If you were looking for a substantive discussion of the problems facing the United States, last night’s State of the Union address was a let down.
President Barack Obama spent 62 minutes speaking in mostly generalities and explaining to us how great government spending is, but also warning the Congress that he will veto bills containing earmarks – special projects that are inserted into legislation that go bypass the normal budget process. President Obama also pledged to take measures to cut spending by enacting a five-year freeze on non-defense discretionary spending. While he may consider this to be some great feat, Obama’s proposal will only save $400 billion during that time. This is a drop in the bucket compared to the $6 trillion in budget deficits projected by the Congressional Budget Office.
Obama noted in his speech that non-defense discretionary spending represents a relatively small portion of the budget – around 12 percent, using his numbers, and added that “we have to stop pretending that cutting this kind of spending alone will be enough.”
Doug Mataconis, Brett Bittner, Mike Hassinger, Tom Knighton and Jason Pye will be live-blogging President Barack Obama’s State of the Union address and the Republican response given by Rep. Paul Ryan (R-WI). We’ll kick things off around 8:30pm (EST).
Our friends at the Cato Institute are also live-blogging this evening.
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Politico is reporting that President Barack Obama will call for a freeze on non-defense discretionary spending in the run up to his State of the Union address to Congress on Wednesday:
President Obama plans to announce a three-year freeze on discretionary, “non-security” spending in the lead-up Wednesday’s State of the Union address, Hill Democratic sources familiar with the plan tell POLITICO.
The move, intended to blunt the populist backlash against Obama’s $787 billion stimulus and an era of trillion-dollar deficits — and to quell Democratic anxiety over last Tuesday’s Massachusetts Senate election — is projected to save $250 billion, the Democrats said.
The freeze would not apply to defense spending or spending on intelligence, homeland security or veterans.
The move would likely be welcomed by Blue Dog Democrats and deficit hawks, but party liberals would likely bridle at baselining a wide array of popular domestic spending programs.
It sounds like a big deal, but this will only save $250 billion over the next 10 years. Non-defense discretionary spending makes up only a small portion of the overall annual budget. In the $3.5 trillion FY 2010 budget, only $477 billion is non-defense discretionary spending. That’s around 14% of total spending and less than half of total discretionary spending (including defense).
This freeze would not effect “mandatory spending,” including Medicare, Medicaid and Social Security, which accounts for over $2 trillion in spending.
While President Barack Obama proposed on Tuesday night to cut spending, increase “investment” - a code word for more spending, reform the tax code, among many other pledges and announcements of new policy initiatives.
A post-speech analysis by the National Taxpayers Union found that despite the five-year spending freeze proposal, Obama’s proposals will have a net cost of $21 billion, and that’s on the low-end of estimates.
Some of the policy experts from the Cato Institute weighed in on the various proposals and themes in the State of the Union, ranging from the speeding freeze, to high-speed rail, trade and ObamaCare:
Last night, President Barack Obama called for a five-year spending freeze in non-defense discretionary spending; hardly a bold move considering that budget deficits will surpass $6 trillion over the next 10 years. However, the Republican-controlled House earlier in the day passed a resolution that would set the budget at 2008 levels:
In a 256-165 vote, the House approved a measure instructing Rep. Paul Ryan (Wis.), the GOP chairman of the House Budget Committee, to set the budget for this year at 2008 spending levels or lower.
The House approved H.Res. 38 on a mostly party-line vote after rejecting a Democratic motion to recommit the resolution by a 184-242 vote.
Seventeen Democrats voted with Republicans: Reps. Jason Altmire (Pa.), John Barrow (Ga.), Dan Boren (Okla.), Ben Chandler (Ky.), Jim Cooper (Tenn.), Jim Costa (Calif.), Jerry Costello (Ill.), Joe Donnelly (Ind.), Tim Holden (Pa.), Larry Kissell (N.C.), Dan Lipinski (Ill.), Jim Matheson (Utah), Collin Peterson (Minn.), Mike Quigley (Ill.), Mike Ross (Ark.), Kurt Schrader (Ore.), and Heath Shuler (N.C.).
