective,
The Obama administration loses the deficit -- and the spending -- argument. "But you can't look at this as anything less than a tremendous defeat for the Obama administration. It's not the policy itself. The freeze locks in a post-stimulus, and potentially post-jobs-bill, level of spending. It's not terribly onerous. But it's also the administration's white flag on the argument that the deficit must be understood as a health-care reform problem rather than a taxes and spending problem. This was their most audacious effort to change the way Americans think, and it didn't work. For all the effort Democrats put into building a health-care bill that cuts the deficit, a full 60 percent of Americans think (pdf) the legislation increases the deficit. Only 15 percent think it's a deficit reducer."

In fact, apparently the Senate healthcare bill is very good at cutting the deficit. "The health care bill before the Senate would cut costs and reform health-care delivery more than any piece of legislation in American history, White House budget director Peter Orszag declared on Wednesday. "The bottom line is the bill that is currently on the Senate floor contains more cost containment and delivery system reforms in its current form than any bill that has ever been considered on the Senate floor period," the Office of Management and Budget director told reporters during a conference organized by the publication Health Affairs."

Meanwhile the liberal blogosphere is going nuts. The Hotline has a summary as does Andrew Sulivan and Brad DeLong can't find anyone (on the left or right) that likes it.


Anonymous said...

I'm sorry, no really I am. I had such high hopes for this president.

Obama just appears pathetic and weak. A three year spending freeze, in the middle of the worst recession in 70 years.

As policy, he and his advisors know it is not the correct thing to do to improve the employment picture in this country. This just reinforces the republican talking point that government, especially the Federal government, is incompetent and will waste your hard-earned money.

As politics, it looks like a desperate attempt to slow the exodus of independent voters and give the Blue Dogs something to chew on. Independent voters will feel that they can't trust this man because he changes course with the wind, and the blue dogs will just continue to abuse Obama as they have for the last year.

Clinton could get away with it cause he was "Bubba" - a regular white guy from the south when he wanted to be. I feel your pain....HA HA HA.

Obama simply can't pull that rabbit out his hat.

As I said before, Obama had his moment to solidify his bona fides with the independent voters and the base of the party. But he decided to go with Wall Street over Main Street. Choose wisely.......well Obama chose the bright shiny object and has now lost.

It's all about trust, and right now, there is very little trust in Obama to do the right thing.

Howard said...

I'll wait till he actually announces it. As the updates indicate, it doesn't take effect until 2012, hopefully that's no longer the middle of a recession. And he has job creation programs to announce. Still, this does seem to be a failure of public relations.

Elizabeth Warren was on the Daily Show and liked the financial industry reform that passed the House and now wants people to get it passed in the senate. And if it does, Obama will certainly sign it.

Richard said...

People are worried about the deficit because they are told to worry about the deficit. "It's the economy, stupid" and job creation is the thing that most people care about. If the economy remains this way there will be no fixing the deficit. if the government does what it can to start a recovery, then the deficit can take care of itself later when the economy is booming rather than busting.

It does seem to me that the President is caving to his opponents. He could also get a little help rather than hindrance from the Democrats in congress. It's aggravating. Please pass health care reform, please pass job creation bills. Please make the Republicans in the Senate actually filibuster and look like asses.

I hope he has got some fireworks for tonight.

Anonymous said...

I saw something this morning about a Schumer-Hatch jobs tax credit.

If it adds jobs at a reasonable cost to the treasury, all for the better.

Especially, since it seems to target the unemployed (out of work longer than 60 days).

Unfortunately, I have given up hope of seeing progressive projects like high-speed rail, renewable energy, and electric grid improvements, to name a few, get any kind of traction. These things are greatly needed and would have provided millions of jobs (assuming all work and materials from US vendors). These sorts of projects are truly no-brainers that now have to be sacrificed on the alter of re-election politics.

Unfortunately, not being able to move forward on these, and similar projects, has long-term implications, both for the nation and the planet.

I'm not sure if I can stomach watching the State of the Union tonight.

There's always reruns of the Jersey Shore.

Concerning the debt/deficit. currently we have about a 12 trillion dollar debt of which about 10 trillion dollars was created under republican presidents. I swear that repubs like to build up enormous budget deficits by giving tax breaks to the wealthy and borrowing to finance the difference. This leaves democrats, when they finally come back into power, with enormous debt burdens and no fiscal room to manuever. It's a perfect strategy that has shut down progressives for the last 30 years.

Unfortunately, your average independent voter is too stupid and/or too lazy to do the 5 minutes of homework to verify the debt numbers as a function of party affiliation of Presidents over the last 30 years.

Bill Clinton runs budget surpluses during his second term, with an unemployment rate when he left office at a shade above 5%. And what did the Democratic party get in return from the independent voters.....George Walker Bush as President.

Good luck trying to fix this political mess.

Anonymous said...

Just came across a piece on Huffington Post. If Obama has any conviction left (perhaps he never really had any to begin with) he needs to ask one question during the State of the Union:

Why is every family in America donating $2,000 to Wall Street for their 2009 bonuses?

Do the math, that what it comes out to. Pure stealing, legal or not, it's theft. At the very least, it's the latest part of a massive transfer of wealth from the middle class to the wealthiest few, that has been going on for 30 years. The simplest way to describe it is welfare for Millionaires and Billionaires.

People understand this in their gut, even if they can't do the math or explain how and why it is happening. This is where the outrage comes from. This is why the democrats are in such political trouble at the moment. Obama needs to channel FDR and quick.