• Chilly Reception for Obama’s Spending Freeze

    I’m up early so I might as well round up some reactions to Obama’s proposed spending freeze. I’ll give mine first. It’s pretty simple. Want to deal with the long-term spending problem? How ’bout doing something on the biggest source of spending increases, which is–wait for it–health care! Now if we only had a legislative vehicle that begins to address that problem, maybe one that could be passed quickly…hmmm….

    OK, want to know what others think? Read on.

    Matt Yglesias runs through the scenarios for how the proposed freeze will pass through the congressional sausage machine. But he is actually skeptical the proposal is serious. Yglesias concludes, “I suspect this initiative was deliberately leaked to progressive bloggers in an effort to get denounced by the left and I don’t want to give them the satisfaction.” That is, Obama is inviting a fight with the left in order to center himself.

    Ezra Klein describes how spending freezes normally work through Congress.

    The administration will target worthless programs, like agricultural subsidies, in order to preserve good programs. But the reason worthless programs live in budget after budget is they have powerful backers. And those backers will rush to Congress to protect their profits. …

    Now you’ve removed some of the cuts, but you still want to hit the overall target. So the cuts could get reapportioned to hit programs that lack powerful constituencies. Many of those programs help the poor.

    And that’s why the left would be enraged. He concludes, “You can attend a lot of Democratic rallies without ever hearing the chant, “When I say ‘spending,’ you say ‘freeze!’ ‘SPENDING!'””

    Clearly Obama is trying to reinvent himself in the wake of the Massachusetts vote and this spending freeze idea is just one of several responses. Kevin Drum is gobsmacked at the rapidity of this pivot:

    I’m not sure I’ve ever seen this level of political panic grip a party so fast over a single election loss. It’s just remarkable. Yes, I know Dems were getting nervous before last week’s election, and Scott Brown’s victory just opened the floodgates, so to speak. But still. I’ve just never seen anything quite like this.

    Finally, at least a few economists are not pleased. First, there’s Brad DeLong who calls this “dingbat kabuki” and insinuates that Obama is Herbert Hoover with a better smile (actually, did Hoover have a smile?). And, finally, Mark Thoma makes my point, which is the best way to conclude:

    The long-term budget problem is due to primarily one thing, rising health care costs. Everything else is dwarfed by that problem. If we solve the health care cost problem, the rest is easy. If we don’t solve it the rest won’t matter.

    This was an opportunity for Obama to explain the importance of health care reform and how it relates to the long-term debt problem.

    Exactly.

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    • Were the House and Senate health care bills projected to reduce health care costs?

      • @Dan Webber – Relative to trend or overall? I think the answer to the former is yes, though not by much and only long term (from memory, could be wrong). The answer to the latter is most definitely no. Nothing short of collapse of the country would do that.