The vote came after another tense hour-long debate in which Democrats accused Republicans of not revealing the budget levels. Republicans countered that the resolution is the start of a process for reducing spending, not a final budget bill.
Republicans are trying to show voters that they are committed to reducing spending after winning back the House on a campaign to bring austerity to Washington. Ryan has talked about reducing spending for fiscal year 2011 by $60 billion, but some conservative Republicans have talked about making bigger cuts.
Political Math explains President Barack Obama’s proposed freeze on non-defense discretionary spending:
Voters aren’t buying the rhetoric from President Obama on his proposed spending freeze, according to new polling from Rasmussen:
A new Rasmussen Reports national telephone survey finds that just nine percent (9%) think the freeze will reduce the deficit a lot.
Eighty-one percent (81%) disagree, including 42% who say it will have no impact. Another 39% say the freeze in nearly all areas except defense, national security, veterans affairs and entitlement programs such as Medicare, Medicaid and Social Security will reduce the deficit a little.
Still, 56% favor the president’s plan for a three-year freeze on discretionary spending. Only 24% oppose it, and 20% more are undecided. Other data suggests that voters view the proposal as a first step in the right direction.
Overall, 57% would like to see a cut in government spending, 23% favor a freeze, and 12% say the government should increase spending. Republicans and unaffiliated voters overwhelmingly favor spending cuts. Democrats are evenly divided between spending cuts and a spending freeze.
What’s more, voters aren’t buying the rosy picture of the economy that the president painted during his State of the Union address to Congress, with majorities not believing that Obama has cut taxes for 95% of Americans or that the economy is growing or that 2 million more people have been put back to work by “stimulus” spending.
Economist Veronique de Rugy writes that President Barack Obama’s freeze on non-defense discretionary spending is a “binge diet”:
That’s right. President Obama is talking about freezing—not cutting—16 percent of the total fiscal 2011 budget. This is a small part of the budget, especially considering that this portion grew by 16.3 percent between fiscal 2009 and fiscal 2010 (and, once we include all fiscal 2010 spending, this increase will reach 24 percent). And this is on top of the 5.5 percent increase a year during each of the Bush years.
In other words, this budget freeze is akin to skipping dessert after binging at an all-you-can-eat buffet, and still hoping to lose weight.
In addition, the across-the-board freeze is so full of caveats and loopholes that it can only be seen as a joke. Here, our dieter isn’t allowed to eat desserts, unless it’s one with chocolate and whipped cream.
For instance, the freeze won’t apply to the $513 billion in unspent stimulus funds. Nor will it apply to the $247 billion of Troubled Asset Relief Program funds or to any of the programs that cash from repaid TARP funds will pay for, such as the $30 billion to prop up community bank lending to small businesses proposed by the president during his speech.
She also notes that the proposal has been met with skepticism by more liberal congressional Democrats. So it’s likely that the proposal will not go anywhere.
House Speaker Nancy Pelosi said Wednesday that defense spending shouldn’t be exempt from President Barack Obama’s proposal for a three-year freeze on federal spending.
In his State of the Union address Wednesday night, Obama is expected to address worries about the federal deficit by proposing a three-year freeze on all “non-security” spending. But just hours before the speech, Pelosi told POLITICO that any spending freeze should be “across the board.”
“Everybody has to make a sacrifice,” the San Francisco Democrat said in an interview conducted as part of POLITICO’s “Inside Obama’s Washington” video series. “If you’re asking everybody else in the country who has an interaction with the federal government — and that means our states and cities and all the rest, too — to cut back, then I think we have to subject every federal dollar to the very harshest scrutiny.”
The Department of Defense received a 12+% bump in spending ($663 billion) in President Obama’s first budget. Pelosi makes an argument that defense spending could be cut by 5%.
Here is a rare area of agreement with Pelosi. Defense spending is bloated and wasteful. Contracts are often awarded because they are popular in a district or state, such as the F-22 Raptor (just an example, there are more).