Politics

The spin, and the facts, on Obama’s spending freeze

Here’s the spin and the facts from the White House – and from Republicans – on the spending freeze in President Obama’s State of the Union address.

Spin: Obama is announcing a five-year freeze on a portion of government spending.

Fact: In fact it’s only partially new. He proposed a three-year freeze during last year’s State of the Union, and put it into place. So this extends last year’s proposal by two years.

“It is true that we already had a three-year freeze, so there were already significant savings in the budget. But we’ve extended that by two years,” Gene Sperling, a top economic adviser to Obama, said Tuesday afternoon.

Spin: The White House is selling the freeze, as Sperling put it, as “one of the deepest and toughest spending restraint budgets that has been seen by a president.”

Fact: They are freezing less than one half of one fourth of the budget. The current budget is $3.8 trillion, but for general purposes, consider the budget to be roughly $3.5 trillion each year over the last few years. Of that amount, about $2.5 trillion is mandatory spending, much of that being entitlement programs such as Medicare, Medicaid and Social Security. Of the $1 trillion that is left over in discretionary spending, only about $400 billion in annual spending fits into the category that Obama is freezing.

Another way to look at this is that the total budget is just under 24 percent of the economy, or gross domestic product, which is roughly $15 trillion. Obama is freezing a portion of the budget that is only two percent of GDP.

Obama does admit in his speech that he is freezing “a little more than 12% of our budget.”

“To make further progress, we have to stop pretending that cutting this kind of spending alone will be enough. It won’t,” he says, according to his prepared remarks.

Spin: The White House says they will reduce the deficit by $400 billion over 10 years. The $400 billion figure will stick in people’s minds. The 10 year window likely will not.

Fact: That’s $40 billion a year cut from the projected deficit.

Spin: Obama will say he is cutting spending. A White House fact sheet Tuesday said: “This freeze will require substantial cuts, including to programs the president supports.”

Fact: The freeze can only be considered to be cutting spending in the context of future budgets, and in the light of the fact that those future budgets have automatic increases baked into them, often to account for inflation. To be fair, Republican “cuts” are also figures derived from counting against future projected spending levels.