The White House’s proposal to freeze discretionary spending at the civil agencies was slammed from both sides Tuesday with conservatives tabbing it a meaningless gesture while liberals argued the president is overreacting to GOP Senator-elect Scott Brown’s victory in Massachusetts last week.
During a conference call on Tuesday Office of Management Budget Deputy Director Rob Nabors outlined the administration’s proposal, which includes a top-line cap on discretionary spending at fiscal 2010 levels but allows for individuals programs to both gain or lose funding. Nabors said the 2010 budget was focused on getting Americans back to work but the fiscal 2011 budget, which begins in October, will focus on reining in discretionary spending. He said the White House believes the economy will be on stronger footing during 2011, allowing the administration to address some of the long-term structural problems.
Critics argued that the cap on discretionary spending will have almost no impact on the deficit, since non-defense discretionary spending makes up less than a fifth of the total budget. On Tuesday the Congressional Budget Office (CBO) forecast a federal deficit of $1.3 trillion for fiscal 2010. That’s 9.2% of the Gross Domestic Product, the second-highest level since World War II.
“This will have a negligible impact on the deficit. It’s more of a political statement than a policy statement,” said Craig Jennings, director of federal fiscal policy at the non-profit OMB Watch.
Nabors said the funding cap wouldn’t affect spending on defense, homeland security, veterans affairs or international affairs. Entitlements and other mandatory programs would also be unaffected.
Heritage Foundation senior fellow J.D. Foster said the move preserves discretionary funding at their already-elevated 2010 levels and ignores defense and entitlements, the largest portions of the budget, making the move meaningless in terms of reducing the deficit.
“You can’t pretend to be taking the budget seriously by walling those programs off from fiscal discipline,” Foster said. “The money is not in discretionary spending and you have to go where the money is. You cannot have a major impact unless you address entitlements.”
Nabors said programs prized by the president such as Pell grants would also be protected from the freeze. Among the areas that have been mentioned as possibly facing cuts are housing and anti-poverty programs, agricultural subsidies, the Interior Department and research funding.
“Not everything is of equal importance to the country or the president’s agenda,” Nabors said. “Those things most important to president like education and energy research are at top of list.
While transportation is among the areas included in the spending freeze, Foster said the move would not affect highway funding. That leaves only a handful of government programs that will have to be scaled back or eliminated to produce the anticipated $250 billion of savings over 10 years, an amount Jennings referred to as “nothing” in relation to the federal deficit. Jennings said the programs up for cuts would likely include funding for worker training, heating assistance, mental health services and other programs without political backers but aimed at the people most affected by the recession.
“Ultimately this makes no sense from a deficit standpoint, hurting people that depend on these programs. In this economic climate it’s absolutely the wrong thing to do,” Jennings said.
Jennings pointed out that much of the short-term concern about the budget is due to the recession, which has severely eroded the country’s tax base while significantly increasing expenditures on automatic stabilizers such as unemployment insurance and food stamps. Once the economy recovers, he argued, that imbalance would correct itself. He said the other major contributor to the immediate deficit is the $787 billion Recovery Act, which likely won’t be off agencies’ books until fiscal 2012.